Aggregating and Decomposing Productivity
AbstractWe illustrate how the aggregate level of total factor productivity, as obtained from aggregate input and output statistics, can be replicated by summing appropriately weighted firm-level measures. This exact aggregation has a number of advantages over existing practices. First, the contribution of different sub-samples to a well-defined aggregate is easily identified. Second, the importance of patterns at the micro level, such as larger size or higher capital intensity for more productive firms, for the aggregate can be calculated. Third, it allows the exact decomposition of aggregate output growth into the contribution of several factors, among which firm-level total factor productivity growth, an inherently relative concept. A sample of all Chinese manufacturing firms with annual sales above five million RMB is used to illustrate the usefulness of the different decompositions.
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Bibliographic InfoArticle provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen in its journal Review of Business and Economics.
Volume (Year): LIII (2008)
Issue (Month): 2 ()
labor productivity; total factor productivity; exact aggregation; China; manufacturing;
Find related papers by JEL classification:
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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- M. Del Gatto & A. Di Liberto & C. Petraglia, 2008.
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- Massimo Armenise & Giorgia Giovannetti & Gianluca Santoni, 2011. "FDI in Business Services has general TFP effects : evidence from Italy," Working Papers Series wp2011_12.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze dell'Economia e Dell'Impresa.
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