IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Untested Assumptions and Data Slicing: A Critical Review of Firm-Level Production Function Estimators

  • Markus Eberhardt
  • Christian Helmers

This paper surveys the most popular parametric and semi-parametric estimators for Cobb-Douglas production functions arising from the econometric literature of the past two decades. We focus on the different approaches dealing with 'transmission bias' in firm-level studies, which arises from firms' reaction to unobservable productivity realisations when making input choices. The contribution of the paper is threefold: we provide applied economists with (i) an in-depth discussion of the estimation problem and the solutions suggested in the literature; (ii) a detailed empirical example using FAME data for UK high-tech firms, emphasising analytical tools to investigate data properties and the robustness of the empirical results; (iii) a powerful illustration of the impact of estimator choice on TFP estimates, using matched data on patents in 'TFP regressions'. Our discussion concludes that while from a theoretical point of view the different estimators are conceptually very similar, in practice, the choice of the preferred estimator is far from arbitrary and instead requires in-depth analysis of the data properties rather than blind belief in asymptotic consistency.�

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper513.pdf
Download Restriction: no

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 513.

as
in new window

Length:
Date of creation: 01 Nov 2010
Date of revision:
Handle: RePEc:oxf:wpaper:513
Contact details of provider: Postal: Manor Rd. Building, Oxford, OX1 3UQ
Web page: http://www.economics.ox.ac.uk/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
  2. Eberhardt, Markus & Teal, Francis, 2009. "Econometrics for Grumblers: A New Look at the Literature on Cross-Country Growth Empirics," MPRA Paper 15813, University Library of Munich, Germany.
  3. Christian Helmers & Mark Rogers, 2010. "Innovation and the Survival of New Firms in the UK," Review of Industrial Organization, Springer, vol. 36(3), pages 227-248, May.
  4. Gavin Wallis & Alex Turvey, 2009. "Volume of capital services: estimates for 1950 to 2007," Economic and Labour Market Review, Palgrave Macmillan, vol. 3(1), pages 53-61, January.
  5. Maurice J.G. Bun & Frank Windmeijer, 2007. "The Weak Instrument Problem of the System GMM Estimator in Dynamic Panel Data Models," Bristol Economics Discussion Papers 07/595, Department of Economics, University of Bristol, UK.
  6. Basu, Susanto & Fernald, John G, 1997. "Returns to Scale in U.S. Production: Estimates and Implications," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 249-83, April.
  7. Richard Blundell & Steve Bond, 1999. "GMM estimation with persistent panel data: an application to production functions," IFS Working Papers W99/04, Institute for Fiscal Studies.
  8. Steve Bond & Måns Söderbom, 2005. "Adjustment costs and the identification of Cobb Douglas production functions," IFS Working Papers W05/04, Institute for Fiscal Studies.
  9. Christian Helmers & Mark Rogers, 2011. "Intellectual Property at the Firm-Level in the UK: The Oxford Firm-Level Intellectual Property Database," Economics Series Working Papers 546, University of Oxford, Department of Economics.
  10. Disney, Richard F & Haskel, Jonathan & Heden, Ylva, 2000. "Restructuring And Productivity Growth In UK Manufacturing," CEPR Discussion Papers 2463, C.E.P.R. Discussion Papers.
  11. Rachel Griffith & Rupert Harrison & John Van Reenen, 2004. "How special is the special relationship? Using the impact of US R&D spillovers on UK firms as a test of technology sourcing," IFS Working Papers W04/32, Institute for Fiscal Studies.
  12. Basu, Susanto & Fernald, John G., 1995. "Are apparent productive spillovers a figment of specification error?," Journal of Monetary Economics, Elsevier, vol. 36(1), pages 165-188, August.
  13. Måns Söderbom & Francis Teal, 2004. "Openness and Human Capital as Sources of Productivity Growth: An Empirical Investigation," Development and Comp Systems 0409031, EconWPA.
  14. Markus Eberhardt & Christian Helmers & Hubert Strauss, . "Do Spillovers Matter When Estimating Private Returns to R&D?," Discussion Papers 11/22, University of Nottingham, GEP.
  15. Ulrich Doraszelski & Jordi Jaumandreu, 2007. "R&D and productivity : estimating production functions when productivity is endogenous," Economics Working Papers we078652, Universidad Carlos III, Departamento de Economía.
  16. Massimo Del Gatto & Adriana Di Liberto & Carmelo Petraglia, 2011. "Measuring Productivity," Journal of Economic Surveys, Wiley Blackwell, vol. 25(5), pages 952-1008, December.
  17. Kiviet, Jan F., 1995. "On bias, inconsistency, and efficiency of various estimators in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 68(1), pages 53-78, July.
  18. Steve Bond & Céline Nauges & Frank Windmeijer, 2005. "Unit roots: identification and testing in micro panels," CeMMAP working papers CWP07/05, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  19. Greenstone, Michael & Hornbeck, Richard A. & Moretti, Enrico, 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Scholarly Articles 11185831, Harvard University Department of Economics.
  20. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2007. "Returns to capital in microenterprises : evidence from a field experiment," Policy Research Working Paper Series 4230, The World Bank.
  21. Breusch, Trevor & Qian, Hailong & Schmidt, Peter & Wyhowski, Donald, 1999. "Redundancy of moment conditions," Journal of Econometrics, Elsevier, vol. 91(1), pages 89-111, July.
  22. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Are women more credit constrained ? experimental evidence on gender and microenterprise returns," Policy Research Working Paper Series 4746, The World Bank.
  23. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," NBER Working Papers 8724, National Bureau of Economic Research, Inc.
  24. Suresh de Mel & David McKenzie & Christopher Woodruff, 2010. "Wage Subsidies for Microenterprises," American Economic Review, American Economic Association, vol. 100(2), pages 614-18, May.
  25. Coakley, Jerry & Fuertes, Ana-Maria & Smith, Ron, 2006. "Unobserved heterogeneity in panel time series models," Computational Statistics & Data Analysis, Elsevier, vol. 50(9), pages 2361-2380, May.
  26. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
  27. Bun, Maurice J. G. & Kiviet, Jan F., 2003. "On the diminishing returns of higher-order terms in asymptotic expansions of bias," Economics Letters, Elsevier, vol. 79(2), pages 145-152, May.
  28. Giulia Faggio & Kjell Salvanes & John Van Reenen, 2007. "The Evolution of Inequality in Productivity and Wages: Panel Data Evidence," NBER Working Papers 13351, National Bureau of Economic Research, Inc.
  29. Benfratello, Luigi & Sembenelli, Alessandro, 2002. "Research joint ventures and firm level performance," Research Policy, Elsevier, vol. 31(4), pages 493-507, May.
  30. Richard Harris & Qian Cher Li, 2008. "Evaluating the Contribution of Exporting to UK Productivity Growth: Some Microeconomic Evidence," The World Economy, Wiley Blackwell, vol. 31(2), pages 212-235, 02.
  31. Ackerberg, Daniel & Lanier Benkard, C. & Berry, Steven & Pakes, Ariel, 2007. "Econometric Tools for Analyzing Market Outcomes," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 63 Elsevier.
  32. Jacques Mairesse & Jordi Jaumandreu, 2005. "Panel-data Estimates of the Production Function and the Revenue Function: What Difference Does It Make?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(4), pages 651-672, December.
  33. Giovanni S.F. Bruno, 2004. "Approximating the Bias of the LSDV Estimator for Dynamic Unbalanced Panel Data Models," KITeS Working Papers 159, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2004.
  34. Blalock, Garrick & Gertler, Paul J., 2004. "Learning from exporting revisited in a less developed setting," Journal of Development Economics, Elsevier, vol. 75(2), pages 397-416, December.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:513. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Caroline Wise)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.