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A more flexible decomposition of productivity growth

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  • Troy Matheson

Abstract

Conventional productivity growth decompositions, such as those of Baily, Bartelsman and Haltiwanger (2001) and Grilliches and Regev (1995), first aggregate each firm's productivity level into an aggregate productivity index, and then allocate aggregate growth back to the firms forming the aggregate. It is shown that this can produce misleading results, and two more flexible decompositions are proposed that are consistent with the superlative Tornqvist productivity growth index.

Suggested Citation

  • Troy Matheson, 2006. "A more flexible decomposition of productivity growth," Applied Economics Letters, Taylor & Francis Journals, vol. 13(11), pages 695-698.
    • Handle: RePEc:taf:apeclt:v:13:y:2006:i:11:p:695-698
    DOI: 10.1080/13504850600903837
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    References listed on IDEAS

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    1. Bernard, Andrew B & Jones, Charles I, 1996. "Productivity across Industries and Countries: Time Series Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 135-146, February.
    2. Paul Schreyer, 2001. "The OECD Productivity Manual: A Guide to the Measurement of Industry-Level and Aggregate Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 37-51, Spring.
    3. Martin Neil Baily & Eric J. Bartelsman & John Haltiwanger, 2001. "Labor Productivity: Structural Change And Cyclical Dynamics," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 420-433, August.
    4. John Haltiwanger, 1997. "Measuring and analyzing aggregate fluctuations: the importance of building from microeconomic evidence," Review, Federal Reserve Bank of St. Louis, issue May, pages 55-78.
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