Measures Of Productivity Growth Research Articles

Productivity growth measurement and decomposition under a dynamic inefficiency specification: The case of German dairy farms

Standard parametric models for efficiency and total factor productivity growth measurement either impose strict structures on the time-evolution of efficiency scores or no structure at all. When the data capture a sector in turbulent periods both specifications may be inappropriate. The dynamic stochastic frontier model takes a middle way in terms of the time-structure it imposes on efficiency scores. We apply the dynamic stochastic frontier model to the case of German dairy farms in a period that is characterized by high milk price volatility. The model is able to capture time-specific efficiency and total factor productivity growth shocks that may have been induced by this high volatility. Furthermore, the dynamic stochastic frontier model is favored by the data when compared to a model that imposes a very restrictive time structure on efficiency and two models that do not impose any time structure at all.

Measuring productivity growth in construction

Measuring productivity growth in construction

Linking Wealth and Productivity of Natural Capital for 140 Countries Between 1990 and 2014

This study explores the relationship between inclusive wealth, economic growth, and productivity of natural capital (including forestry, fishery, fossil energy reserves and minerals) for 140 countries between 1990 and 2014. For this objective, a Malmquist productivity index is developed, and regression analysis is performed. The results are threefold. First, we found that natural capital deterioration constituted the main driving force of declining wealth per capita following fossil fuel extraction. Second, the adjustment to a conventional productivity growth measure depends on GDP growth and an endowment growth shift of natural capital relative to other input factors. Third, we also found that the initial phase of GDP growth was accompanied by slower natural capital utilization followed by a phase of deterioration as these countries continue to develop economically. With further economic development, enhanced technology and effective natural resources utilization limit the material basis and result in reduced natural capital extraction. These results imply that natural capital extraction management for a broader income level can be implemented for sustainability in both the short and long term.

Reallocation and the Role of Firm Composition Effects on Aggregate Wage Dynamics

Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate but a recent strand of the literature has emphasized the need to take into account the growing importance of worker composition effects during downturns. With reference to the Italian case we document that also firm composition effects increasingly matter in explaining the aggregate wage dynamics, i.e. aggregate wage growth has been lifted up by the increase in the employment weight of high wage firms. To the extent that this reallocation occurs towards more productive firms, the composition effects may also reflect an efficiency enhancing mechanism. We use a newly available dataset based on social security records covering the universe of Italian employers be-tween 1990 and 2013 and employ a standard measure of allocative efficiency on wages paid across firms. We show that this measure has improved over time since prior to the recent downturn and that it is aligned, at the sectoral level, with measures of productivity growth and market openness to competition. We then focus on the recent downturn and find that large firms were able to adjust wages more than small firms, and that small firms instead adjusted employment to a larger extent. Finally, we document that the continued improvement in the measure of allocative efficiency over this period correlates positively with measures of economic activity (evolution of employment and value added) across sectors.

Growth of Sugarcane in Maharashtra and Total Factor Productivity Analysis

Measurement of productivity growth is very essential to take appropriate policy decisions for the development of the agriculture sector. The present study measures Growth of Sugarcane in Maharashtra with total factor Productivity analysis. Tornquist-Theil Index method is used for this study. The results indicated that increase in production of sugarcane crop is because of increased area and productivity of sugarcane crop in Maharashtra. There is a growth in output index of sugarcane crop by 3.70 percent and in input index, it was found to be 1.09 percent hence the total factor productivity of sugarcane crop in Maharashtra state increases by of 2.59 percent, with 70 percent TFP share in output. Area under high yielding varieties, Rainfall and road density had positive and significant impact on total factor productivity growth of sugarcane crop in Maharashtra.

Against All Odds: The Contribution of the Healthcare Sector to Productivity. Evidence from Italy and UK from 2004 to 2011

We assess the productivity growth of the English and Italian healthcare systems over the period from 2004 to 2011. The English (NHS) and the Italian (SSN) healthcare systems share many similar features, facilitating comparison: basic founding principles, financing, organization, management, and size. We measure productivity growth as the rate of change in outputs over the rate of change in inputs. We find that the overall NHS productivity growth index increased by 10% over the whole period, at an average of 1.39% per year, while SSN productivity increased overall by 5%, at an average of 0.73% per year. Differential growth reflects different policy objectives. In England, the NHS focused on increasing activity, reducing waiting times and improving quality. Italy focused more on cost containment and rationalized provision, in the hope that this would reduce unjustified and inappropriate provision of services.

Productivity change analysis in dairy farms following Polish accession to the EU – An output growth decomposition approach

The aim of this study was to assess changes in productivity of dairy farms after Poland’s accession to the European Union using a new decomposition of output growth within a stochastic frontier framework. We demonstrate how changes in economies of scale can be isolated, which leads to redefined components of output growth and a better measure of productivity growth. The productivity component is disaggregated to its three generic sources: total scale change, real technical change and efficiency change. An analysis of 1191 dairy farms based on data from 2004 to 2011 reveals that production growth (3.91%) is mostly due to input accumulation (3.4%) rather than productivity growth (0.51%.). Further decomposition indicates that the productivity component is driven by real technical growth (1%) and changes in scale elasticity, which had a negative effect on productivity (−0.81%). Conversely, technical efficiency growth (0.36%) played a minor role.

Co-Movements Between Key Components Of Aggregate Productivity And Real Exchange Dynamics In Developing Countries

The relationship between productivity growth and the real exchange rate has dominated the field of international economics for a long time. However, previous empirical studies do not focus on the nexus between real exchange rate and unraveling sources of productivity growth, i.e., technical change and several exhaustive measures of efficiency. In this paper, we investigate the relationship between the real exchange rate and key components of aggregate productivity for a sample of countries in four developing country regions. Our methodology proceeds in two stages. First, a non-parametric method is used to estimate the Hicks-Moorsteen total factor productivity (HMTFP) change, which is decomposed into technical change and different exhaustive measures of efficiency change. This methodology allows one to extract different exhaustive measures of efficiency change. Second, system-GMM models are used to explore the dynamics of the real exchange rate and different components of productivity while controlling for other exchange rate fundamentals and civil conflicts. The results for total factor productivity (TFP) and TFP efficiency indicates that the TFP has not changed much in the sample period. In addition, the average TFP efficiency has remained relatively low because only a few countries defined the best practice frontier while a majority of the countries operated below this frontier. In particular, Africa has lagged behind other regions in terms of TFP improvement. Our results also indicate that the main differences in TFP change are explained by differences in efficiency, an indication of disparities in the use of available technology across countries and regions. We also find that a positive change in technological innovation and its diffusion tend to appreciate the real exchange rate. These results are robust across different model specifications. Two key policy implications can be extrapolated from our results. First, our results show significant differences in the evolution of different components of TFP across regions; indications that policy targets to improve productivity growth across regions are unlikely to be uniform. Second, our results also show that policies that target specific drivers of productivity change have the potential to also influence the international competitiveness of a country through the real exchange rate-technological-efficiency change linkages.

A superlative index number formula for the Hicks-Moorsteen productivity index

The Malmquist and Hicks-Moorsteen productivity indexes are the two most widely used theoretical indexes for measuring productivity growth. Since these productivity indexes are defined by unknown distance functions, it is necessary to estimate the distance functions to compute them in principle. On the other hand, the Tornqvist productivity index is an empirical index number formula that is directly computable from the prices and quantities of the inputs and outputs alone. Caves et al. (1982) imply that the Malmquist index coincides with the Tornqvist index under profit maximizing behaviour and constant returns to scale technology. The purpose of the present paper is to point out that the Hicks-Moorsteen productivity index coincides with the Tornqvist productivity index under the same condition. We emphasize that the condition of constant returns to scale is indispensable for deriving the equivalence between the two indexes. Moreover, even when this condition is relaxed to the α returns to scale, the equivalence between the Hicks-Moorsteen and Tornqvist productivity indexes is shown to hold true.

Customer‐employee substitution: Evidence from gasoline stations

AbstractWe document the adoption of self‐service pumps in U.S. gasoline stations from 1977 to 1992. Using establishment‐level data from the Census of Retail Trade over this period, we show that self‐service stations employ approximately one quarter fewer attendants per pump, all else equal. The work done by these attendants has shifted to customers, biasing upward conventional measures of productivity growth.

Effects of FDI spillover on regional productivity

PurposeWhen spillovers are measured at a national level, the regional benefits may not be identified if they are too small. Very few studies that examined how FDI impacts the regional productivity of the host nations have shown mixed results. The evidence is still scarce and little is known about how the regional penetration of FDI affects the regional productivity performance. The trajectory of regional productivity growth in India has been a subject of scrutiny and intense debates and remains less systematically investigated. The purpose of this paper is to fill this lacuna by investigating the effect of FDI spillover on regional productivity in Indian states.Design/methodology/approachUsing data supplied by the Central Statistical Organization, National Statistical Organization, National Sample Survey Office, and National Accounts Statistics, Government of India at the Indian Ministry of Statistics and Programme Implementation, first, the study employs stochastic frontier model to explore the extent to which FDI spillover contributes to the regional productivity from panel data of 28 Indian states over 1993-2013. Second, the study examines the roles of absorptive ability and technology gap on productivity effect of FDI. Third, by adopting SFA, we measure productivity growth of Indian states in terms of Malmquist productivity index. Fourth, India’s development is imbalanced. To analyze the imbalance due to skewed distribution of FDI among Indian states, Indian states are divided into three regions, and the spillover effects of FDI on TFP in these regions are explored.FindingsThe results on the effects of FDI spillover on regional productivity in India using stochastic frontier and panel data from 28 states over 1993-2013 show that R&D, technology import, human capital, and various specifications of FDI have a significant impact on the regional productivity in India except technology gap. Study does not find support for the resource curse hypothesis in Indian states. Productivity growth for India using the Malmquist TFP index based on the stochastic frontier shows positive impact. The TFP growth in the three regions of India is turned to be differently attributed by the FDI spillover.Originality/valueLittle is known about how the regional penetration of FDI affects the regional productivity performance. This research aims to fill this lacuna by investigating the effect of FDI spillover on regional productivity in Indian states which has been a subject of scrutiny and intense debates.

Productivity indexes under Hicks neutral technical change

The Malmquist and Hicks–Moorsteen productivity indexes are the two most widely used theoretical indexes for measuring productivity growth of firms, industries and countries. We indicate that these two indexes coincide under constant returns to scale technology and Hicks neutral technical change. While the conditions on production technology under which two indexes coincide have been examined before, this is the first study on the types of technical change under which they coincide. We shed new insight on the relationship between these popular indexes.

Directed technological change and productivity growth: the Italian evidence 1861-2010

The paper presents a new methodology to identify the effects of the introduction of directed technological change on the measure of total factor productivity growth. Its application to the evidence of Italian economic growth in the years 1861-2010 confirms that technological change has been strongly directed with relevant effects on the actual levels of total factor productivity growth measured by a procedure able to account for the changes in the output elasticity of inputs and identify shift and bias effects.

Directed technological change and productivity growth: the Italian evidence 1861-2010

The paper presents a new methodology to identify the effects of the introduction of directed technological change on the measure of total factor productivity growth. Its application to the evidence of Italian economic growth in the years 1861-2010 confirms that technological change has been strongly directed with relevant effects on the actual levels of total factor productivity growth measured by a procedure able to account for the changes in the output elasticity of inputs and identify shift and bias effects.

TOTAL FACTOR PRODUCTIVITY AND FRONTIER PRODUCTION FUNCTION = PRODUKTIVITAS FAKTOR PRODUKSI TOTAL DAN FUNGSI PERODUKSI FRONTIER

The total factor productivity became an interesting concept in the measurement of productivity growth. Productivity is a ratio of output to input. The most common measurement of productivity is single factor productivity or partial productivity such as of land, labor, or capital.A total (factor) productivity is a productivity of all factors of production where the factors are aggregated. In cross-sectional studies this total productivity is a ratio of actual to potential output where the potential output is estimated from ther frontier production function. One of the methods to estimate this frontier function is by using linear programming technique.The total productivity does not always coincide with a single factor productivity of land (yield), that in the study area the larger farms tend to have higher total productivity than yield

Allocative Efficiency and Aggregate Wage Dynamics in Italy

Aggregate wages display little cyclicality compared with what a standard model would predict. Wage rigidities are an obvious candidate, but a recent strand of the literature has emphasized the need to take into account the growing importance of worker composition effects during downturns. With reference to the Italian case we document that firm composition effects also matter increasingly in explaining aggregate wage dynamics, i.e. aggregate wage growth has been raised by the increase in the employment weight of high-wage firms. To the extent that this reallocation occurs towards more productive firms, the composition effects may also reflect an efficiency enhancing mechanism. We use a newly available dataset based on social security records covering the universe of Italian employers from 1990 to 2013 and employ a standard measure of allocative efficiency on wages paid across firms. We show that this measure has improved progressively since before the recent downturn, being aligned at the sectoral level with measures of productivity growth and market openness to competition. We then focus on the recent downturn and find that large firms were able to adjust wages more than small firms and that small firms instead adjusted employment to a larger extent. Finally, we document that the continued improvement in the measure of allocative efficiency over this period correlates positively with measures of economic activity (evolution of employment and value added) across sectors.

To Mix or Specialise? A Coordination Productivity Indicator for English and Welsh farms

AbstractThis paper introduces a nonparametric measure of coordination productivity growth where the subprocesses are explicitly modelled in the production technology. The coordination productivity indicator is decomposed into a coordination technical inefficiency change component and a coordination technical change component. This decomposition allows assessment of reallocation impacts on the different sources of productivity growth. The empirical application focuses on a large panel of English and Welsh farms over the period 2007–2013. The results show that coordination inefficiency significantly increases with the proportion of resources allocated to livestock production in economic and statistical terms. Coordination inefficient farms should generally allocate more land to crop production. Depending on the region, the average coordination productivity growth ranges from −9.7% to 15.9% per year. It is driven by coordination technical change rather than coordination inefficiency change.

An assessment of how well we account for intangibles

Estimates of intangible capital stock are of prime importance for accurate measurement of productivity growth. Aggregate intangible capital stock is usually estimated using the so-called Corrado-Hulten-Sichel (CHS) new growth accounting framework. Yet this framework has not received much academic scrutiny to-date. This article proposes a validity test of two intangible investment series in the CHS framework, namely and architectural and engineering designs. The test involves assessing the extent to which these intangible investment series explain the demand for trademarks and design rights. The econometric analysis is performed on an unbalanced panel of 32 countries from 1980 to 2010. The results suggest that brand equity investment is a powerful predictor of trademark applications. However, investment in design activity is not correlated with the count of design rights, which I take as evidence that current methodologies do not account well for design activities.

Productivity Growth and International Competitiveness

This paper presents a measure of effective multifactor productivity (MFP) growth for Canada, the U.S., Australia, Japan and selected EU countries. The measure differs from the standard MFP growth as it measures productivity growth in the production of different types of products instead of by industry and it captures the effect of productivity gains in both foreign and domestic upstream industries. The paper finds that the increase in effective MFP is closely associated with the decline in output price and improvement in international competitiveness. Multifactor productivity growth for small, open economies and for the production of manufacturing, investment and export goods is partly attributable to productivity gains in the production of intermediate inputs in foreign countries.

An Assessment of How Well We Account for Intangibles

Estimates of intangible capital stock are of prime importance for accurate measurement of productivity growth. Aggregate intangible capital stock is usually estimated using the so-called Corrado-Hulten-Sichel (CHS) new growth accounting framework. Yet this framework has not received much academic scrutiny to-date. This paper proposes a validity test of two intangible investment series in the CHS framework, namely ‘brand equity’ and ‘architectural and engineering designs.’ The test involves assessing the extent to which these intangible investment series explain the demand for trademarks and design rights. The econometric analysis is performed on an unbalanced panel of 32 countries from 1980 to 2010. The results suggest that brand equity investment is a powerful predictor of trademark applications. However, investment in design activity is not correlated with the count of design rights, which I take as evidence that current methodologies do not account well for design activities.