There remains considerable debate in the theoretical and empirical literature about the differences in the cyclical dynamics of firms by firm size. This paper contributes to the debate in two ways. First, the key distinction between firm size and firm age is introduced. The evidence presented in this paper shows that young businesses (that are typically small) exhibit very different cyclical dynamics than small/older busi-nesses. The second contribution is to present evidence and explore explanations for the finding that young/small businesses were hit especially hard in the Great Reces-sion. The collapse in housing prices accounts for a significant part of the large decline of young/small businesses in the Great Recession. [JEL E32, E24, D22, L26] IMF Economic Review advance online publication, 27 August 2013; doi:10.1057/imfer.2013.15 The 2007–09 recession is one of the two largest cyclical downturns experi-enced in the United States in the post-WWII era—the other being the 1982–83 recession. One obvious difference between these two downturns is the subsequent

Abstract If trade barriers are managed by inecient institutions, trade liberalization can lead to greater-than-expected gains. We examine Chinese textile and clothing exports before and after the elimination of externally imposed export quotas. Both the surge in export volume and the decline in export prices following quota removal are driven by net entry. This outcome is inconsistent with a model in which quotas are allocated based on rm productivity, implying misallocation of resources. Removing this misallocation accounts for a substantial share of the overall gain in productivity associated with quota removal.

The economic costs of environmental regulations have been widely debated since the U.S. began to restrict pollution emissions more than four decades ago. Using detailed production data from nearly 1.2 million plant observations drawn from the 1972-1993 Annual Survey of Manufactures, we estimate the effects of air quality regulations on manufacturing plants ’ total factor productivity (TFP) levels. We find that among surviving polluting plants, stricter air quality regulations are associated with a roughly 2.6 percent decline in TFP. The regulations governing ozone have particularly large negative effects on productivity, though effects are also evident among particulates and sulfur dioxide emitters. Carbon monoxide regulations, on the other hand, appear to increase measured TFP, especially among refineries. The application of corrections for the confounding of price increases and output declines and sample selection on survival produce a 4.8 percent estimated decline in TFP for polluting plants in regulated areas. This corresponds to an annual economic cost from the regulation of manufacturing plants of

No region of the United States fared worse over the post-war period than the “Rust Belt,” the heavy manufacturing zone bordering the Great Lakes. We argue that a lack of competition in labor and output markets in the Rust Belt’s main industries were responsible for much of the region’s decline. We formalize this theory in a dynamic general-equilibrium model in which productivity growth and regional employment shares are determined by the extent of competition. When plausibly calibrated, the model explains roughly half the decline in the Rust Belt’s manufacturing employment share. Industry evidence support the model’s predictions that investment and productivity growth rates were relatively low in the Rust Belt.

I analyze a model of production in a competitive environment with heterogeneous …rms. E ¢ cient production requires individuals within the organization to take noncontractible actions for which rewards must be informally promised rather than contractually assured. The credibility of such promises emerges from a …rm’s future competitive rents. Equilibrium competitive rents are ine ¢ ciently concentrated at the top. I explore several policy and empirical implications of this result. (JEL D21, D24, L14, L22)

helpful comments. Gennaioli thanks the Barcelona Graduate School of Economics and the European Research Council for financial support. Shleifer thanks the Kauffman Foundation for support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Whether and to what extent environmental regulations influence the competitiveness of firms remains a hotly debated issue. Using detailed production data from tens of thousands of U.S. manufacturing plants drawn from Annual Survey of Manufactures, we estimate the effects of environmental regulations—captured by the Clean Air Act Amendments ’ division of counties into pollutant-specific nonattainment and attainment categories—on manufacturing plants ’ total factor productivity (TFP) levels. We find that among surviving polluting plants, a nonattainment designation is associated with a roughly 2.6 percent decline in TFP. The regulations governing ozone have particularly discernable effects on productivity, though effects are also seen among particulates and sulfur dioxide emitters. Carbon monoxide nonattainment, on the other hand, appears to increase measured TFP, though this appears to be concentrated among refineries. When we apply corrections for two likely sources of positive bias in these estimates (price mismeasurement and sample selection on survival), we estimate that the total TFP loss for polluting plants in nonattaining counties is 4.8 percent. This corresponds to an annual lost output in the manufacturing sector of roughly $21 billion in 2010 dollars. We thank participants at the University of Chicago, NBER EEE meetings, Lynn Riggs, and Frank Limehouse for

There is substantial within-industry variation in the prices that plants pay for their material inputs. Using plant-level data from the U.S. Census Bureau, I explore the consequences and sources of this variation in materials prices. For a sample of in-dustries with relatively homogeneous products, the standard deviation of plant-level productivity would be 7 % smaller if all plants faced the same materials prices. More-over, plant-level materials prices are persistent, spatially correlated, and positively associated with the probability of exit. The contribution of entry and exit to ag-gregate productivity growth is smaller for productivity measures that are purged of materials price variation. After documenting these patterns, I discuss three potential sources of materials price variation: geography, di¤erences in suppliersmarginal costs, and within-supplier markup di¤erences. Together, these variables explain 15 % of the variation of materials prices. 1

For the last decade we have been using double-blind survey techniques and randomized sampling to construct management data on over 10,000 organizations across twenty countries. On average, we find that in manufacturing American, Japanese, and German firms are the best managed. Firms in

This paper estimates the incidence of state corporate taxes on workers, landowners, and firm owners in a spatial equilibrium model in which corporate taxes affect the lo-cation choices of both firms and workers. Heterogeneous, location-specific productivities and preferences determine the mobility of firms and workers, respectively. Owners of mo-nopolistically competitive firms receive economic profits and may bear the incidence of corporate taxes as heterogeneous productivity can make them inframarginal in their lo-cation choices. We derive a simple expression for equilibrium incidence as a function of a few estimable parameters. Using variation in state corporate tax rates and apportionment rules, we estimate the reduced-form effects of tax changes on firm and worker location decisions, wages, and rental costs. We then use minimum distance methods to recover the parameters that determine equilibrium incidence as a function of these reduced-form effects. In contrast to previous assumptions of infinitely mobile firms and perfectly immo-bile workers, we find that firms are only approximately twice as mobile as workers over a ten-year period. This fact, along with equilibrium impacts on the housing market, implies that firm owners bear roughly 40 % of the incidence, while workers and land owners bear 35 % and 25%, respectively. Finally, we derive revenue-maximizing state corporate tax rates and discuss interactions with other local taxes and apportionment formulae.