Productivity Dynamics with Technology Choice: An Application to Automobile Assembly
AbstractDuring the 1980"s, all Japanese automobile producers opened assembly plants in North America. Industry analysts and previous research claim that these transplants are more productive than incumbent plants and that they produce with a substantially different production process. I compare the production processes by estimating a model that allows for heterogeneity in technology and productivity, both of which are intrinsically unobservable. The model is estimated on a panel of assembly plants, controlling for capacity utilization and price effects.The results indicate that the more recent technology uses capital more intensively and it has a higher elasticity of substitution between labour and capital. Hicks--neutral productivity growth is estimated to be lower, while capital--biased (labour--saving) productivity growth is higher for the new technology. Using the estimation results, I decompose industry--wide productivity growth and find plant--level changes in lean plants to be the most important contributor. Plant--level productivity growth is further decomposed to reveal the importance of capital--biased productivity growth, increases in the capital--labour ratio, and returns to scale. Copyright The Review of Economic Studies Limited 2003
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Review of Economic Studies.
Volume (Year): 70 (2003)
Issue (Month): 1 (January)
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Other versions of this item:
- Johannes van Biesebroeck, 2003. "Productivity Dynamics with Technology Choice: An Application to Automobile Assembly," Review of Economic Studies, Oxford University Press, vol. 70(1), pages 167-198.
- Johannes Van Biesebroeck, 2000. "Measuring Productivity Dynamics with Endogenous Choice of Technology and Capacity Utilization: An Application to Automobile Assembly," Working Papers 00-16, Center for Economic Studies, U.S. Census Bureau.
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