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Estimating Total Factor Productivity Growth: Canadian Freight Railways, 1986 to 2009

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  • James Uguccioni

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Abstract

Canadian railways are a vital part of the country’s transportation sector, moving goods and people across the country. We perform firm-level productivity analysis of Canadian freight railways for 1986 to 2009, focusing on the two railways which dominate the market: Canadian National (CN) and Canadian Pacific (CP). We obtain total factor productivity (TFP) estimates both by constructing productivity indices and by econometrically estimating cost functions. Driven in part by operational improvements, the strong TFP growth at both firms considerably outpaced aggregate TFP growth in Canada over the period of interest. This robust TFP growth, together with significant capital deepening, led to impressive labour productivity gains. We pay special attention to the productivity effects of the 1995 privatization of CN. While CN enjoyed much stronger productivity growth over the 1986-2009 period than CP, its performance was equally superior before and after the 1995 privatization.

Suggested Citation

  • James Uguccioni, 2016. "Estimating Total Factor Productivity Growth: Canadian Freight Railways, 1986 to 2009," International Productivity Monitor, Centre for the Study of Living Standards, vol. 30, pages 77-97, Spring.
  • Handle: RePEc:sls:ipmsls:v:30:y:2016:5
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    File URL: http://www.csls.ca/ipm/30/uguccioni.pdf
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    References listed on IDEAS

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    1. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    2. James Uguccioni, 2016. "Firm-level Total Factor Productivity Growth: Canadian Freight Railways, 1986 to 2009," CSLS Research Reports 2016-08, Centre for the Study of Living Standards.
    3. Tulkens, Henry & Vanden Eeckaut, Philippe, 1995. "Non-parametric efficiency, progress and regress measures for panel data: Methodological aspects," European Journal of Operational Research, Elsevier, vol. 80(3), pages 474-499, February.
    4. Andrew Sharpe, 2015. "Ontario's Productivity Performance, 2000-2012: A Detailed Analysis," CSLS Research Reports 2015-04, Centre for the Study of Living Standards.
    5. Douglas W. Caves & Laurits R. Christensen & Joseph A. Swanson, 1981. "Economic Performance in Regulated and Unregulated Environments: A Comparison of U. S. and Canadian Railroads," The Quarterly Journal of Economics, Oxford University Press, vol. 96(4), pages 559-581.
    6. Caves, Douglas W & Christensen, Laurits R & Swanson, Joseph A, 1981. "Productivity Growth, Scale Economies, and Capacity Utilization in U.S. Railroads, 1955-74," American Economic Review, American Economic Association, vol. 71(5), pages 994-1002, December.
    7. Keeler, Theodore E, 1974. "Railroad Costs, Returns to Scale, and Excess Capacity," The Review of Economics and Statistics, MIT Press, vol. 56(2), pages 201-208, May.
    8. Diewert, W E, 1992. "The Measurement of Productivity," Bulletin of Economic Research, Wiley Blackwell, vol. 44(3), pages 163-198, July.
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    Citations

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    Cited by:

    1. Alexander Murray, 2016. "Partial versus Total Factor Productivity: Assessing Resource Use in Natural Resource Industries in Canada," CSLS Research Reports 2016-20, Centre for the Study of Living Standards.
    2. James Uguccioni, Andrew Sharpe and Alexander Murray, 2016. "Labour Productivity and the Distribution of Real Earnings in Canada, 1976 to 2014," CSLS Research Reports 2016-15, Centre for the Study of Living Standards.

    More about this item

    Keywords

    Rail; Transport; Productivity; Transportation; Canada; Total Factor Productivity; Multifactor Productivity;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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