Dispersion and Volatility of TFPQ in Service Industries
Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)
This study, using microdata on narrowly-defined service industries, presents empirical findings on the cross-sectional dispersion and time-series volatility of total factor productivity (TFP). The novelty of this study lies in its use of high-frequency, establishment-level panel data to compare the physical measure of productivity (TFPQ) and revenue-based productivity (TFPR) in the service industries. According to the analysis, first, TFPQ and TFPR are highly correlated with each other in terms of cross-section as well as time-series dimensions. Second, the within-industry dispersion of TFPQ is not necessarily larger than that of TFPR, which differs from past studies on the manufacturing sector. Third, TFPQ dispersion is lower when aggregated industry-level TFPQ is higher, and vice versa. Fourth, service producers with highly volatile TFP are less productive.
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:17088
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