Working Paper: CEPR ID: DP16388
Authors: Xavier Giroud; Simone Lenzu; Quinn Maingi; Holger M. Mueller
Abstract: Abstract This paper shows that local productivity spillovers propagate throughout the economy through the plant-level networks of multi-region firms. Using confidential Census plant-level data, we show that large manufacturing plant openings not only raise the productivity of local plants but also of distant plants hundreds of miles away, which belong to multi-region firms that are exposed to the local productivity spillover through one of their plants. To quantify the significance of plant-level networks for the propagation and amplification of local productivity shocks, we develop and estimate a quantitative spatial model in which plants of multi-region firms are linked through shared knowledge. Our model features heterogeneous regions, which interact through goods trade and labor markets, as well as within-location, across-plant heterogeneity in productivity, wages, and employment. Counterfactual exercises show that while knowledge sharing through plant-level networks amplifies the aggregate effects of local productivity shocks, it widens economic disparities between individual workers and regions in the economy.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Knowledge sharing through plant-level networks (O36) | Aggregate effects of local productivity shocks (O49) |
| Knowledge sharing (O36) | Economic disparities between regions (R11) |
| Local productivity shocks (J69) | Global spillover effects (F69) |
| Large manufacturing plant openings (L69) | Productivity of incumbent plants in winner county (O49) |
| Productivity of incumbent plants in winner county (O49) | Productivity of distant plants belonging to the same multiregion firms (F12) |
| Productivity of incumbent plants in winner county (O49) | Employment in distant plants belonging to the same multiregion firms (R30) |