Sang V. Nguyen

On Productivity and Plant Ownership Change: New Evidence from the Longitudinal Research Database

In this article we examine the type of establishment that experiences ownership change and how the transferred properties perform after acquisition. Our empirical work uses an unbalanced panel of 28,294 plants taken from the Longitudinal Research Database (LRD) for the period 1977-1987. We find that (1) ownership change is generally associated with the transfer of plants with above average productivity, but large plants are more likely to be purchased, rather than closed, when they are performing poorly; and (2) transferred plants experience improvement in productivity performance. These results suggest that the managerial-discipline theory cannot be used to explain most ownership changes.

Returns to scale in small and large U.S. manufacturing establishments

The objective of this study is to assess the possibility of differences in the production technologies between large and small establishments in five selected 4-digit SIC manufacturing industries. We particularly focus on estimating returns to scale and then make interferences regarding the efficiency of small businesses relative to large businesses. Using cross-section data for two census years, 1977 and 1982, we estimate a transcendental logarithmic (translog) production model that provides direct estimates of economies of scale parameters for both small and large establishments. Our primary findings are: (i) there are significant differences in the production technologies between small and large establishments; and (ii) based on the scale parameter estimates, small establishments appear to be as efficient as large establishments under normal economic conditions, suggesting that large size is not a necessary condition for efficient production. However, small establishments seem to be unable to maintain constant returns to scale production during economic recession such as that in 1982.

Public Use Microdata: Disclosure and Usefulness

Official statistical agencies such as the Census Bureau and the Bureau of Labor Statistics collect enormous quantities of microdata in statistical surveys. These data are valuable for economic research and market and policy analysis. However, the data cannot be released to the public because of confidentiality commitments to individual respondents. These commitments, coupled with the strong research demand for microdata, have led the agencies to consider various proposals for releasing public use microdata. Most proposals for public use microdata call for the development of surrogate data that disguise the original data. Thus, they involve the addition of measurement errors to the data. In this paper, we examine disclosure issues and explore alternative masking methods for generating panels of useful economic microdata that can be released to researchers. While our analysis applies to all confidential microdata, applications using the Census Bureaus Longitudinal Research Data Base (LRD) are used for illustrative purposes throughout the discussion.

Returns to Scale in Small and Large U.S. Manufacturing Establishments: Further Evidence

Nguyen and Reznek (1991) used plant-level data for five 4-digit SIC industries to estimate and compare the degrees of returns-to-scale for establishments of various size classes for the years 1977 and 1982. They found that the estimated scale elasticities of all plant sizes have values approximately equal to one. They, therefore, concluded that both small and large establishments under study are equally efficient in production. The purpose of the present study is to extend and improve upon Nguyen and Rezneks work by (1) extending the data set to cover the entire U.S. manufacturing sector, (2) improving the model by including energy as a separate input in production, and (3) relaxing the assumption of homogeneity and estimating an unrestricted (non-homogeneous, non-homothetic) production model. With the improved model and data, it is found that the estimated scale elasticities for all sizes of establishment are statistically insignificantly different from one. Thus, the result confirms and strengthens Nguyen and Rezneks finding that a large establishment size is not a necessary condition for efficient production.

Factor Substitution In U.S. Manufacturing: Does Plant Size Matter

We use micro data for 10,412 U.S. manufacturing plants to estimate the degrees of factor substitution by industry and by plant size. We find that (1) capital, labor, energy and materials are substitutes in production, and (2) the degrees of substitution among inputs are quite similar across plant sizes in a majority of industries. Two important implications of these findings are that (1) small plants are typically as flexible as large plants in factor substitution; consequently, economic policies such energy conservation policies that result in rising energy prices would not cause negative effects on either large or small U.S. manufacturing plants; and (2) since energy and capital are found to be substitutes, the 1973 energy crisis is unlikely to be a significant factor contributing to the post 1973 productivity slowdown.

Factor substitution in small and large U.S. manufacturing establishments: 1977–82

The objective of this article is to assess the possibility of differences in factor substitution in the production of small and large U.S. manufacturing establishments. For empirical implementation, we specify and estimate separate three-factor translog production factors, using confidential plant-level data for five four-digit industries extracted from the U.S. Bureau of the Census Longitudinal Research Database. Our primary finding is that for most industries under study, small establishments appear to be at least as flexible as large establishments in factor substitution. This finding, together with our previous results on economies of scale (Nguyen and Reznek, 1991), suggests that for the five industries under examination, large size is not a necessary condition for efficient production.