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The Structure Of Firm R&D, The Factor Intensity Of Production, And Skill Bias

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  • James D. Adams

Abstract

This paper explores the effect of research and development (R&D) and capital on factor intensity and skill bias in a sample of manufacturing plants. Firm and industry R&D as well as plant level capital increase the factor intensity of labor over materials. In contrast, skill bias originates in portions of capital and R&D. Equipment capital and firm R&D in the same product as a plant are consistently skill biased, while structures are biased against skill. Furthermore, general firm and industry R&D increase investment in equipment but not structures. This shows that the skill bias of R&D occurs through two distinct channels. First, firm R&D specific to the product increases the relative demand for skilled labor directly and in the short run through the cost function. Second, general firm and industry R&D exert an additional skill bias by favoring equipment over structures in the long run, demonstrating the broader compass of the skill bias of R&D over time. © 1999 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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  • James D. Adams, 1999. "The Structure Of Firm R&D, The Factor Intensity Of Production, And Skill Bias," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 499-510, August.
  • Handle: RePEc:tpr:restat:v:81:y:1999:i:3:p:499-510
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    Cited by:

    1. Carstensen, Vivian, 2002. "Reorganization of Firms and Productivity: A Treatment Effects Approach," Hannover Economic Papers (HEP) dp-257, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    2. 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.
    3. Alfranca, Oscar & Huffman, Wallace E., 1999. "Private R&D Investments in Agriculture: The Role of Incentives and Institutions," ISU General Staff Papers 199912010800001333, Iowa State University, Department of Economics.
    4. Mariacristina Piva & Marco Vivarelli, 2002. "The Skill Bias: Comparative evidence and an econometric test," International Review of Applied Economics, Taylor & Francis Journals, vol. 16(3), pages 347-357.
    5. Mariacristina Piva & Enrico Santarelli & Marco Vivarelli, 2004. "Technological and Organizational Changes as Determinants of the Skill Bias: Evidence from a Panel of Italian Firms," Papers on Entrepreneurship, Growth and Public Policy 2004-03, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    6. James Adams, 2006. "Learning, internal research, and spillovers," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(1), pages 5-36.
    7. Bagayev, Igor & Najman, Boris, 2014. "Money to fill the gap? Local financial development and energy intensity in Europe and Central Asia," MPRA Paper 55193, University Library of Munich, Germany.
    8. Marco Vivarelli & Mariacristina Piva, 2001. "The skill bias in Italy: a first report," Economics Bulletin, AccessEcon, vol. 15(2), pages 1-8.

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