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arXiv · 2203.02220

A Classifier-Lasso Approach for Estimating Production Functions with Latent Group Structures

Daniel Czarnowske
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Abstract

I present a new estimation procedure for production functions with latent group structures. I consider production functions that are heterogeneous across groups but time-homogeneous within groups, and where the group membership of the firms is unknown. My estimation procedure is fully data-driven and embeds recent identification strategies from the production function literature into the classifier-Lasso. Simulation experiments demonstrate that firms are assigned to their correct latent group with probability close to one. I apply my estimation procedure to a panel of Chilean firms and find sizable differences in the estimates compared to the standard approach of classification by industry.

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BibTeXRIS

Daniel Czarnowske. 2022-03-04. A Classifier-Lasso Approach for Estimating Production Functions with Latent Group Structures. https://arxiv.org/abs/2203.02220

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