Relocation Patterns in U.S. Manufacturing

Abstract

This paper summarizes relocation patterns in the U.S. manufacturing industry over the period 1972-1992, using plant- and firm-level data from the U.S. Census of Manufactures. This study contributes to the existing literature on firm dynamics by distinguishing entry due to relocation from entry by new firms, and exit due to relocation from permanent exit. In contrast to previous studies which report that entering plants experience relatively lower productivity, I find that some entering plants - specifically, those that are not new but merely relocated - have higher productivity. I also find a pattern of relocation that suggests that plants tend to be relocated to areas that are becoming new centers for the industry; namely, plants are moved out of areas in which the industry is heavily concentrated to areas where it is not, but these areas also have higher employment growth rates than other areas.

Keywords: entry, exit, relocation

JEL Classification: D2, L2, R3