The Relations Between Industrial Research and Development and Factor Demands

The Effectiveness of State Business Tax Incentive Programs: The Case of North Carolina

“…We use a depreciation rate of 0.09489 for machinery and equipment (M&E) and a depreciation rate of 0.047 for central administrative offices (CAO), based on Hayashi and Inoue (1991). An obsolescence rate of 0.05 for R&D was taken from Schott (1978). The elasticities of labor, M&E, and CAO were taken from You (1981), and the elasticity of R&D from Schott (1978).…”

“…An obsolescence rate of 0.05 for R&D was taken from Schott (1978). The elasticities of labor, M&E, and CAO were taken from You (1981), and the elasticity of R&D from Schott (1978). They are 0.386, 0.790, 0.790, and 0.74887, respectively.…”

“…31. According to Schott (1978), technical knowledge, such as product and process innovations, is obtained through R& D investment. The obsolescence rate represents the decrease of technical knowledge over time.…”

Statistical Analysis and Forecasting of Economic Structural Change

“…Schott (1978) formalizes the relationship between industrial R&D and factor demands by private sector producers. The desired levels of factor demand are derived from the following cost minimisation problem: minC = LHw+ Kc+ kb s.t.…”

“…s (23.73) where C are the total costs, L is the number of persons employed, H are the hours per person, w is the hourly wage rate, K is the capital stock, c is the user cost of capital, k is the technical knowledge stock, b is the user cost of technical knowledge, Q is the potential industrial output, k is a constant, and C p is the rate of capital utilization. Thus, the optimum long-run demand function for technical knowledge is [Schott (1978) [Griliches (1986)] where R is the deflated gross investment in research.…”