Research

WORKING PAPERS

“Firms for Funding: The Effect of Million Dollar Plants on School Finances and Student Achievement” (w/ Viviana Rodriguez)

Abstract: School districts are sensitive to their local economic environment. A growing focus of regional economic development is to attract new facilities of large firms (“Million Dollar Plants”). Despite the size of these facilities, their impact on public schools and student outcomes is not well understood. To examine this, we compare school districts in counties that win a Million Dollar Plant (MDP) to those in counties considered finalists. We show that winning an MDP leads to a persistent increase in school district revenue that more than offsets the increase in student enrollment. Next, we show that this windfall revenue is mostly spent on instructional expenses and teacher hiring, leading to a reduction in average class size and improvements in reading and math scores. Finally, we find considerable heterogeneity by facility-type with manufacturing plants leading districts to spend additional property tax revenue on capital projects and high-tech establishments inducing expenditures on instruction that improve math proficiency scores.

“Does Goliath Help David? Anchoring Firm Creation” (NEW DRAFT FORTHCOMING)

Abstract: Can policymakers induce clusters using place-based business subsidies? A major development in U.S. economic policy is the use of business subsidies targeting megafirms to locate in specific locations. We study whether these targeted firms serve as anchors for industry agglomerations, lead to the re-homing of industries and supply chains, and contribute to labor market dynamism. We construct a hand-collected data set covering events where a large firm geographically expanded while announcing a runner-up site and match to restricted employee-employer U.S. Census data. Our difference-in-differences estimates suggest that the average anchor firm leads to a reallocation from old to young firms in the winning county that account for approximately 2,300 jobs in 120 new business establishments in economically proximate and occupationally similar industries. Spillover effects appear limited with most job transitions occurring within county-industry, but along the firm age distribution.

“Frictions for Firms in the New Geography of Innovation” (w/ Xian Jiang and William Kerr)

Abstract: While the rise in the spatial concentration of U.S. invention in a narrow set of cities is well documented (e.g., Kerr and Robert-Nicoud, 2020), we explore the role of housing price differentials on the concentration of inventor migration across a few cities following the software boom and prominent R&D lab collapses. We document that the rise in concentration was largely fueled by a rise in software and digital technology that forced firms to re-organize their R&D spatial footprint across cities with increasingly disparate housing price trajectories. Our estimates suggest that inventors in cities facing technological displacement are 8.15% more likely to continue patenting if housing prices double. Interestingly, we find ex ante software experience prior to a lab collapse does not insulate a patent inventor from falling out of the set of active U.S. inventors relative to their non-software lab colleagues in the same technology field.

WORKS IN PROGRESS

Location Spillovers, Labor Market Outcomes, and Firm Productivity (w/ Saheel Chodavadia, William Kerr, and Stephen Ross)

Multinationals, Greenfield Investment, and the Environment (w/ Xian Jiang and Haruka Takayama)