Silvo Dajcman,

Faculty of Economics and Business,

University of Maribor, Slovenia

E-mail: silvo.dajcman@um.si

Production function and product and labor market imperfections in Slovenia: an industry-level panel approach

Abstract. Following recent advances in the panel time-series data analysis, this paper estimates the aggregate production function for Slovenia using industry-level data, thus allowing for variable non-stationarity, cross-industry heterogeneity and dependence. The production function parameter estimates are then used to calculate the joint (product and labor) market imperfections parameter developed by Dobbelaere and Mairesse (2013). The results illustrate that: 1) a constant return-to-scale assumption can be imposed on the aggregate production function, 2) industry-level output elasticities with respect to inputs are heterogenous, 3) the joint market imperfections parameter indicates that, on average, Slovenia´s producers´ output markets can be characterized as imperfect, and 4) the labor markets features the ˝efficient-bargaining˝ labor model characteristics.

Received: March, 2018

1st Revision: May, 2018

Accepted: September, 2018

DOI: 10.14254/2071-789X.2018/11-3/21

JEL Classification: D02, O17, P31

Keywords: production function, heterogeneity, cross-sectional dependence, labor and output market imperfections