Productivity: Should We Include Bads?
AbstractThis paper studies the interaction between economic and environmental performance. Applying the directional output distance function approach, the purpose is to compare estimates of Luenberger total factor productivity indicators, including and excluding bad outputs. Specifically, based on unique firm level data from Swedish manufacturing covering the period 1990 to 2008, we explore to what extent excluding bad outputs leads to erroneous productivity measurement. The main conclusion is that bad outputs should not only be included in the estimations, but also reduction in bad outputs should be credited. From this point of view the directional output distance function approach and the Luenberger indicator serves as an appropriate basis of productivity measurement.
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Bibliographic InfoPaper provided by CERE - the Center for Environmental and Resource Economics in its series CERE Working Papers with number 2012:13.
Length: 26 pages
Date of creation: 31 May 2012
Date of revision:
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Web page: http://www.cere.se
Swedish manufacturing; Luenberger indicator; emissions; productivity;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-05 (All new papers)
- NEP-EFF-2012-06-05 (Efficiency & Productivity)
- NEP-ENV-2012-06-05 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Walter Briec & Kristiaan Kerstens, 2008. "Infeasibility and Directional Distance Functions with Application to the Determinateness of the Luenberger Productivity Indicator," Working Papers 2008-ECO-11, IESEG School of Management.
- William L. Weber & Bruce Domazlicky, 2001. "Productivity Growth and Pollution in State Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 195-199, February.
- Kumar, Surender, 2006. "Environmentally sensitive productivity growth: A global analysis using Malmquist-Luenberger index," Ecological Economics, Elsevier, vol. 56(2), pages 280-293, February.
- Rolf Färe & Shawna Grosskopf & Carl A Pasurka, Jr., 2001. "Accounting for Air Pollution Emissions in Measures of State Manufacturing Productivity Growth," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 381-409.
- Byung M. Jeon & Robin C. Sickles, 2004. "The role of environmental factors in growth accounting," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 567-591.
- Fare, Rolf & Grosskopf, Shawna & Pasurka, Carl Jr., 2007. "Pollution abatement activities and traditional productivity," Ecological Economics, Elsevier, vol. 62(3-4), pages 673-682, May.
- Walter Briec & Kristiaan Kerstens, 2008.
"The Luenberger Productivity Indicator: An Economic Specifcation Leading to Infeasibilities,"
2008-ECO-09, IESEG School of Management.
- Briec, Walter & Kerstens, Kristiaan, 2009. "The Luenberger productivity indicator: An economic specification leading to infeasibilities," Economic Modelling, Elsevier, vol. 26(3), pages 597-600, May.
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