Establishment-level Data Research Articles

Information Quality and Workplace Safety

ABSTRACTThis paper examines the effect of internal information quality on workplace safety. Using establishment-level data on workplace injuries from the Occupational Safety and Health Administration (OSHA) and employing a strict fixed-effects structure, we show that higher information quality is associated with significantly lower work-related injury rates. Further investigation reveals that the effect is stronger when more decision rights reside in headquarters, weaker when employees have greater bargaining power, and weaker when firms are subject to financial constraints. Our findings are robust to the use of two plausibly exogenous shocks and other robustness checks. Our study suggests an important economic consequence of information quality not examined by prior literature.

Contract employment as a worker discipline device

Fixed-term labor contracting has increasingly replaced regular open-ended employment in developing countries. What justifies its emergence? What determines its intensity? What policy responses are appropriate, if any? In a two-tiered task-based model of the labor market, we demonstrate that within establishments, fixed-term contracting can indeed co-exist with open-ended efficiency wage contracts as it enables firms to enforce regular worker discipline at strictly lower cost. Furthermore, the intensity of fixed-term employment is shown to increase even in times of rising labor demand, if a fixed-term worker status does not increase the likelihood of regular job arrival. Using establishment-level data from Indian manufacturing, we find evidence consistent with such an assumption. Policy-wise, the model unveils two margins of hiring distortions associated with fixed-term employment – task assignment and total employment distortions —- against which the merits of a suite of oft-noted labor market flexibility policies can be assessed.

Robots and Labor in the Service Sector: Evidence from Nursing Homes

In one of the first studies of service sector robotics using establishment-level data, we study the impact of robots on staffing in Japanese nursing homes, using geographic variation in robot subsidies as an instrumental variable. We find that robot adoption increases employment by augmenting the number of care workers and nurses on flexible employment contracts, and decreases difficulty in staff retention. Robot adoption also reduces the monthly wages of regular nurses, consistent with reduced burden of care. Our findings suggest that the impact of robots may not be detrimental to labor and may remedy challenges posed by rapidly aging populations. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Information Quality and Workplace Safety

This paper examines the effect of internal information quality on workplace safety. Using establishment-level data on workplace injuries from the Occupational Safety and Health Administration (OSHA) and employing a strict fixed-effects structure, we show that higher information quality is associated with significantly lower work-related injury rates. Further investigation reveals that the effect is stronger when more decision rights reside in headquarters, weaker when employees have greater bargaining power, and weaker when firms are subject to financial constraints. Our findings are robust to the use of two plausibly exogenous shocks and other robustness checks. Our study suggests an important economic consequence of information quality not examined by prior literature.

The Effects of Reforming a Federal Employment Agency on Labor Demand

In this paper we report the results of an empirical study on the employment growth effects of a policy intervention, explicitly aimed at increasing placement efficiency of the Federal Employment Agency in Germany. We use the Hartz III reform in the year 2004 as an exogenous intervention that improves the matching process and compare establishments that use the services of the Federal Employment Agency with establishments that do not use the placement services. Using detailed German establishment level data, our difference-in-differences estimates reveal an increase in employment growth among those firms that use the agency for their recruitment activities compared to non-user firms. After the Hartz III reform was in place, establishments using the agency grew roughly two percentage points faster in terms of employment relative to non-users and those establishments achieve an increase in the proportion of hires. We provide several robustness tests using, for example, inverse-probability weighting to additionally account for differences in observable characteristics. Our paper highlights the importance of the placement service on the labor demand side, in particular on the so far overlooked establishment level.

The Impact of COVID-19 on Small Business Dynamics and Employment: Real-time Estimates With Homebase Data

The COVID-19 pandemic has led to an explosion of research using real-time establishment-level data. One key challenge when working with this data is how to take into account the effects of business openings and closings. In this paper, we address this challenge by matching small business establishment records from Homebase with information on business activity from Google, Facebook, and Safegraph to distinguish business closings and openings from other sample exits and entry. We show that this distinction is critical to benchmark the data to pre-pandemic administrative records and estimate the effects of the pandemic on small business activity. We find four key results: (1) employment of small businesses in four of the hardest hit service sectors contracted more severely in the beginning of the pandemic than employment of larger businesses, but small businesses also rebounded more strongly and have on average recovered a higher share of job losses than larger businesses; (2) closings account for 70% of the initial decline in small business employment, but two thirds of closed businesses have reopened and the annual rate of closings is just slightly higher than prior to the pandemic; (3) new openings of small businesses constitute an important driver of the recovery but the annual rate of new openings is only about half the rate one year earlier (4) small business employment was affected less negatively in counties with early access to loans from the Paycheck Protection Program (PPP) and in counties where Federal Pandemic Unemployment Compensation (FPUC) was more generous relative to pre-pandemic earnings of likely recipients, with business closings accounting for a large part of these two effects. The results dispel the popular notion that small businesses continue to suffer more from the pandemic than larger businesses. At the same time, our analysis suggests that PPP and FPUC helped to significantly mitigate the negative effects of the pandemic for small businesses by, respectively, alleviating financial constraints and stimulating demand for local services.

Are the problem spaces of economic actors increasingly virtual? What geo-located web activity might tell us about economic dynamism

The principal questions this research will address are: 1) whether a higher propensity to visit websites of interest to actual or nascent entrepreneurs is associated with higher rates of new firms births in an area; 2) whether a higher propensity to visit websites of interest to those working on design problems is associated with the quality of business in terms of orientations toward design or innovation; and 3) whether a higher propensity to visit websites of interest to those pursuing arts as an avocation is associated with an increased ability to find nonobvious solutions that might be manifest in business quality. The unique data that allow examining these questions were compiled from billions of web hits by geo-located devices. These data are combined with both detailed establishment level data with reliable information on the innovation and design orientation of firms, and a longitudinal census of all establishments with a formal credit relationship in the U.S. The findings confirm that businesses located in areas with a high propensity to visit design and arts avocation websites are more likely to pursue more far ranging innovation and are more likely to integrate design into their innovation processes. Firm birth rates are higher in areas with a high propensity to visit websites of interest to entrepreneurs, and the existence of high growth firms is strongly associated with demonstrated interest in design and arts avocation websites. The possible uses of these nontraditional measures as indicators of economic dynamism are discussed.

Who Benefits from Place-Based Policies? Job Growth from Opportunity Zones

The Tax Cuts and Jobs Act of 2017 established a new program called Opportunity Zones (OZs) that created tax advantages for investing in businesses or real estate in a limited number of low-income Census tracts. We use a census of establishment-level data on employment to identify the effect of the program on job creation. We show that in metropolitan areas, the OZ designation increased employment growth relative to comparable tracts by between 3.0 and 4.5 percentage points and new jobs were created across many different industries and education levels. The OZ designation did not create jobs in rural areas.

Creditor control rights and resource allocation within firms

We examine the within-firm resource allocation and restructuring outcomes at firms violating debt covenants. Using establishment-level data from the US Census Bureau, we find that covenant violations are followed by reductions in employment, investment, and more frequent establishment closures among violating firms’ noncore business lines and less productive establishments. These changes are concentrated among establishments at which manager-shareholder agency costs are pronounced and when key lenders have industry experience. Our findings suggest that enhanced creditor control reduces managerial agency costs and encourages a more efficient allocation of resources within the boundaries of firms in technical default.

The effects of labor regulation on firms and exports: Evidence from Indian apparel manufacturing

We examine the impact of labor regulations on firm outcomes and explore their differential effects on exporters. Building on a conceptual framework developed from standard theory and a detailed qualitative study of India's apparel industry, our econometric analysis exploits establishment-level data on formal Indian garment manufacturers between 2009-10 and 2013-14 and interstate variation in labor laws. We find a close fit between the implications of our conceptual framework, the qualitative evidence and the data. Apparel producers in states with pro-worker labor regulations tend to replace labor with capital. This choice of technique effect is smaller for exporting firms, which are more tightly bound to norms for organizing production in global supply chains. Pro-worker labor regulations also reduce output levels more for exporters than for non-exporters, consistent with exporters being bound to international pricing norms. Labor regulations thus have a particularly adverse impact on exporters. Our findings underscore the cost of poorly-designed and implemented labor regulations in a labor-abundant country wishing to spur exports, employment and industrial activity in labor-intensive industries.

Do Firms Adapt to Climate Change? Evidence from Establishment-Level Data

Using detailed information on establishments owned by U.S. public firms from 1990 to 2012, we show that higher abnormal temperatures over the previous five years in a county lead to a significant reduction in local employment and the number of establishments. The decline in employment and establishments is larger for firms in non-tradable sectors and consumer services and retailing industries, and when managers are likely to care more about global warming. In addition, we find that establishments located in abnormally hot counties seek to hire new workers with greater education and IT skills. Our findings are consistent with the notion that it is the declining local consumer demand, rather than deteriorating employee productivity, that drives firms’ responses. Overall, we provide large-sample evidence on firms’ adaptation to climate change and the resultant impacts on the local economy.

A Race to Lead: How Chinese Government Interventions Shape the Sino-US Production Competition

Using U.S. and China establishment-level data, this paper studies the dynamic interdependence in industrial activities between the U.S. and China. In a VAR framework, high birth rates of Chinese firms predict same-industry firm exits and lowered employment in the U.S., particularly in the export-intensive industries. Moreover, high industry subsidy from the Chinese government is followed by a decrease in the number of establishments and employment in the corresponding U.S. industries, although these subsidies are not motivated by existent deterioration in investment opportunities in the targeted industries in the developed world. China's Five-year Plans offer a tight causal inference as shocks to China's industry growth. These shocks were not preceded by low productivity or valuation in the same industries in the U.S. but were followed by shrinkage of establishments and employment in these industries.

Government Employment Guarantee, Labor Supply, and Firms’ Reaction: Evidence from the Largest Public Workfare Program in the World

AbstractUsing establishment-level data, we examine the impact of the Indian government’s employment guarantee program on labor and firm behavior. We exploit the staggered implementation of the program for identification and find that the program led to a 10% reduction in the permanent workforce in firms. Firms responded to the adverse labor-supply shock by resorting to increased mechanization. This significantly increased the firms’ cost of production, leading to a decline in net profits and productivity. These effects manifested primarily in firms paying low wages, firms having low labor productivity and greater sales volatility, and firms located in states with pro-employer labor regulations.

Does Public Healthcare Affect Firm Outcomes? Plant-level Evidence From U.S. Manufacturing Firms

Using confidential establishment-level data from the U.S. Census Bureau, this paper studies the effects of ACA Medicaid expansion on corporate behavior in the U.S. manufacturing sector. We find that Medicaid expansion leads to a significant decrease in capital investment and productivity at the plant level. However, the effect of Medicaid expansion on plant-level employment or labor compensation is economically small. We find that there are no differential pre-treatment trends in the outcomes across plants in states that expanded and did not expand Medicaid.

Creative Destruction or Just Destruction? Effects of Floods on Manufacturing Establishments in India

Climate change is projected to increase the frequency and severity of flooding. In this paper, I examine the direct consequences of floods on manufacturing establishments in India as well as indirect effects on the entire manufacturing sector through the sect-oral reallocation of labor. I construct a unique panel data set of flood inundations using high-precision satellite images, which I match with formal and informal sector establishment-level data. I show that floods cause a significant reduction in output, capital, and employment in formal establishments. I also document significant heterogeneity in vulnerability and resilience to floods within the formal manufacturing sector. The least-productive formal establishments are the most vulnerable to floods: a 10 percent increase in flood exposure leads to a 0.6 percentage point increased probability of exit among low-productivity firms. I do not observe any associated labor reallocation to more productive establishments, which could support the creative destruction hypothesis. Rather, I find suggestive evidence of labor reallocation to informal household-run micro-enterprises. As there is a large labor productivity gap across formal and informal sectors, I show that because of the disaster-induced labor reallocation, a 10 percent increase in the incidence of flooding causes a 17.3 percent reduction in aggregate productivity in the manufacturing sector.

University Innovation and Local Economic Growth

This paper identifies the extent to which knowledge from U.S. universities drives industry agglomeration. Establishment-level data indicate faster growth in employment, wages, and corporate innovation after the Bayh-Dole Act’s shock to the spread of innovation from universities in industries more closely related to the nearby university’s innovative strengths. Federal research funding amplified the effect. University knowledge spillovers strengthen with geographic proximity, density, and local skills. Consistent with spatial equilibrium models, the growth effect is driven by nearby entry in university-linked industries, especially of multi-unit expansions; these firms disproportionately partner with universities in R&D, transfer IP, and innovate.

Downward Nominal Wage Rigidity in the United States during and after the Great Recession

Rigidity in wages has long been thought to impede the functioning of labor markets. One recent strand of the research on wage flexibility in the United States and elsewhere has focused on the possibility of downward nominal wage rigidity and what implications such rigidity might have for the macroeconomy at low levels of inflation. The Great Recession of 2008-09, during which the unemployment rate topped 10 percent and price deflation was at times seen as a distinct possibility, along with the subsequent slow recovery and persistently low inflation, has added to the relevance of this line of inquiry. In this paper, we use establishment-level data from a nationally representative establishment-based compensation survey collected by the Bureau of Labor Statistics to investigate the extent to which downward nominal wage rigidity is present in U.S. labor markets. We use several distinct methods proposed in the literature to test for downward nominal wage rigidity, and to assess whether such rigidity is more severe at low rates of inflation and in the presence of negative economic shocks than in more normal economic times. Like earlier studies, we find evidence of a significant amount of downward nominal wage rigidity in the United States. We find no evidence that the high degree of labor market distress during the Great Recession reduced the amount of downward nominal wage rigidity and some evidence that operative rigidity may have increased during that period.

Exporting Uncertainty: The Impact of Brexit on Corporate America

We show that the 2016 Brexit Referendum had multi-faceted consequences for corporate America, shaping employment, investment, divestitures, R&D, and savings. The unexpected vote outcome led US firms to cut jobs and investment within US borders. Using establishment-level data, we document that these effects were modulated by the reversibility of capital and labor. American-based job destruction was particularly pronounced in industries with less skilled and more unionized workers. UK-exposed firms with less redeployable capital and high input-offshoring dependence cut investment the most. Data on the near-universe of US establishments also point to measurable, negative effects on establishment turnover (openings and closings). Our results demonstrate how foreign-born political uncertainty is transmitted across international borders, shaping domestic capital formation and labor allocation. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Product Market Competition and the Relocation of Economic Activity: Evidence from the Supply Chain

We show that increasing competition changes the location of business activity and, in turn, affects supply chain relationships. Using establishment-level data, we find that when upstream product markets become more competitive, suppliers are more likely to relocate their establishments closer to customers. Following the supplier’s relocation, its sales to the customer increase, its relationship with the customer is less likely to be terminated, and its innovation is more aligned with the customer’s innovation. However, the improved relationship, by causing the supplier to engage more in innovation dedicated to the customer, adversely affects creative innovation, which is known to drive growth.

What does Wall Street tell us about Main Street?

We use detailed establishment-level data to understand whether and how the composition of the US stock market differs from the composition of US firms as a whole. Although the locational composition of employment in public firms is similar to that of all US firms, we find certain industries significantly overrepresented. Further, the gap between the industrial composition of publicly-traded and all firms has grown over the last thirty years, and public firms display markedly different growth dynamics than private firms. Despite this, we show that stock returns within industries and geographies predict employment changes in those industries and geographies.