Fast Cars and Debutantes: Manufacturing-Induced Firm and Labor Outcomes in the South Pubblico

Abstract

The American South has emerged as a major hub for manufacturing investment, driven by its comparative advantages in labor costs, regulation, and infrastructure. This study investigates the impact of large-scale auto-manufacturing plant openings on firm and labor market outcomes across the region. Focusing on fourteen plants opened between 1981 and 2011, I use a Difference-in-Differences (DiD) framework and commuting zones as the geographic unit of analysis to estimate aggregate effects on firm density, employment, and real wages. The results show significant and persistent increases in the number of large firms and employment rates, consistent with agglomeration and clustering effects. Impacts on small firms are more heterogeneous, with evidence suggesting initial declines followed by recovery. Wage gains are modest but statistically significant, reflecting gradual labor market adjustments. These findings contribute evidence on the regional spillovers of industrial investment and provide a methodological framework for analyzing manufacturing-led growth in the American South.

Table of Contents

1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2 Literature Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3.1 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3.2 Model Specification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

3.2.1 Two-Way Fixed Effects (TWFE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

3.2.2 Extended Two-Way Fixed Effects (eTWFE) . . . . . . . . . . . . . . . . . . . . . . . . 14

3.2.3 Callaway and Sant’Anna Difference-in-Differences (CSDID) . . . . . . . 15

4 Results and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

4.1 Firm Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

4.2 Labor Market Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

4.3 Robustness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

4.3.1 Alternative Samples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

4.3.2 Shifting Adoption Times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

4.3.3 Considering Construction Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

6 Figures and Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

A Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

About this Honors Thesis

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School	Emory College
Department	Economics
Degree	B.A.
Submission	Honors Thesis
Research Field	Economics, General Economics, Labor
Parola chiave	Staggered DiD Agglomeration Spillovers Labor Markets Manufacturing
Committee Chair / Thesis Advisor	Paloma Lopez de mesa Moyano, Emory University
Committee Members	Pedro H. C. Sant'Anna, Emory University Krzysztof (Chris) Karbownik, Emory University

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