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Production Factor Returns: The Role of Factor Utilization

Author

Listed:
  • Gilbert Cette

    (Centre de recherche de la Banque de France - Banque de France)

  • Nicolas Dromel

    () (PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)

  • Rémy Lecat

    () (Centre de recherche de la Banque de France - Banque de France)

  • Anne-Charlotte Paret

    (Centre de recherche de la Banque de France - Banque de France, ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique)

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 utilization. Thanks to original French firm-level data (1992–2008), we show how increasing returns to scale disappear when working time, capacity utilization rate, and, particularly, capital operating time are introduced in the production function.

Suggested Citation

  • Gilbert Cette & Nicolas Dromel & Rémy Lecat & Anne-Charlotte Paret, 2015. "Production Factor Returns: The Role of Factor Utilization," PSE - Labex "OSE-Ouvrir la Science Economique" hal-01015405, HAL.
  • Handle: RePEc:hal:pseose:hal-01015405
    DOI: 10.1162/REST_a_00434
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01015405
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    Citations

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    Cited by:

    1. Cette Gilbert & Lecat Rémy & Ahmed Jiddou Ahmed Ould, 2016. "How do firms adjust production factors to the cycle?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(2), pages 361-394, June.
    2. Françoise Delmez & Vincent Vandenberghe, 2017. "Working long hours: less productive but less costly? Firm-level evidence from Belgium," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2017022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    3. V. Bignon & F. Boissay & C. Cahn & L.-M. Harpedanne de Belleville, 2016. "Extended eligibility of credit claims for Eurosystem refinancing Consequences for the supply of credit to companies," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 15-23, Autumn.
    4. Gilbert Cette & Nicolas Dromel & Rémy Lecat, 2013. "Labour Relations Quality and Productivity: An Empirical Analysis on French Firms," Review of Economics and Institutions, Università di Perugia, vol. 4(2).
    5. Gilbert Cette & Rémy Lecat & Carole Ly-Marin, 2017. "Long-term growth and productivity projections in advanced countries," OECD Journal: Economic Studies, OECD Publishing, vol. 2016(1), pages 71-90.
    6. Francesco Daveri & Rémy Lecat & Maria Laura Parisi, 2016. "Service Deregulation, Competition, and the Performance of French and Italian Firms," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(3), pages 278-302, July.
    7. repec:cuf:journl:y:2017:v:18:i:1:liu is not listed on IDEAS
    8. J. Morenas & B. Rudelle, 2016. "Money and its counterparts in France and in the euro area," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 25-34, Autumn.
    9. A. Berthou, 2016. "Current account adjustments and productivity dynamics in Europe during the crisis," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 59-70, Autumn.
    10. R. Cezar, 2016. "France’s trade integration measured in value added," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 47-58, Autumn.
    11. V. Grossmann-Wirth & M. Vari, 2016. "Exiting low interest rates in a situation of excess liquidity: the experience of the Fed," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 5-14, Autumn.
    12. repec:bfr:bullbf:2018:216:01 is not listed on IDEAS
    13. C. Guette-Khiter, 2016. "Non-resident holdings of French CAC 40 companies at end-2015," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 43, pages 35-46, Autumn.
    14. Chouard, V. & Minier, A. & Tarrieu, S. & Baudry, L. & Soual, A., 2015. "La progression modérée de la durée d’utilisation des équipements se poursuit en 2014 - Résultats de l’enquête menée par la Banque de France," Bulletin de la Banque de France, Banque de France, issue 199, pages 43-52.

    More about this item

    Keywords

    Production factor;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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