Nonparametric Estimates of the Components of Productivity and Profitability Change in U.S. Agriculture

Christopher J. O’Donnell

197 citations0/0 files storedAmerican Journal of Agricultural Economics

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Efficiency Analysis Using DEA Agricultural economics and policies Economic Growth and Productivity

Abstract

Recent theoretical advances in total factor productivity (TFP) measurement mean that TFP indexes can now be exhaustively decomposed into unambiguous measures of technical change and efficiency change. To date, all applications of this new methodology have involved decomposing indexes that have poor theoretical properties. This article shows how the methodology can be used to decompose a new TFP index that satisfies all economically‐relevant axioms from index theory. The application is to state‐level data from 1960 to 2004. In most states, the main drivers of agricultural TFP change are found to have been technical change and scale and mix efficiency change.

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References

1957The Measurement of Productive Efficiency 1957Technical Change and the Aggregate Production Function 1982The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity 1994Data Envelopment Analysis: Theory, Methodology, and Applications 1967The Explanation of Productivity Change 2010Measuring and decomposing agricultural productivity and profitability change*1982A Translog Cost Function Analysis of U.S. Agriculture, 1939–77 2009Persistence Pays

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