Working Paper BETA #2006-34

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Title : Using the Asymptotically Ideal Model to estimate the impact of knowledge on labour productivity: An application to Taiwan in the 1990s

Author(s) : Chia-Lin CHANG, Stéphane ROBIN

Abstract : This paper examines the impact of embodied and disembodied knowledge on labour productivity in Taiwan’s manufacturing industry, using the Asymptotically Ideal Model. The model is estimated on a panel of 27,754 firms observed from 1992 to 1995, using three estimations procedures: fixed-effect regression, random-effect GLS, and Hausman-Taylor estimation. Our findings show that, in traditional industries, labour productivity is mostly driven by embodied knowledge, whereas in high-tech industries, labour productivity depends on both embodied and disembodied knowledge. The latter result may be the consequence of the Industrial Upgrading Statute implemented in Taiwan after 1991.

Key-words : Asymptotically Ideal Model; Disembodied Knowledge; Embodied Knowledge; Labour Productivity; Newly In

JEL Classification : C51, J24, L60, O38