TY  - JOUR
AU  - Biesebroeck,Johannes Van
TI  - Robustness of Productivity Estimates
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10303
PY  - 2004
Y2  - February 2004
UR  - http://www.nber.org/papers/w10303
L1  - http://www.nber.org/papers/w10303.pdf
N1  - Author contact info:
Johannes Van Biesebroeck
Centre for Economic Studies
K.U.Leuven
Naamsestraat 69
3000 Leuven
BELGIUM
Tel: +32 16 32 67 93
Fax: +32 16 32 67 96
E-Mail: jo.vanbiesebroeck@econ.kuleuven.be
AB  - Researchers interested in estimating productivity can choose from an array of methodologies, each with its strengths and weaknesses. Many methodologies are not very robust to measurement error in inputs. This is particularly troublesome, because fundamentally the objective of productivity measurement is to identify output differences that cannot be explained by input differences. Two other sources of error are misspecifications in the deterministic portion of the production technology and erroneous assumptions on the evolution of unobserved productivity. Techniques to control for the endogeneity of productivity in the firm's input choice decision risk exacerbating these problems. I compare the robustness of five widely used techniques: (a) index numbers, (b) data envelopment analysis, and three parametric methods: (c) instrumental variables estimation, (d) stochastic frontiers, and (e) semiparametric estimation. The sensitivity of each method to a variety of measurement and specification errors is evaluated using Monte Carlo simulations.
ER  -