Questions tagged [productivity]

A measure of efficiency in production for some given set of inputs

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Question on productivity cycles

What is “productivity cycles”? Is this different from business cycles? And suggest papers on the productivity cycles as both theoretical and empirical studies? I will be happy if you inform me ...
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Modelling the optimal mix of labour

I am trying to model the profit maximization decision of a firm that uses two types of labor, workers A and workers B. I started by drawing the marginal product and marginal cost curves (lines, for ...
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How do labor literature measure productivity of the worker?

When a firm hires a worker, they have incomplete information on the workers' productivity. Firm's goal is to hire the most productive workers, and they estimate productivity of the workers given the ...
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Why in Italy and Spain, as productivity grows, wages don't grow too?

As you can see in this report: https://rpubs.com/lovepeacejoy404/crescita_salariale between labor productivity and the average wage there is a correlation of 76% (Pearson index), while with the ...
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Testing Kaldor's Second Law

According to Kaldor's second law, as manufacturing industry grows, the productivity in manufacturing will increase: $$p_i=f(g_m)$$ And, from the article of Heather Wells and A.P. Thirlwall (Testing ...
Tunay Sabri Yüksel's user avatar
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The relation between productivity and prices

I apologize if this is a stupid question, I am new/ an amateur in this field. I am wondering, in what way productivity and wages are actually related. If all labor was physical and I invented a pill ...
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Total Factor Productivity and Leontief Production Function

Just a bit of a conceptual question regarding the Leontief production function and the concept of total factor productivity (TFP). In particular, I wondered if these two concepts are at odds? The ...
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Labor Productivity movers and determinants: regression form

Consider a sample of firms' labor productivity over time. Some firms improve their productivity rating (i.e., jump from the lower to the higher productivity quartiles), some don't, and some stay ...
cel's user avatar
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Does diversity lead to more productivity?

Is it true that "Companies with diverse workforces outperform those with homogenous teams"? That's what TrendsWatching says anyway. And is it "diverse workforce" or "workforce ...
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Total factor productivity (TFP) estimation in R via estprod package

good morning I am trying to calculate the total factor productivity (TFP) for companies in the manufacturing industry through the Levinsohn-Petrin model. To do so, I use the prodest package in R. ...
Greissly Cardenas's user avatar
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What are the causes for the recent dramatic decline in productivity in the US

The recent Q2 release by the BLS on "Productivity and Costs", shows a big drop in productivity (the biggest ever since 1948): more work-hours but less output. Nonfarm business sector labor ...
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Calculation of labor, capital and productivity deviation

In Ohanian (2010): The Economic Crisis from a Neoclassical Perspective ( https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.4.45 ) I read about labor, capital and productivity deviation. I would like ...
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Steady-state savings rate

I'm having trouble with the steady-state savings rate type of problems. Here is the problem I'm stuck on: The production is $Y = 0.5*K^{1/3}(AN)^{2/3}$. If savings is $s$%, what are the steady-state ...
user40459's user avatar
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Intuition behind value added as TFP measure

In some papers the authors use value-added over capital and labor as TFP measure, what is the intuition behind this? For example, in one paper I just read the authors use $ \frac{VA}{(p_{K}K + p_{L}L)}...
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Why are prices deflated in a productivity estimation?

When measuring TFP with the Olley-Pakes method for example, why is it the case that the input and output prices are deflated by an industry price index? What's the intuition behind this? Say we use ...
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Is there any good summary, lecture notes, textbook or videos that give overview of firm-level productivity models?

As the title says, I am looking for some tutorials/educational materials for firm-level productivity models. I am looking for some source that would cover the most commonly used models. Also, it is a ...
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The CORE team's writings about labour productivity, real wages, markup and the price-setting curve

I've been reading the free online economics handbook that's developed as part of the CORE-project (here). The book is a refreshing read, but I'm struggling to follow their discussion of the price ...
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Relationship between capital and decreasing marginal prodcutivity

In Capital by Thomas Piketty ( chapter The capital - labor spit in the twenty first century - page 271) we have below quote The evolution of the rate of return on capita, r, significantly reduces the ...
sakeesh's user avatar
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Error while estimating a production function with prodest package in R

I have an unbalanced panel with 15063 firms between 2012 and 2018. I am using this code to estimate the production function with Levinsohn & Petrin method: ...
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can Unit Labour Cost > 100%?

I struggle to interpret this ECB chart: click here for the chart Several countries show consistently $Unit Labour Cost \gg 100%$. For example, Lithuania. Cost of labour $\gg$ Total Output, doesn't ...
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Relationship between productivity and GDP

I was looking at the OECD data for GDP per hour worked as a stand in for productivity and was extremely confused when I started comparing the numbers and tried to understand the relationship between ...
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Literature recommendation

Classic economic theory suggests people earn wages according to their productivity. Over time CEO's, directors, managers and the like seem to earn more relative to the 'normal worker'. Lets call this ...
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Competitive wages under imperfect information

Do competitive wages always have to be defined by marginal productivity? Can we have competitive wages which are not based on productivity, when the information is not perfect? To put it in context, ...
Elina Gilbert's user avatar
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Human Capital Vs TFP

I'm interested in familiarizing myself with some of the intra-debates that have occurred over the years, having to do with Mankiw, Romer, Weil (1992) and Klenow, Rodriguez-Clare (1997). Some argue ...
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Basic New Keynesian model with flexible price

I would like to know what would be the response of variables in the Basic New Keynesian model but with flexible prices (ie not with Calvo pricing). For example I have troubles to see how having ...
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etymology of TFP (total factor productivity)

In economics, total-factor productivity (TFP), also called multi-factor productivity, is usually measured as the ratio of aggregate output (e.g., GDP) to aggregate inputs.1 Under some simplifications ...
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Arellano and Bond (1991) GMM estimation in R by using plm package

I am a last-year student at university, currently working on my Bachelor's (so still learning R), and I really hope that you would suggest a potential solution (even if to use Python). So, the main ...
Wadim iLchuk's user avatar
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How can I add a multidimensional panel to estimate TFP (year, id, region) in R?

I'm not sure about adding fixed effects for the variables year,id,region (using the estprod library) as in this paper using LP stimator. In the STATA forum ( #18 #...
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Unbalanced panel data in prodest package in R

I have a question regarding the usage of unbalanced panel data for TFP estimation by using the prodest package. The dataset could be found here: https://drive.google.com/file/d/...
Wadim iLchuk's user avatar
8 votes
3 answers
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All else being equal, What is the value of job creation?

Job creation value Just to clarify, I have no experience, academic background or deep understanding of economics. Apologies for such a basic question but I couldn't find a real answer. I hear a lot ...
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Is this a correct way of calculating productivity? And can the proposed data be (accurately) used for doing so?

I want to know if my thinking for calculating productivity [2019-USD/hour-worked] is correct. Basics: Take the GDP of a country and divide by the total amount of hours worked in that country -> ...
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Stochastic Frontier Analysis (SFA) in Stata: Technical Efficiency Estimates

I am prepared to look quite the fool, but hopefully you can help me. I am trying to perform Stochastic Frontier Analysis on a balanced panel dataset by estimating the following model: I think the ...
Econometric Novice's user avatar
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Prodest package in R for TFP estimation, gives different results

I have the following issue: each time I run the estimation of the TFP by using prodest package in R 4.0.3, I obtain different coefficients before the variables as well as omega variable is different: ...
Wadim iLchuk's user avatar
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Arellano and Bond (1991) or Blundell and Bond (1998) in R estimation

I have the following problem with the Arellano and Bond (1991) or Blundell and Bond (1998) estimators in R using the plm package. I receive the following problem when trying to run the needed ...
Wadim iLchuk's user avatar
2 votes
2 answers
128 views

Are prices part of total factor productivity?

I am trying to understand how production is related to income/profit and where do prices enter. Suppose there is a single firm with a Cobb-Douglas production technology: $$Y=AK^{\alpha}L^{\beta}$$ ...
Paul's user avatar
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TFP in R via estprod package

I want to calculate the TFP by using the estprod function (I use R 4.0.2). As far as I understood the only way to calculate the TFP is manual following this logic . ...
Wadim iLchuk's user avatar
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Which diagnostic tests are suitable for Measuring Total Factor Productivity (TFP)?

I did the TFP estimation with Levinsohn Petrin (in R) but I have doubts about the diagnostic tests e.g. I know that the estimation of autocorrelation in residuals has to be done (it would be very ...
cdcarrion's user avatar
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TFP estimation in R by using prodest and estprod packages

I am writing my Bachelor Thesis and I really need help with the TFP estimation. so far I have a dataset with log values of Value added (va), Labour (l), Capital (k), and Materials (m). The initial ...
Wadim iLchuk's user avatar
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Can demand side restrictions explain the productivity paradox (Solow paradox)?

Productivity paradox https://en.wikipedia.org/wiki/Productivity_paradox is the name for the slow productivity growth (i.e. slow GDP growth) of the developed economies despite the robotics, AI, ...
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Data on labour productivity in India

I am trying to find historical data at the district, or ideally at the city-level on labour productivity (by sector, with a special focus on agriculture) or perhaps data on a similar measure?
Maria's user avatar
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Measurement for the downstream use of a commodity

I am looking to find a measurement that would tell me the size of the market of the downstream use of some particular commodity. For example, salt or wheat would be used by many companies downstream. ...
MGInt's user avatar
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2 votes
2 answers
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Why labor-augmenting technological progress increases employment and wages?

My textbook says that advances in technology typically raise the marginal product of labor and shift the labor demand curve to the right and calls it labor-augmenting technological advances. The book ...
boinka's user avatar
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4 votes
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CES aggregator for intermediates with heterogeneous productivity

I'm following Atkeson, Burstein (2019 JPE), and cannot understand the aggregation result. There is measure $M(z)$ of firms with productivity $z$, with production function $$ y(z) = z k(z)^\alpha l(z)^...
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Low oil price and impact

Today I read an artcicle about the falling oil price (maybe it'll go under 30$ per barel the next days). Why is this a bad news? Lower oil price can give an advantage for a higher productivity.
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How would increase labor productivity lead to improved living standards of people in an economy?

I would like to know more about the mechanisms through which higher labor productivity would translate into higher living standards for a population in a given economy.
StatsScared's user avatar
1 vote
1 answer
154 views

Measuring productivity with the Törnqvist index

I have a sample of companies, of which I want to calculate the productivity of each individual firm relative to a hypothetical firm in the industry. Choosing the measurement method was not easy, but ...
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What is the average percent of value an employee makes which he gets on salary (called)?

I'm looking for any statistics showing the average percent of money employees get from the monetary value they create, primarily from the US or EU. Is there a term for this ratio?
Probably's user avatar
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BreakEven/productivity/salary/employees

If employees’ salaries are increased by 20%, what is the increase in productivity required to break even? Can someone assist me in solving this question? Productivity = (output per period)/(number ...
maths New's user avatar
1 vote
2 answers
31 views

Are there any economic theories around the concept of companies focusing on that which is easier to calcuate?

A lot of the organisations I have worked for have focused on that which is easy to calculate. For example, direct cost savings are often easy to calculate, but analysing the wider implications of a ...
Barnaby Golden's user avatar
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When does the law of diminishing returns apply?

Law of diminishing returns does not always apply: The law of diminishing returns states that in all productive processes, adding more of one factor of production, while holding all others constant, ...
Volker Siegel's user avatar