The Many Decompositions of Total Factor Productivity Change

Total factor productivity change, here defined as output quantity change di- vided by input quantity change, is the combined result of (technical) efficiency change, technological change, a scale effect, and input and output mix ef- fects. Sometimes allocative efficiency change is supposed to also play a role. Given a certain functional form for the productivity index, the problem is how to decompose such an index into factors corresponding to these five or six components. A basic insight offered in the present paper is that mean- ingful decompositions of productivity indices can only be obtained for indices which are transitive in the main variables. Using a unified approach, we ob- tain decompositions for Malmquist, Moorsteen-Bjurek, price-weighted, and share-weighted productivity indices. A unique feature of this paper is that all the decompositions are applied to the same dataset of a real-life panel of decision-making units so that the extent of the differences between the various decompositions can be judged.

[1]  Hideyuki Mizobuchi.  Productivity indexes under Hicks neutral technical change , 2017 .

[2]  C. Lovell.  Recent Developments in Productivity Analysis , 2016 .

[3]  Giannis Karagiannis,et al.  Productivity measurement in radial DEA models with a single constant input , 2016, Eur. J. Oper. Res..

[4]  Ming-Miin Yu,et al.  Profit-oriented productivity change , 2015 .

[5]  Tsu-Tan Fu,et al.  Metafrontier cost Malmquist productivity index: an application to Taiwanese and Chinese commercial banks , 2015 .

[6]  C. A. Knox Lovell,et al.  Productivity Accounting: The Economics of Business Performance , 2015 .

[7]  W. Diewert,et al.  Decompositions of Profitability Change using Cost Functions , 2014 .

[8]  Kristiaan Kerstens,et al.  Comparing Malmquist and Hicks-Moorsteen productivity indices: Exploring the impact of unbalanced vs. balanced panel data , 2014, Eur. J. Oper. Res..

[9]  Diego Prior,et al.  Environmental externalities and regulation constrained cost productivity growth in the US electric utility industry , 2013 .

[10]  Bert M. Balk,et al.  Price and Quantity Index Numbers: Models for Measuring Aggregate Change and Difference , 2012 .

[11]  C. O'Donnell.  An aggregate quantity framework for measuring and decomposing productivity change , 2012 .

[12]  Kristiaan Kerstens,et al.  Technology-Based Total Factor Productivity and Benchmarking: New Proposals and an Application , 2011 .

[13]  Ku-Hsieh Chen,et al.  A cross-country comparison of productivity growth using the generalised metafrontier Malmquist productivity index: with application to banking industries in Taiwan and China , 2011 .

[14]  W. Briec,et al.  The Hicks–Moorsteen Productivity Index Satisfies the Determinateness Axiom , 2011 .

[15]  B. Balk.  An Assumption-Free Framework for Measuring Productivity Change , 2010 .

[16]  Léopold Simar,et al.  Forecasting the Malmquist productivity index , 2008 .

[17]  M. Goto,et al.  Productivity, efficiency, scale economies and technical change: A new decomposition analysis of TFP applied to the Japanese prefectures , 2005 .

[18]  Emmanuel Thanassoulis,et al.  A cost Malmquist productivity index , 2004, Eur. J. Oper. Res..

[19]  Shawna Grosskopf,et al.  Some Remarks on Productivity and its Decompositions , 2003 .

[20]  C. Lovell,et al.  The Decomposition of Malmquist Productivity Indexes , 2003 .

[21]  T. Coelli,et al.  A Primer on Efficiency Measurement for Utilities and Transport Regulators , 2003 .

[22]  B. Balk.  Scale Efficiency and Productivity Change , 2001 .

[23]  Per J. Agrell,et al.  A Caveat on the Measurement of Productive Efficiency , 2001 .

[24]  Emmanuel Thanassoulis,et al.  Assessing productivity changes in UK hospitals reflecting technology and input prices , 2000 .

[25]  Jesús T. Pastor,et al.  Radial DEA models without inputs or without outputs , 1999, Eur. J. Oper. Res..

[26]  Emili Grifell-Tatjé,et al.  Profits and Productivity , 1999 .

[27]  B. Balk,et al.  Industrial Price, Quantity, and Productivity Indices: The Micro-Economic Theory and an Application , 1998 .

[28]  G. Benston,et al.  The Residual: On Monitoring and Benchmarking Firms, Industries, and Economies with Respect to Productivity , 1997 .

[29]  Hans Bjurek.  The Malmquist Total Factor Productivity Index , 1996 .

[30]  Rikard Althin,et al.  A new, transitive productivity index , 1996 .

[31]  D. Primont,et al.  Multi-Output Production and Duality: Theory and Applications , 1994 .

[32]  W. Diewert.  Fisher ideal output, input, and productivity indexes revisited , 1992 .

[33]  K. Schittkowski,et al.  Lecture Notes in Economics and Mathematical Systems , 1985 .

[34]  R. Moorsteen.  On Measuring Productive Potential and Relative Efficiency , 1961 .

[35]  Kevin J. Fox,et al.  Decomposing productivity indexes into explanatory factors , 2017, Eur. J. Oper. Res..

[36]  C. Lovell,et al.  Exact Relationships Between Fisher Indexes and Theoretical Indexes , 2016 .

[37]  F. Førsund.  Productivity Interpretations of the Farrell Efficiency Measures and the Malmquist Index and Its Decomposition , 2016 .

[38]  E. Balla,et al.  Accounting for externalities in the measurement of productivity growth: the Malmquist cost productivity measure , 2005 .

[39]  R. Färe,et al.  A note on decomposing the Malmquist productivity index by means of subvector homotheticity , 2001 .

[40]  R. Färe,et al.  Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries , 1994 .

[41]  J. Hicks.  The Measurement of Capital in Relation to the Measurement of Other Economic Aggregates , 1961 .