The Verdoorn Law: Some Evidence from Non-parametric Frontier Analysis

Destefanis, Sergio (2002): The Verdoorn Law: Some Evidence from Non-parametric Frontier Analysis. Published in: John McCombie, Maurizio Pugno, Bruno Soro (eds.) No. Ch. 8, Productivity Growth and Economic Performance - Essays on Verdoorn's Law (19 December 2002): pp. 136-164.

Abstract

In this paper we show how the nature of economies of scale can be assessed using a set of procedures based on non-parametric frontier analysis. Through these procedures it is possible to characterise qualitatively the nature of returns to scale for each observation, yielding important information on the heterogeneity of observations across both time and space. Also an approximate quantitative measure of returns to scale can be produced for each observation. By way of application, we assess economies of scale across a sample of 52 countries, taken from the Penn World Table, mark 5.6. We suggest that this exercise is a useful addition to the existing literature on Verdoorn Law, as non-parametric frontier analysis allows a novel approach to the issues of simultaneity and spuriousness.

• Item Type: MPRA Paper
• Language: English
• Keywords: DEA, FDH, Increasing returns to scale, Elasticity of scale, Penn World Table.
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E23 - Production; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

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