Heterogeneity, productivity and selection: an empirical study of Norwegian manufacturing firms
AbstractHow do firms differ, and why do they differ even within narrowly defined industries? Using evidence from a new panel data set for four high-tech, manufacturing industries covering a 10-year period, we show how differences in sales, materials, labor costs and capital across firms can be summarized by firm-specific, dynamic factors, which we interpret in view of a structural model. The model contains the complete system of supply and factor demand equations. Our results show that a firm's efficiency is strongly linked to profitability and firm size, but only weakly related to labor productivity. Our second task is to understand the origin and evolution of the differences in efficiency. Among the firms established within the 10-year period that we consider permanent differences in efficiency dominate over differences generated by firm-specific, cumulated innovations.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 401.
Date of creation: Jan 2005
Date of revision:
efficiency; firm heterogeneity; labor productivity; permanent differences; firm-specific innovations; attrition; maximum likelihood;
Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-13 (All new papers)
- NEP-EFF-2005-02-13 (Efficiency & Productivity)
- NEP-INO-2005-02-13 (Innovation)
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- Erling Holmøy & Kim Massey Heide, 2005. "Is Norway immune to Dutch Disease? CGE Estimates of Sustainable Wage Growth and De-industrialisation," Discussion Papers 413, Research Department of Statistics Norway.
- Torstein Bye & Erling Holmøy & Kim Massey Heide, 2006.
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- Torstein Bye & Erling Erling Holmoy, 2010. "Removing Policy-based Comparative Advantage for Energy Intensive Production: Necessary Adjustments of the Real Exchange Rate and Industry Structure," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 177-198.
- Hans LÃ¶Ã¶f, 2011. "R&D-Persistency, Metropolitan Externalities and Productivity," ERSA conference papers ersa11p1396, European Regional Science Association.
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