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Theoretical Framework -- A Vision Beyond Capital and Labor
Published in Shanzi Ke, Beyond Capital and Labor, 2018
There have been two general sets of productivity measures frequently used in early studies, average factor productivity and total factor productivity. Average factor productivity is also named partial productivity (Kendrick 1977), defined as output per unit of a specific input. It is apparent and understandable that in most cases researchers and practitioners are more interested in labor productivity than any other non-human factor productivity. Total factor productivity (TFP) refers to output per unit of combined measure of all conventional inputs. TFP has longer history in government publications than any partial productivity measures. Let us turn to TFP first due to the availability of the relevant measures derived in early sections.
Productivity measurement at the sectoral level: The case of Greek lignite mining
Published in G. N. Panagiotou, T. N. Michalakopoulos, Mine Planning and Equipment Selection 2000, 2018
Besides that the term ‘total factor productivity (TFP)’ refers to the ratio of output to all inputs (aggregate input), it is often cited in the related literature as the productivity of labor and capital (multi-factor productivity).
The impact of the change in institutional regulation on construction productivity: firm-level evidence in a developing economy
Published in Construction Management and Economics, 2023
Mohd Azrai Azman, Nor Nazihah Chuweni, Faridah Muhamad Halil, Ku Mohammad Asyraf Ku Azir, Boon L. Lee, Farah Nazira Juhari, Martin Skitmore
TFP is the ratio of aggregate outputs to aggregate inputs or output quantity index divided by an input quantity index (O'Donnell 2018). TFP can pick up the change in regulation more accurately because it considers the important inputs used in production compared to labor productivity, which uses only labor input (Abdel-Wahab and Vogl 2011). There are several measurement issues, such as offsite prefabrication facilities, which are usually accounted for in the manufacturing sector. Thus, construction productivity is less accurate at the industry level because it can only capture onsite activities. In this case, innovations occurring during offsite activities are missing (Nasir et al.2014). In addition, the accurate calculation of TFP requires an appropriate output and input aggregator index–but not all aggregator indices have the properties needed (Azman et al.2019).
Estimation and evaluation of productivity change and its drivers in the English and Welsh water sector: a stochastic cost frontier approach
Published in Urban Water Journal, 2019
Maria Molinos Molinos-Senante, Alexandros Maziotis
Total factor productivity (TFP) is a basic and instinctive measure to evaluate the performance of firms, sectors or countries. It is measured as the ratio of aggregate outputs to aggregate inputs, i.e. it is an overall measure of productivity. The evaluation of TFP changes is a useful tool to improve the competitiveness and performance of economic sectors (Lawrence, Diewert, and Fox 2006). TFP growth plays a significant role in incentive-based price regulation in different industries such as the telecommunication, energy or water industries (Marques, Simoes, and Pires 2011; De Witte and Marques 2012), and therefore, water regulatory authorities may be interested in measuring TFP growth (Filippini, Hrovatin, and Zoric 2010). As it was reviewed by Worthington (2014), in the water industry, benchmarking and subsequent changes in TFP assume a strategic significance as a way to replicate markets (Guerrini, Romano, and Campedelli 2013) as it allows water companies to have a better understanding of the best or frontier company and use this knowledge to improve performance (Maziotis et al. 2016a).
Comparison of Total Factor Productivity and Total Productivity for Their Relationship Attributes with Profit
Published in Engineering Management Journal, 2021
Naveen Tiruvengadam, Mario G. Beruvides, Armando Elizondo-Noriega
Total Factor Productivity (TFP) is a productivity metric that is preferred by economists (van Beveren, 2012). In addition to capital and labor, TFP is an input factor that determines output, and how this output is influenced by factors both endogenous (capital and labor) and exogenous (e.g. regulatory frameworks, economic constraints, institutional traits, geography) to the firm (Mahadevan, 2003). Evidently, an efficient and effective use of capital and labor resources, leading to a higher output, is indicative of a higher TFP. TFP itself is influenced by the level of technology of the firm, which is typically higher for larger firms given the higher levels of capital available to them for technology improvement and acquisition.