Fixed Efects |
Productivity is plant-specific, but time-invariant. |
Mundlak (1961)Mundlak, Y. (1961). Empirical production function free of management bias. Journal of Farm Economics, 43 (1), 44–56. http://dx.doi.org/10.2307/1235460 http://dx.doi.org/10.2307/1235460...
; Van Beveren (2012)Van Beveren, I. (2012). Total factor productivity estimation: A practical review. Journal of Economic Surveys, 26 (1), 98–128. http://dx.doi.org/10.1111/j.1467-6419.2010.00631.x http://dx.doi.org/10.1111/j.1467-6419.20...
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GMM |
Productivity has a persistent component that leads to a dynamic specification; the variables past values are not related to the contemporary productivity but are related with the contemporary variables values. |
Anderson and Hsiao (1981)Anderson, T. W., & Hsiao, C. (1981). Estimation of dynamic models with error components. Journal of the American statistical Association, 76 (375), 598–606. http://dx.doi.org/10.1080/01621459.1981.10477691 http://dx.doi.org/10.1080/01621459.1981....
; Arellano and Bond (1991)Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58 (2), 277–297. http://dx.doi.org/10.2307/2297968 http://dx.doi.org/10.2307/2297968...
; Bond and Blundell (2000)Bond, S., & Blundell, R. (2000). GMM estimation with persistent panel data: An application to production functions. Econometric Reviews, 19 (3), 321–340. http://dx.doi.org/10.1080/07474930008800475 http://dx.doi.org/10.1080/07474930008800...
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System GMM |
Besides GMM assumptions, it assumes that the variables'lagged difference are not related with the productivity level. |
Bond and Blundell (2000)Bond, S., & Blundell, R. (2000). GMM estimation with persistent panel data: An application to production functions. Econometric Reviews, 19 (3), 321–340. http://dx.doi.org/10.1080/07474930008800475 http://dx.doi.org/10.1080/07474930008800...
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Olley and Pakes (OP) |
Invertibility condition: investment should be strictly increasing in productivity. |
Olley and Pakes (1996)Olley, S. G., & Pakes, A. (1996). The dynamics of productivity in the telecommunications equipment industry. Econometrica, 64 (6), 1263–1297. http://dx.doi.org/10.2307/2171831 http://dx.doi.org/10.2307/2171831...
; Ackerberg et al. (2006)Ackerberg, D., Caves, K., & Frazer, G. (2006, December). Structural identification of production functions. http://www.econ.ucla.edu/ackerber/ACF20withtables.pdf http://www.econ.ucla.edu/ackerber/ACF20w...
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Levinsohn and Petrin (LP) |
Invertibility condition: material consumption should be strictly increasing in productivity. |
Levinsohn and Petrin (2003)Levinsohn, J., & Petrin, A. (2003). Estimating production functions using inputs to control for unobservables. Review of Economics Studies, 70 (2), 317–340. http://dx.doi.org/10.1111/1467-937X.00246 http://dx.doi.org/10.1111/1467-937X.0024...
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Wooldridge |
Besides the invertibility condition of the material consumption, it is considered the labor use is possibly affected by the productivity shocks. |
Ackerberg et al. (2006)Ackerberg, D., Caves, K., & Frazer, G. (2006, December). Structural identification of production functions. http://www.econ.ucla.edu/ackerber/ACF20withtables.pdf http://www.econ.ucla.edu/ackerber/ACF20w...
; Wooldridge (2009)Wooldridge, J. M. (2009). On estimating firm-level production functions using proxy variables to control for unobservables. Economics Letters , 104 (3), 112–114. http://dx.doi.org/10.1016/j.econlet.2009.04.026 http://dx.doi.org/10.1016/j.econlet.2009...
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