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Productivity Measurement With Big Data: A Data‐Driven Approach Capturing Firm Heterogeneity

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  • Shipei Zeng
  • Kevin J. Fox

Abstract

We develop a new method for estimating production frontiers that allows the identification of sources of firm productivity variability. Our novel approach enhances the understanding of productivity growth and its sources, and the role of firm dynamics on growth. The empirical results using Australian firm‐level data demonstrate that the approach can provide important insights, which can better inform policy formulation.

Suggested Citation

  • Shipei Zeng & Kevin J. Fox, 2025. "Productivity Measurement With Big Data: A Data‐Driven Approach Capturing Firm Heterogeneity," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 58(4), pages 289-298, December.
    • Handle: RePEc:bla:ausecr:v:58:y:2025:i:4:p:289-298
    DOI: 10.1111/1467-8462.70014
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    References listed on IDEAS

    as
    1. W. Erwin Diewert & Kevin J. Fox, 2022. "Substitution Bias in Multilateral Methods for CPI Construction," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 40(1), pages 355-369, January.
    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. Ilke Van Beveren, 2012. "Total Factor Productivity Estimation: A Practical Review," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 98-128, February.
    4. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    5. Ivancic, Lorraine & Erwin Diewert, W. & Fox, Kevin J., 2011. "Scanner data, time aggregation and the construction of price indexes," Journal of Econometrics, Elsevier, vol. 161(1), pages 24-35, March.
    6. Kevin J. Fox & Peter Levell & Martin O'Connell, 2022. "Multilateral index number methods for Consumer Price Statistics," Economic Statistics Centre of Excellence (ESCoE) Discussion Papers ESCoE DP-2022-08, Economic Statistics Centre of Excellence (ESCoE).
    7. Bournakis, Ioannis & Mallick, Sushanta, 2018. "TFP estimation at firm level: The fiscal aspect of productivity convergence in the UK," Economic Modelling, Elsevier, vol. 70(C), pages 579-590.
    8. Bert Balk, 2003. "The Residual: On Monitoring and Benchmarking Firms, Industries, and Economies with Respect to Productivity," Journal of Productivity Analysis, Springer, vol. 20(1), pages 5-47, July.
    9. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    10. Diewert, W E, 1980. "Capital and the Theory of Productivity Measurement," American Economic Review, American Economic Association, vol. 70(2), pages 260-267, May.
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