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Identifying productivity when it is a factor of production

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  • Flynn, Zach

Abstract

Economists typically model a plant's productivity as an exogenous characteristic, but the people who run and work at manufacturing plants make choices, at a cost, that affect plant productivity. I develop a method to partially identify the productivity distribution when such choices determine productivity. The method uses a monotone comparative static result I prove in a general economic model. It does not require instruments or timing assumptions. I use the method to study the effect of implementing market-based pricing on productivity in the electricity generation industry.

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  • Flynn, Zach, 2018. "Identifying productivity when it is a factor of production," SocArXiv bwxfz, Center for Open Science.
  • Handle: RePEc:osf:socarx:bwxfz
    DOI: 10.31219/osf.io/bwxfz
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