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Capital operating time and working time in the production function : an evaluation on a panel firms over the period 1989-2001

  • Florian Pelgrin

    (Faculté des Hautes Etudes Commerciales (HEC))

  • Arnaud Sylvain

    (Centre de Recherche en Développement Economique et Finance Internationale (CEDERS))

  • Eric Heyer

    (OFCE)

While a number of studies have demonstrated the importance of factor utilization in economic analysis, the impact of operating hours and/or hours of work in the production function remains largely unknown, particularly in terms of the capital operating time. Using French data on industrial firms for the period 1989 to 2001, we estimate a Cobb-Douglas production function that considers the stocks and both the capital operating time and the working time. We draw on the framework defined by Blundell and Bond (2000), assuming that serially correlated shocks allow a dynamic representation of the production function, and we use the system generalized method of moments for estimation. Splitting capital operating time into shiftwork patterns and working time, our results show that shiftwork patterns matter for the estimation of a production function while working time is less informative. Specifically, our estimates yield identical output elasticities for shiftwork and capital: thus, doubling the shifts is equivalent to doubling the stock of capital. In addition, we cannot reject the hypothesis of constant returns to scale and the Cobb-Douglas specification is accepted when taking into account the capital operating time and/or the working time. Otherwise, a Translog production function is more appropriate.

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Paper provided by Sciences Po in its series Sciences Po publications with number 2004-09.

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Date of creation: Sep 2004
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Handle: RePEc:spo:wpmain:info:hdl:2441/2041
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  1. A. Ronald Gallant & Gene H. Golub, 1982. "Imposing Curvature Restrictions on Flexible Functional Forms," Discussion Papers 538, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  12. Steve Bond & Clive Bowsher & Frank Windmeijer, 2001. "Criterion-based inference for GMM in autoregressive panel-data models," IFS Working Papers W01/02, Institute for Fiscal Studies.
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  14. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
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  17. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
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  23. repec:cup:cbooks:9780521314275 is not listed on IDEAS
  24. Frank Windmeijer, 2000. "A finite sample correction for the variance of linear two-step GMM estimators," IFS Working Papers W00/19, Institute for Fiscal Studies.
  25. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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