Researchers of industrial relations issues in manufacturing have long recognized that careful study of production has significant implications for labor productivity. Recent theory and analysis has shown the large influence of organizational forgetting. The authors of this study demonstrate that forgetting by workers in an establishment or line of production as a substantive characteristic of actual production processes is overstated and that alternative, simpler theoretical and empirical explanations have at least as good explanatory power. Using inside-the-firm analysis, they find that the omitted-variable bias in other studies due to data limitations has the potential for spurious estimates of large forgetting rates by lines of work. Further, they find that forgetting, although important and interesting, is not as influential as previous work for labor productivity has suggested. Further analysis of the production function and the role of organizational forgetting needs to be fully specified in a model to include internal production and labor relations characteristics, like those in this study, to be a plausible model of the production process within manufacturing establishments.

The U.S. public transit system represents a multi-billion dollar industry that provides essential transit services to millions of urban residents. We study the market for new transit buses that features a set of non-profit transit agencies purchasing buses primarily from a few domestic bus makers. In contrast with private passenger vehicles, the fuel economy of public buses has not improved during the last thirty years and is irresponsive to fuel price changes. To understand these findings, we build a model of bus fleet management decisions of public transit agencies that yields testable hypotheses. Our empirical analysis of bus fleet turnover and capital investment highlights the role of energy prices, environmental regulations, and the "Buy America" mandate associated with receiving federal funding to purchase public transit buses.

We thank Alessandro Gavazza for sharing data with us. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

The U.S. public transit system represents a multi-billion dollar industry that provides essential transit services to millions of urban residents. We study the market for new transit buses that features a set of non-profit transit agencies purchasing buses primarily from a few domestic bus makers. Unlike private vehicles, the fuel economy of public buses is irresponsive to fuel price changes. To understand this finding, we build a model of bus fleet management decisions of local transit agencies that yields testable hypotheses. Our empirical analysis of bus fleet turnover and capital investment suggests that transit agencies: (1) do not respond to energy prices in either their scrappage or purchase decisions; (2) respond to environmental regulations by scrapping diesel buses earlier and switch to natural gas buses; (3) prefer purchasing buses from manufacturers whose assembly plants are located in the same state; (4) exhibit significant brand loyalty or lock-in effects; (5) favor domestically produced buses when they have access to more federal funding.

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