Increase In Reallocation Research Articles

Multinationals and Reallocation: Productivity Growth in the Canadian Manufacturing Sector, 2001–2010

The article examines the role of multinationals and reallocation in productivity growth in the Canadian manufacturing sector in 2001–2010. It finds that foreign-controlled enterprises were more important than domestically controlled enterprises in overall labour productivity growth for 2001–2010, but the contribution of foreign-controlled enterprises declined after 2006 as a result of an increase in the exits of large and productive foreign-controlled firms during that period. Restructuring in the manufacturing sector intensified after 2006. During 2006–2010, there was an increase in reallocation to enterprises that are more productive and an increase in reallocation of labour to industries that are more capital and intermediate input intensive. The effect of new enterprises displacing exitors also increased after 2006, mostly because of the increased effect of domestic entrants displacing exitors while the effect of foreign entry and exit declined. Offsetting those positive effects of reallocation on labour productivity growth is the negative effect of reallocation of labour to the firms with lower relative capital and intermediate intensities within the same industries. Finally, the article finds that the decline in labour productivity growth after 2006 was partly due to a decline in the productivity contribution of foreign-controlled enterprises as a result of an increase in the exits of large and productive foreign-controlled firms during that period.

Finance and Welfare: The Effect of Access to Credit on Family Structure

There is a large debate over the welfare effects of the early 2000s housing boom and bust. One potentially important welfare effect is the impact of mortgage credit expansion on family structure. Exploiting pre-housing boom variation on the distribution of old homeowners who live alone and are older than 65, I conduct within-county analysis with zip code level data to causally identify the effect of access to credit on fertility outcomes through a channel associated with a more efficient reallocation of the existing housing stock among households. I examine two other housing channels, house wealth gains and new construction, and show that the most relevant channel is the reallocation, which allows young households to access space by either moving to larger homes or achieving homeownership earlier in their life-cycle. A one standard deviation increase in reallocation leads to a 6.4% increase in fertility from 2000 to 2006. The same increase in house prices leads to only a 2.7% increase, and in new construction leads to a 1.5% decline in fertility from 2000 to 2006. I estimate that approximately 500,000 babies were born between 2000 and 2006 because of the reallocation channel.

Job Reallocation and Productivity Growth in the Ukrainian Transition

We analyse the pace and patterns of job reallocation in Ukraine using 1992–2000 panel data on nearly the universe of continuing manufacturing firms inherited from the Soviet Union. Employment growth displays a substantial increase in heterogeneity during this transition period, with a corresponding rise in excess job reallocation. Unlike data for Soviet Russia in the 1980s, Ukrainian job reallocation in the 1990s was clearly productivity enhancing, both within and across industries. The speed of the increase in reallocation and its effect on aggregate productivity was somewhat slower than in Russia, however, perhaps reflecting the more ‘gradualist’ reform strategy in Ukraine.