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Bureau of Labor Statistics > Office of Survey Methods and Research > Publications > Browse Research Papers

Productivity Dispersion, Entry, and Growth in U.S. Manufacturing Industries

Cindy Cunningham, Lucia Foster, Cheryl Grim, John Haltiwanger, Sabrina Wulff Pabilonia, Jay Stewart, and Zoltan Wolf

Abstract

Within-industry productivity dispersion is pervasive and exhibits substantial variation across countries, industries, and time. We build on prior research that explores the hypothesis that periods of innovation are initially associated with a surge in business start-ups, followed by increased experimentation that leads to rising dispersion potentially with declining aggregate productivity growth, and then a shakeout process that results in higher productivity growth and declining productivity dispersion. Using novel detailed industry-level data on total factor productivity and labor productivity dispersion from the Dispersion Statistics on Productivity along with novel measures of entry rates from the Business Dynamics Statistics and productivity growth data from the Bureau of Labor Statistics for U.S. manufacturing industries, we find support for this hypothesis, especially for the high-tech industries.