measuring micro and macro productivity dynamics
Download
Skip this Video
Download Presentation
Measuring Micro and Macro Productivity Dynamics

Loading in 2 Seconds...

play fullscreen
1 / 21

Measuring Micro and Macro Productivity Dynamics - PowerPoint PPT Presentation


  • 458 Views
  • Uploaded on

Measuring Micro and Macro Productivity Dynamics. Remarks By John Haltiwanger. Overview. Objectives: Measure productivity at micro and macro levels in consistent fashion Reallocation dynamics at micro level important for aggregate

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Measuring Micro and Macro Productivity Dynamics' - Jimmy


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
overview
Overview
  • Objectives:
    • Measure productivity at micro and macro levels in consistent fashion
      • Reallocation dynamics at micro level important for aggregate
    • Track firm dynamics including entry and exit to measure and analyze importance of static and dynamic allocative efficiency vs. “within firm productivity” growth
  • Challenges:
    • TFP difficult to measure
    • Firm dynamics difficult to measure
methodological issues
Methodological Issues

Challenges:

1. Difficult to measure outputs and inputs especially capital

a. Capital

b. Prices especially at micro level

2. Estimating factor elasticities:

a. OLS

b. Cost Shares

c. Proxy methods (Olley-Pakes; Levinsohn-Petrin)

d. IV

mixed messages on challenges
Mixed Messages on Challenges…
  • Labor productivity and TFP often highly correlated
    • More important to get representative sample and firm dynamics than TFP?
  • Capital measurement difficult and potentially important for policies/institutions
  • Price/output measurement difficult given data limitations and very important for positive and normative implications
productivity shocks
PRODUCTIVITY SHOCKS
  • TFP - residual from KLEM production function:

where the production function is estimated in logs:

Inputs may be correlated w/ productivity, so use IVs:

    • Output of downstream producers.
    • Regional governments expenditures.
    • Energy and materials prices.
    • Estimated factor elasticities by sector using cost-share approach and results are robust (e.g., correlation between two measures is 0.88 and moments very similar).

Source: Eslava et al. (2005)

slide11

U.S. Exit Selection Results

Source: Foster, Haltiwanger and Syverson (2005)

aggregate productivity and allocation
Aggregate productivity and allocation
  • Olley and Pakes (1996) static decomposition:

where: N: # of firms in a sector;

    • The first term is the unweighted average of firm-level productivity,
    • The second term reflects allocation of resources: do firms with higher productivity have greater market share.
    • Requires representative cross sectional samples but does not require accurate longitudinal linkages
      • Cannot quantify directly importance of entry and exit
    • By construction, cross term takes out country effects so abstracts from some aspects of measurement error
the cross sectional efficiency of the allocation of activity
The cross-sectional efficiency of the allocation of activity

Source: Bartelsman, Haltiwanger and Scarpetta (2005)

the cross sectional efficiency of the allocation of activity1
The cross-sectional efficiency of the allocation of activity

Source: Bartelsman, Haltiwanger and Scarpetta (2005)

dynamic decomposition of productivity growth
Dynamic decomposition of productivity growth
  • Advantages:
    • Explicit measure of contribution of entry and exit
  • Disadvantages:
    • Horizon dependent
    • Experimentation, learning and selection may make especially dynamic economies have a low contribution of net entry at short horizons but high contribution at long horizons
within firm productivity growth dominates at five year horizons in mfg
Within-firm productivity growth dominates at five-year horizons in Mfg

Source: Bartelsman, Haltiwanger and Scarpetta (2005)

slide19

Differences Between continuing, entering and exiting

establishments in U.S. Manufacturing

Source: Foster, Haltiwanger and Syverson (2005)

slide20

Sensitivity of U.S. Manufacturing Decomposition to Prices

Source: Foster, Haltiwanger and Syverson (2005)

guidance
Guidance?
  • Micro/macro links critical
    • Large fraction of level of productivity associated with allocative efficiency
    • Important contribution of changes in allocative efficiency and/or reallocation/net entry components for productivity growth
  • Measurement of TFP challenge in general and especially at micro level
  • Greater weight on representative sample with micro/macro links than TFP vs. Labor productivity?
    • But measurement matters:
      • Prices and market structure matter and are often missing piece in micro/macro link
ad