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Estimating random effects production function models with selectivity bias: an application to Swedish crop producers
Department of Economics, University of Gothenburg, Viktoriagatan 30, S-411 25 Gothenburg, Sweden.ORCID iD: 0000-0002-7902-4683
1994 (English)In: Agricultural Economics, ISSN 0169-5150, E-ISSN 1574-0862, Vol. 11, no 2-3, 171-189 p.Article in journal (Refereed) Published
Abstract [en]

In this paper, the estimation of production functions and measurement of the rate of technical change is performed when selectivity bias is expected. A sample selection model consisting of a selection and a regression equation is estimated using Heckman’s two-stage method. It is discussed in the context of a production function where the underlying technology is represented by a translog functional form. For the regression, a random effects model with heteroscedastic variances is assumed. This model and an alternative conventional model retaining heteroscedasticity without considering selectivity bias are estimated using the Generalized Least Squares method. The data used are a large rotating panel data set from Swedish crop producers over the period 1976-1988. The empirical results from the comparison between these two models show that the introduction of heteroscedasticity and the integration of sample selection in the production relationship is important. The impact of a correction for selectivity bias on the results, in terms of input elasticities and returns to scale is found to be significant.

Place, publisher, year, edition, pages
1994. Vol. 11, no 2-3, 171-189 p.
Keyword [en]
methodological analysis; modelling approach; production function; selectivity bias; technical change, Sweden
National Category
Economics
Identifiers
URN: urn:nbn:se:hj:diva-24477Scopus ID: 2-s2.0-0028551282OAI: oai:DiVA.org:hj-24477DiVA: diva2:743146
Available from: 2014-09-03 Created: 2014-09-01 Last updated: 2016-01-14Bibliographically approved

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