Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries



Sector__________

________29________

_________31 *_________

_________32__________

_________33_________

Constant

0.396*** (0.074)

1.281*** (0.171)

0.475*** (0.074)

1.278*** (0.299)

lnx1

0.650*** (0.045)

0.573*** (0.050)

0.332*** (0.076)

0.824*** (0.101)

lnx2

0.499*** (0.038)

0.604*** (0.037)

0.756*** (0.056)

0.337*** (0.081)

lnx1 *lnx1

0.001 (0.031)

0.036 (0.051)

lnx2 *lnx2

0.048*** (0.018)

0.081*** (0.020)

lnx1 *lnx2

-0.054 (0.041)

-0.164*** (0.053)

Dummy 2002

0.023 (0.053)

Dummy 2003

0.004 (0.053)

Dummy 2004

0.095* (0.053)

γ

0.884*** (0.070)

0.569*** (0.058)

0.944*** (0.027)

0.656*** (0.072)

μ

-2.341 (2.701)

1.430*** (0.247)

-4.508* (2.694)

1.501*** (0.392)

Log likelihood

-1,495.70

-914.79

-423.63

-215.01

Sector__________

________34 *________

________35________

_________36_________

Constant

1.005*** (0.158)

0.983 *** (0.148)

0.264*** (0.042)

lnx1

0.904*** (0.044)

0.745*** (0.059)

0.756*** (0.026)

lnx2

0.297*** (0.027)

0.399*** (0.045)

0.406*** (0.024)

lnx1 *lnx1

0.050 (0.036)

0.020 (0.015)

lnx2 *lnx2

0.049*** (0.015)

0.048*** (0.009)

lnx1 *lnx2

-0.085** (0.038)

-0.059*** (0.020)

Dummy 2002

0.225*** (0.060)

-0.006 (0.038)

Dummy 2003

0.244*** (0.060)

-0.127*** (0.037)

Dummy 2004

0.260*** (0.066)

-0.108*** (0.036)

γ

0.624*** (0.035)

0.598*** (0.030)

0.868*** (0.018)

μ

1.371*** (0.204)

1.436*** (0.170)

-3.257*** (0.530)

Log likelihood

-779.74

-1,242.07

-3,629.46

lnx1 is the log of labour, lnx2 the log of capital, lnx3 the log of material costs, γ an estimate of the share of technical

efficiency in total variance and μ the mean of the distribution of inefficiency effects.

Standard errors are given in parenthesis, *** indicates significance at the 1% level, ** indicates significance at the 5% level, *
indicates significance at the 10% level

*Restricted to Cobb-Douglas model due to violation of theoretical properties

36



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