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The Growth of Industrial Sectors: Theoretical Insights and Empirical Evidence from U.S. Manufacturing

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  • Sandro Sapio
  • Grid Thoma

Abstract

In this paper, we study the growth rates of 4-digit sectors in U.S. manufacturing. Two measures of size (value of shipments, value added) are considered, for each of the 38 years (1959-1996) of a sample of 458 4-digit sectors, drawn from the NBER Manufacturing Productivity database. Whole sample results are partly in line with firm growth facts: (i) sectoral growth rates are distributed according to heavy-tailed Subbotin distributions, with shape coefficient between 1.0 (Laplace) and 1.5; (ii) the volatility of growth rates is decreasing with respect to size, with a scaling exponent varying over time, but always between -0.20 and -0.10. Preliminary analyses on more homogeneous groups cast doubts on the evidence of scaling, but leave basically unaffected the distributional properties of sectoral growth. These results shed light on the role of inter-firm correlations, market concentration, and positive intersectoral feedbacks as drivers of meso-economic dynamics.

Suggested Citation

  • Sandro Sapio & Grid Thoma, 2006. "The Growth of Industrial Sectors: Theoretical Insights and Empirical Evidence from U.S. Manufacturing," LEM Papers Series 2006/09, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2006/09
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    Cited by:

    1. Matthias Duschl & Thomas Brenner, 2013. "Characteristics of regional industry-specific employment growth rates' distributions," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 249-270, June.
    2. Giorgio Fagiolo & Mauro Napoletano & Andrea Roventini, 2008. "Are output growth-rate distributions fat-tailed? some evidence from OECD countries," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(5), pages 639-669.
    3. repec:ebl:ecbull:v:15:y:2006:i:7:p:1-8 is not listed on IDEAS
    4. Sandro Sapio & Andrea Roventini & Mauro Napoletano, 2006. "Modelling smooth and uneven cross-sectoral growth patterns: an identification problem," Economics Bulletin, AccessEcon, vol. 15(7), pages 1-8.
    5. Matthias Duschl & Thomas Brenner, 2011. "Characteristics of Regional Industry-specific Employment Growth – Empirical Evidence for Germany," Working Papers on Innovation and Space 2011-07, Philipps University Marburg, Department of Geography.
    6. repec:hal:wpspec:info:hdl:2441/9848 is not listed on IDEAS
    7. Slutskin, Lev, 2009. "Statistical Analysis of Inflationary Processes in Manufacturing Sectors of American Economy, 1959-1996," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 13(1), pages 89-104.
    8. repec:spo:wpecon:info:hdl:2441/9848 is not listed on IDEAS
    9. Carolina Castaldi & Sandro Sapio, 2008. "Growing like mushrooms? Sectoral evidence from four large European economies," Journal of Evolutionary Economics, Springer, vol. 18(3), pages 509-527, August.
    10. repec:spo:wpmain:info:hdl:2441/9848 is not listed on IDEAS
    11. repec:hal:spmain:info:hdl:2441/9848 is not listed on IDEAS
    12. Kenneth Carlaw & Richard Lipsey, 2011. "Sustained endogenous growth driven by structured and evolving general purpose technologies," Journal of Evolutionary Economics, Springer, vol. 21(4), pages 563-593, October.

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    Keywords

    Sectoral Growth; Subbotin Distribution; Scaling; U.S. Manufacturing;
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