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Allocation of Company Research and Development Expenditures to Industries Using a Tobit Model

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  • Christian Awuku-Budu
  • Leo Sveikauskas

Abstract

This paper uses Census microdata and a regression-based approach to assign multi-division firms’ pre-2008 Research and Development (R&D) expenditures to more than one industry. Since multi-division firms conduct R&D in more than one industry, assigning R&D to corresponding industries provides a more accurate representation of where R&D actually takes place and provides a consistent time-series with the National Science Foundation R&D by line of business information. Firm R&D is allocated to industries on the basis of observed industry payroll, as befits the historic importance of payroll in Census assignments of firms to industry. The results demonstrate that the method of assigning R&D to industries on the basis of payroll works well in earlier years, but becomes less effective over time as firms outsource their manufacturing function.

Suggested Citation

  • Christian Awuku-Budu & Leo Sveikauskas, 2015. "Allocation of Company Research and Development Expenditures to Industries Using a Tobit Model," Working Papers 15-42, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:15-42
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    File URL: https://www2.census.gov/ces/wp/2015/CES-WP-15-42.pdf
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    References listed on IDEAS

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    1. Allen, Steven G, 2001. "Technology and the Wage Structure," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 440-483, April.
    2. Zvi Griliches, 1998. "Productivity Growth and R&D at the Business Level: Results from the PIMS Data Base," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 134-156, National Bureau of Economic Research, Inc.
    3. Zvi Griliches, 1998. "R&D and Productivity Growth at the Industry Level: Is There Still a Relationship?," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 213-240, National Bureau of Economic Research, Inc.
    4. Sveikauskas, Leo A, 1983. "Science and Technology in United States Foreign Trade," Economic Journal, Royal Economic Society, vol. 93(371), pages 542-554, September.
    5. Christian Awuku-Budu & Carol A. Robbins, 2014. "The Role of Industry Classification in the Estimation of Research and Development Expenditures," Working Papers 14-45, Center for Economic Studies, U.S. Census Bureau.
    6. Leo Sveikauskas, 2007. "R&D and Productivity Growth: A Review of the Literature," Working Papers 408, U.S. Bureau of Labor Statistics.
    7. Lucia Foster & Cheryl Grim, 2010. "Characteristics of the Top R&D Performing Firms in the U.S.: Evidence from the Survey of Industrial R&D," Working Papers 10-33, Center for Economic Studies, U.S. Census Bureau.
    8. Ann P. Bartel & Nachum Sicherman, 1999. "Technological Change and Wages: An Interindustry Analysis," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 285-325, April.
    9. Christian Awuku-Budu & Carol A. Robbins, 2014. "The Role of Industry Classification in the Estimation of Research and Development Expenditures," BEA Working Papers 0116, Bureau of Economic Analysis.
    10. Zvi Griliches, 1984. "R&D, Patents, and Productivity," NBER Books, National Bureau of Economic Research, Inc, number gril84-1, March.
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    Cited by:

    1. Anders Broström & Eric Giertz, 2021. "Service development accounts for an even smaller share of European R&D investments than we may think," The Journal of Technology Transfer, Springer, vol. 46(4), pages 1256-1267, August.

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    Keywords

    business R&D; industry classification; Tobit model; establishment payroll;
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