Estimating production functions for the US states: the role of public and human capital
Nikos Benos (),
Nikolaos Mylonidis () and
Stefania Zotou ()
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Stefania Zotou: University of Ioannina
Empirical Economics, 2017, vol. 52, issue 2, No 10, 721 pages
Abstract This paper estimates production functions for the 48 contiguous U.S. states over the 1970–2000 period employing recently developed panel estimators that tackle simultaneously parameter heterogeneity, cross-sectional dependence and non-stationarity. The findings suggest that labor, private capital and, when controlling for cross-sectional dependence, average schooling years exert a positive and significant effect on state income. In contrast, the income effect of public capital stock is negative. The state-specific coefficients indicate that this effect likely stems from the negative elasticity of income with respect to public capital in the states located primarily in the Snow Belt region.
Keywords: Production function; Cross-sectional dependence; Panel analysis; Public capital; Human capital (search for similar items in EconPapers)
JEL-codes: R11 C23 H54 I25 (search for similar items in EconPapers)
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