Measuring the shift in the short-run production frontier

Hideyuki Mizobuchi ()
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Hideyuki Mizobuchi: Ryukoku University

Evolutionary and Institutional Economics Review, 2022, vol. 19, issue 1, No 12, 300 pages

Abstract: Abstract We introduce two labour productivity indexes. Both indexes are intended to capture the shift in the short-run production frontier, which can be attributed to technological progress or growth in capital inputs. The two indexes adopt distinct approaches to measuring the distance between the production frontiers. One is based on the distance function and the other is based on the profit function. In the end, we show that these two theoretical measures coincide with the index number formulae that are computable from the observable prices and quantities of output and input. By applying these formulae to the U.S. industry data of the years 1970–2005, we compare newly proposed labour productivity indexes with the average labour productivity growth over periods and across industries. We revisit the hypothesis of Baumol’s disease throughout our observations on the trend of industry labour productivities in the service sector.

Keywords: Labour productivity; Index numbers; Malmquist index; Törnqvist index; Output distance function; Input distance function; Baumol’s disease; Service sector (search for similar items in EconPapers)
JEL-codes: C14 D24 O47 O51 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s40844-021-00212-6

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