Frontier firms, inefficiency and productivity dynamics
Time & Date: 10:00 -11:00, ,Monday, January 11, 2021
Speaker: Dr. Shipei Zeng
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Productivity dynamics occur when firms enter and exit a market. Contributions from firms to industry productivity can be decomposed into effects from entrants, exiters and incumbents. As opposed to productivity dynamics, productivity can also be decomposed into explanatory factors regarding efficiency and technical progress. These two patterns of decomposition provide different perspectives about the driving components of productivity. I propose a framework that merges them and produces a cross dimension. Industry productivity can not only be allocated as firm contributions, but also its explanatory factors can be illustrated analogously. It is developed by specifying firms that are on production frontiers, measuring the deviation from frontiers, and integrating explanatory factors with firm dynamics. A difference-in-differences approach is proposed that validates the firm dynamics from the counterfactual perspective. As an empirical exercise, the framework is applied to Australian firm-level data and reveals the dominant contribution of incumbent firms to industry productivity and industry efficiency.
Shipei Zeng is a Ph.D. candidate in Economics at the University of New South Wales, Sydney, Australia. He received his BA and MA in Economics at Renmin University of China. His research covers production, productivity and prices, with a focus on big data from administrative sources. As an applied econometrician, he is interested in productivity decomposition, price imputation and firm dynamics, using especially micro data and data science techniques. He is the author of an R computing package “dfvad” (accepted by CRAN and updated on GitHub) for productivity analysis. He ranked at top places in data prediction contests such as the iFLYTEK AI Developer Competition (2/1635) and the Digital Sichuan Innovation Competition (4/535).