Conceptualization and Measurement of Productivity Growth and Technical Change: A Nonparametric Approach

Subhash Ray

Chapter 20 in Handbook of Production Economics, 2022, pp 821-870 from Springer

Abstract: Abstract The famous Solow residual measures productivity change as the difference between the growth rates of output and input. Under constant returns to scale and in the absence of any technical inefficiency, it serves as a measure of technical change. In neoclassical production economics, productivity change can be measured alternatively from the production, cost, profit, or distance functions. In continuous time analysis, one measures the rates of productivity and technical change. In discrete time, one measures indexes of productivity and technical change over time. This chapter describes the Tornqvist, Fisher, and Malmquist productivity indexes along with the Luenberger productivity indicator based on the directional distance function and how they relate to one another. Also discussed is the relation between productivity and profitability of a firm. The relevant nonparametric DEA models for measuring the Malmquist index and the Luenberger productivity indicator are formulated for nonparametric analysis of productivity, technical change, and change in efficiency.

Keywords: Solow residual; Shephard distance function; Directional distance function; Data envelopment analysis; D24; C61 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/978-981-10-3455-8_26

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