Working Paper: NBER ID: w29084
Authors: Xavier Giroud; Simone Lenzu; Quinn Maingi; Holger Mueller
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: C51; C68; E23; E24; L23; O4; R12; R13; R3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Large manufacturing plant openings (MDPs) (L69) | Productivity of incumbent plants in the winner county (O49) |
| Large manufacturing plant openings (MDPs) (L69) | Productivity gains of plants belonging to multiregion firms located outside the winner county (F12) |
| Presence of a plant in the winner county (Q15) | Productivity gains from multi-region firms' plants outside the winner county (F12) |
| Distance from MDP (C49) | Local spillovers (F69) |
| Knowledge-sharing dynamics within firms (O36) | Global productivity spillovers (O49) |