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The Structure of Firm R&D and the Factor Intensity of Production

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  • James D. Adams
Abstract
This paper studies the influence of the structure of firm R&D, industry R&D spillovers, and plant level physical capital on the factor intensity of production. By the structure of firm R&D we mena its distribution across states and products. By factor intensity we mena the cost shares of variable factors, which in this paper are blue collar labor, white collarlabor, and materials. We characterize the effect of the structure of firm R&D on factor intensity using a Translog cost function with quasi-fixed factors. This cost function gives rise to a system of variable cost shares that depends on factor prices, firm and industry R&D, and physical capital. The paper turns to estimation of this system using a sample of plants owned by chemical firms. We find that total firm R&D, industry R&D spillovers, and plant level physical capital are factor biased towards labor as a whole, and factor saving in materials. None of these three factors consistently increase the factor intensity of white collar workers relative to blue collar workers. Since white collar workers are the more skilled of the two grades of labor, none of these factors is strongly associated with skill bias. When we turn to the structure of firm R&D, we find that the strongest effect of firm R&D on the factor intensity of white collar workers occurs when the R&D is conducted in the same product area as the plant. Indeed, the skill bias effect of firm R&D in the same product dominates all other variables, implying that skill bias is technologically 'localized' within firms. All told, the findings suggest that skill bias is governed by portions of the firm's R&D program that are targeted on articular plants, rather than transmitted through capital or by general firm and industry know-how.

Suggested Citation

  • James D. Adams, 1997. "The Structure of Firm R&D and the Factor Intensity of Production," NBER Working Papers 6099, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6099
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    Cited by:

    1. Gray, Richard S. & Malla, Stavroula & Tran, Kien C., 2003. "An Empirical Analysis Of Public And Private Spillovers Within The Canola Biotech Industry," 2003 Annual meeting, July 27-30, Montreal, Canada 22137, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Piva, Mariacristina & Santarelli, Enrico & Vivarelli, Marco, 2005. "The skill bias effect of technological and organisational change: Evidence and policy implications," Research Policy, Elsevier, vol. 34(2), pages 141-157, March.
    3. Lucy Chennells & John Van Reenen, 1999. "Has technology hurt less skilled workers? A survey of the micro-econometric evidence," IFS Working Papers W99/27, Institute for Fiscal Studies.
    4. Guido Friebel & Gerard McCullough & Laura Padilla Angulo, 2014. "Patterns of Restructuring The US Class 1 Railroads from 1984 to 2004," Journal of Transport Economics and Policy, University of Bath, vol. 48(1), pages 115-135, January.
    5. Ljubica Nedelkoska & Simon Wiederhold, 2010. "Technology, outsourcing, and the demand for heterogeneous labor: Exploring the industry dimension," Jena Economics Research Papers 2010-052, Friedrich-Schiller-University Jena.
    6. TESTE, Thierry, 1999. "Technologies de l'information et de la communication : Approches économètriques sur le paradoxe de productivité," LATEC - Document de travail - Economie (1991-2003) 1999-06, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
    7. Hollanders, Hugo & ter Weel, Bas, 2002. "Technology, knowledge spillovers and changes in employment structure: evidence from six OECD countries," Labour Economics, Elsevier, vol. 9(5), pages 579-599, November.
    8. Harabi, Najib, 2000. "Employment Effects of Ecological Innovations: An Empirical Analysis," MPRA Paper 4395, University Library of Munich, Germany.
    9. K. Raabe & I. Arnold & C.J.M. Kool, 2006. "Firm Size and Monetary Policy Transmission: A Theoretical Model on the Role of Capital Investment Expenditures," Working Papers 06-14, Utrecht School of Economics.
    10. Lucia Foster & Cheryl Grim, 2010. "Characteristics of the Top R&D Performing Firms in the U.S.: Evidence from the Survey of Industrial R&D," Working Papers 10-33, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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