This paper examines the interaction between product entry/exit and consumer demand over the business cycle. I develop a model of product market dynamics featuring endogenous choices of producers and consumers within a unified framework. Utilizing micro-level scanner data, the study estimates the model to capture the responses of producers and consumers during the Great Recession. The findings reveal that producers react to negative demand shocks by reducing entries and increasing exits, with these responses varying according to the underlying consumer demand structure. These heterogeneous reactions intensify welfare losses and amplify the adverse effects of the business cycle, particularly for low-quality products. By exploring the diverse characteristics of products and their impacts, this research highlights the significant role of endogenous choices in shaping aggregate economic outcomes.

This paper studies the critical but underexplored role of subcontracting in shaping the spatial and firm-level effects of federal government spending. Leveraging newly available data on defense subcontract awards since 2011, linked with NETS establishment-level data, we examine prime–subcontractor relationships across counties, industries and time. We document three stylized facts: (1) subcontracting leads to widespread geographic relocation of federal dollars; (2) it reallocates spending across sectors, notably from service-sector primes to manufacturing subcontractors; and (3) large firms dominate subcontracting networks, even receiving subawards from smaller primes. Accounting for this geographic relocation shows that conventional estimates understate local multiplier effects by approximately 20%. While subcontracting broadens the spatial reach of federal spending, its average local impact is smaller than that of prime contracts. Establishment-level evidence shows that, subcontractors—especially large ones and those in goods sectors—exhibit weaker and less persistent employment and revenue gains than prime contractors, reflecting the shorter and less stable nature of subcontracts. These weaker multipliers also stem from the skewed distribution of subcontracts toward large manufacturers. Overall, our findings reveal substantial heterogeneity in how procurement opportunities diffuse through the private sector and shape the effects of federal spending.

We decompose the employment effect of the minimum wage into changes in employment within continued establishments and changes due to the exits of establishments. For small-sized establishments, we distinguish between other labor adjustment margins, such as hours worked, hiring, and separation at the individual level. Using employer–employee matched panel data, we show that the magnitude and channels of the employment effect differ by establishment size and industry. We find a negative effect of the minimum wage on employment growth, which is highly concentrated among small establishments. In particular, in the food and lodging and manufacturing industries, a substantial part of the effect is driven by business closing.