Economics at your fingertips  

Decomposing the Luenberger–Hicks–Moorsteen Total Factor Productivity indicator: An application to U.S. agriculture

Frederic Ang and Pieter Jan Kerstens

European Journal of Operational Research, 2017, vol. 260, issue 1, 359-375

Abstract: This paper introduces a decomposition of the additively complete Luenberger–Hicks–Moorsteen Total Factor Productivity indicator into the usual components: technical change, technical inefficiency change and scale inefficiency change. Our approach is general in that it does not require differentiability or convexity of the production technology. Using a nonparametric framework, the empirical application focuses on the agricultural sector at the state-level in the U.S. over the period 1960–2004. The results show that Luenberger–Hicks–Moorsteen productivity increased substantially in the considered period. This productivity growth is due to output growth rather than input decline, although the extent depends on the convexity assumption of the technology. Technical change is the main driver, while the role of technical inefficiency change and scale inefficiency change also depends on the convexity assumption of the technology.

Keywords: Data Envelopment Analysis; Luenberger–Hicks–Moorsteen Total Factor Productivity indicator; decomposition; Non-convex technology; Additive completeness, (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Series data maintained by Dana Niculescu ().

Page updated 2017-10-01
Handle: RePEc:eee:ejores:v:260:y:2017:i:1:p:359-375