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Appendix
We use the value of gross production net of subsidies and excise taxes as a measure of output.
This mainly comprises the turnover plus the net change in the stock of final products. We do
not include turnover from goods for resale or from activities that are classified as miscellaneous,
such as license fees, commissions, rents, leasing, and etc., because we assume that such revenue
cannot adequately be explained on the basis ofa production function.
Median production shares of these input categories and other descriptive statistics are re-
ported in Table A.1. The dominant categories are material inputs and payroll, the median values
of which add up to about 73 percent of the overall expenses. The median values of the shares
sum up to 92.4 percent. The difference to unity of approximately 7.6 percent can be interpreted
as the share of gross profits in production. Since firms with less than 500 employees are in-
cluded in the Cost Structure Census only as a representative random sample, we use weights
27