The Deviation Terms in the Decomposition of Aggregate Productivity Growth
JEL Classification: O47
Abstract
In the decomposition of aggregate productivity growth, corresponding components are generally indexed according to the deviation of individual-level productivity from aggregate productivity. This paper provides an alternative perspective and points out that this decomposition method seems more suitable for studying change in relative aggregate productivity growth than for aggregate productivity growth when a deviation term is adopted.
Keywords:
Growth decomposition, Aggregate productivity, Deviation term, Within and between effectsAcknowledgments
This research is supported by the Department of Education of Guangdong Province’s Key Discipline Research Enhancement Project (2021ZDJS117). Le Li thanks the Japan Society for the Promotion of Science for the support when he worked as a JSPS International Research Fellow (P18759) between 2018 and 2020. We thank Marco Grazzi for his comments.
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