The Dynamics of Plant-Level Productivity in U.S. Manufacturing

Abstract

Recent work in I.O. has emphasized the importance of firm- and plant-level heterogeneity in total factor productivity. In this paper, we estimate establishmentlevel productivity for the entire U.S. manufacturing sector from 1976 until 1999 by using the Census Bureau’s Longitudinal Research Database combined with the Bureau’s Longitudinal Business Database. We characterize the time series properties of establishment-level idiosyncratic shocks to productivity, taking into account aggregate economy-wide and industry-level shocks. We use simulated method of moments estimation to control for short sample bias and to isolate estimation errors