Project R-3959

Imperfect markets, the financial crisis and measuring productivity: a micro-econometric analysis (Research)

First, the project considers four non-neoclassical assumptions: capital under (-over) utilization, wage bargaining, scale effects and mark-ups. When adapting the TFP measure for these market imperfections, it is also important to empirically verify to what extent the measure is sensitive to different model specifications. In that way, the bias in TFP (growth and distribution), resulting from not controlling for these imperfections, is analysed. Secondly, positive and negative exogenous effects of the financial crisis on TFP, as predicted by the existing literature, are investigated. More specifically, the project estimates the impact of these effects on the level and growth of TFP and on their underlying distributions (using semi/non-parametric estimators). Specific attention is also given to the quantification of the financial crisis. Thirdly, the project relies on firm-level data in order to better isolate different heterogeneous effects that otherwise may be levelled out when using aggregate data. Furthermore, a unique database is constructed, whereby production data will be linked to other data (e.g. employee-employer database and business surveys).

01 October 2012 - 31 March 2015