Factor substitution in small and large U.S. manufacturing establishments: 1977–82

The objective of this article is to assess the possibility of differences in factor substitution in the production of small and large U.S. manufacturing establishments. For empirical implementation, we specify and estimate separate three-factor translog production factors, using confidential plant-level data for five four-digit industries extracted from the U.S. Bureau of the Census Longitudinal Research Database. Our primary finding is that for most industries under study, small establishments appear to be at least as flexible as large establishments in factor substitution. This finding, together with our previous results on economies of scale (Nguyen and Reznek, 1991), suggests that for the five industries under examination, large size is not a necessary condition for efficient production.     

Scale economies in the savings and loan industry before diversification

This study investigates scale economies in the savings and loan (S&L) industry prior to deregulation. Use of the translog cost function permits the estimation of U-shaped cost curves and of separate scale and branch size eonomies. The model also allows the cost elasticities to vary by size of financial institution. The model is estimated on a large nationwide sample of savings and loan associations. The results indicate significant economies of scale over a wide range of output for institutions that engage in traditional specialized activities.     

Ownership and technical efficiency in Malaysia's automotive industry: A stochastic frontier production function analysis

This article examines the direct effect of the extent of foreign ownership on technical efficiency in Malaysia's automotive industry by applying a stochastic frontier production function analysis to micro-panel data over the years 2000–2004. Technical efficiency in the overall automotive industry is positively related to the degree of vertical integration, the size of establishments in the respective sub-sectors, a higher quality of the work force, and a higher foreign ownership share in the establishment combined with higher net-import intensity. Foreign ownership and net-export intensity are not significant determinants of technical efficiency inthe parts sub-sector. Although majority foreign ownership is not allowed in the assembly sub-sector, this sub-sector is large, with asmall number of establishments generating scale economies in the automotive industry. The determinants of technical efficiency in the parts sub-sector show that foreign ownership per se does not enhance technical efficiency since other determinants like the degree of vertical integration and the size of establishments are significant determinants of technical efficiency.     

The pattern of changes in the long-term development of establishment size

Hypotheses and analyses dealing with the expansion of small businesses are usually carried out over relatively short periods of time. The patterns drawn from these examinations, e.g., on the question of specific differences in the growth of size, are usually influenced by configurations of the overall economy and limit the realization of regular processes to the phases they are based upon. A second disadvantage lies in most cases in the fact that data sources are used for the empirical analyses that do not cover the economic system as a whole nor for all sizes of establishments. This study attempts to present the development of the sizes of establishments in Germany over a period of more than one hundred years (1882 to 1987) and thus avoids the narrow perspective of previous examinations. It becomes evident that this development does not take a continuous course; instead, it follows a wave pattern. Since this discontinuous development pattern is common to almost all sectors, it appears to be a general phenomenon. This study reveals that the small establishments with more than five employees, contrary to most theoretical assumptions, are of utmost importance even when considered over a long period of time. The growth of small establishments in recent years, observable in all sectors, may not be a unique phenomenon; however, in view of an overall growth of employment and the simultaneous shrinking of large establishments, it occurs under a new constellation.     

Establishment exits in Germany: the role of size and age

Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various “liabilities” of establishment survival identified in the literature, we analyzed the impact of establishment size and put a special focus on differences between young and mature establishments. Our empirical analysis shows that the mortality risk falls with establishment size, which confirms the liability of smallness. The probability of exit is substantially higher for young establishments which are not more than 5 years old, thus confirming the liability of newness. There also exists a liability of aging since exit rates first decline over time, reaching a minimum at ages 15–18, and then rise again somewhat. The determinants of exit differ substantially between young and mature establishments, suggesting that young establishments are more vulnerable in a number of ways.     

Estimation of meat demand system in Jordan: an almost ideal demand system

This paper reports the results of the estimation of a linear approximate almost ideal demand system for Jordan meat demand using cross‐sectional data collected by the Department of Statistics in Jordan as part of the household expenditure survey. A censored regression method for the system of equation is used to analyse the meat consumption patterns. This method allows for inclusion of a large number of zero consumption for some foods. Two‐step demand system was estimated. In the first stage, Inverse Mill Ratio is estimated by using probit regression model. In the second stage, the estimated variable is included in the AIDS model to estimate food demand elasticities. The objective of this work is to provide econometric estimates of the different types of demand elasticities for meats in Jordan. To be consistent with the demand theory, the homogeneity, symmetry and adding up restrictions were satisfied in the estimated models. The estimated model was used to obtain estimates of Hicksian, Marshallian and expenditure demand elasticities for meats in Jordan. The results revealed that the demand for mutton and poultry is elastic while the demand for beef and fish is inelastic. The cross‐price elasticities indicate that poultry and beef are substitutes to mutton. The expenditure elasticities confirm that beef and mutton are luxury goods while poultry and fish are necessity goods.     

Job Flows and Job Quality by Establishment Size in the Finnish Manufacturing Sector 1980–94

This paper studies how employment patterns and growth vary with establishment size in the Finnish manufacturing sector during the period 1980–94. The findings are compared with the predictions of alternative theories of firm growth. The paper also examines some aspects of job quality in different size categories, including wages, labour productivity, working hours, labour turnover and the persistence of jobs. According to the findings, small establishments create and destroy jobs relatively more than large establishments. In addition, in the smallest size categories both the share of gross job creation and the share of gross job destruction is larger than the share of employment. However, there is no clear relationship between establishment size and net employment change. Furthermore, after studying different aspects of job quality, we can conclude that the jobs offered by small and large establishments differ greatly in many respects and it is difficult to evaluate the total welfare effect.     

Employment generation by small producers in the Canadian manufacturing sector

This paper uses job turnover data to compare how job creation, job destruction and net job change differ for small and large establishments in the Canadian manufacturing sector. It uses several different techniques to correct for the regression-to-the-mean problem that, it has been suggested, might incorrectly lead to the conclusion that small establishments create a disproportionate number of new jobs. It finds that net job creation for smaller establishments is greater than that of large establishments after such changes are made. The paper also compares the importance of small and large establishments in the manufacturing sectors of Canada and the United States. The Canadian manufacturing sector is shown to have both a larger proportion of employment in smaller establishments but also to have a small establishment sector that is growing in importance relative to that of the United States.     

Firm size and employment determination in dutch manufacturing industries

This paper examines whether the determination of employment differs between large and small firms. An employment equation is estimated on panel data of 67 (35) three-digit industries in Dutch manufacturing (1974–1986). The conclusions are as follows. Firstly, employment adjustment appears to be faster in small firms than in large ones. Secondly, the elasticity of factor substitution and the real wage elasticity at constant output are nearly the same for large and small firms. Thirdly, the estimated output elasticities suggest constant returns to scale in large firms and increasing returns in small ones. Finally, the number of working hours has less impact on employment in small firms than in large ones.     

Union-Nonunion Gender Wage and Benefit Differentials across Establishment Sizes

Based on data from the National Longitudinal Surveys of Youth (NLSY), both male and female workers in larger establishments receive not only higher wages but also have a higher probability of receiving benefits than those in smaller establishments. This phenomenon reinforces the well documented size effect. This study also provides evidence of vast gender differences in estimated union effects on the different components of the compensation structure. Hence unions should not treat both genders similarly with respect to wages and benefits. Specifically, unions may be successful in attracting more female workers to join rank and file if unions could play an active role in making available maternity (paternity) leave, and also provided opportunities for women to join large establishments.     

Are Small Firms Really Less Productive?

Small and medium-sized establishments (SMEs) account for a large proportion of industrial employment and production in almost all countries. Moreover, the recent literature emphasizes the role SMEs play in nurturing entrepreneurship and generating new products and processes. Although SMEs could be a source of new ideas and innovations, there are substantial productivity differences between small and large establishments. In this paper, we analyze three sources of productivity differentials: technical efficiency, returns to scale, and technical change. Our analysis on the creation, survival, and growth of new establishments in Turkish manufacturing industries in the period 1987–1997 shows that all these three factors play a very important role in determining the survival probability and growth prospects of new establishments.     

Demand systems for energy consumption by the manufacturing sector

This paper aims to test empirically a new approach for estimating derived demand equations for alternative energy sources in manufacturing. Our approach is based on the assumption of weak separability in production. The model used is the “Dynamic Generalized Linear Expenditure System” (DGLES). The major advantage of this model is that it allows the consistent estimation of energy demand functions and the implied price (compensated and uncompensated) and expenditure elasticities based on minimum information requirements. The model was estimated using pooled time-series manufacturing data for 1962–1980 for two Canadian provinces (Quebec and Ontario) and one region, the Prairies (Alberta, Saskatchewan, Manitoba). The complete system of energy demands involves six competitive uses of energy (electricity, fuel oil, natural gas, coal and coke, and liquified petroleum gas).     

The Survival and Growth of New Establishments in Sweden, 1987-1995

The aim of the study is to examine the survival of new establishments and to identify factors affecting their survival probability and their employment growth.This study uses a unique data set on all new establishments that were created in Sweden 1987 and 1988, with the exception of the construction industry. The results show among others that:(i) new establishments face a high risk of closing down, (ii) the probability of establishment survival increases with the age and size of the establishment,(iii) variables that are assumed to measure access to resources (being a part of a multi-unit firm,and being new due to merger or dispersal) have a positive effect on survival, (iv) the number of employees at the start- up year has a negative effect on the employment growth, and (v) demographic and educational factors are important in explaining survival and growth.     

The effects of offshoring on the elasticity of labor demand

In this paper, I use detailed plant-level data to analyze the relationship between offshoring and labor demand elasticities in the U.S. manufacturing sector during the 1972-2001 period. The results suggest that conditional demand elasticities for production workers are positively associated with increased exposure to offshoring both in the short-run and in the long-run. This relationship holds both for the unbalanced panel of plants and, for plants which continue their operations throughout the sample period. Controlling for skill biased technical change does not alter the magnitude or the significance of the estimated positive relationship between offshoring and labor demand elasticities.     

Labor demand and trade reform in Latin America

Trade liberalization is thought to result in higher own-wage elasticities of labor demand, particularly for unskilled labor, with adverse implications for both labor market volatility and wage dispersion. The paper first argues that theoretically the link between liberalization and labor-demand elasticities is less clear than has previously been asserted. It then uses dynamic panel techniques to estimate labor-demand relations for manufacturing establishments in Chile, Colombia, and Mexico across periods of trade policy reform. The results do not strongly support the hypothesis that trade liberalization has a direct impact on own-wage elasticities.     

Financial Analysis of Palestinian Industry Including Small Scale Firms

The study aims to explore the financial aspects of the Palestinian industry, and to investigate productivity and efficiency of small scale industry compared with large scale firms. In order to help policy makers in industrial planning in the new emerged Palestinian state. A special instrument has been used to collect the financial and quantitative data for the related manufacturing firms from a random sample of 215 Palestinian firms. The one way analysis of variance test was used to examine whether the mean scores differ significantly among scale sizes of the Palestinian industry concerning the selected performance measures. In addition, the Scheffe test was used as a post hoc comparison way to identify which scale size firms' performance differs than the other two scale sizes.The research revealed that small scale firms in Palestinian industry have higher labor productivity values than large scale firms, while large scale firms accomplished higher net profit margin compared to small scale industry. Creating an additional job in large scale Palestinian industry needs less cost than creating a job in small scale industry, and large scale firms have better opportunity in getting external financing than small firms.     

Intermediate inputs,external rebalancing and relative price adjustment

The traditional multi-sector macro model without production inputs is a value-added trade model. This paper shows that calibrating such a misspecified value-added trade model to available gross-flow trade data – a common practice in the literature – can lead to mismeasured (i) preference weights and (ii) price elasticities. Further, the calibrated model can give substantially different predictions regarding the relative price response to external rebalancing, when compared to a preferred alternative model with inputs that is consistent with gross-flow trade data. We find that mismeasured preference weights and price elasticities both contribute sizably to deviations in model predictions and estimate correctly-measured parameters for the value-added trade model.     

A Note on the Firm Size – Export Relationship

The positive relationship between firm size and direct exports is often considered as a stylized fact. Numerous econometric investigations back theoretical considerations by showing that a ceteris paribus positive relationship between firm size and direct export activities exists. This note contributes to the literature by closely looking at an econometric modelling issues that has largely been neglected hitherto. Various approaches used in the literature to model the exports/sales ratio, which is a percentage variable with usually many observations at the lower limit, are discussed. It is argued that all these methods are seriously flawed, and an alternative approach is suggested that is applied using data from a large comprehensive recent survey of German manufacturing establishments. Furthermore, the relation between firm size and exports is examined in four selected industries to test whether the importance of economies of scale and transaction cost efficiencies vary considerably between industries.     

Demand Analysis of Meat in Malaysia

One distinct change in Malaysians' food consumption behavior has been the preference toward meat products. Thus it is meaningful to gain insight of meat consumption patterns. As the market becomes increasingly market-led, information on current meat consumption patterns is required to assess how they are likely to change as prices and incomes change. This study attempts to provide a better understanding of demand for meat products in Malaysia. By utilizing data from Household Expenditure Survey 2004/2005, Engel curve analysis was conducted to derive income elasticities of meat products from QUAIDS model. The estimated income elasticities show that current food consumption patterns are showing signs of convergence toward a Western diet, exhibiting tendency for preference toward red meats (mutton and beef) over white meats (poultry and pork). The estimated elastic own-price elasticities indicate that Malaysian consumers are sensitive to the change in prices of the meat products, with other things remain constant.     

Intermediate inputs,external rebalancing and relative price adjustment

The traditional multi-sector macro model without production inputs is a value-added trade model. This paper shows that calibrating such a misspecified value-added trade model to available gross-flow trade data – a common practice in the literature – can lead to mismeasured (i) preference weights and (ii) price elasticities. Further, the calibrated model can give substantially different predictions regarding the relative price response to external rebalancing, when compared to a preferred alternative model with inputs that is consistent with gross-flow trade data. We find that mismeasured preference weights and price elasticities both contribute sizably to deviations in model predictions and estimate correctly-measured parameters for the value-added trade model.