SSRN Author: Zach FlynnZach Flynn SSRN Content
https://www.ssrn.com/author=2832606
https://www.ssrn.com/rss/en-usWed, 01 Jan 2020 01:10:46 GMTeditor@ssrn.com (Editor)Wed, 01 Jan 2020 01:10:46 GMTwebmaster@ssrn.com (WebMaster)SSRN RSS Generator 1.0REVISION: Unproductive by Choice: Substitution and the Slowdown in Aggregate Productivity Growth in the United StatesI propose a new decomposition of aggregate total factor productivity. I model productivity as an index of unmeasured factors of production, and decompose the conditional factor demand for this index. With this model of productivity, changes in the price of labor or capital cause substitution to or from productivity. I study whether such changes explain the slowdown in US productivity growth from 2005 to 2016. I find that the declining growth rate of the effective price of labor and capital encouraged substitution away from productivity. If labor and capital prices had remained constant, productivity growth would be accelerating.
https://www.ssrn.com/abstract=3368575
https://www.ssrn.com/1853820.htmlTue, 31 Dec 2019 11:24:56 GMTREVISION: Identifying Productivity When It Is a Factor of ProductionEconomists typically model a plant's productivity as an exogenous characteristic, but the people who run and work at manufacturing plants make choices, at a cost, that affect plant productivity. I develop a method to partially identify the productivity distribution when such choices determine productivity. The method uses a monotone comparative static result I prove in a general economic model. It does not require instruments or timing assumptions. I use the method to study the effect of implementing market-based pricing on productivity in the electricity generation industry.
https://www.ssrn.com/abstract=3068560
https://www.ssrn.com/1820301.htmlMon, 02 Sep 2019 11:12:26 GMTREVISION: Unproductive by Choice: Substitution and the Slowdown in Aggregate Productivity Growth in the United StatesI propose a new decomposition of aggregate total factor productivity using a model where productivity is an index of unmeasured factors of production. The decomposition uses the conditional factor demand for the unmeasured factors. In this model, changes in the effective price of labor and capital can cause substitution to or from productivity. I study whether such changes explain the slowdown in US productivity growth from 2005 to 2016. I find that if not for the declining growth rate of the effective price of labor and capital encouraging substitution away from productivity, productivity growth would be accelerating.
https://www.ssrn.com/abstract=3368575
https://www.ssrn.com/1808925.htmlSun, 21 Jul 2019 13:14:49 GMTREVISION: Identifying Productivity When It Is a Factor of ProductionEconomists typically model a plant's productivity as an exogenous characteristic, but the people who run and work manufacturing plants make choices, at a cost, that affect its productivity. I develop a method to partially identify the productivity distribution when such choices determine productivity. The method uses a monotone comparative static result I prove in a general economic model. It does not require instruments or timing assumptions. I use the method to study the effect of implementing market-based pricing on productivity in the electricity generation industry.
https://www.ssrn.com/abstract=3068560
https://www.ssrn.com/1807596.htmlWed, 17 Jul 2019 07:03:39 GMTREVISION: Measuring Markups with Production DataWe show standard methods to estimate production functions do not identify markups.<br>This nonidentification creates spurious skewness in estimated markup distributions.<br>We also show that ex-ante structure on the returns to scale solves the identification<br>problem. In US public firm data and in a Monte Carlo experiment, we find that<br>applying constant returns to scale performs remarkably well and reduces the skewness<br>in the markup distribution among public-firm by as much as half in comparison to<br>nonidentified estimates. This results in half the efficiency losses in output and labor<br>shares when calibrated to a recent macroeconomic model.
https://www.ssrn.com/abstract=3358472
https://www.ssrn.com/1798127.htmlSat, 15 Jun 2019 20:07:23 GMTREVISION: Ex-ante Evaluation of a Policy's Effect on Productivity: The Substitution and Scale Effects of Carbon Taxation on Power Plant ProductivityI develop a general framework for ex-ante analysis of a policy's effect on productivity. I use it to study the effect of carbon taxation on power plant productivity in the United States. Carbon taxes increase the price of burning fossil fuels, potentially encouraging power plants to be more fuel efficient. Whether carbon taxes do so is ambiguous because carbon taxes also increase the overall cost of electricity production, encouraging power plants to reduce output which reduces the plant's incentive to take costly actions to be more productive. I find carbon taxation reduces fuel productivity at commonly-proposed carbon taxes.
https://www.ssrn.com/abstract=3223189
https://www.ssrn.com/1794792.htmlFri, 07 Jun 2019 04:07:28 GMTNew: Inference Based on Continuous Linear Inequalities via Semi-Infinite ProgrammingI develop a consistent, asymptotically normal estimator of bounds on functions of parameters partially identified by the intersection of continuous linear inequalities. The inference strategy uses results from the semi-infinite programming literature to form a convenient estimator. Aside from allowing for continuous constraints, an advantage of the estimator is that it can be used to compute a closed form confidence interval, without numerically inverting a hypothesis test. So it is easy to compute confidence intervals even if the number of parameters is very large, especially when we are interested in a linear function of parameters. I also consider the dual problem of bounding a linear function of a sequence, an infinite dimensional parameter, partially identified by finitely many linear restrictions on the sequence.
https://www.ssrn.com/abstract=3390788
https://www.ssrn.com/1794630.htmlThu, 06 Jun 2019 15:31:17 GMTNew: Identifying the Elasticity of Experience and Its Effect on Market StructureExperience is a factor of production. Practice makes perfect. But when prior production enters the firm's current production function, standard dynamic models of firm production like the Olley and Pakes (1996) proxy model suffer from a simultaneity problem. Furthermore, flexible inputs are chosen dynamically and firms may even choose negative markups temporarily to increase their stock of experience. So identification approaches that are based on assuming zero or positive markups will not work (like Gandhi, Navarro, and Rivers 2019). I develop an identification approach that works for this problem. My approach only requires panel data on firm input and output choice so it can be broadly applied. I use this appoach to study the evolution of learning rates (the rate at which firms learn from experience over time) and how differences in learning rates help explain differences in the firm size distribution across industries.
https://www.ssrn.com/abstract=3374308
https://www.ssrn.com/1788994.htmlFri, 17 May 2019 13:59:52 GMTREVISION: Unproductive by Choice: Substitution and the Slowdown in Aggregate Productivity Growth in the United StatesI develop a new decomposition of aggregate total factor productivity. The decomposition is based on the idea that all output produced in the economy is the result of the use of some factor of production, but we cannot measure all factors of production. I model productivity as an index of these unobserved factors of production. This view of productivity introduces a new avenue through which productivity can either grow or decline. Changes in the effective price of labor and capital will cause substitution to or from productivity. I decompose productivity using its conditional factor demand equation to measure the extent to which changes in the effective price of labor and capital are behind the slowdown in productivity growth in the United States from 2006 to 2016. I find fully two-thirds of the slowdown can be explained by relatively more substitution to labor and capital and away from productivity.
https://www.ssrn.com/abstract=3368575
https://www.ssrn.com/1786034.htmlWed, 08 May 2019 08:19:29 GMTREVISION: Identifying Market Power in Production DataProduction-based estimates of markups require output elasticities for a flexible input, but these elasticities are not identified under the standard assumptions of proxy variable estimators. We show markups are identified given an additional economic restriction: constant returns to scale technology. We present Monte Carlo evidence that ignoring the identification problem, as in prior literature, introduces significant bias in estimated markups. Comparing estimators on US public firm data, we find that our approach is also more robust to testable forms of misspecification. Emerging macroeconomic models imply output and labor share wedges using our markup estimates of 1 and 11 percent for our baseline specification, half the size of non-identified estimators. A more demanding specification implies respective losses of 4 and 21 percent.
https://www.ssrn.com/abstract=3358472
https://www.ssrn.com/1776407.htmlWed, 03 Apr 2019 08:28:23 GMTREVISION: Identifying Productivity When It Is a ChoiceProductivity is typically modeled as an exogenous plant characteristic, but the people who run the plant make choices that affect how productive it is. Instruments that are uncorrelated with productivity but correlated with input use are therefore rare because when plants want to adjust one factor of production, input use, they also want to adjust other factors of production, like productivity. This article develops a method to partially identify statistics of the productivity distribution based on a monotone comparative static result without assuming productivity is exogenous or requiring an instrumental variable. I use the method to study the productivity effect of restructuring in the electricity generation industry.
https://www.ssrn.com/abstract=3068560
https://www.ssrn.com/1767069.htmlWed, 27 Feb 2019 23:23:17 GMT