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The Structure of Firm R&D and the Factor Intensity of Production

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  • James D. Adams

Abstract

This paper studies the influence of the structure of firm R&D, industry R&D spillovers, and plant level physical capital on the factor intensity of production. By the structure of firm R&D we mena its distribution across states and products. By factor intensity we mena the cost shares of variable factors, which in this paper are blue collar labor, white collarlabor, and materials. We characterize the effect of the structure of firm R&D on factor intensity using a Translog cost function with quasi-fixed factors. This cost function gives rise to a system of variable cost shares that depends on factor prices, firm and industry R&D, and physical capital. The paper turns to estimation of this system using a sample of plants owned by chemical firms. We find that total firm R&D, industry R&D spillovers, and plant level physical capital are factor biased towards labor as a whole, and factor saving in materials. None of these three factors consistently increase the factor intensity of white collar workers relative to blue collar workers. Since white collar workers are the more skilled of the two grades of labor, none of these factors is strongly associated with skill bias. When we turn to the structure of firm R&D, we find that the strongest effect of firm R&D on the factor intensity of white collar workers occurs when the R&D is conducted in the same product area as the plant. Indeed, the skill bias effect of firm R&D in the same product dominates all other variables, implying that skill bias is technologically 'localized' within firms. All told, the findings suggest that skill bias is governed by portions of the firm's R&D program that are targeted on articular plants, rather than transmitted through capital or by general firm and industry know-how.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6099.

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Date of creation: Jul 1997
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Publication status: published as The Review of Economics and Statistics, Vol. 81 (August 1999): 499-510.
Handle: RePEc:nbr:nberwo:6099

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  1. Jacques Mairesse & Bronwyn H. Hall, 1996. "Estimating the Productivity of Research and Development: An Exploration of GMM Methods Using Data on French & United States Manufacturing Firms," NBER Working Papers 5501, National Bureau of Economic Research, Inc.
  2. Boozer, Michael A., 1997. "Econometric Analysis of Panel Data Badi H. Baltagi Wiley, 1995," Econometric Theory, Cambridge University Press, vol. 13(05), pages 747-754, October.
  3. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
  4. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  5. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  6. Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
  7. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August.
  8. Adam B. Jaffe, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits and Market Value," NBER Working Papers 1815, National Bureau of Economic Research, Inc.
  9. Hsiao,Cheng, 2003. "Analysis of Panel Data," Cambridge Books, Cambridge University Press, number 9780521818551, April.
  10. Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
  11. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
  12. Jeffrey I. Bernstein & M. Ishaq Nadiri, 1986. "Research and Development and Intraindustry Spillovers: An Empirical Application of Dynamic Duality," NBER Working Papers 2002, National Bureau of Economic Research, Inc.
  13. Griliches, Zvi, 1969. "Capital-Skill Complementarity," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 465-68, November.
  14. Tor Jakob Klette, 1996. "R&D, Scope Economies, and Plant Performance," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 502-522, Autumn.
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Cited by:
  1. Harabi, Najib, 2000. "Employment Effects of Ecological Innovations: An Empirical Analysis," MPRA Paper 4395, University Library of Munich, Germany.
  2. Friebel, Guido & McCullough, Gerard & Padilla Angulo, Laura, 2008. "Patterns of Restructuring: The U.S. Class 1 Railroads from 1984 to 2004," CEPR Discussion Papers 6836, C.E.P.R. Discussion Papers.
  3. Piva, Mariacristina & Santarelli, Enrico & Vivarelli, Marco, 2005. "The skill bias effect of technological and organisational change: Evidence and policy implications," Research Policy, Elsevier, vol. 34(2), pages 141-157, March.
  4. Ljubica Nedelkoska & Simon Wiederhold, 2010. "Technology, outsourcing, and the demand for heterogeneous labor: Exploring the industry dimension," Jena Economic Research Papers 2010-052, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  5. Gray, Richard S. & Malla, Stavroula & Tran, Kien C., 2003. "An Empirical Analysis Of Public And Private Spillovers Within The Canola Biotech Industry," 2003 Annual meeting, July 27-30, Montreal, Canada 22137, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. Lucy Chennells & John Van Reenen, 1999. "Has technology hurt less skilled workers? A survey of the micro-econometric evidence," IFS Working Papers W99/27, Institute for Fiscal Studies.
  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. K. Raabe & I. Arnold & C.J.M. Kool, 2006. "Firm size and monetary policy transmission : a theoretical model on the role of capital investment expenditures," Working Papers 06-14, Utrecht School of Economics.
  9. TESTE, Thierry, 1999. "Technologies de l'information et de la communication : Approches économètriques sur le paradoxe de productivité," LATEC - Document de travail - Economie (1991-2003) 1999-06, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
  10. Hollanders, Hugo & ter Weel, Bas, 2002. "Technology, knowledge spillovers and changes in employment structure: evidence from six OECD countries," Labour Economics, Elsevier, vol. 9(5), pages 579-599, November.

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