Propagation and Amplification of Local Productivity Spillovers / Xavier Giroud, Simone Lenzu, Quinn Maingi, Holger Mueller.

Format:

Book

Author/Creator:

Giroud, Xavier.

Contributor:

National Bureau of Economic Research.

Lenzu, Simone.

Maingi, Quinn.

Mueller, Holger.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29084.

NBER working paper series no. w29084

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

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.

Notes:

Print version record

July 2021.