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Technical Efficiency, Technological Development, And The Labor Productivity Gap In Mexican Manufacturing

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  • Juan Carlos Chávez-Martín del Campo
  • Felipe de Jesús Fonseca-Hernández

Abstract

This paper applies a stochastic frontier approach to analyze the evolution of technical efficiency in Mexican manufacturing and its effect on the labor productivity gap among states over the period 1988-2008. The model allows for heterogeneity in technological development by introducing region-specific effects in the econometric specification. The main findings of our analysis are threefold. First, technical efficiency was both increasing and converging over time and across states in a context where labor productivity was also converging. Second, there are considerable differences in the levels of technological development of the north and the central regions with respect to the south that partially explains the labor productivity gap. Third, the dynamics of technical efficiency contributed to reduce inequality in productivity among states over the analyzed period.

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Bibliographic Info

Article provided by Euro-American Association of Economic Development in its journal Regional and Sectoral Economic Studies.

Volume (Year): 13 (2013)
Issue (Month): 2 ()
Pages: 43-58

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Handle: RePEc:eaa:eerese:v:13:y2013:i:2_4

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Related research

Keywords: Manufacturing; Mexican regions; Labor productivity; Stochastic frontier; Structural efficiency; Technical efficiency.;

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  1. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  2. Kumbhakar, Subal C. & Wang, Hung-Jen, 2005. "Estimation of growth convergence using a stochastic production frontier approach," Economics Letters, Elsevier, vol. 88(3), pages 300-305, September.
  3. Young, Andrew & Higgins, Matthew & Levy, Daniel, 2007. "Sigma Convergence versus Beta Convergence: Evidence from U.S. County-Level Data," MPRA Paper 2714, University Library of Munich, Germany.
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  8. Duffy, John & Papageorgiou, Chris, 2000. " A Cross-Country Empirical Investigation of the Aggregate Production Function Specification," Journal of Economic Growth, Springer, vol. 5(1), pages 87-120, March.
  9. William Greene, 2002. "Fixed and Random Effects in Stochastic Frontier Models," Working Papers 02-16, New York University, Leonard N. Stern School of Business, Department of Economics.
  10. Enrique Dávila & Georgina Kessel & Santiago Levy, 2002. "El sur también existe: un ensayo sobre el desarrollo regional de México," Economia Mexicana NUEVA EPOCA, , vol. 0(2), pages 205-260, July-Dece.
  11. Mercedes Gumbau-Albert, 2000. "Efficiency and technical progress: sources of convergence in the Spanish regions," Applied Economics, Taylor & Francis Journals, vol. 32(4), pages 467-478.
  12. Scott Merryman, 2010. "FRONTIER_TECI: Stata module to generate technical efficiency confidence intervals," Statistical Software Components S4571691, Boston College Department of Economics.
  13. Kumbhakar,Subal C. & Lovell,C. A. Knox, 2003. "Stochastic Frontier Analysis," Cambridge Books, Cambridge University Press, number 9780521666633, October.
  14. Kneller, Richard & Andrew Stevens, Philip, 2003. "The specification of the aggregate production function in the presence of inefficiency," Economics Letters, Elsevier, vol. 81(2), pages 223-226, November.
  15. Bannister, Geoffrey J. & Stolp, Chandler, 1995. "Regional concentration and efficiency in Mexican manufacturing," European Journal of Operational Research, Elsevier, vol. 80(3), pages 672-690, February.
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