Ulrich Doraszelski, Lixiong Li
arXiv 16 Jun 2025 · Econometrics
arXiv:2506.13520 · PDF · DOI · OpenAlex · Extracted main text
We advance the proxy variable approach to production function estimation. We show that the invertibility assumption at its heart is testable. We characterize what goes wrong if invertibility fails and what can still be done. We show that rethinking how the estimation procedure is implemented either eliminates or mitigates the bias that arises if invertibility fails. In particular, a simple change to the first step of the estimation procedure provides a first-order bias correction for the GMM estimator in the second step. Furthermore, a modification of the moment condition in the second step ensures Neyman orthogonality and enhances efficiency and robustness by rendering the asymptotic distribution of the GMM estimator invariant to estimation noise from the first step.
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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.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Doraszelski \ Jaumandreu (2024) Reexamining the De Loecker & Warzynski (2012) method for estimating markups, Working paper, University of Pennsylvania, Philadel… | 0.843 | 4 | 4 | 75% |
| 2 | Ackerberg, Caves \ Frazer (2015) `Identification properties of recent production function estimators', Econometrica 83(6), 2411–2451 | 0.644 | 2 | 2 | 100% |
| 3 | Andrews, Gentzkow \ Shapiro (2017) `Measuring the sensitivity of parameter estimates to estimation moments', Quarterly Journal of Economics 132(4), 1553–1592 | 0.644 | 2 | 2 | 100% |
| 4 | De Loecker \ Warzynski (2012) `Markups and firm-level export status', American Economic Review 102(6), 2437–2471 | 0.644 | 2 | 2 | 100% |
| 5 | Neyman (1959) Optimal asymptotic tests of composite statistical hypotheses, in V. Grenander, ed., `Probability and Statistics', John Wiley & S… | 0.644 | 2 | 2 | 100% |
| 6 | Brand (2020) Estimating productivity and markups under imperfect competition, Working paper, University of Texas, Austin | 0.511 | 2 | 1 | 100% |
| 7 | Chernozhukov, Escanciano, Ichimura, Newey \ Robins (2022) `Locally robust semiparametric estimation', Econometrica 90(4), 1501–1535 | 0.511 | 2 | 1 | 100% |
| 8 | Foster, Haltiwanger \ Syverson (2008) `Reallocation, firm turnover, and efficiency: Selection on productivity or profitability?', American Economic Review 98(1), 394–… | 0.511 | 2 | 1 | 100% |
| 9 | Hu, Huang \ Sasaki (2020) `Estimating production functions with robustness against errors in the proxy variables', Journal of Econometrics 215(2), 375–398 | 0.511 | 2 | 1 | 100% |
| 10 | Ackerberg \ De Loecker (2024) Production function identification under imperfect competition, Working paper, University of Texas, Austin | 0.405 | 1 | 1 | 100% |
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