Propagation and Amplification of Local Productivity Spillovers

69 Pages Posted: 22 Sep 2021

See all articles by Xavier Giroud

Xavier Giroud

Columbia University - Columbia Business School, Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Simone Lenzu

New York University, Stern School of Business; New York University (NYU) - Stern School of Business

Quinn Maingi

New York University (NYU) - New York University

Holger M. Mueller

New York University (NYU) - Department of Finance; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Date Written: July 2021

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.

Suggested Citation

Giroud, Xavier and Lenzu, Simone and Maingi, Quinn and Mueller, Holger M., Propagation and Amplification of Local Productivity Spillovers (July 2021). CEPR Discussion Paper No. DP16388, Available at SSRN: https://ssrn.com/abstract=3928667

Xavier Giroud (Contact Author)

Columbia University - Columbia Business School, Finance ( email )

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HOME PAGE: http://www.columbia.edu/~xg2285/

National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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Simone Lenzu

New York University, Stern School of Business ( email )

Stern School of Business
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New York, NY 10012-1126
United States

HOME PAGE: http://simonelenzu.com

New York University (NYU) - Stern School of Business ( email )

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HOME PAGE: http://simonelenzu.com

Quinn Maingi

New York University (NYU) - New York University

Holger M. Mueller

New York University (NYU) - Department of Finance ( email )

44 West 4th Street
New York, NY 10012-1126
United States
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212-995-4233 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~hmueller/

National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR)

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United Kingdom

European Corporate Governance Institute (ECGI) ( email )

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Belgium

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