Questions tagged [productivity]

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

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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 ...
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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 ...
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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, ...
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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 ...
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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/...
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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 ...
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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: ...
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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 ...
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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: $$Y=AK^{\alpha}L^{\beta}$$ ...
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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 . ...
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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 ...
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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 ...
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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?
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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. ...
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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 ...
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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.
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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?
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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 ...
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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 ...
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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, ...
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Does recycling lead to fewer jobs?

Say I buy a glass bottle, I can either put it in the landfill or recycle it. My understanding is, glass will breakdown into sand. (Not sure how well though, since we sometimes find glass from Roman ...
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Persistent changes in relative prices due to productivity differences

I read a couple of years ago that in the long run (in centuries) the relative price between, say, schooling and agriculture keeps increasing, since the latter sector gets more and more productive, ...
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Why is increased productivity infinitely good

From investopedia: Supply rises with productivity, dropping real prices and increasing real wages; it lifts people out of poverty and allows them to focus on efforts beyond mere survival. I ...
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Is the definition of Investment variable in Economics?

I studied that Investment is the expenditure incurred on the procurement of such goods that would help us in production of goods and services. And mainly consists of Fixed and Inventory Investment ...
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Can we see the computer age in the productivity statistics?

Robert Solow famously said: You can see the computer age everywhere but in the productivity statistics This quote is often linked with the productivity paradox (https://en.wikipedia.org/wiki/...
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Total factor productivity and revenue

On page 116 of The British Industrial Revolution in Global Perspective Robert Allen writes "...the total factor productivity of enclosed farms was 18 per cent higher than that of open fields. If ...
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Tax system is progressive or regressive

Let´s discuss a little! When the direct effect of a tax or transfer policy (compared to what would happen in the absence of the policy) is a reduction in inequality, it is called progressive policy. ...
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How can the number of hairdressers in the UK be up 50% since 2010?

In this recent article, The Economist argues that one of the reasons behind the anaemic recent wage growth in Britain is that the recent job growth has been concentrated in lower-productivity jobs and ...
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What's a product that historically has always had the same value, and probably will in the future?

Money usually has inflation tied to it, but is there a product that has stayed around the same value world wide for a very long time, and probably will for a very long time as well (something like 100 ...
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4 votes
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Empirical explanation on divergence between productivity and wages since the 70s

There is a well know graph, that shows a tight link between productivity and wages, until the 70s, and a break of the link since: There's a lot of possible explanations for this, I keep hearing more ...
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2 firms production decision for one agent

I'm trying to solve the optimal production $\{x,y\}$ for a risk neutral agent with weight $w$ in firm $X$ and weight $1-w$ in firm $Y$. Each firm has marginal cost $c^X$ and $c^Y$ respectively. The ...
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