Causes and Labor Market Consequences of Producer Heterogeneity

Sammanfattning: Essay I studies establishment-level employment changes in the Swedish Manufacturing sector over the 1972-96 period. The results show that modest changes in the aggregated employment record have been the resulting sum of rather large gross flows of jobs and that this constant reshuffling of jobs has important implications for the workforce and is closely related to process of economic growth. Shifts in employment across industries or other observable characteristic of establishments cannot explain the different employment outcomes across establishments. Essay II (with Altin Vejsiu) studies the determinants of plant closures in Swedish Manufacturing. From our theoretical framework we derive and empirically test hypotheses regarding the linkages between the probability of plant failure and industry-specific characteristics; local labor market conditions; and plant-specific sources of heterogeneity, including insider mechanisms in wage determination, plant specific human capital, selection mechanisms and technology vintage effects. Our results suggest that all these factors matter in ways that by and large conform to the a priori hypotheses. Essay III investigates the importance of access to product markets in explaining the spatial wage distribution by estimating the parameters of a spatial labor demand model. The model takes into account the effects of sorting of heterogeneous labor and heterogeneity in transportation costs. The results are consistent with the idea that increasing returns to scale together with transportation costs is an important driving force behind urban agglomeration and sizeable spatial wage differentials.Essay IV (with Harry Holzer and Julia Lane) presents a dynamic analysis of workers who persistently have low earnings over a period of three or more years. Some of these workers manage to escape from this low-earning status over subsequent years, while many do not. We analyze the characteristics of persons and especially of their firms and jobs that enable some to improve their earnings status over time.