Reallocation and Technology: Evidence from the U.S. Steel Industry

Friday, October 2, 2015
Allan Collard-Wexler
Jan De Loecker

Abstract

We measure the impact of a drastic new technology for producing steel—the minimill—on industry-wide productivity in the US steel industry, using unique plant-level data between 1963 and 2002. The sharp increase in the industry's productivity is linked to this new technology through two distinct mechanisms: (i) the mere displacement of the older technology (vertically integrated producers) was responsible for a third of the increase in the industry's productivity, and (ii) increased competition, due the minimill expansion, drove a productivity resurgence at the surviving vertical integrated producers and, consequently, the productivity of the industry as a whole. (JEL D24, L13, L23, L61, M11, O31, O33)

Citation: 

Allan Collard-Wexler and Jan De Loecker, American Economic Review, 131-171, January 2015, Vol. 105 No. 1