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A Richer Understanding of Australia's Productivity Performance in the 1990s: Improved Estimates Based Upon Firm‐Level Panel Data *
Author(s) -
BREUNIG ROBERT,
WONG MARNHEONG
Publication year - 2008
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2008.00460.x
Subject(s) - productivity , panel data , production (economics) , industrial organization , production function , aggregate (composite) , function (biology) , business , economics , econometrics , multifactor productivity , labour economics , microeconomics , total factor productivity , macroeconomics , materials science , evolutionary biology , biology , composite material
Australian industry is characterised by differences across firms, entry of new firms and exit of unsuccessful firms. These facts highlight the inappropriateness of measuring productivity using aggregate production functions based upon representative firms. In this study, we model heterogeneous firms which change over time. We model the interrelationship between productivity shocks, input choices and decisions to cease production. Firm‐level data provides production function estimates for 25 two‐digit Australian industries. A new aggregation method for industry‐level data allows us to separate productivity changes from output composition changes. Our study sheds new light on the Australian productivity performance.