Japan's Productivity Stagnation: Using Dynamic Hsieh-klenow Decomposition

Author Name HOSONO Kaoru (Faculty Fellow, RIETI) / TAKIZAWA Miho (Gakushuin University)
Creation Date/NO. September 2019 19-E-069
Research Project Microeconometric Analysis of Firm and Industry Growth
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First draft: September 2019
Revised: February 2022


This study provides a new perspective on Japan's stagnant aggregate productivity by extending the Hsieh and Klenow (2009) framework to account for productivity growth, entry and exit, and product variety change. We measure the technical efficiency (TE) and allocative efficiency (AE) by the aggregate production possibility frontier and the distance from the frontier, respectively. We apply our approach to establishment- and firm-level datasets from Japan and find that the AE among survivors declined during the banking crisis period, while the TE declined during the global financial crisis period.

Published: Hosono, Kaoru, and Miho Takizawa, 2022. "Japan's productivity stagnation: Using dynamic Hsieh–Klenow decomposition," Contemporary Economic Policy, Volume 40, Issue 1 (2022), 218-232.