ESSAYS ON PRODUCTIVITY ANALYSIS
Type of DegreePhD Dissertation
Agricultural Economics and Rural Sociology
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This dissertation includes three essays conducting analyses of firm performance with the emphasis on estimating production technology, productivity, cost effectiveness and their relations with closely related aspects of firm behavior: exporting decisions, cross-firm learning and technology spillovers, local neighborhood influences, operational scope, etc. I contribute to the literature by extending and implementing methods for structural identification of firm-level production/cost functions and productivity to address issues of heterogeneity and endogeneity. In the first chapter, I investigate the nexus between firm productivity and export behavior in a structural framework of firm production. My approach allows the firm’s productivity to be affected not only by its own export behavior but also by that of its spatially proximate peers. The latter channel facilitated by cross-firm spillovers has been largely ignored in the literature. My model provides an internally consistent strategy for the measurement of productivity-boosting effects of exports that accommodates both channels. I apply it to Chilean manufacturing data from 1995-2007 and find significant evidence in favor of both the internal (within-firm) and external (cross-firm) effects of exporting. The next chapter proposes a methodology to accommodate locational heterogeneity in production analysis. My approach is novel in that I explicitly model spatial variation in parameters in the production-function estimation. I accomplish this by allowing the parameters to be unknown functions of the firm’s geographic location and estimate them via local kernel methods. This allows the production technology to vary across space, thereby accommodating neighborhood influences on firm production. Using this methodology, I study China’s chemicals manufacturing in 2002-2004 and find that differences in technology are the main source of the cross-location differential in total productivity in this industry. The third chapter provides new and more robust evidence of scope economies in U.S. commercial banking. I improve upon the prior literature not only by analyzing the most recent data and accounting for banks’ nontraditional non-interest-income-centered operations, but also in multiple methodological ways. I estimate a flexible time-varying-coefficient panel-data quantile regression model which accommodates three-way heterogeneity across banks. The results provide strong evidence in support of significantly positive scope economies across banks of virtually all sizes.