Estimating a non-neutral production function: a heterogeneous treatment effect approach

Davide Antonioli, Georgios Gioldasis () and Antonio Musolesi ()
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Georgios Gioldasis: Università degli Studi di Ferrara
Antonio Musolesi: Università degli Studi di Ferrara

No 618, SEEDS Working Papers from SEEDS, Sustainability Environmental Economics and Dynamics Studies

Abstract: This paper addresses the issue of estimating a production function that allows us to depart from the standard hypothesis of Hicks neutrality while also coping with the endogeneity of a dummy innovation variable. We consider specifications that relax Hicks neutrality, and we derive the testable conditions for common parametric approximations under which Hicks neutrality holds. The model is estimated through instrumental variables methods, allowing for a heterogeneous effect of innovation on the production process. The econometric analysis rejects Hicks neutrality and highlights three main features: i) a capital-saving technology of innovative with respect to non-innovative firms, ii) a locally progressive technical change and iii) fully heterogeneous technologies when comparing innovative to non-innovative firms.

Keywords: Biased technical change; Hicks neutrality; Innovation; Productivity; Knowledge production function; CDM model; Instrumental variables; heterogeneous treatment effect (search for similar items in EconPapers)
JEL-codes: C26 C31 D24 O33 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2018-03, Revised 2018-03
New Economics Papers: this item is included in nep-eff
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http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0618.pdf First version, 2018 (application/pdf)
http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0618.pdf Revised version, 2018 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:srt:wpaper:0618

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