DP14227 Measuring Productivity: Lessons from Tailored Surveys and Productivity Benchmarking

Author(s): David Atkin, Amit Khandelwal, Adam Osman
Publication Date: December 2019
Keyword(s): productivity
Programme Areas: International Trade and Regional Economics, Development Economics, Macroeconomics and Growth
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14227

We use tailored surveys and benchmarking in the flat-weave rug industry to better understand the shortcomings of standard productivity measures. TFPQ performs poorly because of variation in product specifications across firms. Controlling for specifications aligns TFPQ with lab benchmarks. We also collect quality metrics to construct quality productivity (the ability to produce quality given inputs) and find substantial dispersion across firms. This motivates interest in multi-dimensional productivity, or capability. As quality productivity is negatively correlated with TFPQ, TFPR may perform better at capturing capabilities in settings where better firms make products with more demanding specifications that have greater input requirements.