<>
" if you have low labor and capital"
Just out of curiosity: Which line of argumentation makes you think that
service sector firms have "low labor"? (what does "low" mean in this
context, anyway...)
HTH
Martin
-----Ursprüngliche Nachricht-----
Von: [email protected]
[mailto:[email protected]] Im Auftrag von Prabal De
Gesendet: Dienstag, 27. Oktober 2009 17:24
An: [email protected]
Betreff: Re: st: AW: RE: levpet for service sector firms
My Bad. It does stand for Total Factor Productivity which is
contribution of the 'residual term' A after factoring out
contributions of labor and capital in a production function. For a log
Cobb-Douglas production function
logY = logA + (alpha)logL + (1-alpha)logK
Nick:
Since this is essentially an "accounting" procedure, TFP will be
mechanically high if you have low labor and capital. And
Levinsohn-Petrin procedure controls for endogeneity in capital stock
by instrumenting with intermediate inputs like fuel.
Now intuitively, for service sector firms both physical capital and
fuel are much less important. Then one argument is that they DO have
very high TFP. I haven't found a logic contrary to this myself except
toying with other intermediate inputs like communication expenses(nor
any reference), but then there are smarter economists around and in
Statalist. I still hope someone can shed more light on this issue.
Thanks and regards,
Prabal
On 10/27/09, Martin Weiss <[email protected]> wrote:
>
> <>
>
> Prabal may also want to let statalisters know what "TFP" stands for... Let
> me guess: "Total Factor Productivity"?
>
> As far as I can tell, not even the -rather comprehensive- article
> introducing -levpet-
> http://www.stata-journal.com/sjpdf.html?articlenum=st0060 mentions this
> term....
>
>
>
>
> HTH
> Martin
>
>
> -----Ursprüngliche Nachricht-----
> Von: [email protected]
> [mailto:[email protected]] Im Auftrag von Nick Cox
> Gesendet: Dienstag, 27. Oktober 2009 14:44
> An: [email protected]
> Betreff: st: RE: levpet for service sector firms
>
> Just curious, as I only understand some of this and it's not my field:
> why do different numbers require a different logic?
>
> Nick
> [email protected]
>
> Prabal De
>
> I am trying to estimate a production function for service sector
> firms using <levpet>. However, the usual method for manufacturing
> sector is giving very high TFPs as naturally the service sector firms
> use less physical capital. Is there is variation of the levpet
> procedure for service sector firms?
>
>
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