Accounting for unobservables in production models:management and inefficiency

Antonio M. Alvarez, Carlos Arias () and William H Greene
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Carlos Arias: University of León

No E2004/72, Economic Working Papers at Centro de Estudios Andaluces from Centro de Estudios Andaluces

Abstract: This paper explores the role of unobserved managerial ability in production and its relationship with technical efficiency. Previous analyses of managerial ability have been based on strong assumptions about its role in production or on the use of proxies. We avoid these limitations by introducing managerial ability as an unobserved random variable in a translog production function. The resulting empirical model can be estimated as a stochastic production frontier with random coefficients.

Keywords: Managerial ability; technical efficiency; production frontier; random coefficients model; maximum simulated likelihood. (search for similar items in EconPapers)
JEL-codes: C5 D2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc and nep-bec
Date: 2004
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Related works:
Working Paper: Accounting For Unobservables In Production Models: Management And Inefficiency (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:cea:doctra:e2004_72

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