Do spillovers matter when estimating private returns to R&D? Articles uri icon


  • Eberhardt, M.
  • Strauss, H.

publication date

  • May 2013

start page

  • 436

end page

  • 448


  • 2


  • 95

International Standard Serial Number (ISSN)

  • 1530-9142

Electronic International Standard Serial Number (EISSN)

  • 0034-6535


  • A large body of literature estimates private returns to R&D adopting the Griliches knowledge production framework, which ignores the potential impact of spillovers on consistent estimation. Using a panel of twelve manufacturing industries across ten OECD economies, we investigate whether ignoring spillovers leads to bias in the estimated private returns to R&D. We compare results from a common factor framework, which accounts for spillovers and other unobserved shocks, to those from a standard Griliches approach. Our findings confirm that conventional estimates conflate own-R&D and spillover effects, implying that spillovers cannot be ignored even when the interest lies exclusively in evaluating private returns to R&D.