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In a companion study to that of Griliches and Mairesse for the United States, we have investigated the relationship between output, labor, and physical and RD it is less so in the time dimension. However, the within-firm estimates are still significant and of a likely order of magnitude.In this respect, they are more satisfactory than the U.S. ones. We show that this is largely due to a better measurement of the variables: (1) the fact that we can use a value-added measure of output instead of sales (or equivalently that we include materials among the factors of the production function); (2) the fact that we can correct the measures of labor, physical capital and output for the double counting or expensing out of the labor, capital and materials components of R&D expenditures.

Productivity and R&D at the Firm Level in French Manufacturing