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Estimating Production Functions Using Inputs to Control for Unobservables
Open accessAbstract
We add to the methods for conditioning out serially correlated unobserved shocks to the production technology. We build on ideas first developed in Olley and Pakes (1996). They show how to use investment to control for correlation between input levels and the unobserved firm-specific productivity process. We show that intermediate inputs (those inputs which are typically subtracted out in a value-added production function) can also solve this simultaneity problem. We discuss some theoretical benefits of extending the proxy choice set in this direction and our empirical results suggest these benefits can be important.
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Citations
Cites
Technical Change and the Aggregate Production Function
Solow, R. M. (1957) · The Review of Economics and Statistics · doi:10.2307/1926047 · Cited by 12,259
Cited by
Syverson, C. (2011) · Journal of Economic Literature · doi:10.1257/jel.49.2.326 · Cited by 2,942
The Fall of the Labor Share and the Rise of Superstar Firms*
Autor, D., Dorn, D., Katz, L. F., Patterson, C., & Van Reenen, J. (2020) · The Quarterly Journal of Economics · doi:10.1093/qje/qjaa004 · Cited by 2,206
Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?
Foster, L., Haltiwanger, J., & Syverson, C. (2008) · American Economic Review · doi:10.1257/aer.98.1.394 · Cited by 1,861
Do exports generate higher productivity? Evidence from Slovenia
De Loecker, J. (2007) · Journal of International Economics · doi:10.1016/j.jinteco.2007.03.003 · Cited by 1,256
Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings
Greenstone, M., Hornbeck, R., & Moretti, E. (2010) · Journal of Political Economy · doi:10.1086/653714 · Cited by 1,138
Metadata
- Authors
- Levinsohn, J., & Petrin, A.
- Venue
- Review of Economic Studies
- Publisher
- Oxford University Press (OUP)
- Published
- 2003-04
- Volume
- 70
- Issue
- 2
- Pages
- 317-341
- ISSN
- 0034-6527 (ISSN-L)
- 1467-937X
- OpenAlex
- W3021040265
- Cited by
- 6,496
- References
- 1
- FWCI
- 139.19
- Type
- journal article
- Language
- en
- Open access
- bronze
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
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