NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Does Knowledge Intensity Matter? A Dynamic Analysis of Research and Development, Capital Utilization and Labor Requirements

Jeffrey I. Bernstein, M. Ishaq Nadiri

NBER Working Paper No. 1238
Issued in November 1983
NBER Program(s):   PR

In this paper we have developed a dynamic analysis of a firm under-taking research and development (R&D) investment, physical capital accumulation and utilization, along with labor requirement decisions. Empirical work has found that there are significant costs to develop knowledge. Consequently, R&D capital is treated as a quasi-fixed factor, along with the traditional physical capital stock. A number of empirically relevant implications arise from the analysis. It is shown that along the dynamic path as the R&D intensity of physical capital increases, knowledge per worker rises and the utilization rate of physical capital decreases. We distinguish between the intertemporal movement of the firm,and the response to unanticipated changes in demand and cost conditions. An increase in product demand causes the firm to increase both the R&D growth rate and the labor intensity of R&D capital. Contrary to a viewpoint held by many,the R&D investment does not displace labor. Finally, our model provides a framework to justify the empirically observed direct relationship between the physical capital growth and utilization rates.

download in pdf format
   (323 K)

email paper

This paper is available as PDF (323 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w1238

 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us