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Timothy Dunne |

Senior Economic Advisor

Timothy Dunne is a senior economic advisor in the Research Department. His primary fields of interest are applied industrial economics and labor economics.

Before joining the Bank, Dr. Dunne was the Chong K. Liew Professor of Economics at the University of Oklahoma, and earlier he served as the director of research in the Office of the Chief Economist at the U.S. Bureau of the Census.

He earned his B.A. in economics and history from the College of William and Mary in 1981 and his Ph.D. in economics from Pennsylvania State University in 1987.

• Fed Publications
• Other Publications

Title	Date	Publication	Author(s)	Type
Workshop on Entrepreneurial Finance: A Summary	November, 2009		Timothy Dunne; Scott Shane; James B Thomson;	Policy Discussion Papers
	Abstract: This Policy Discussion Paper summarizes papers that were presented at the Workshop on Entrepreneurial Finance, which was held March 12–13, 2009, at the Federal Feserve Bank of Cleveland. Researchers presented new empirical research that exploits data sets on entrepreneurial activity that are based on broad and representative data samples. Papers in the workshop focused primarily on analyses of the sources and structure of start-up finance, including the importance of bank lending, venture capital, angel investors, and owner equity.
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Entry, Exit and the Determinants of Market Structure	August, 2009	Federal Reserve Bank of Cleveland, Working Paper no. 0907	Timothy Dunne; Shawn D Klimek; Mark J Roberts; Daniel Yi Xu;	Working Papers
	Abstract: Market structure is determined by the entry and exit decisions of individual producers. These decisions are driven by expectations of future profits which, in turn, depend on the nature of competition within the market. In this paper we estimate a dynamic, structural model of entry and exit in an oligopolistic industry and use it to quantify the determinants of market structure and long-run firm values for two U.S. service industries, dentists and chiropractors. We find that entry costs faced by potential entrants, fixed costs faced by incumbent producers, and the toughness of short-run price competition are all important determinants of long run firm values and market structure. As the number of firms in the market increases, the value of continuing in the market and the value of entering the market both decline, the probability of exit rises, and the probability of entry declines. The magnitude of these effects differ substantially across markets due to differences in exogenous cost and demand factors and across the dentist and chiropractor industries. Simulations using the estimated model for the dentist industry show that pressure from both potential entrants and incumbent ?rms discipline long-run profits. We calculate that a seven percent reduction in the mean sunk entry cost would reduce a monopolist’s long-run profits by the same amount as if the firm operated in a duopoly.
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Foreclosure Metrics	July, 2009		Timothy Dunne; Guhan Venkatu;	Economic Commentary
	Abstract: As the foreclosure crisis deepens, increased attention is being paid to foreclosure statistics, which are often used to judge the intensity of foreclosure problems both within and across regions. However, these statistics need to be interpreted carefully; different foreclosure statistics embed different information, and making informative comparisons with various metrics requires understanding how each is constructed.
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Investment Spikes and Uncertainty in the Petroleum Refining Industry	July, 2008	Federal Reserve Bank of Cleveland, Working Paper no. 0805	Timothy Dunne; Xiaoyi Mu;	Working Papers
	Abstract: This paper investigates the effect of uncertainty on the investment decisions of petroleum refineries in the US. We construct uncertainty measures from commodity futures market and use data on actual capacity changes to measure investment episodes. Capacity changes in US refineries occur infrequently and a small number of investment spikes account for a large fraction of the change in industry capacity. Given the lumpy nature of investment adjustment in this industry, we empirically model the investment process using hazard models. An increase in uncertainty decreases the probability a refinery adjusts its capacity. The results are robust to various investment thresholds. Our findings lend support to theories that emphasize the role of irreversibility in investment decisions.
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The Dynamics of Market Structure and Market Size in Two Health Services Industries	October, 2007	Federal Reserve Bank of Cleveland, Working Paper no. 0712	Timothy Dunne; Shawn D Klimek; Mark J Roberts; Daniel Yi Xu;	Working Papers
	Abstract: The relationship between the size of a market and the competitiveness of the market has been of long-standing interest to IO economists. Empirical studies have used the relationship between the size of the geographic market and both the number of firms in the market and the average sales of the firms to draw inferences about the degree of competition in the market. This paper extends this framework to incorporate the analysis of entry and exit flows. A key implication of recent entry and exit models is that current market structure will likely depend upon the history of past participation. The paper explores these issues empirically by examining producer dynamics for two health service industries, dentistry and chiropractic services. We find that the number of potential entrants and past number of incumbent firms are correlated with current market structure. The empirical results also show that as market size increases the number of firms rises less than proportionately, firm size increases, and average productivity increases. However, the magnitude of the correlations are sensitive to the inclusion of the market history variables.
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The Growth of Cities in the Fourth District	August, 2007	Federal Reserve Bank of Cleveland, Economic Commentary	Timothy Dunne;	Economic Commentary
	Abstract: Many Fourth District cities have experienced relatively weak population growth over the past half century. One possible reason some cities have recently grown more is because they have better educated workforces. Recent research suggests that the educational attainment of residents is critical to population growth, particularly for cities in the Northeast and Midwest.
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Title	Date	Publication	Author(s)	Type
The Dynamics of Market Structure and Market Size in Two Health Service Industries	January, 2009	Producer Dynamics: New Evidence from Micro Data, University of Chicago Press, forthcoming	Timothy Dunne; Shawn D Klimek; Mark J Roberts; Daniel Yi Xu;	Article in Book
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Comments on "Measuring and Analyzing Cross-country Differences in Firm Dynamics"	January, 2009	Producer Dynamics: New Evidence from Micro Data, University of Chicago Press, forthcoming	Timothy Dunne;	Comment
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Investment Spikes and Uncertainty in the Petroleum Refining Industry	January, 2009	Journal of Industrial Economics, forthcoming	Timothy Dunne; Xiaoyi Mu;	Journal Article
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The Impact of Public Information on Bidding in Highway Procurement Auctions	January, 2008	European Economic Review, Vol. 52, 2008, pp. 150-181.	Timothy Dunne; Dakshina De-Silva; Anu Kankanamge; Georgia Kosmopoulou;	Journal Article
	Abstract: A number of papers in the theoretical auction literature show that the release of information regarding the seller’s valuation of an item can cause bidders to bid more aggressively. This widely accepted result in auction theory remains largely untested in the empirical literature. Recent theoretical work has also shown that this effect can be more pronounced in auctions with larger common cost uncertainty. We examine the impact of a policy change by the Oklahoma Department of Transportation that led to the release of the state?s internal estimate of the costs to complete highway construction projects. We perform a differences-in-differences analysis comparing bidding in Texas, a state that had a uniform policy of revealing the same information all throughout the period of analysis, to bidding in Oklahoma. Our results show that, in comparison to Texas auctions, the average bid in Oklahoma fell after the change in engineers? cost estimate (ECE) policy. This decline in bids was even larger for projects where the common uncertainty in costs is greater. Moreover, the within-auction standard deviation of bids fell after the change in ECE policy with the most significant decline observed again in projects with greater common cost uncertainty.
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Technology Adoption and the Skill Mix of US Manufacturing Plants	July, 2005	Scottish Journal of Political Economy, July 2005, v. 52, iss. 3, pp. 387-405	Timothy Dunne; Kenneth Troske;	Journal Article
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Review of “The Economic Impact of ICT: Measurement, Evidence, and Implications”	June, 2005	Organization for Economic Cooperation and Development, Journal of Economic Literature	Timothy Dunne;	Review
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Exit from Regional Manufacturing Markets: The Role of Entrant Experience	January, 2005	International Journal of Industrial Organization, vol. 23, 2005, pp. 399-421	Timothy Dunne; Shawn D Klimek; Mark J Roberts;	Journal Article
	Abstract: Producers entering a market can differ widely in their prior production experience, ranging from none to extensive experience in related geographic or product markets. In this paper, we quantify the nature of prior plant and firm experience for entrants into a market and measure its effect on the subsequent decision to exit the market. Using plant-level data for seven regional manufacturing industries in the U.S., we find that a producer’s experience at the time it enters a market plays an important role in the exit decision, affecting both the overall probability of exit and the method of exit. After controlling for observable plant and market variables that affect profits, there remain systematic differences in exit patterns across three groups of plants distinguished by their prior experience: de novo entrants, experienced plants that enter by diversifying their product mix, and new plants owned by experienced firms. The results indicate that the exit decision cannot be treated as determined solely by current and future plant, firm, and market conditions, but that the plant’s history also plays an important independent role in conditioning the likelihood of survival.
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Wages and Productivity Dispersion in U.S. Manufacturing: The Role of Computer Investment	June, 2004	Journal of Labor Economics, June, 2004, pp. 397-430	Timothy Dunne; Lucia Foster; John Haltiwanger; Kenneth Troske;	Journal Article
	Abstract: By exploiting establishment-level data, this paper sheds new light on the source of the changes in the structure of production, wages, and employment that have occurred over the last several decades. Based on theoretical work by Caselli (1999) and Kremer and Maskin (1996), we focus on investigating the following two related hypotheses. The first hypothesis is that the channel through which skill biased technical change works through the economy is via changes in the dispersion in wages and productivity across establishments. The second is that the increased dispersion in wages and productivity across establishments is linked to differential rates of technological adoption across establishments. Our findings are supportive of these hypotheses. Specifically, we find that (1) the between plant component of wage dispersion is a growing part of total wage dispersion, (2) much of the between plant increase in dispersion is within industries, (3) the between plant measures of wage and productivity dispersion have increased substantially over the last few decades, and (4) a substantial fraction of the rising dispersion in wages and productivity is accounted for by increasing wage and productivity differentials across high and low computer investment per worker plants and high and low capital intensity plants.
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An Empirical Analysis of Entrant and Incumbent Bidding in Road Construction Auctions	January, 2003	Journal of Industrial Economics, vol. 51, 2003, pp. 295-316	Timothy Dunne; Dakshina De-Silva; Georgia Kosmopoulou;	Journal Article
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Sequential Bidding in Auctions of Construction Contracts	January, 2002	Economic Letters, vol. 76, 2002, pp. 239-244	Timothy Dunne; Dakshina De-Silva; Georgia Kosmopoulou;	Journal Article
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Gross Employment Flows in Coal Mining	January, 2001	Economic Letters, vol. 71, 2001, pp. 217-224	Timothy Dunne; David Merrell;	Journal Article
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A Comparison of Employment Flows in the Canadian and U.S. Manufacturing Sectors	January, 1998	The Review of Economics and Statistics, August, 1998, pp. 523-542	Timothy Dunne; John Baldwin; John Haltiwanger;	Journal Article
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Capital Adjustment Patterns in Manufacturing Plants	January, 1998	The Review of Economic Dynamics, vol. 1, 1998, pp. 409-429	Timothy Dunne; Mark Doms;	Journal Article
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Technology and Jobs: Secular Changes and Cyclical Dynamics	January, 1997	Carnegie-Rochester Conference Series on Public Policy, 1997, pp. 107-178	Timothy Dunne; John Haltiwanger; Kenneth Troske;	Journal Article
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Workers, Wages, and Technology	January, 1997	Quarterly Journal of Economics, February, 1997, pp. 253-290	Timothy Dunne; Mark Doms; Kenneth Troske;	Journal Article
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Wages, Employment Structure, and Employer Size-Wage Premia: Their Relationship to Advanced-technology Usage at U.S. Manufacturing Establishments	March, 1995	Economica, March, 1995, pp. 89-107	Timothy Dunne; James Schmitz;	Journal Article
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Job Change in the Manufacturing Sectors of Canada and the United States	January, 1995	The Dynamics of Industrial Competition, J.Baldwin, Cambridge University Press, pp 119-52	Timothy Dunne; John Baldwin; John Haltiwanger;	Article in Book
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Energy Intensity, Electricity Consumption, and Advanced Manufacturing Technology Usage	January, 1995	Technological Forecasting and Social Change, October, 1995	Timothy Dunne; Mark Doms;	Journal Article
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Plant Age and Technology Usage in U.S. Manufacturing Industries	October, 1994	Rand Journal of Economics, vol. 25. No. 3, Fall, 1994, pp. 488-499	Timothy Dunne;	Journal Article
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Unionism and Gross Employment Flows	January, 1994	Southern Economic Journal, January, 1994, pp. 727-738	Timothy Dunne; David A Macpherson;	Journal Article
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Costs, Demand, and Imperfect Competition as Determinants of Plant-Level Output Prices	January, 1992	Empirical Studies in Industrial Organization: Essays in Honor of Leonard W. Weiss, Kluwer Academic Publishers, pp. 13-34	Timothy Dunne; Mark J Roberts;	Article in Book
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The Duration of Employment Opportunities in U.S. Manufacturing	May, 1991	The Review of Economics and Statistics, May, 1991, pp. 216-227	Timothy Dunne; Mark J Roberts;	Journal Article
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A Note on Ownership and Performance in Manufacturing Firms	April, 1991	Southern Economic Journal, April, 1991, pp. 1164-1169	Timothy Dunne; David A Macpherson;	Journal Article
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Variation in Producer Turnover across U.S. Manufacturing Industries	January, 1991	Entry and Market Contestability: An International Comparison, Basil Blackwell, pp. 187-203	Timothy Dunne; Mark J Roberts;	Article in Book
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The Growth and Failure of U.S. Manufacturing Plants	November, 1989	Quarterly Journal of Economics, November 1989, pp. 671-698. Reprinted in Small Firms and Economic Growth, 1997, and in Innovation, Evolution of Industry and Economic Growth, 2000	Timothy Dunne; Mark J Roberts; Larry Samuelson;	Journal Article
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Firm Entry and Post-Entry Performance in U.S. Chemical Industries	October, 1989	Journal of Law and Economics, October 1989, pp 233-271	Timothy Dunne; Mark J Roberts; Larry Samuelson;	Journal Article
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Plant Turnover and Gross Employment Flows in the U.S. Manufacturing Sector	January, 1989	Journal of Labor Economics, January 1989, pp. 48-71	Timothy Dunne; Mark J Roberts; Larry Samuelson;	Journal Article
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The Patterns of Firm Entry and Exit in the U.S. Manufacturing Sector, 1963-1982	December, 1988	he Rand Journal of Economics, Winter, 1988, pp. 495-515. Reprinted in Small Firms and Economic Growth, 1997	Timothy Dunne; Mark J Roberts; Larry Samuelson;	Journal Article
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The Role of Technology Use in the Survival and Growth of Manufacturing Plants		International Journal of Industrial Organization, December, 1995. Reprinted in Innovation, Evolution of Industry and Economic Growth, Audretsch and Klepperer (eds), The International Library of Critical Writings in Economics, Series Editor: Mark Blaug, 20	Timothy Dunne; Mark Doms; Mark J Roberts;	Journal Article
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