Measuring Aggregate Productivity Growth Using Plant-Level Data

30 Pages Posted: 10 Apr 2006 Last revised: 26 Jun 2022

See all articles by Amil Petrin

Amil Petrin

University of Minnesota - Duluth; National Bureau of Economic Research (NBER)

James A. Levinsohn

University of Michigan; National Bureau of Economic Research (NBER)

Date Written: December 2005

Abstract

We define aggregate productivity growth as the change in aggregate final demand minus the change in the aggregate cost of primary inputs. We show how to aggregate plant-level data to this measure and how to use plant-level data to decompose our measure into technical efficiency and reallocation components. This requires us to confront the "non-neoclassical" features that impact plant-level data including plant-level heterogeneity, the entry and exit of goods, adjustment costs, fixed and sunk costs, and market power. We compare our measure of aggregate productivity growth to several competing variants that are based only on a single plant-level factor of technical efficiency. We show that theory suggests our measure may differ substantially from these measures of aggregate productivity growth. We illustrate this using panel data from manufacturing industries in Chile. We find that our measure does differ substantially from other widely used measures with especially marked differences in the fraction of productivity growth attributed to reallocation.

Suggested Citation

Petrin, Amil and Levinsohn, James A., Measuring Aggregate Productivity Growth Using Plant-Level Data (December 2005). NBER Working Paper No. w11887, Available at SSRN: https://ssrn.com/abstract=875738

Amil Petrin

University of Minnesota - Duluth ( email )

1049 University Drive
Duluth, MN 55812
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

James A. Levinsohn (Contact Author)

University of Michigan ( email )

611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-763-2319 (Phone)
734-764-8063 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
97
Abstract Views
1,282
Rank
489,322
PlumX Metrics