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A control function approach to measuring the total factor productivity of enterprises in Poland

Mariusz Górajski () and Mirosław Błażej ()
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Mariusz Górajski: University of Lodz, Faculty of Economics and Sociology
Mirosław Błażej: Statistics Poland, Department of Macroeconomic Studies and Finance

Bank i Kredyt, 2020, vol. 51, issue 3, 293-316

Abstract: Investigation of external and internal determinants of total factor productivity (TFP) is one of the main issues in the economics of growth. This paper aims to measure TFP and to identify the determinants of productivity for enterprises in Poland in the period of 2005–2016. Moreover, we examine sector heterogeneity of productivity and identify the sectors of the Polish economy in which enterprises achieve significantly higher TFP indicators. We estimate the production function by applying the econometric method of control functions. Under weak assumptions, this method allows for a consistent estimation of labour and capital elasticities of gross value added. We determine empirical distributions of TFP for the whole sample and conditional to selected productivity determinants. By applying econometric panel data models for the individual firms, we confirm the dependence of TFP of the enterprise on the form of ownership, investment rate, firm-level export status and their size. Finally, we observe a sector differentiation of TFP distributions and their strong dependence on the market concentration index.

Keywords: total factor productivity; production function estimation; control function methods; Levinsohn-Petrin model; Olley-Pakes model; TFP determinants (search for similar items in EconPapers)
JEL-codes: C14 C23 D21 D24 (search for similar items in EconPapers)
Date: 2020
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Handle: RePEc:nbp:nbpbik:v:51:y:2020:i:3:p:293-316