Products and Productivity

Andrew Bernard, Stephen Redding and Peter Schott

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: When firms make decisions about which product to manufacture at a more disaggregated level than observed in the data, measured firm productivity will reflect both true differences in productivity and non-random decisions about which products to manufacture. This paper examines a model of industry equilibrium where firms endogenously sort across products. We use the model to characterize the direction and magnitude of the resulting bias in productivity and to trace the implications for evaluating the aggregate effects of policy reforms such as industry deregulation. The endogenous sorting of firms across products provides a new source of reallocation and leads to biased measures of deregulation’s impact on firm and aggregate productivity.

Keywords: Product choice; Productivity measurement; Firm heterogeneity; Industry deregulation (search for similar items in EconPapers)
JEL-codes: D21 L11 L60 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2008-08
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Downloads: (external link)
https://www2.census.gov/ces/wp/2008/CES-WP-08-22.pdf First version, 2008 (application/pdf)

Related works:
Journal Article: Products and Productivity (2009)
Working Paper: Products and Productivity (2005)
Working Paper: Products and Productivity (2005)
Working Paper: Products and productivity (2005)
Working Paper: Products and Productivity (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:08-22

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