The impact of industry mix, technological change, selection, and plant entry and exit on metropolitan labor productivity in the United States

This paper examines the impact of changes in industry mix, changes in technology, differential plant growth, plant entry and plant exit on metropolitan labor productivity growth between 1963 and 1997. Analysis is based upon unpublished plant-level data from the United States Bureau of the Census. We show that manufacturing productivity varies markedly between metropolitan areas in the United States. The most influential components of productivity growth are technological changes within incumbent plants and changes in industry mix. Significant differences in the relative contributions of these components of productivity change exist across metropolitan areas. Regional differences in rates of plant openings and plant closures also exert considerable impact on metropolitan productivity improvement.