Measuring Productivity Change without Neoclassical Assumptions: A Conceptual Analysis

The measurement of productivity change (or difference) is usually based on models that make use of strong assumptions such as competitive behaviour and constant returns to scale. This survey discusses the basics of productivity measurement and shows that one can dispense with most if not all the usual, neoclassical assumptions. By virtue of its structural features, the measurement model is applicable to individual establishments and aggregates such as industries, sectors, or economies. ∗ The views expressed in this paper are those of the author and do not necessarily reflect any policy of Statistics Netherlands. Preliminary versions were presented at seminars at the universities of Duisburg-Essen (13 December 2006) and Verona (19 March 2007), and at the Sixth Annual Ottawa Productivity Workshop (14-15 May 2007). Further presentations were given at the Australian Bureau of Statistics (22 June 2007), The University of New South Wales (29 June 2007), and The University of Queensland (17 July 2007).