Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192302 
Year of Publication: 
2002
Series/Report no.: 
Discussion Papers No. 320
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
How do firms differ, and why do they differ even within narrowly defined industries? Using evidence from six high-tech, manufacturing industries covering a 24-year period, we show that differences in sales, materials, labor costs and capital across firms can largely be summarized by a single, firm-specific, dynamic factor, which we label efficiency in the light of our structural model. The model contains the complete system of supply and factor demand equations. It suggests that efficiency is strongly linked to profitability and firm size, but it is unrelated to labor productivity. Our second task is to understand the origin and evolution of the differences in efficiency. Among the firms established within the 24-year period that we consider, permanent differences in efficiency dominate over differences generated by firm-specific, cumulated innovations.
Subjects: 
efficiency
firm heterogeneity
labor productivity
intrinsic differences
firm-specific innovations
state space models
maximum likelihood.
JEL: 
C33
C51
D21
Document Type: 
Working Paper

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