On the Anatomy of Productivity Growth: A Decomposition of the Fisher Ideal TFP Index
AbstractDecompositions of productivity indices contribute to our understanding of what drives the observed productivity changes by providing a detailed picture of their constituents. This paper presents the most comprehensive decomposition of total factor productivity (TFP) to date. Starting from the Fisher ideal TFP index, we systematically isolate the productivity effects of changes in production technology, technical efficiency, scale efficiency, allocative efficiency, and the market strength. The three efficiency components further decompose into input- and output-side effects. The proposed decomposition is illustrated with an empirical application to a sample of 459 Finnish farms over period 1992-2000.
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Bibliographic InfoPaper provided by EconWPA in its series Econometrics with number 0410010.
Length: 42 pages
Date of creation: 20 Oct 2004
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index numbers and aggregation; Total Factor Productivity (TFP) measurement; Fisher ideal index; Malmquist index; decompositions; agriculture;
Find related papers by JEL classification:
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
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