Productivity, Welfare andReallocation : Theory and Firm-Level Evidence

Basu, Susanto ; Pascali, Luigi ; Schiantarelli, Fabio ; Serven, Luis

关键词: AGGREGATE PRODUCTION FUNCTION;    ALLOCATIVE EFFICIENCY;    ARMA;    AVERAGE PRODUCTIVITY;    AVERAGE PRODUCTIVITY GROWTH;   

DOI  :  10.1596/1813-9450-5226
RP-ID  :  WPS5226

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

A considerable literature has focused onthe determinants of total factor productivity (TFP),prompted by the empirical finding that TFP accounts for thebulk of long-term growth. This paper offers a deeper reasonfor such focus: the welfare of a representative consumer issummarized by current and anticipated future Solowproductivity residuals. The equivalence holds for anyspecification of technology and market structure, as long asthe representative household maximizes utility while takingprices parametrically. This result justifies total factorproductivity as the right summary measure of welfare, evenin situations where it does not properly measure technology,and makes it possible to calculate the contributions ofdisaggregated units (industries or firms) to aggregatewelfare using readily available data. Based on this finding,the authors compute firm and industry contributions towelfare for a set of European countries (Belgium, France,Great Britain, Italy, Spain) using industry-level andfirm-level data. With additional assumptions abouttechnology and market structure (specifically, that firmsminimize costs and face common factor prices), the authorsshow that welfare change can be further decomposed intothree components that reflect, respectively, technicalchange, aggregate distortions, and allocative efficiency.Then, using the appropriate firm-level data, they assess theimportance of each of these components as sources of welfareimprovement in the same set of European countries.