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Whittling Away At Productivity Dispersion Futher Notes: Persistent Dispersion or Measurement Error?

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  • Douglas W Dwyer

Abstract

This note considers several hypotheses regarding measurement error as a source of observed cross-sectional dispersion in plant-level productivity in the US textile industry. The hypotheses that reporting error and/or price rigidity in either materials and/or output account for a substantial portion of the observed dispersion in productivity are consistent with the data. Similarly, the hypothesis that transitory product niches or fashion effects lead to differential markups and consequently dispersion in observed productivity is consistent with the data. The hypothesis that transfer pricing problems lead to persistent differences in plant-level productivity, in contrast, does not appear to be consistent with the data. Finally, the hypothesis that some plants have permanent product niches that lead to dispersion in observed productivity does not appear to be consistent with data. In order to avoid imposing a strong functional form on the data, this note follows a non-parametric methodology developed in the early paper.

Suggested Citation

  • Douglas W Dwyer, 1996. "Whittling Away At Productivity Dispersion Futher Notes: Persistent Dispersion or Measurement Error?," Working Papers 96-11, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:96-11
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    File URL: https://www2.census.gov/ces/wp/1996/CES-WP-96-11.pdf
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    1. Douglas W Dwyer, 1995. "Whittling Away At Productivity Dispersion," Working Papers 95-5, Center for Economic Studies, U.S. Census Bureau.
    2. Douglas W Dwyer, 1996. "ARE FIXED EFFECTS FIXED? Persistence in Plant Level Productivity," Working Papers 96-3, Center for Economic Studies, U.S. Census Bureau.
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    Keywords

    CES; economic; research; micro; data; microdata; chief; economist;

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