Abstract
Earlier studies have attributed cyclical variations in regional manufacturing employment to differences in the regions’ industrial compositions and growth rates. Using OLS regressions, this paper demonstrates that the ownership characteristics of a region's manufacturers (branch plants versus unit concerns) and the location of the area with respect to national and regional markets were also factors that influenced the sensitivity of a region's manufacturing employment to fluctuations in aggregate demand. Areas with a relatively high concentration of multi-unit firms and geographically isolated regions experienced greater cyclical severity in manufacturing employment. This increased cyclical severity resulting from the tendency of multi-unit firms to: (1) consolidate production during periods of depressed demand through closing their high cost facilities, and (2) accommodate increased sales and reduce transportation costs during prosperity by opening branches outside the population centers.
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