Macro and Micro Dynamics of Productivity: From Devilish Details to Insights

Glenn Blackwood, Lucia Foster, Cheryl Grim, John Haltiwanger and Zoltán Wolf

American Economic Journal: Macroeconomics, 2021, vol. 13, issue 3, 142-72

Abstract: Firm-level, revenue-based productivity measures are ubiquitous in studies of firm dynamics and aggregate outcomes. One common measure is increasingly interpreted as reflecting "distortions" since in distortions' absence, equalization of marginal revenue products should yield no dispersion in this measure. Another common but distinct measure is the residual of the firm-level revenue function, which reflects "fundamentals." Using micro-level US manufacturing data, we find these alternative measures are highly correlated, exhibit similar dispersion, and have similar relationships with growth and survival. However, the distinction between these alternative measures is critically important for quantitative assessment of the level and decline of allocative efficiency.

JEL-codes: D21 D22 D24 G32 L60 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (17)

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Working Paper: Macro and Micro Dynamics of Productivity: From Devilish Details to Insights (2017)
Working Paper: Macro and Micro Dynamics of Productivity: From Devilish Details to Insights (2017)
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DOI: 10.1257/mac.20170282

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