Total factor productivity - a misleading concept
The paper criticises the concept of total factor productivity as a measure of technical change and economic performance on two grounds: (i) theoretical, because it shares all the weaknesses of the neoclassical production function from which it is derived; (ii) its relevance in helping to understand...
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| Format: | Article |
| Language: | English |
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Associazione Economia civile
2012-04-01
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| Series: | PSL Quarterly Review |
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| Online Access: | https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/9935 |
| _version_ | 1811172421110071296 |
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| author | Angelo Reati |
| author_facet | Angelo Reati |
| author_sort | Angelo Reati |
| collection | DOAJ |
| description |
The paper criticises the concept of total factor productivity as a measure of technical change and economic performance on two grounds: (i) theoretical, because it shares all the weaknesses of the neoclassical production function from which it is derived; (ii) its relevance in helping to understand the present technological revolution in computer and information technologies, since it concerns only disembodied technical change. The practical conclusion is that total factor productivity is more a measure of "noise" than a genuine indicator of technical progress. In spite of the above drawbacks, total factor productivity is still widely used in empirical work on technical change. This is all the more surprising since the alternative concept of productivity of labour not only avoids the above mentioned criticisms but is theoretically superior to its rival concept because it captures the true nature of present technical change.
JEL Codes: J24, D24, O47
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| first_indexed | 2024-04-10T17:30:48Z |
| format | Article |
| id | doaj.art-e8bda167eaf44a2babbd7a3e6ad25c9d |
| institution | Directory Open Access Journal |
| issn | 2037-3635 2037-3643 |
| language | English |
| last_indexed | 2024-04-10T17:30:48Z |
| publishDate | 2012-04-01 |
| publisher | Associazione Economia civile |
| record_format | Article |
| series | PSL Quarterly Review |
| spelling | doaj.art-e8bda167eaf44a2babbd7a3e6ad25c9d2023-02-03T16:47:59ZengAssociazione Economia civilePSL Quarterly Review2037-36352037-36432012-04-015421810.13133/2037-3643/9935Total factor productivity - a misleading conceptAngelo Reati The paper criticises the concept of total factor productivity as a measure of technical change and economic performance on two grounds: (i) theoretical, because it shares all the weaknesses of the neoclassical production function from which it is derived; (ii) its relevance in helping to understand the present technological revolution in computer and information technologies, since it concerns only disembodied technical change. The practical conclusion is that total factor productivity is more a measure of "noise" than a genuine indicator of technical progress. In spite of the above drawbacks, total factor productivity is still widely used in empirical work on technical change. This is all the more surprising since the alternative concept of productivity of labour not only avoids the above mentioned criticisms but is theoretically superior to its rival concept because it captures the true nature of present technical change. JEL Codes: J24, D24, O47 https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/9935Factor ProductivityProduction FunctionProductionProductivityTotal Factor Productivity |
| spellingShingle | Angelo Reati Total factor productivity - a misleading concept PSL Quarterly Review Factor Productivity Production Function Production Productivity Total Factor Productivity |
| title | Total factor productivity - a misleading concept |
| title_full | Total factor productivity - a misleading concept |
| title_fullStr | Total factor productivity - a misleading concept |
| title_full_unstemmed | Total factor productivity - a misleading concept |
| title_short | Total factor productivity - a misleading concept |
| title_sort | total factor productivity a misleading concept |
| topic | Factor Productivity Production Function Production Productivity Total Factor Productivity |
| url | https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/9935 |
| work_keys_str_mv | AT angeloreati totalfactorproductivityamisleadingconcept |