The Deaths of Manufacturing Plants

48 Pages Posted: 10 Jul 2002

See all articles by Andrew B. Bernard

Andrew B. Bernard

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

J. Bradford Jensen

Georgetown University - McDonough School of Business; Peterson Institute for International Economics

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Date Written: June 2002

Abstract

This paper examines the causes of manufacturing plant deaths within and across industries in the U.S. from 1977-1997. The effects of international competition from low wage countries, exporting, ownership structure, product diversity, productivity, geography, and plant characteristics are considered. The probability of shutdowns is higher in industries that face increased competition from low-income countries, especially for low-wage, labor-intensive plants within those industries. Conditional on industry and plant characteristics, closures occur more often at plants that are part of a multi-plant firm and at plants that have recently experienced a change in ownership. Plants owned by U.S. multinationals are more likely to close than similar plants at non-multinational firms. Exits occur less frequently at multi-product plants, at exporters, at plants that pay above average wages, and at large, older, more productive and more capital-intensive plants.

Keywords: Exit, Shutdown, Closure, Heckscher-Ohlin, Takeovers, Entry Costs, International Trade, Low-wage Competition, Agglomeration, Specialization, Multi-plant Firms, Multinational Firms

JEL Classification: D21, D24, F11, F14, F23, L20, L6

Suggested Citation

Bernard, Andrew B. and Jensen, J. Bradford, The Deaths of Manufacturing Plants (June 2002). Available at SSRN: https://ssrn.com/abstract=315665 or http://dx.doi.org/10.2139/ssrn.315665

Andrew B. Bernard (Contact Author)

Dartmouth College - Tuck School of Business ( email )

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HOME PAGE: http://mba.tuck.dartmouth.edu/pages/faculty/Andrew.Bernard/

National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR) ( email )

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J. Bradford Jensen

Georgetown University - McDonough School of Business ( email )

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Washington, DC 20057
United States

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

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