Analysis on the Dispersion and Volatility of TFP in the Service Industries

Author Name MORIKAWA Masayuki (Vice Chairman & Vice President, RIETI)
Creation Date/NO. February 2017 17-J-010
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This study, using producer-level data for several narrowly-defined service industries, presents empirical findings on the cross-sectional dispersion and time-series volatility of total factor productivity (TFP). The novelty of this study is its use of high-frequency, time-series micro data to compare TFPQ and TFPR in the service industries. According to the analysis, first, volatility of TFPQ and TFPR is highly correlated with each other at the establishment level. Second, dispersion of productivity among establishments is generally larger for TFPR than TFPQ. This finding is different from past studies of the manufacturing sector. Third, dispersion of TFP is smaller when aggregated industry-level TFP is higher, and vice versa. Fourth, producers with highly volatile TFP are less productive.

The English version of this paper is 17-E-088.