Heterogeneity in Panel Data: Are There Stable Production Functions?
We estimate separate productions functions for approximately 450 manufacturing firms each in France and the United States and for 850 manufacturing firms in Japan, covering the 13 year period 1967-1979, and focus on the wide dispersion in the estimated slope coefficients in all three countries. The main question asked Is: "Is this dispersion real?" Could it be just a reflection of sampling variability or is it an indication of real heterogeneity? We estimate the "true" dispersion using three different approaches: Maximum Likelihood, regressions of squares and cross-products of residuals, and Swamy's "residual" method, and try to interpret the somewhat different answers which emerge. In particular, we investigate the "reality" of the estimated heterogeneity by looking at its stability over time and by relating it to differences in capital shares and the industrial structure. We conclude that the observed heterogeneity is not "real." It is caused by some non-stable misspecification of our simple model, implying that we are unlikely to discern different but stable individual production relations in samples of this size which contain only a limited number of the economically relevant variables.
|Date of creation:||Jun 1988|
|Date of revision:|
|Publication status:||published as Mairesse, Jacques and Zvi Griliches. "Heterogeneite et Panels: Y-A-T-I-L Des Fonctions De Production Stables?" from Melanges Economiques: Essais en L'Honneur De Edmond Malinvaud, Paris-Economica, 1988.|
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- Thomas E. MaCurdy, 1981. "Multiple Time-Serie3 Models Applied to Panel Data," NBER Working Papers 0646, National Bureau of Economic Research, Inc.
- Zvi Griliches, 1998.
"Comparing Productivity Growth: An Exploration of French and U.S. Industrial and Firm Data,"
in: R&D and Productivity: The Econometric Evidence, pages 157-186
National Bureau of Economic Research, Inc.
- Zvi Griliches & Jacques Mairesse, 1991. "Comparing Productivity Growth: An Exploration of French and U.S. Industrial and Firm Data," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 45-82 National Bureau of Economic Research, Inc.
- Griliches, Zvi & Mairesse, Jacques, 1983. "Comparing productivity growth: An exploration of french and U.S. industrial and firm data," European Economic Review, Elsevier, vol. 21(1-2), pages 89-119.
- Zvi Griliches & Jacques Mairesse, 1982. "Comparing Productivity Growth: An Exploration of French and U.S. Industrial and Firm Data," NBER Working Papers 0961, National Bureau of Economic Research, Inc.
- Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
- Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
- Jacques Mairesse & Christian Baudelot, 1988. "Introduction," Revue Économique, Programme National Persée, vol. 39(1), pages 7-11.
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