What Determines Productivity?
Journal of Economic Literature
no. 2, June 2011
Economists have shown that large and persistent differences in productivity levels across businesses are ubiquitous. This finding has shaped research agendas in a number of fields, including (but not limited to) macroeconomics, industrial organization,
labor, and trade. This paper surveys and evaluates recent empirical work addressing the question of why businesses differ in their measured productivity levels. The causes are manifold, and differ depending on the particular setting. They include elements sourced in production practices -- and therefore over which producers have some direct control, at least in theory -- as well as from producers' external operating
environments. After evaluating the current state of knowledge, I lay out what I see are the major questions that research in the area should address going forward. (JEL D24, G31, L11, M10, O30, O47)
"What Determines Productivity?"
Journal of Economic Literature,
Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
Production, Pricing, and Market Structure; Size Distribution of Firms
Business Administration: General
Technological Change; Research and Development: General
Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence