Productivity: Should We Include Bads?

Rolf Färe (), Shawna Grosskopf, Tommy Lundgren (), Per-Olov Marklund () and Wenchao Zhou ()
Additional contact information
Rolf Färe: Dept. of Agriculture and Resource Economics, Postal: Oregon State University, Corvallis,, Oregon, , USA, http://people.oregonstate.edu/~farer/
Tommy Lundgren: CERE, Centre for Environmental and Resource Economics, Postal: SLU and Umeå, University, , Umeå, , Sweden, http://www.cere.se
Per-Olov Marklund: CERE, Centre for Environmental and Resource Economics and CERUM, Centre for Regional Science, Postal: Umeå University, , Sweden, http://www.cerum.umu.se
Wenchao Zhou: CERUM, Centre for Regional Science, Postal: Umeå University, , Sweden, http://www.cerum.umu.se

No 2012:13, CERE Working Papers from CERE - the Center for Environmental and Resource Economics

Abstract: This paper studies the interaction between economic and environmental performance. Applying the directional output distance function approach, the purpose is to compare estimates of Luenberger total factor productivity indicators, including and excluding bad outputs. Specifically, based on unique firm level data from Swedish manufacturing covering the period 1990 to 2008, we explore to what extent excluding bad outputs leads to erroneous productivity measurement. The main conclusion is that bad outputs should not only be included in the estimations, but also reduction in bad outputs should be credited. From this point of view the directional output distance function approach and the Luenberger indicator serves as an appropriate basis of productivity measurement.

Keywords: Swedish manufacturing; Luenberger indicator; emissions; productivity (search for similar items in EconPapers)
JEL-codes: D24 Q01 Q53 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2012-05-31
New Economics Papers: this item is included in nep-eff and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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