Abstract
This paper decomposes the Malmquist productivity index into several assembling components: technical change (further break down into technical change magnitude, input bias and output bias), technical efficiency change, scale efficiency change, and output-mix effect. A translog output distance function is chosen to represent the production technology and each component of the Malmquist index is computed using the estimated parameters. This parametric approach allows us to statistically test the hypothesis regarding different components of the Malmquist index and the natural of production technology. The empirical application in Chinese agriculture shows that the average productivity grows at 2 percent per year during 1978-2010. This growth is mostly driven by technical change, which is found to be neutral.
Highlights
Productivity change is defined as the ratio of change in outputs to change in inputs
This paper extends the methodology of [3,4] to decompose the Malmquist index into different components while taking into account of technology bias and scale efficiency change simultaneously
For output distance function to be non-increasing in Before reporting the estimated productivity growth, we input k need to check whether the translog functional form is suitable for the study
Summary
Productivity change is defined as the ratio of change in outputs to change in inputs. The DEA approach estimates the Malmquist index and its components through the calculation of distance functions under both constant and variable returns to scale technologies. If the hypothesis of constant returns to scale is not rejected, scale effect term disappears from the Malmquist index By answering these questions, the paper adds value to the existing literature in several ways. The paper adds value to the existing literature in several ways It decomposes the Malmquist productivity index into different components using an output distance function. Unlike [9] the decomposition of this paper is based on the geometric mean of two adjacent Malmquist index, filling a gap in the existing literature of productivity analysis It demonstrates the advantages of the parametric output distance function approach to characterizing the agricultural technology and productivity decomposition.
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