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Production factor returns: the role of factor utilisation

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Author Info

  • Gilbert Cette

    ()
    (Banque de France et Université de la Méditerrannée (DEFI))

  • Nicolas Dromel

    ()
    (Centre d'Economie de la Sorbonne - Paris School of Economics)

  • Rémy Lecat

    ()
    (Banque de France)

  • Anne-Charlotte Paret

    ()
    (Banque de France - ENSAE)

Abstract

Short-term increasing returns to production factors are usually found in empirical studies. We argue they can be due to omitted variables, particularly the intensity of factor utilisation. Thanks to original French firm-level data (1992-2008), we show how increasing returns to scale disappear when working time, capacity utilisation rate and mainly capital operating time are introduced in the production function.

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File URL: ftp://mse.univ-paris1.fr/pub/mse/CES2011/11034.pdf
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Bibliographic Info

Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 11034.

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Length: 20 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:mse:cesdoc:11034

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Keywords: Production function; productivity; factor returns.;

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Cited by:
  1. Daveri, F. & Lecat, R. & Parisi , M L., 2011. "Service deregulation, competition and the performance of French and Italian firms," Working papers 346, Banque de France.

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