Spatial Aspects of the Productivity Slowdown: An Analysis of U.S. Manufacturing Data Author(s): Emilio Casetti and John Paul Jones III Source: Annals of the Association of American Geographers, Vol. 77, No. 1 (Mar., 1987), pp. 76-88 Published by: Taylor & Francis, Ltd. on behalf of the Association of American Geographers Stable URL: http://www.jstor.org/stable/2569203 Accessed: 26-03-2015 15:14 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Taylor & Francis, Ltd. and Association of American Geographers are collaborating with JSTOR to digitize, preserve and extend access to Annals of the Association of American Geographers. http://www.jstor.org This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions Spatial Aspectsof the Productivity Slowdown: An Analysisof U.S. ManufacturingData Emilio Casetti* and John Paul Jones lilt *Department of Geography,Ohio State University, Columbus,OH 43210-1360 tDepartmentof Geography,Universityof Kentucky,Lexington,KY 40506 thespatialdifferentiation intheratesofchangeofmanufacturing Abstract.We investigate productivity growth intheU.S. Usingan application ofthe"expansionmethod,"we focuson therelation between theproductivity slowdownandtheSnowbelt-Sunbelt shiftthatmaterialized at approximately thesame timeduring themid-1960s. We findthatthespatialpatterns ofmanufacturing productivity acceleration weredifferent beforeandafterthemid-1960s, andwe suggestthata redirection ofcapitalflowsis the mechanism behindthespatialpatterns observedandtheinterrelations betweentheslowdownand the shift. Key Words: productivity Snowbelt-Sunbelt slowdown, shifts, capitalflows,expansion trend method, surface expansions. THE recentslowdown in productivity growth the midpointof the ten-yearcensus periodsfrom and thedeclineof theNortheastand Midwest 1940. Note thatwhereasthe Snowbeltdivisions are majoreconomicissues confronting theUnited have decliningratesof netmigration, theSunbelt fromnegative States.They are causes, effects,and symptoms of regionsdisplaya strongturnaround and world to positiverates. Also shownin Figure 1 are esthe erosion in the positionof strength dominancethatthe U.S. economyenjoyedin the timatesof theU.S. annualratesof growthin labor in bothdurableand nondurablemanperiodimmediately followingWorldWar II. Both productivity contributed to the inflationary significantly pres- ufacturing.These estimates,coveringthe 1950suresandhighunemployment levelsofrecentyears. 66, 1966-73, and 1973-77 time periods, come The continuedprosperity of theU.S. economyde- fromKendrick(1980, 14). Both manufacturing pends largelyupon the extentto which the pro- sectorsshow a decline in growthrates, and the ductivityslowdown and the decline of the old declineis roughlycontemporaneous withtheshifts industrialcore regions are counteractedand re- in regionalnetmigrationrates. versed. This temporalcoincidencepointsto a possible The crisis in the Northeastand Midwest has relationbetweenthetwoand suggeststhattheprobeen associated with acceleratedeconomic and ductivityslowdownmay also possess significant populationgrowthin some regionsin the South spatial dimensions.Althoughconsiderableattenand West. The combinationof thesetrends,often tionhas been devotedto understanding Snowbeltreferredto as the Snowbelt-Sunbelt shift,began Sunbeltshifts,littlework has been done on the at approximately thesame timeas theproductivity spatial dimensionsof the productivity slowdown slowdownin the mid-1960s. The temporalcoin- and on the relationshipsbetweenthe slowdown cidence betweenthe Snowbelt-Sunbelt shiftand and the shifts.These relativelyneglectedissues in Figure are thefocusof thispaper. theproductivity slowdownis illustrated 1. In it,thepercentagenetmigration ratesfortwo The productivity slowdownis a decline in the Snowbeltcensusdivisions(theMiddleAtlanticand rate of growthof productivity thatconstitutesa and fortwo Sunbeltdivisions negativeproductivity East North-Central) acceleration.In this paper (the East and West South-Central)are plottedat we aim to identifysignificantspatial patternsof Annalsof theAssociationofAmericanGeographers, 77(1), 1987,pp. 76-88 (D Copyright 1987 by Associationof AmericanGeographers 76 This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions Productivity Slowdown 77 15.0- 10.0 5.0- MA _ _ _ _ ~~~~~DURABLE ENC DECENNIALPERCENT NET MIGRATION: SELECTED CENSUS DIVISIONS 3.5 NON-DURABLE _r 3 // 2 25 0.0 1 2.0 -5.0 -10.0 ESC --- _ __ / AVERAGEANNUAL PERCENT PRODUCTIVITYGROWTH: DURABLEAND NON-DURABLE MANUFACTURING I -15.0 1940 1950 1960 1970 1980 Figure 1. The productivity slowdown and Snowbelt-Sunbeltshifts.Migrationdata are percentagerates of net migrationby census periodfortheMiddle Atlantic(MA), East NorthCentral(ENC), West SouthCentral(WSC), and South Atlantic(SA) census divisions.Productivity data are average annual percentagegrowthratesby manufacturing typeand are takenfromKendrick(1980). productivity accelerationfortwotimeperiods,one omybeganin themid-1960s.It soon caused grave precedingand theotherfollowingboththeSnow- concernbecause itwas takento signala worsening belt-Sunbeltshiftand theproductivity slowdown. of the competitivepositionof the U.S. economy We use trendsurfaceexpansionsto estimatethe vis a vis othercountriesand to reducethe possiincreasesin wages and spatial variationof a differential equation from bilityof noninflationary slowdown was interwhichmeasuresof accelerationare extracted.As incomes. The productivity ofperverseecoonly statisticallysignificantspatial variationis pretedas bothcause and symptom employedto derivetheaccelerationmeasures,the nomic trends that needed to be addressed, resultingspatial patternscan be presumedto re- understood,and corrected. veal substantive realitiesrather thanaveragednoise. slowdownhas on theproductivity The literature Our results show that before the onset of the been growingrapidly(see, e.g., Denison 1979; Snowbelt-Sunbeltshiftthe rate of productivity Federal Reserve Bank of Boston 1980; Kendrick growthwas highestin the old industrialcore re- and Grossman 1980; Maital and Meltz 1980; gions,whereasaftertheshiftit became highestin Moomaw 1980). Explanationshave focusedon the portionsof theSunbelt.In theconcludingportion qualityof labor inputs,the amountand direction of the paper, we articulatetwo hypothesescon- ofinvestments, regand theimpactof government cerningthelinkagebetweentheshiftand thespa- ulation (Christainsenand Haveman 1981; Filer tial aspectsof productivity dynamics. 1980; Baily 198la). The mainpointsof theseexplanationscan be summarizedas follows: The ProductivitySlowdown Productivity growthis a traitof modem economies. This is notto say thatepisodesof declining productivity cannotbe foundin themodernworld. In contemporary developed countries,however, theruleratherthan productivity growthconstitutes theexception.Increasingproductivity growthgenerally identifieshealthy economic sectors, regions, or countries. The productivity slowdownin the U.S. econ- of laborinputshas been (1) A higherproportion contributed by women and youngerpeople since slowdown.Increased theonsetof theproductivity laborparticipation by womenresultedfromstructuralchangesin Americansociety;thelargerproportionof youngerpeople in the labor forcehas been due to theagingofthe"baby boom" cohort. Some authors suggest that female and young workerscontributeless productivelabor inputs (Perry1971; Perloffand Wachter1980). (2) The rate of capital formationhas declined This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions 78 Casettiand Jones (Kopcke 1980; Baily 1981b; Boucher 1981; Fraumeniand Jorgenson1981). Freshcapitalhas been divertedfromdirectlyproductiveinvestments into expendituresrelated to governmentregulations (Crandall1980, 1981; Myersand Nakamura1980; Christainsenand Haveman 1981; Link 1982c). Researchand developmentexpenditures have also declined(Mansfield1965; Terleckyj1974, 1982; NSF 1977; Griliches 1980a, 1980b; Clark and Griliches1981; Link 1982a, 1982b). (3) The pressuresfromunions, consumerists, environmentalists, and assorted social welfare proponentsproduced "excessive" government regulationand a businessclimateunfavorableto productivity growth(Freemanand Medoff1979; Abramowitz1981; Gollop and Roberts1982). accelerationin the industrialcore regions,where most of the manufacturing is concentrated,was translatedinto a favorableproductivity performance at the nationalscale. Subsequently,productivitygains associatedwitha smallerbutgrowing Sunbelteconomymay not have been enough to compensatefortheproductivity slowdownin other partsof thecountry.If thisis thecase, thenspatial in productivity differentials accelerationassociated withthe Snowbelt-Sunbelt shiftsmay have contributed to thenationaldeclinein productivity growth. The Snowbelt-SunbeltShift The shiftof populationandjobs fromSnowbelt The spatialdimensionsoftheproductivity slow- to Sunbeltconstitutesa complex clusterof notdown have attracted littleattention. In an analysis too-sharply definedspatialchangesthatare partly at theCensus Division level, Hultenand Schwab an accelerationand partlya reversalof previous (1984) concludedthatthe slowdownin manufac- trends(Sternlieband Hughes 1975; Vining and turinglabor productivity was almostubiquitous, Strauss1977). The shiftbegan in the mid-1960s, withonlyminorregionalvariations.On theother whenpopulationand economicactivitystartedto hand, the recentinvestigations of the spatial va- moveoutof establishedindustrial regionsand large lidityof the Verdoornlaw describedbelow sug- metropolitanagglomerations.At the same time in theproductivity slowdown otherplaces - notablyin theWest, in theSouth, gestspatialpatterning and pointtowardpossible linkagesbetweenthis some mid-sizedurbancenters,and some nonmetand Snowbelt-Sunbelt shifts. ropolitanareas - began to grow (Beale 1977; patterning Accordingto the Verdoornlaw, productivity Berryand Dahman 1977; Chinitz1978; Rees 1979; grows fasterin economic sectorsthatare in the Sternlieband Hughes 1975, 1978). The dispersal process of expanding.Cross-sectionalstate-level of populationand economic activitiesout of old coresis typicalofthedeglomerative trends analyses (Casetti 1982b; Casettiand Jones1983; industrial and documentedfora Casetti 1984a, 1984b) indicatedthathigherpro- thathave been investigated ductivity growthtendstobe associatedwithhigher numberof countries(Richardson1980; Viningand outputgrowthand thatthe productivity response Pallone 1982). to outputgrowthtended to be higherin some In many respectsthe Snowbelt-Sunbeltshift an unexpected reversaloflong-run Snowbeltregionsbeforethemid-1960sand higher constitutes trends in some Sunbeltareas in subsequentyears. This thatshaped the spatial structure of the American suggeststhatdifferent spatialpatternsof produc- socioeconomicsystem(Viningand Strauss1977). tivitydynamicsprevailedbeforeand aftertheon- Such a shiftcannotbe explainedin termsof cuset of the productivityslowdown and of the mulativecausation and growthpole theories,as slow- thesetheoriesimplythatthemoredevelopedareas Snowbelt-Sunbeltshift.As a productivity down denotesa weakeningof thecompetitivepo- will grow comparativelymore and will induce aroundthem.The failure sitionof an economy,it is reasonableto expect growthin theterritories changes in the spatial dynamicsof productivity of conventionalregionaldevelopmentconceptsto as thoseunderway re- anticipatetrendsas significant wheneverthecompetitivepositionof different altered.The economic de- in the U.S. has led to a varietyof attemptsto gions is significantly theoriesof regionalgrowth(Richardcline of the old industrialcores in the U.S. and reformulate therapidexpansionof some regionsin the South son 1980; Casetti 1981; Peet 1984). of regionalgrowthand The majordeterminants stronglysuggestsympathetic changes in produccan declineaccordingto thesenew reformulations tivitydynamics. as follows.The old industrial A relationbetweenspatial patternsin produc- be summarized cores activitiesthatare estivitydynamicsand nationaltrendsis also plau- dependupon manufacturing sible. Prior to the mid-1960s, the productivity pecially vulnerable to competitionfrom other This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions Productivity Slowdown countriesbecause of higherlabor costs and more obsoletecapitalin sucholdermanufacturing areas. Also, old industrial coresoftenexperiencestronger social and politicalpressuresby groupscommitted to protectingthe environment, the workers,and theless fortunate membersof society.Despitethe positiverole suchpressuresplay,theybringabout higherbusinesscosts thatcompoundtheperverse dynamicsexperiencedby theseregions(Bluestone andHarrison1982;Casetti1984c;Peet1983, 1984). New businessesand plants,however,thatare disproportionately thoseeconomicactivitiesin which the U.S. is stronglycompetitivetendto locate in a few Sunbeltareas thatare experiencingspectacular growth. It is generallybelievedthatcapitalflowsplayed a veryimportant rolein theSnowbelt-Sunbelt shift (Clark and Gertler 1983; Clark, Gertler, and Whiteman1986, 210ff.). Capital leavingregions withpoor business climatesin the old industrial in theSuncoresformorefavorableenvironments belt producesjob shiftsthatalterthe traditional interregional migration streams.An influxof capital will, however, tend to increase the rate of productivitygrowth(Casetti and Jones 1983). Therefore,it seems reasonableto hypothesizethat the faster-growing Sunbeltregionshave recently accelerationthan experiencedhigherproductivity previously,whereas the opposite holds for the Snowbeltareas thatare stagnatingor declining. The Model 79 and laborinputs,so thatlaborproductivity is given by P = YIL. (1) Let Z signifythelogarithmic transformation of P: Z = lnP. (2) Denotethefirstand secondderivativeofa variable withrespectto timet, as follows: Z' = dZ/dt,and (3) Z" = dZ'/dt. (4) Since Z = lnP, the logarithmicderivativeof productivitywithrespectto time,Z', is the percentage rateof changeof productivity over time: Z' = (l/P)(dPldt). (5) The timederivativeof Z' is theinstantaneous rate of changeof percentageproductivity change and acconsequentlyis an indicatorof productivity accelerationmeaceleration.Z" is theproductivity surethatwe use in thispaper. The methodemployedto investigatethespatial variationof productivity accelerationinvolves(1) specifyingan equation capable of yieldingproductivityaccelerationby implicitderivationwith respectto timeand then(2) expandingtheparametersof thisequationto producespatiallydifferentiatedestimatesof productivity acceleration.The specificsof the methodfollow. Let Evaluatingthe spatialvariationof productivity Z' = f(Z) (6) acceleration(the rate of change of the rate of growth)is not an easy task. The straightforward equationrelatingpercentagerate approachto measuringaccelerationinvolvesfirst be a differential to thelogarithmof proobtaininggrowthrates for two consecutivetime of changeof productivity therateof changebe- ductivity.Taking the derivativeswithrespectto periodsand thenestimating tweenthetwo. Because thecalculationof a growth timeof bothsides of Equation(6) we obtain rateamplifiesany noise presentin thedata, howZ = g(Z,Z'), (7) ever, thisapproachamplifiesnoise in theoriginal data threetimes:(1) in producingthe productivity growthrates, (2) in obtainingaccelerationmea- whichexpressesthemeasureof accelerationused sures, and (3) in computingrates of change of in thisinvestigation, Z", as some functionof peraccelerationover space. centagerateof changeof productivity, Z', and of We assess spatialvariationin theratesof change the logarithmof productivity, Z. If Equation (6) of productivity of lev- definesZ' as an intrinsically growthfromcross-sections -linearfunctionof Z, els of and rates of change in productivity. The accelerationestimatescan be arrivedat by ordinoise amplificationwiththis methodologyis not narymultipleregression.To showit,letus specify anal- f(Z) as a polynomialin Z greaterthan that involved in growth-rates yses. ... Z= Let Y and L denote,respectively,value added (8) ao+aZ+a2Z2+a3Z3+ This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions 80 Casettiand Jones, so that Z' = Z'(a I + 2a2Z + 3a3Z2 .). (9) If cross-sectionalvalues of Z' and Z are available, regressionestimatesof the a's in Equation (8) can be obtained and then employed using Equation(9) to obtaincross-sectional estimatesof Z'. Specifically,accelerationestimatesby area can be obtainedfromthe estimateda's and fromthe Z andZ' values fortheobservations.However,Z" estimatesobtainedusing this approachwould be based on the assumptionthatthe Z'(Z) relation specifiedby Equation(6) is stableoverthespatial contextconsidered.In otherwords,it assumesnot onlythatthesamefunctional ofZ'(Z) specification is valid throughout the area underconsideration butalso thatits parametersare spatiallyinvariant. The assumptionthatthe same specificationof Z'(Z) is valid throughout the periodis not unreasonable,especiallyif thetimeintervalconsidered is nottoo large. The specificationof a functional relationin termsof a low-orderpolynomialis one of thesimplestpossible,and it is legitimateto use a simplefunctionin theabsenceof reasonsfavoringa morecomplexfunction.No suchreasonsare apparenthere. The assumptionthatEquation (8) should hold with the same parametersover the studyarea is, however,undulyrestrictive. Regionaldifferences in economicstructure and level of economicmaturity, and differences stemmingfromhistoricaland physicalfactors,suggest thatthe parametersof Equation (8) mightnot be spatiallyinvariant.A reformulation of the model thatallows thetestingfor,and estimationof, spatial parametervariationcan be easily arrivedat usingtheexpansionmethod(Casetti1972, 1982a). The approachused in thispaperis a modification of thetrendsurfaceexpansionsdiscussedin Jones (1984). The expansionmethodis a techniqueforgeneratingmorecomplexterminalmodelsfromsimpler initialones and involves redefiningat least some of the parametersof the initial model as functionsof relevantvariables.The expandedparametersare thenput back intothe initialmodel to producea terminalmodel. For appropriateinitial models and functionalspecificationsof the expansions,theterminalmodelis intrinsically linear and consequentlyits parameterscan be estimatedby ordinary multipleregression.In thetrend surfaceexpansionsthe parametersof the initial model are expanded into polynomialsin the coordinatesof areal centroids. Suppose, forinstance,thatwe selectthedifferentialequation Z= ao+aZ+a2Z2 (1 0) as theinitialmodel. Equation(10) is a specialcase of (8) and is theequationthatwill be used in the empiricalanalysesdescribedlater.A quadratictrend the surfaceexpansionof (10) involvesredefining parametersao, a,, and a2 of (10) into quadratic polynomialsin the spatialx-y coordinatesof the observations,which in this studyare state centroids: ao = a00 + a0jX + a02Y + a03X2 + a04Y2 + a05XY, al (11) = a10 + aj1X + a12Y + aj3X2 (12) + a14Y2 + a15XY, and a2 = a20 + a2IX + a22Y + a24Y2 + a25XY. + a23X2 (13) sides of Equations(11), Replacingtheright-hand in (12), and (13) forthecorresponding parameters Equation (10) yieldsan 18-termterminalmodel. This model is capable of estimationby ordinary multipleregression.Specifically,stepwiseregressionor backwardselectioncan be used to estimate theterminalmodel thathas the largestR2 and all from regressioncoefficients significantly different in thisestimated zero. The appropriate parameters intotheexpansion equationcan thenbe substituted Equations(11), (12), and (13) in orderto specify of theinitial thespatialvariationof theparameters model. on polynomialregressionsand on The literature trendsurfaceanalysesnotesthatsuccessivepowers of temporaland/orspatial coordinatescan produce highlycorrelatedvariables. This multicollinearitycan pose a seriousproblemif all the termsin a polynomialareincludedin,a regression. The techniquessuggestedforobviatingthisproblem have includedorthogonalpolynomials,ridge regressions,and principalcomponentsanalysis. The approachadoptedhere involvesobtaining varimaxrotatedprincipalcomponentsof thepowersof theobservations'coordinatesand thenusing these to expand the initialmodel. Expansionsin termsof rotatedprincipalcomponentswere carriedout by redefining thecoefficients ao, a,, and This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions Productivity Slowdown 81 a2 of Equation(10) as linearfunctions of variables 1981, 201ff.).For each regressionfourtestswere executed,each based on a different specification PI, P2, -.- : of theweightmatrix,W: , + + + ao = a00 ao pI a, = al0 + allp, a02P2 (14) *-- + aI2p2 + ...,and a2 = a20 + a2IpI + a22p2 + *- , (15) (16) wherethep's are rotatedprincipalcomponentsof X, Y, X2, Y2,andXY whenquadratictrendsurface ofX, Y, X2, y2,XY, expansionsare contemplated; X3, Y3, X2Y, and XY2 when cubic trendsurface expansionsare desired,and so on. Expansionsin termsof rotatedprincipalcomare ponentsof the coordinates'transformations vastly preferableto using the rotatedprincipal componentsof variablesappearingin trendsurface expansions.They constitute a convenientapproachof generalapplicability to theinvestigation of the spatialor temporalvariationof theparameters of an initialequation using the expansion method.Rotatedprincipalcomponentsof the coto a trend ordinatetransformations corresponding surfaceof a givenorderfora givenspatialsetting needs to be done only once and can be used repeatedlyto carryoutexpansionsof different initial models. Such reusabilityof the rotatedcomponentsroutinizesthe applicationof the expansion methodto investigating the spatialvariationof a model's parameters.It is also likelyto solve multicollinearity problemsthatdo not arise fromthe initial model itself. This approach proved adequate to solve themulticollinearity problemin the empiricalanalyseshere. The stepwiseregressionand backwardselection proceduresemployedin theestimationof terminal the modelsrelyupont (or F) testsfordetermining variables that are significantlyassociated with andshouldbe retained.These population parameters significancetestsare based, however,on the assumptionthatthe errortermsassociatedwiththe a significant observationsare independent; spatial of regressionresidualsis inconsisautocorrelation tentwithsuch independence.Spatial autocorrelation of the regressionresidualscould resultfrom errortermsproducedby spatiallyautoregressive of theregression processesor by misspecification model. A failureto incorporate systematic parametervariationin a regressionmodelconstitutes potentialmisspecification. This reasoningsuggestedthattestsforautocorrelationshould be performedfor all the regresin thisinvestigation. The testscarried sionsreported out were based on the I statistic(Cliffand Ord W(ij) = 1 if d(ij)<200 miles, else W(ij)=0, W(ij) = 1 if d(ij)<400 miles, else W(ij)=0, W(ij) = 1 if d(ij)<600 else W(ij)=0, miles, and W(ij) = 1 if d(ij) < 800 miles, else W(ij) = 0 where W(ij) is the entryof the weightmatrix to observationsi and j, and d(inj) corresponding is the distancein miles betweenthe locationsof observationsi and j. Here the observationsare states, and the distancesare between-statecentroids.These specificationsof the weightmatrix W allow testingfor spatial autocorrelation at the local scale (200 and 400 mi.) and at the regional scale (600 and 800 mi.), and have alreadyproved usefulfordetectingspatialautocorrelation among residualsin regressionsemployingstatelevel data (Jones1983). Analysis The purposeof theempiricalanalysispresented in thissectionis (1) to determinewhetherstatisticallysignificantspatial patternsof productivity accelerationexist and (2) whethertheydifferbeforeand afterthe onset of the Snowbelt-Sunbelt slowdown.It is useful shiftand oftheproductivity to pointoutthattheanalyseshere,as well as those by Hultenand Schwab (1984), are based on agdata and do notaddressthe gregatemanufacturing comparativeimpactsof spatialvariationin indusiftheseinvestigations are trymixes.Undoubtedly, attentionhas to be given to inpursuedfurther, dustrymix effectsand to the spatial impactsof in productivity differentials industry dynamics.The occurrenceof significantspatial patternsof productivityaccelerationneeds, however,to be investigatedand establishedfirst. The primarydata used in our analysesare (1) the numberof manufacturing productionworkers value added for and the aggregatemanufacturing theyears 1954, 1963, 1967, and 1977 forthe48 coterminous statesof theU.S. plus theDistrictof This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions 82 Casettiand Jones Table 1. Regression Resultsa Columbiaand (2) thegeographicalcoordinatesof theseareal units. 1954-63 The 1954, 1963, and 1967 manufacturing data Z'= .04355 + .OlOlSZ + .00167Z2 were takenfromthe 1977 Cityand CountyData (25.58)b (1.62) (.08) Book (U.S. Bureau of theCensus 1979); the 1977 R= .254 R2 = .064 data come fromthe 1980 StatisticalAbstractof I(200)C = .694 I(400) = 2.018 theU.S. (U.S. Bureau of The Census 1980). The I(600) = 1.263 I(800) = .234 value added was convertedintoconstant1967 dollars. From these sources, we calculatedthe per- 1967-77 Z'= .02022 + .00336Z + .05870Z2 centageratesof changeof productivity over time (10.80) (.48) (2.29) intervalsencompassing1954-77 and logarithms R= .320 R2 = .100 of productivity at the midpointof the intervals. I(200) = - .274 I(400) = .311 The x-y geographicalcoordinatesof the state I(600) = - .155 I(800) = .543 centroids arefromDouglas (1932). Thesedatawere firstreplaced by deviationsfromthe respective 1 954-63 d Z= .04353 + .01213Z- .0029-P32 means.These deviationswereused to generatethe (- 2.57) (38.91) (2.44) transformations that appear in second-, third-, + .01424Zp32 fourth-,and fifth-degree polynomialtrendsur(2.64) faces. These setsof variableswerethenseparately R= .539 R2 = .291 subjected to principalcomponentsanalysis folI(200) = - .016 I(400) = .604 lowed by varimaxrotation.Onlycomponentswith I(600) = .538 I(800) = .374 eigenvaluesgreaterthanone wereretained.These manipulations produced2 componentsfromthe5- 1967-77d Z'= .02033 + .01561Zp31 + .07900Z2 termsecond-degreepolynomialvariables,3 com(12.07) (2.04) (3.29) ponentsfromthe9-termthird-degree polynomial, + .05184Z2p32 . 10572Z2p33 4 componentsfrom the 14-termfourth-degree (2.07) (-3.01) polynomial,and 4 componentsfromthe 20-term R R2 = .308 .555 fifth-degree polynomial.The ith varimaxrotated I(200) = - .0602 I(400) = - .202 principalcomponentcomputedfromthevariables 1(600) = -1.123 I(800) = -.024 appearingin a polynomialtrendsurfaceof degree a = Z' instantaneous percentagerateof growthof manufacbe denotedas Pij j will henceforth forthe intervals1954-63 and 1967turinglabor productivity Separateanalyses were carriedout forthe pe- 77. = Z at the naturallogarithmof manufacturing productivity riodsrespectively precedingand followingtheonof thetimeintervals1954-63 and 1967-77. set of the Snowbelt-Sunbeltshift.The 1954-63 midpoint b t-valuesare in parenthesesunderthe respectiveregression and 1967-77 timeintervalswere chosen because coefficients. C StandardizedI statisticscalculated fromthe regressionretheycover the endpointsof the 1954-77 timepesiduals usingthe four-weight matricesspecifiedin the text. riodforwhichpostwardata are available and bed Obtainedby backwardselectionfromexpansionsin terms cause theystraddletheonsetoftheshift.The 1963- of third-degree varimaxrotatedcomponents. 67 period was skipped on the groundsthat the shiftsmaterializedapproximately at thattime.The the validityof thesetestsis open to tocorrelated, analyses involved(1) specifyinga suitableZ'(Z) is a potentialindifunction,(2) specifyingand estimatinga suitable question.This autocorrelation ofthemodel. The trendsurfaceexpansionofZ'(Z), and then(3) ob- catorof spatialmisspecification accelerationby 1967-77 regressionsshow a statisticallysignifitainingestimatesof productivity stateforthe 1954-63 and 1967-77 timeintervals. cantquadratictermand no evidenceof spatialauThese estimates were then summarized, dis- tocorrelation. We experimented withvarioustrendsurfaceexplayed, and interpreted. Aftersome experimentation theZ'(Z) equation pansionsby expandingtheZ = a + bZ + cZ2 equawas specifiedas a second-degreepolynomial.Es- tionintotrendsurfacesof degrees1 through5. In timates of the nonexpanded Z' = a + bZ + CZ2 the first-degree expansionx-y coordinateswere equationare shown in the firstand second parts used. In the expansionsof degree 2 through5, of Table 1. None of thecoefficients forthe 1954- varimaxrotatedprincipalcomponentsoftrendsur63 regressionare statistically but be- face termswere employed.The terminalmodels significant, cause the regression'sresidualsare spatiallyau- wereestimatedforthe 1954-63 and 1967-77 data This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions Productivity Slowdown 83 theregres- withlargerproductivity usingbackwardselectionand retaining accelerations foundin New sion stepwiththelargestR2 in whichall variables England,the upperMidwest,and the Northwest. are significant at p S .05. Spatial autocorrelation Loweraccelerations prevailin theSouthand West. testson the residualsfromthese ten regressions Some elementsof thispatternremainin the 1967yielded no significantautocorrelation for any of 77 map (Fig. 3), in which the states along the thefourweightconfigurations considered. Canadian borderretainhighlevels of acceleration The regressionsforthe earlyperiodindicate relativeto theremainderof thecountryand some theexistenceof spatialvariationin theparameters southernstatesretainlow values. In the 1967-77 oftheinitialequationeven forexpansionsin terms period,however,highaccelerationsare also found of a first-degree polynomial.For thelatterperiod in Texas and Louisiana, two stateslocated in a only the expansionsof thirddegreeor higherin- regionthatpreviouslyhad consistently low scores, volve spatial terms.The statisticallysignificant whereasaccelerationvalues in thelowestquartile spatialtermsdemonstrate the existenceof spatial materializein some New England and western in the initialmodel's parameters. states. instability Individualaccelerationsby statewere obtained A comparativepictureof accelerationchanges fromthe derivativeswithrespectto time of the is providedin Figure4. This map is based on an regressionequations, using estimatedregression indexconstructed the 1954-63 by firstconverting coefficientsand productivitydata as shown in and 1967-77 accelerationvalues to "standardEquation (9). The accelerationestimateschange ized" accelerationsand thentakingthedifference somewhatwithdifferent expansions.The overall betweenthetwostandardized foreach accelerations spatial patternsthattheyproduce, however,are state. Standardizedaccelerationsare in deviation quitestableforexpansionsof sufficiently highde- fromthe U.S. mean dividedby the standarddegree. Specifically,the same statestend to have viationfortheU.S. overthesametime This indexis unaffected highestand lowestaccelerations by theoverallnational periodacrossall theexpansionsintotrendsurfaces decline in accelerationduringthe studyperiod. of thirddegreeor higher.Therefore,we selected Minorchanges(from- 0. 10 to 0. 10) characterize thethird-degree trendsurfaceexpansionsforfur- thosestatesthatmaintainedtheirrelativeposition therconsideration.The regressionresultscorre- between1954 and 1977 (thesestatesare shownin spondingto these expansions are shown in the whitein Fig. 4). Figure4 revealsthatstateswith thirdand fourthparts of Table 1. Acceleration standardizedaccelerationstabilitycan be foundin estimatesbased on these regressionswere com- the West, South, and North-Central Census Reputedforstates,ranked,and mappedby quartiles. gions, whereasmoderateor large declines domiThe maps forthe 1954-63 and 1967-77 periods nate in New England. Moderate increases are shownrespectivelyin Figures2 and 3. characterizethe midsectionof the country(IlliFigure 2 reveals a strongnorth-south pattern, nois, Iowa, Kentucky,and Missouri),some westAccelerationby Regions and Divisions Table 2. Productivity 1967-77 1954-63 NortheastRegion New England Middle Atlantic North-Central Region East North-Central West North-Central South Region South Atlantic East South-Central West South-Central West Region Mountain Pacific a ACa SACb AC SAC .4447 .5149 .3044 .2638 .2106 .3018 -.4547 -.3649 -.3811 -.7302 .1006 -.0981 .6306 .62 .72 .42 .36 .28 .42 -.67 -.54 -.56 - 1.06 .13 -.16 .88 -.0283 -.0601 .0353 .0467 .0373 .0534 -.0070 -.0258 -.0803 .1089 -.0019 .0145 - .0458 - .23 - .45 .23 .31 .24 .35 - .07 -.21 - .60 .75 -.04 .08 - .35 Accelerationtimes 100. acceleration(accelerationin deviationfromthe U.S. mean dividedby the standarddeviationforthe U.S.). bStandardized This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions Casetti and Jones 84 -2.52 -0.22 0.14 0.42 2.14 accelerationforthe 1954-1963 timeperiod. Figure 2. Estimatesof productivity ern states (Arizona, Nevada, and Utah), and Oklahoma and NorthDakota. Increasesof more than 1.00 are confinedto the Sunbelt states of Florida, Alabama, Louisiana, Texas, New Mexico, and to Wyoming.Declines,on theotherhand, occur to a largerextenton the northeastern seaboardand in thesouthernstatesof Arkansas,Mississippi, Virginia,and the Carolinas. The largest declines are confinedto northern states:Oregon, Idaho, South Dakota, Maine, and New Hampshire.Thus, althoughstandardized accelerationincreases, decreases, and stabilitycan be foundin manyareas of the country,the overall pictureis one of increases in a handfulof southernstates combinedwitha contiguousregionof decline or at beststabilityin theindustrial and northern states of the East. A pictureof the change in productivity accelerationat the census region and census division level of resolutionis given in Table 2. The accelerationmeasures for the 1954-63 and 1967-77 timeperiods(shown in Cols. 1 and 3 of Table 2) were obtainedby takingthe mean of theacceleration values forthe statesin each regionand division; columns 2 and 4 of the table contain standardized accelerations.Contrasting theentries in Columns 2 and 4 of Table 2 shows thatthe Northeastregionsuffereda majordecline in productivity acceleration,thattheSouthwas thelargestrelativegainerin acceleration, andthattheWest andNorth-Central regionsexperienced littlechange. At the division level the clear "winner" is the West South-Central, while theclear "losers" are theNew Englandand Pacificdivisions.The overall pictureemergingfromTable 2 and fromFigures 2, 3, and 4 leads us to speculateabout the mechanismsthatproducedit. Discussion Prosperouseconomiesare characterized by productivityacceleration.This is whytheproductivityslowdownbecamethefocusof publicconcern. Approximatelycoincidentwith the productivity growthslowdown were the shiftsof population andjobs describedearlier.How can we relatethe productivity slowdownto theseshifts? The populationandjob shiftscan be creditedto theflowof capitalout of areas formerly thefocus This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions ProductivitySlowdown ACCELERATION x 1X 85 _ -0.28 -0.07 0.01 0.03 0.44 accelerationforthe 1967-1977 timeperiod. Figure 3. Estimatesof productivity economiesand laterthefocusof Conclusion of agglomeration concernover business costs and entrepreneurial businessclimate.The worstbusinessclimatesmay Our findingsindicatethatthespatialpatternsof have occurred,however,in Snowbeltareas with accelerationin theU.S. productivity manufacturing This acceleration. andproductivity highproductivity beforevs. aftertheondifferent significantly were population the between linkage a points toward and the Snowslowdown productivity the set of slowand employmentshiftand the productivity and jobs. A in shift population belt-Sunbelt gainswere down: Beforetheshift,theproductivity acceleration productivity between correspondence the As Sunbelt. in the than Snowbelt higherin the sense that in the was detected growth and regional businessclimateslowlybecame morefavorablein pein the earlier growth with lower regions some the Sunbelt, investmentsstartedto respond to also were West South-Central, the as such riod, proto than more business climate differentials acceleration.In by low productivity characterized ductivitydifferentials. to bothhigh these areas shifted second period the It seems legitimateto hypothesizethatthecapConacceleration. productivity higher and growth proof higher areas from away ital movements and high growth acceleration high formerly versely, ductivity growth toward areas where the con- areas such as theNortheastshiftedto "perverse" growthwas sloweror stagnating productivity dynamicsandto lowerratesof growth. productivity productivity overall the to tributedsignificantly Perhaps the coincidence between Snowbeltdynamicsin the U.S. Perhaps in the futurethe reversewill occur. As the Sunbelt maturesand Sunbeltshiftsand spatialpatternsof productivity takes on a largershareof Americanmanufactur- accelerationreflectstheoutflowof resourcesfrom accelerationand into accelerationin the Sunbelt areas of higherproductivity ing, the productivity accelerationbutbetmay morethancompensateforthe lowerproduc- areas withlowerproductivity climates. ter business tivityaccelerationin some of the old industrial The debatesover thecauses of theproductivity to an increasein prostates.This could contribute slowdownhave pointedout thatabout40 percent ductivitygrowthat thenationallevel. This content downloaded from 157.253.50.51 on Thu, 26 Mar 2015 15:14:57 UTC All use subject to JSTOR Terms and Conditions Casetti and Jones 86 CHANGE IN SCORES -275 -1.00 -0.10 0.10 1.00 4.83 accelerationbetweenthe 1954-1963 and 1967-1977 Figure 4. Differencein statestandardscores of productivity timeperiods. 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