CHAPTER 3

Loss of Establishments

Introduction

Some have argued that the loss of employment in manufacturing is tied to strong gains in productivity, that is, growth in the output per hour of labor. In other words, productivity gains arising from computers, robotics, and lean processes have replaced or reduced the number of employees needed to manufacture a product. In some instances, that argument may hold true, or, at least, be part of the story. On the other hand, however, general economic theory generally tends to argue that higher productivity leads to lower costs, lower prices, higher demand, and a resultant growth in employment, not a drop in employment (Nordhaus 2005). However, with the strong loss of employment occurring across just about ...

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