KNOWLEDGE SPILLOVERS, ABSORPTIVE CAPACITY, AND SKILL INTENSITY OF CHILEAN MANUFACTURING PLANTS

Authors


  • We thank Rodrigo Echeverria, Universidad Austral de Chile, for help in obtaining the Chilean Manufacturing Census data, and two anonymous referees and Mark Partridge for valuable suggestions on earlier versions of the manuscript.

Abstract

ABSTRACT Knowledge spillovers are an important source of economic growth. In this study, we identify a mechanism through which knowledge spillovers occur among plants in the Chilean manufacturing industry. A plant-level production function is estimated with the absorptive-capacity hypothesis, that is, employment of skilled workers is a key channel through which knowledge is transmitted across plants. Results show that a plant's productivity from spillovers increases with its skill intensity, which is measured by the share of skilled workers in total employment. We also find that plants in a region with a large knowledge stock increase their skill intensity to benefit more from spillovers. Our results suggest that an increase in regional knowledge stock is the most effective policy to improve a plant's productivity. However, policies that encourage a plant to employ high skill-intensive production also enhance its productivity.

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