Evaluating the impact of manufacturing extension on productivity growth

This article combines the richest data set and most rigorous econometric methodology used, to date, to evaluate the impact of manufacturing extension services on client productivity growth. Client plants are identified in the Longitudinal Research Database (LRD) and their labor productivity growth between 1987 and 1992 is compared to nonclients. Both simple OLS and two-stage models are used to estimate the effect of manufacturing extension on productivity growth. The first-stage probit model is informative about the client selection process. Results suggest that participation in manufacturing extension is associated with between 3.4 and 16 percent higher labor productivity growth between 1987 and 1992. The article demonstrates the usefulness of longitudinal microdata sets, such as the LRD, for program evaluation. © 1998 by the Association for Public Policy Analysis and Management