CES-WP-08-14
Market Forces, Plant Technology, and the Food Safety Technology Use
Michael Ollinger, Danna Moore
June 01, 2008
Economists (Ollinger and Mueller, 2003; Golan et al., 2004) have considered some of the economic forces, such as demands from major customers, that encourage plants to maintain food safety process control. Other economists, such as Roberts (2005), have identified food safety technologies that enable better control harmful pathogens. However, economists have not put the two together. The purpose of this paper is to examine the impact of economic forces, including firm effects and plant technology, customer demands, and regulation, on food safety technology use. Preliminary results suggest that customer demand has the greatest impact.
 View Paper 24 Pages 151887 Bytes
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CES-WP-08-13
On the Lifecycle Dynamics of Venture-Capital- and Non-Venture-Capital-Financed Firms
Manju Puri, Rebecca Zarutskie
May 01, 2008
We use a new data set that tracks U.S. firms from their birth over two decades to understand the life
cycle dynamics and outcomes (both successes and failures) of VC- and non-VC financed firms. We
first ask to what market-wide and firm-level characteristics venture capitalists respond in choosing to
make their investments and how this differs for firms financed solely by non-VC sources of
entrepreneurial capital. We then ask what are the eventual differences in outcomes for firms that
receive VC financing relative to non-VC-financed firms. Our findings suggest that VCs follow
public market signals similar to other investors and typically invest largely in young firms, with
potential for large scale being an important criterion. The main way that VC financed firms differ
from matched non-VC financed firms, is they demonstrate remarkably larger scale both for
successful and failed firms, at every point of the firms’ life cycle. They grow more rapidly, but we
see little difference in profitability measures at times of exit. We further examine a number of
hypotheses relating to VC-financed firms’ failure. We find that VC-financed firms’ cumulative
failure rates are lower than non-VC-financed firms but the story is nuanced. VC appears initially
“patient” in that VC-financed firms are less likely to fail in the first five years but conditional on
surviving past this point become more likely to fail relative to non-VC-financed firms. We perform a
number of robustness checks and find that VC does not appear to have more stringent survival
thresholds nor do VC-financed firm failures appear to be disguised as acquisitions nor do particular
kinds of VC firms seem to be driving our results. Overall, our analysis supports the view that VC is
“patient” capital relative to other non-VC sources of entrepreneurial capital in the early part of firms’
lifecycles and that an important criterion for receiving VC investment is potential for large scale,
rather than level of profitability, prior to exit.
View Paper 51 Pages 216213 Bytes
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CES-WP-08-12
Neighborhood Effects on High-School Drop-Out Rates and Teenage Childbearing: Tests for Non-Linearities, Race-Specific Effects, Interactions with Family Characteristics, and Endogenous Causation using Geocoded California Census Microdata
Rhiannon Patterson
May 01, 2008
This paper examines the relationship between neighborhood characteristics and the likelihood that a youth
will drop out of high school or have a child during the teenage years. Using a dataset that is uniquely wellsuited
to the study of neighborhood effects, the impact of the neighborhood poverty rate and the percentage
of professionals in the local labor force on youth outcomes in California is examined. The first section of
the paper tests for non-linearities in the relationship between indicators of neighborhood distress and youth
outcomes. Some evidence is found for a break-point at low levels of poverty. Suggestive but inconclusive
evidence is also found for a second breakpoint, at very high levels of poverty, for African-American youth
only. The second part of the paper examines interactions between family background characteristics and
neighborhood effects, and finds that White youth are most sensitive to neighborhood effects, while the
effect of parental education depends on the neighborhood measure in question. Among White youth, those
from single-parent households are more vulnerable to neighborhood conditions. The third section of the
paper finds that for White youth and Hispanic youth, the relevant neighborhood variables appear to be the
own-race poverty rates and the percentage of professionals of youths’ own race. The final section of the
paper estimates a tract-fixed effects model, using the results from the third section to define multiple
relevant poverty rates within each tract. The fixed-effects specification suggests that for White and
Hispanic youth in California, neighborhood effects remain significant, even with the inclusion of controls
for any unobserved family and neighborhood characteristics that are constant within tracts.
View Paper 64 Pages 228413 Bytes
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CES-WP-08-11
Analysis of Young Neighborhood Firms Serving Urban Minority Clients
Timothy Bates, Alicia Robb
May 01, 2008
This study empirically investigates Michael Porter’s hypothesis that urban minority
neighborhoods offer attractive opportunities to household-oriented businesses, such as retail
firms (1995). Our analysis compares the traits and performance of firms serving predominantly
minority clients to those selling their products largely to clients who are nonminority whites.
Controlling statistically for applicable firm and owner characteristics, our findings indicate that
the minority neighborhood niche does not offer young firms an attractive set of opportunities.
Relative to opportunities in the corresponding nonminority household niche and the broader
regional marketplace, the neighborhood minority household market is associated with reduced
business viability.
View Paper 22 Pages 75674 Bytes
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CES-WP-08-10
Horizontal Diversification and Vertical Contracting: Firm Scope and Asset Ownership in Taxi Fleets
Evan Rawley, Timothy Simcoe
May 01, 2008
This paper considers the vertical implications of horizontal diversification. Many studies
have documented organizational problems following corporate diversification. We propose that
selective vertical dis-integration – shifting asset ownership to agents – can mitigate rent-seeking
and coordination failures in the diversified firm. We test this proposition in a particularly simple
setting that allows us to isolate the effects of interest and control for the likely endogeneity of
diversification: taxi fleets that diversify into the limousine, or black car, segment following a
wave of entry deregulation in the early 1990s. The results show that taxi fleets are substantially
more likely to use owner-operator drivers following diversification. Moreover, diversified fleets
that use a greater share of owner operators are more productive than diversified fleets that own
most of their vehicles. We interpret these findings as evidence that firms re-organize in response
to the challenges of diversification, and that there are causal links between the horizontal and
vertical boundaries of the fleet.
View Paper 38 Pages 286062 Bytes
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CES-WP-08-09
A Warm Embrace or the Cold Shoulder: Wage and Employment Outcomes in Ethnic Enclaves
Roberto Pedace, Stephanie Rohn
April 01, 2008
This paper examines how immigrant enclaves influence labor market outcomes. We
examine the effect of ethnic concentration on both immigrant earnings and employment in high
immigration states using the non-public use, 1-in-6 sample of the 2000 U.S. Census. Although
we find that there is some variability in the estimated enclave effects, they exhibit an overall
negative impact. Male and female immigrants from several ethnic groups tend to earn lower
wages when residing in areas with larger ethnic concentrations. Similarly, for employment, most
of the statistically significant effects are negative, although much smaller than the enclave
impacts on earnings.
View Paper 38 Pages 328123 Bytes
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CES-WP-08-08
The Efficiency of Internal Capital Markets: Evidence from the Annual Capital Expenditure Survey
Sumit Agarwal, Victor Souphom, Guy Yamashiro
April 01, 2008
We empirically examine whether greater firm diversity results in the inefficient
allocation of capital. Using both COMPUSTAT and the Annual Capital Expenditure Survey
(ACES) we find firm diversity to be negatively related to the efficiency of investment. However
once we distinguish between capital expenditure for structures and equipment, we find that while
firms do inefficiently allocate capital for equipment, they efficiently allocate capital for
structures. These results suggest that when the decision will have long-lasting repercussions,
headquarters will, more often than not, make the correct choice.
View Paper 31 Pages 124830 Bytes
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CES-WP-08-07
Private Equity and Employment
Steven Davis, John Haltiwanger, Ron Jarmin, Josh Lerner, Javier Miranda
March 01, 2008
The impact of private equity on employment arouses considerable controversy. Labor groups concerned about the fortunes of workers employed at buyout firms contend private equity firms destroy jobs. By contrast private equity associations and other groups have released a number of recent studies that claim positive effects of private equity on employment following the takeover. In this paper we conduct a comprehensive examination of the impact of private equity buyouts on the employment outcomes of firms that are taken over by these investment firms. We focus the analysis on two different dimensions. First, what are the employment outcomes of workers employed at establishments existing at the time of the buyout? Second, what is growth performance of the firm following the buyout? We conduct the analysis using a unique linked dataset covering the universe of US firms and information regarding US buyout operations between 1980 and 2005. We find targeted establishments exhibit net employment contraction, higher job destruction and establishment exit relative to controls.
However, targeted firms exhibit higher greenfield entry and more acquisition and divestiture.
View Paper 57 Pages 190803 Bytes
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CES-WP-08-06
Consistent Cell Means for Topcoded Incomes in the Public Use March CPS (1976-2007)
Jeff Larrimore, Richard Burkhauser, Shuaizhang Feng, Laura Zayatz
March 01, 2008
Using the internal March CPS, we create and in this paper distribute to the larger
research community a cell mean series that provides the mean of all income values above the
topcode for any income source of any individual in the public use March CPS that has been
topcoded since 1976. We also describe our construction of this series. When we use this series
together with the public use March CPS, we closely match the yearly mean income levels and
income inequalities of the U.S. population found using the internal March CPS data.
View Paper 53 Pages 206725 Bytes
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CES-WP-08-05
Trends in the Relative Household Income of Working-Age Men with Work Limitations: Correcting the Record Using Internal Current Population Survey Data
Richard Burkhauser, Jeff Larrimore
March 01, 2008
Previous research measuring the economic well-being of working-age men with work
limitations relative to such men without work limitations in the public use March Current
Population Survey (CPS) systematically understates the mean household income of both groups;
overstates the relative household income of those with work limitations; and understates the
decline in their relative household income over time. Using the internal March CPS, we
demonstrate this by creating a cell mean series beginning in 1975 that provides the mean
reported income of all topcoded persons for each source of income in the public use March CPS
data. Using our cell mean series with the public use March CPS, we closely match the yearly
mean income of working-age men with and without work limitations over the period 1987-2004
in the internal data and show that this match is superior to ones using alternative methods of
correcting for topcoding currently used in the disability literature. We then provide levels and
trends in the relative income of working-age men with work limitations from 1980-2006, the
earliest year in the March CPS that such comparisons can be made.
View Paper 42 Pages 139253 Bytes
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