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In economics, total-factor productivity (TFP), also called multi-factor productivity, is usually measured as the ratio of aggregate output (e.g., GDP) to aggregate inputs. [1] Under some simplifying assumptions about the production technology, growth in TFP becomes the portion of growth in output not explained by growth in traditionally ...
The Solow residual measures total factor productivity, but the productivity variable is normally attached to the labor variable in the Solow-Swan model to make technological growth labor-augmenting. This type of productivity growth is required mathematically to keep the shares of national income accruing to the factors of production constant ...
The accounting result is obtained by subtracting the weighted growth rates of the inputs from the growth rate of the output. In this case the accounting result is 0.015 which implies a productivity growth by 1.5%. We note that the productivity model reports a 1.4% productivity growth from the same production data.
An explanation of the difference between efficiency and (total factor) productivity is found in "An Introduction to Efficiency and Productivity Analysis". [1] To complicate the meaning, operational excellence , which is about continuous improvement, not limited to efficiency, is occasionally used when meaning operational efficiency.
The exogenous rate of TFP (total factor productivity) growth in the Solow–Swan model is the residual after accounting for capital accumulation. The Mankiw, Romer, and Weil model provide a lower estimate of the TFP (residual) than the basic Solow–Swan model because the addition of human capital to the model enables capital accumulation to ...
The Total Economy Database was developed at the Groningen Growth and Development Centre (GGDC) in the University of Groningen in the Netherlands in the early 1990s. . Starting in the late 1990s, it began to be produced jointly by GGDC and The Conference Board, a nonprofit founded in 1916 that works on the relationship between business and labor in 60 c
Factor income (also called primary income and earned income) is the flow of income that is derived from the factors of production, i.e., the general inputs required to produce goods and services. Factor income on the use of land is called rent , income generated from labor is called wages , and income generated from capital is divided between ...
The term of partial productivity illustrates well the fact that total productivity is only measured partially – or approximately. In a way, measurements are defective but, by understanding the logic of total productivity, it is possible to interpret correctly the results of partial productivity and to benefit from them in practical situations.