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Cited by 6,496

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Estimating Production Functions Using Inputs to Control for Unobservables

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Levinsohn, James, Petrin, Amil·2003·Review of Economic Studies

Abstract

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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Metadata

Authors
Levinsohn, J., & Petrin, A.
Venue
Review of Economic Studies
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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CoChat. (2026). Citation check: Estimating Production Functions Using Inputs to Control for Unobservables. https://app.cochat.ai/papers/10.1111/1467-937x.00246
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Levinsohn, J., & Petrin, A. (2003). Estimating Production Functions Using Inputs to Control for Unobservables. Review of Economic Studies. https://doi.org/10.1111/1467-937x.00246

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