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Constructive Identification of Heterogeneous Elasticities in the Cobb-Douglas Production Function

Tong Li, Yuya Sasaki

arXiv 27 Nov 2017 · Econometrics · 3 citations (OpenAlex)

arXiv:1711.10031 · PDF · DOI · OpenAlex · Extracted main text

Abstract

This paper presents the identification of heterogeneous elasticities in the Cobb-Douglas production function. The identification is constructive with closed-form formulas for the elasticity with respect to each input for each firm. We propose that the flexible input cost ratio plays the role of a control function under "non-collinear heterogeneity" between elasticities with respect to two flexible inputs. The ex ante flexible input cost share can be used to identify the elasticities with respect to flexible inputs for each firm. The elasticities with respect to labor and capital can be subsequently identified for each firm under the timing assumption admitting the functional independence.

Citation extraction

24
references
75
in-text mentions
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distinct cited
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12,624
main-text words

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Ackerberg, D.A., Caves, K., and Frazer, G (2015) Identification properties of recent production function estimators1.000124100%
2Levinsohn, J. and Petrin, A (2003) Estimating production functions using inputs to control for unobservables1.000104100%
3Gandhi, A., Navarro, S., and Rivers, D (2017) How heterogeneous is productivity? A comparison of gross output and value added0.87482100%
4Olley, G.S. and Pakes, A (1996) The dynamics of productivity in the telecommunications equipment industry0.87472100%
5Doraszelski, U. and Jaumandreu, J (2015) Measuring the bias of technological change0.87462100%
6Kasahara, H., Schrimpf, P., and Suzuki, M (2015) Identification and estimation of production function with unobserved heterogeneity0.87452100%
7Hu, Y., Huang, G., and Sasaki, Y (2017) Estimating production functions with robustness against errors in the proxy variables self0.84333100%
8Doraszelski, U. and Jaumandreu, J (2013) R&D and productivity: estimating endogenous productivity0.81142100%
9Wooldridge, J.M (2009) On estimating firm-level production functions using proxy variables to control for unobservables0.73732100%
10Balat, J. Brambilla, I., and Sasaki, Y (2016) Heterogeneous firms: skilled-labor productivity and the destination of exports0.58531100%

Showing the top 10 of 24 scored citations.

Cited by, within the corpus

arXiv econ.EM papers that cite this one, ranked by how heavily they lean on it.

Citing paperIntensityMentionsSections
1Identification and Estimation of Production Function with Unobserved Heterogeneity Hiroyuki Kasahara Vancouver School of Economics University of British Columbia [email removed] Paul Schrimpf Vancouver School of Economics University of British Columbia [email removed] Michio Suzuki Tohoku University Cabinet Office, Government of Japan [email removed]0.58531
2Prices, Profits, Proxies, and Production0.40511
3Testing the Number of Components in Finite Mixture Normal Regression Models with Panel Data Yu Hao Faculty of Business and Economics The University of Hong Kong [email removed] Hiroyuki Kasahara Vancouver School of Economics The University of British Columbia [email removed]0.40511
4Estimating the Number of Components in Panel Data Finite Mixture Regression Models with an Application to Production Function Heterogeneity Yu Hao Faculty of Business and Economics The University of Hong Kong [email removed] Hiroyuki Kasahara Vancouver School of Economics The University of British Columbia [email removed]0.40511