Sources of Regional Variation in US Manufacturing Plant Closing and Downsizing

Abstract

This study attempts to investigate why manufacturing plant closing and downsizing vary from state to state. Research and Development emerged as a strong factor in both. State labor and environmental regulations are also significant factors. Union power seems to be declining in significance; state policies and political environment matter as well. Wages play a role, but do not appear to be as important as expected. We hope that this study can provide some insights as state policy makers strive for economic growth and development, and fight unemployment, and as manufacturing executives face increasingly complex location, relocation and downsizing challenges. However, the study does not permit us to make public policy recommendation or draw definitive conclusions as to the ability of the independent variables to explain and/or predict the behavior of the dependent variables.