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A control function approach to measuring the total factor productivity of enterprises in Poland

Author

Listed:
  • Mariusz

    (University of Lodz, Faculty of Economics and Sociology)

  • Mirosław Błażej

    (Statistics Poland, Department of Macroeconomic Studies and Finance)

Abstract

Investigation of external and internal determinants of total factor productivity (TFP) is one of the main issues in the economics of growth. This paper aims to measure TFP and to identify the determinants of productivity for enterprises in Poland in the period of 2005–2016. Moreover, we examine sector heterogeneity of productivity and identify the sectors of the Polish economy in which enterprises achieve significantly higher TFP indicators. We estimate the production function by applying the econometric method of control functions. Under weak assumptions, this method allows for a consistent estimation of labour and capital elasticities of gross value added. We determine empirical distributions of TFP for the whole sample and conditional to selected productivity determinants. By applying econometric panel data models for the individual firms, we confirm the dependence of TFP of the enterprise on the form of ownership, investment rate, firm-level export status and their size. Finally, we observe a sector differentiation of TFP distributions and their strong dependence on the market concentration index.

Suggested Citation

  • Mariusz & Mirosław Błażej, 2020. "A control function approach to measuring the total factor productivity of enterprises in Poland," Bank i Kredyt, Narodowy Bank Polski, vol. 51(3), pages 293-316.
    • Handle: RePEc:nbp:nbpbik:v:51:y:2020:i:3:p:293-316
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    References listed on IDEAS

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    More about this item

    Keywords

    total factor productivity; production function estimation; control function methods; Levinsohn-Petrin model; Olley-Pakes model; TFP determinants;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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