For an in-depth treatment of head office locations
and foreign multinational corporations in Canada, see Baldwin and Brown (2005).
With the exception of block-faces, the six-character postal
code is the most disaggregated geographical unit available (there are more
than 750,000 postal code units across the country (Statistics Canada 2002)).
The $1,200 cutoff ensures
that the sample covers only those workers actively engaged in the labour market.
These synthetic establishments represent the average values
for shipments, total employment, value-added, and other key characteristics
of the initial 13,000 ASM plants considered for the mapping. As
such, they represent combinations of ASM plants found across industry-geography
cells. To create these establishments, we use an imputation method based on
a series of underlying assumptions relating to the defining characteristics
of actual ASM plants. For example, if two plants within the same industry-geography
cell are (i) exporters or non-exporters, (ii) foreign-controlled or domestic,
(iii) part of multi-unit or single-unit production facilities, or any paired
combination thereof, then the synthetic establishment represents their average
values. More details relating to this imputation method are available in Breau
and Rigby (2010).
These broadly-defined industrial sectors,
along with the use of aggregate regions, are adopted in order to preserve
confidentiality when disclosing results for certain units with smaller sample
status of a plant in the 1999 ASM is based on the Corporations
and Labour Unions Returns Act-now the Corporations Returns Act-definition
of foreign control. The latter considers a corporation as foreign-controlled
when either 'direct' or 'effective' control (i.e.,
usually when more than 50% of the voting equity of a corporation) is
held by a person, group, or corporation not resident in Canada (Statistics
The capital-to-labour ratio
used in the analysis is proxied by the difference between manufacturing value-added
and the wage bill for production workers divided by manufacturing value-added
for each establishment. Following Baldwin and Gu (2003), a three-year-mean
of the capital-to-labour ratio is also used to eliminate some of the volatility
which inevitably accompanies such data. Multi-plant is a binary variable that
takes on a value of 1 (one) when an establishment is part of a firm
with two or more plants and a value of 0 (zero) otherwise.
Metropolitan areas are
defined as the 47 tracked census metropolitan areas and census agglomerations
used in the 2001 Census of Population.
That is, controlling only for plant size and capital intensity produces point
estimates for the export and foreign-control status dummies that are qualitatively
Note also that post-estimation
diagnostics of variance inflation factors reveal no issues of multicollinearity
across the independent variables for all models.
Note also that the coefficient estimate on
the export binary variable for the Prairie provinces is statistically significant
only at the .10 level.
The logic is as follows: the costs
of exporting to non-U.S. markets (e.g., European and Asian markets) are higher
than the costs of exporting to the U.S. market. Plants that export to those
non-U.S. markets should therefore be more productive than those plants that
export to U.S. markets in order to overcome the higher costs of entry into
those markets. As more productive plants generally pay higher wages, those
plants that export to non-U.S. markets will also pay higher wages. We thank
an anonymous reviewer for this point of clarification.