Advanced Search
MyIDEAS: Login

Nonparametric Estimates Of The Components Of Productivity And Profitability Change In U.S. Agriculture

Contents:

Author Info

Abstract

Profitability change can be decomposed into the product of a total factor productivity (TFP) index and an index of relative price change. O’Donnell (2008) shows that the TFP index can be further decomposed into an index of technical change and various indexes of efficiency change – these indexes measure changes in productivity resulting from movements in the production frontier, movements by firms towards the frontier, and movements by firms around the frontier to capture economies of scale and scope. The O’Donnell decomposition methodology can be applied in any multiple-input multiple-output setting, it makes no assumptions concerning the optimising behaviour of firms or the degree of competition in product markets, and it only involves components that can be unambiguously interpreted as measures of either technical change or efficiency change. This paper uses the methodology to decompose spatially - and temporally-transitive Lowe indexes of TFP change in U.S. agriculture for the period 1960-2004. To implement the methodology, data envelopment analysis (DEA) is used to estimate separate production frontiers for each of the ten farm production regions identified by the USDA Economic Research Service (ERS). California and Florida are found to be the most profitable and productive states. In most states, the main drivers of TFP change over the 45-year study period appear to have been technical change and scale and mix efficiency change. For example, Texas is found to have experienced a 40% increase in productivity due to technical change and a 32% increase in productivity due to economies of scale and scope, resulting in an overall productivity increase of 1.40 ! 1.32 – 1 = 85%; in Tennessee, the combined effects of technical progress (122%), technical efficiency improvement (1%) and diseconomies of scale and scope (-24%) resulted in an net productivity increase of 2.22 ! 1.01 ! 0.76 – 1 = 70%.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.uq.edu.au/economics/cepa/docs/WP/WP022010.pdf
Download Restriction: no

Bibliographic Info

Paper provided by School of Economics, University of Queensland, Australia in its series CEPA Working Papers Series with number WP022010.

as in new window
Length:
Date of creation: 2010
Date of revision:
Handle: RePEc:qld:uqcepa:70

Contact details of provider:
Postal: St. Lucia, Qld. 4072
Phone: +61 7 3365 6570
Fax: +61 7 3365 7299
Email:
Web page: http://www.uq.edu.au/economics/
More information through EDIRC

Related research

Keywords:

Other versions of this item:

References

References listed on IDEAS
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.:
as in new window
  1. Capalbo, Susan M., 1988. "Measuring The Components Of Aggregate Productivity Growth In U.S. Agriculture," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(01), July.
  2. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
  3. V. Eldon Ball & Charles Hallahan & Richard Nehring, 2004. "Convergence of Productivity: An Analysis of the Catch-up Hypothesis within a Panel of States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1315-1321.
  4. O'Donnell, Christopher J., 2010. "Measuring and decomposing agricultural productivity and profitability change," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), December.
  5. Paul, Catherine J. Morrison & Nehring, Richard, 2005. "Product diversification, production systems, and economic performance in U.S. agricultural production," Journal of Econometrics, Elsevier, vol. 126(2), pages 525-548, June.
  6. C.J. O'Donnell, 2008. "An aggregate quantity-price framework for measuring and Decomposing productivity and profitability change," CEPA Working Papers Series WP072008, School of Economics, University of Queensland, Australia.
  7. Catherine J. Morrison Paul & Richard Nehring & David Banker, 2004. "Productivity, Economies, and Efficiency in U.S. Agriculture: A Look at Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1308-1314.
  8. Christopher J. O'Donnell, 2010. "Measuring and decomposing agricultural productivity and profitability change ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 527-560, October.
  9. C.J. O'Donnell, 2010. "DPIN Version 1.0: A Program for Decomposing Productivity Index Numbers," CEPA Working Papers Series WP012010, School of Economics, University of Queensland, Australia.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. J. Laurenceson & C.J. O’Donnell, 2011. "New Estimates and a Decomposition of Provincial Productivity Change in China," CEPA Working Papers Series WP042011, School of Economics, University of Queensland, Australia.
  2. Kerstens, Kristiaan & Van de Woestyne, Ignace, 2014. "Comparing Malmquist and Hicks–Moorsteen productivity indices: Exploring the impact of unbalanced vs. balanced panel data," European Journal of Operational Research, Elsevier, vol. 233(3), pages 749-758.
  3. C.J. O’Donnell, 2011. "Econometric Estimation of Distance Functions and Associated Measures of Productivity and Efficiency Change," CEPA Working Papers Series WP012011, School of Economics, University of Queensland, Australia.
  4. Brennan, Shae & Haelermans, Carla & Ruggiero, John, 2014. "Nonparametric estimation of education productivity incorporating nondiscretionary inputs with an application to Dutch schools," European Journal of Operational Research, Elsevier, vol. 234(3), pages 809-818.
  5. Andrew Maredza and Sylvanus Ikhide, 2013. "The Impact of the Global Financial Crisis on Efficiency and Productivity of the Banking System in South Africa," Working Papers 328, Economic Research Southern Africa.
  6. Arjomandi, Amir & Valadkhani, Abbas & O’Brien, Martin, 2014. "Analysing banks’ intermediation and operational performance using the Hicks–Moorsteen TFP index: The case of Iran," Research in International Business and Finance, Elsevier, vol. 30(C), pages 111-125.
  7. C.J. O'Donnell, 2011. "The Sources of Productivity Change in the Manufacturing Sectors of the U.S. Economy," CEPA Working Papers Series WP072011, School of Economics, University of Queensland, Australia.
  8. C.J. O’Donnell & K. Nguyen, 2011. "An Econometric Approach To Estimating Support Prices And Measures Of Productivity Change In Public Hospitals," CEPA Working Papers Series WP032011, School of Economics, University of Queensland, Australia.
  9. Arjomandi, Amir & Valadkhani, Abbas, 2010. "Banks’ Efficiency and Productivity Analysis Using the Hicks-Moorsteen Approach: A Case Study of Iran," Economics Working Papers wp10-11, School of Economics, University of Wollongong, NSW, Australia.
  10. Christopher O`Donnell, 2014. "An Economic Approach to Identifying the Drivers of Productivity Change in the Market Sectors of the Australian Economy," CEPA Working Papers Series WP022014, School of Economics, University of Queensland, Australia.
  11. Constant, Labintan Adeniyi & Shijun, Ding, 2012. "Benin Agriculture Productivity and profitability Measurement," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126748, International Association of Agricultural Economists.
  12. Mullen, John & Keogh, Mick, 2013. "The Future Productivity and Competitiveness Challenge for Australian Agriculture," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152170, Australian Agricultural and Resource Economics Society.
  13. C.J. O'Donnell & S. Fallah-Fini & K, Triantis, 2011. "Comparing Firm Performance Using Transitive Productivity Index Numbers in a Meta-frontier Framework," CEPA Working Papers Series WP082011, School of Economics, University of Queensland, Australia.
  14. Andreas Mayer & Valentin Zelenyuk, 2014. "An Aggregation Paradigm for Hicks-Moorsteen Productivity Indexes," CEPA Working Papers Series WP012014, School of Economics, University of Queensland, Australia.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:qld:uqcepa:70. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Randal Anderson).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.