Measuring and relating aggregate and subaggregate total factor productivity change without neoclassical assumptions

This article considers the relation between total factor productivity measures for individual production units and those for aggregates such as industries, sectors or economies. This topic has been treated in a number of influential publications, such as Hulten (1978), Gollop (1979) and Jorgenson et al. (1987). What distinguishes this article from other publications in this area is that I deliberately avoid the making of all kinds of (neoclassical) structural and behavioural assumptions, such as the existence of production frontiers with certain properties, or optimizing behaviour of the production units. In addition, I also treat dynamic ensembles of production units, characterized by entry and exit. Thus, a greater level of generality is achieved from which the earlier results follow as special cases.     

Exact decomposition of the Fisher ideal total factor productivity index

Decompositions of total factor productivity (TFP) shed light on the driving factors behind productivity change. We develop the first exact decomposition of the Fisher ideal TFP index which contains no debatable mixed-period components or residuals. We systematically isolate five effects of (1) technical change, (2) technical efficiency, (3) scale efficiency, (4) allocative efficiency, and (5) price effect. The three efficiency components (2–4) represent the efficiency of achieving a given target point. Components (1) and (5) capture the changes of the target point. While the technical change component is well-established, changes in the relative input–output prices can have real effects on the scale and scope of the target. Such changes are captured by the new price effect component (5). The new decomposition is compared with existing decompositions both in theory and by means of an empirical application to a panel data of 459 Finnish farms in years 1992–2000.

Dissecting aggregate output and labour productivity change

This paper is about the relation between output and labour productivity measures for individual production units and for aggregates such as industries, sectors, or economies. In the framework of discrete time periods several useful, symmetric expressions are derived and confronted with results from the literature.     

An aggregate quantity framework for measuring and decomposing productivity change

Total factor productivity (TFP) can be defined as the ratio of an aggregate output to an aggregate input. This definition naturally leads to TFP indexes that can be expressed as the ratio of an output quantity index to an input quantity index. If the aggregator functions satisfy certain regularity properties then these TFP indexes are said to be multiplicatively complete. This paper formally defines what is meant by completeness and reveals that (1) the class of multiplicatively complete TFP indexes includes Laspeyres, Paasche, Fisher, T?rnqvist and Hicks-Moorsteen indexes, (2) the popular Malmquist TFP index of Caves et al. (Econometrica 50(6):1393?C1414, 1982a) is incomplete, implying it cannot always be interpreted as a measure of productivity change, (3) all multiplicatively complete TFP indexes can be exhaustively decomposed into measures of technical change and efficiency change, and (4) the efficiency change component can be further decomposed into measures of technical, mix and scale efficiency change. Artificial data are used to illustrate the decomposition of Hicks-Moorsteen and Fisher TFP indexes.     

Measurement of total factor productivity growth and biases in technological change in Western Australian agriculture

This study investigates productivity growth in broad-acre agriculture in Western Australia. Tornqvist indices of three output groups (crops, sheep products and other) and five input groups (livestock, materials and services, labour, capital and land) are constructed and discussed. Indices of total output and total inputs are also derived and used to form an index of total factor productivity, that is observed to grow at an average annual rage of 2·7%. The input and output indices are also used in the estimation of output supply and input demand equations, derived from a flexible profit function. The Generalized McFadden functional form is used, because it is possible to impose global curvature upon it without loss of flexibility. Asymptotic chi-square tests reject the hypotheses of Hicks-neutral technical change in inputs and in outputs. Technical change is observed to be ‘materials and services’ saving relative to the other input groups, and also appears to favour wool and sheepmeat production relative to the other output groups.     

Measuring total factor productivity,technical change and the rate of returns to research and development

This paper examines the relationship between research and development expenditures and total factor productivity using establishment level (or micro) data. The confidential data are taken from the U.S. Bureau of the Census Annual Survey of Manufacturers and other Census surveys. Several measures of total factor productivity are considered as are several variables that proxy for technical knowledge. The latter include research and development expenditures by the firm, the accumulated research expenditures of the industry, and new equipment purchases. We find that there is a statistically significant relationship among above measures of technical expertise and a broad measure of total factor productivity.The refereeing process of this paper was handled through N.R. Adam.     

Modeling technical progress and total factor productivity: A plant level example

Shifts in the production frontier occur because of changes in technology. A model of how a firm learns to use the new technology, or how it adapts from the first production frontier to the second, is suggested. Two different adaptation paths are embodied in a translog cost function and its attendant cost share equations. The paths are the traditional linear time trend and a learning curve. The model is estimated using establishment level data from a non-regulated industry that underwent a technological shift in the time period covered by the data. The learning curve resulted in more plausible estimates of technical progress and total factor productivity growth patterns. A significant finding is that, at the establishment level, all inputs appear to be substitutes.This paper was processed by N.R. Adam.     

Lending terms and aggregate productivity

Several empirical studies suggest that lending terms are eased in expansions and tightened in recessions, thereby influencing the mix of financed entrepreneurs. We study a model of adverse selection in competitive financial markets and show that lending terms deteriorate with the aggregate state under two general conditions. If exogenous increments to entrepreneurs׳ productivity raise returns to investment and/or tighten the credit line needed to screen out a given entrepreneur type, competition results in contracts with less screening. Two endogenous effects on productivity emerge. Production scales grow closer to optimal, but lower productivity entrepreneurs enter the mix of producers. The positive (negative) effect dominates at low (high) aggregate states.     

Growth in total factor productivity and links among firms

In this paper we study the relevance of links among firms in explaining the mean and the auto-correlation property of the aggregate total factor productivity rate of growth (Solow residual). Our approach relies on the interaction between idiosyncratic shocks of firms and the network structure of firms. We analytically study this phenomenon using the adjacency matrix of a complete network and we present a simulation with more general random adjacency matrices. We also check empirically, using Italian data, the relationship between the network structure and the Solow residual. In particular, in the empirical part, we find two main results: firstly, the relationship between the Solow residual and the measure of connectivity of firms is positive, in accordance with the analytical results. Secondly, we find that the measure of connectivity is pro-cyclical with the annual growth rate of industrial production.     

The effects of certification on total factor productivity: A propensity score matching approach

The primary purpose of this study is to investigate the impact of quality certification on total factor productivity, which is unobservable to and difficult to gauge for firms. To do so, we implement various propensity score matching estimators that handle the self‐selection problem. We use firm‐level data on manufacturing companies in Turkey where firms have devoted significant amounts of resources to get certified. Our findings show that certification does not have any positive effect on total factor productivity. We provide potential explanations for these findings.     

Assessing total factor productivity across Africa: an empirical investigation

Journal of Productivity Analysis - Even though Africa is home to many emerging markets, the attention on African growth might be neglected by economists and scholars due to data unavailability and...     

Estimating total factor productivity using parametric,nonstochastic cost frontiers

The standard approach to measuring total factor productivity can produce biased results if the data are drawn from a market that is not in long-run competititve equilibrium. This article presents a methodology for adjusting data on output and variable inputs to the values they would have if the market were in long-run competitive equilibrium, given the fixed inputs and input prices. The method uses nonstochastic, parametric translog cost frontiers and calculates equilibrium values for output and varible inputs using an iterative linear programming procedure. Data from seven industries for 1970–1979 are used to illustrate the methodology.The editor for this paper was William H. Greene.     

The effects of external and internal shocks on total factor productivity

This paper examines structural changes that occur in the total factor productivity (TFP) within countries. It is possible that some episodes of high economic growth or economic decline are associated with permanent productivity shocks; therefore, this research has two objectives. The first one is to estimate the structural changes present in TFP for a sample of 77 countries between 1950 (1960) and 2000. The second one is to identify possible explanations for breaks. Two sources were analyzed: (i) episodes in political and economic history; (ii) changes in international trade – a measure of absorption of technology. The results suggest that about one-third of the TFP time-series present at least one structural break. Downwards breaks are more common, indicating that after a break the TFP has much difficulty to recover. When we investigated factors related with structural change, developed countries presented a break near the first oil shock while the developing countries’ breaks are more spread along the decades. Thus, external strikes seem to be more relevant for developed countries. However, for each country and break date, it was possible to find an event close to the break date endogenously detected. Last, the relevance of international trade, measured by trade share percentage of GDP, seems to be limited to explain abrupt changes in TFP.     

A note on the relationship between the total factor productivity and the network of firms

In this paper we study the robustness of the results found recently by Guzzini and Palestrini (J Econ Interact Coord 11:35–55, 2016). Since the original analysis was carried out in a static setting, we perform a dynamic panel analysis by using the same dataset. The inclusion of the lagged value of the endogenous variable, missing in the original paper, could be justified for several reasons. Firstly, the statistical relationship may have itself a dynamical nature; secondly the inclusion of lagged-endogenous variable is a way to mitigate the possibility of an omitted variable problem. We find that the results are only qualitatively the same, and we discuss the quantitative differences.

     

Determinants of total factor productivity in former Soviet Union economies: A stochastic frontier approach

This paper investigates the process of GDP generation in former Soviet Union (FSU) economies to provide an understanding of the impact of technology channels on countries’ efficiency. We apply a stochastic frontier approach to 15 FSU economies over the period 1995–2008 and find that FDI and human capital improve countries’ technical efficiency. Furthermore, we show that these factors also have a positive impact on total factor productivity (TFP), which, in turn, improves real GDP growth. Hence, our results suggest that FSU countries should promote public policies that provide incentives to attract foreign investment and enhance domestic education in order to improve their economic growth. Additionally, our empirical evidence argues against the resource curse hypothesis. We also show, by computing efficiency change and technological change indices at the country level, that FSU economies benefit more from exploiting technological progress than from catching up to the best practice frontier.     

我国汽车产业的全要素生产率的估算

文章用永序盘存法估计1991~2013年中国汽车产业的固定资本存量,并结合期间的汽车产业的工作人数和汽车产业全员劳动生产效率,运用横截面软件stata来估计出中国汽车工业在1991~2013年的全要素生产率。并通过计算出的汽车产业的资本存量、劳动投入、全要素生产率,分析出汽车工业产量随时间变化的原因。     

Structural breaks, rural transformation and total factor productivity growth in China

This paper carries out an empirical investigation into the contribution of rural transformation, which can produce efficiency gains over and above those associated with technical progress, to total factor productivity in China during the post-reform period 1980–2010. For the first time for China, the roles of rural transformation and technical progress are examined whilst structural breaks are taken into account. We employ Bai and Perron (Econometrica 66:47–68, 1998; J Appl Econom 18:1–22, 2003a; Econom J 6:72–78, 2003b) methods which allow for multiple structural breaks at unknown dates and can be applied for both pure and partial structural changes. We also evaluate the robustness of our results by employing alternative production functions and two capital series. Two structural breaks near the Tiananmen Square incident in 1989 and the implementation of further reforms and opening-up measures in 1995 were identified for both capital series. We found the contribution of rural transformation to total factor productivity to be significant and positive across all regimes. However, its importance to the growth of total factor productivity has been declining over time, while that of technical progress has been increasing.     

China's total factor productivity estimates by region, investment sources and ownership

This paper constructs China national and provincial physical capital and human capital for the period 1984–2006. The estimation of physical capital is extended to the use of sources of fund and ownership of fund. The growth accounting framework is used to calculate the output, input and total factor productivity growth rates. The relative variance method is used to compare the relative importance to output growth by input growth and productivity growth. The empirical findings show that although output growth in post-reform China has been contributed much by growth in total factor productivity, output volatility has relied more on input growth, and TFP growth has not been supported by complementary changes. There are regional differences when looking at the performance of individual growth rates.     

Costly external finance,reallocation, and aggregate productivity

Empirical studies document that resource reallocation across production units plays an important role in accounting for aggregate productivity growth in the US manufacturing. Financial market frictions could distort the reallocation process and hence may hinder aggregate productivity growth. This paper studies the quantitative impact of costly external finance on aggregate productivity through resource reallocation across firms with idiosyncratic productivity shocks. A partial equilibrium model calibrated to the US manufacturing data shows that costly external finance causes inefficient output reallocation from high productivity firms to low productivity firms and as a result leads to a 1 percent loss in aggregate TFP.