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Firm-Heterogeneous Biased Technological Change: A nonparametric approach under endogeneity

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  • Dewitte, Ruben
  • Dumont, Michel
  • Merlevede, Bruno
  • Rayp, Glenn
  • Verschelde, Marijn

Abstract

We propose a fully nonparametric framework to test to what extent technological change is factor-biased and heterogeneous. We show in a Monte Carlo simulation that our framework resolves the endogeneity issue between productivity and input choice and provides accurate estimates of firm-specific biases. For all Belgian manufacturing industries analyzed, we reject the predominant assumption of Hicks-neutral technological change over the period 1996–2015. We find that technological change is skill-biased, capital saving and domestic materials using. Moreover, we find significant heterogeneity in the pattern of technological change between and within industries. Relying on a rich dataset of firm characteristics, we provide robust indications that firm-level technological change can be attributed to specific firm strategies and technological characteristics.

Suggested Citation

  • Dewitte, Ruben & Dumont, Michel & Merlevede, Bruno & Rayp, Glenn & Verschelde, Marijn, 2020. "Firm-Heterogeneous Biased Technological Change: A nonparametric approach under endogeneity," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1172-1182.
    • Handle: RePEc:eee:ejores:v:283:y:2020:i:3:p:1172-1182
    DOI: 10.1016/j.ejor.2019.11.063
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