Measuring productivity change using alternative input–output concepts: A farm level application using FADN data
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Multifactor productivity growth measures can be constructed using different input–output
concepts. We estimate three distinct productivity growth measures respectively based on gross
output, value added, and cash flow and discuss their economic interpretation. By making use of
an index theory based decomposition model, we deviate from making neo-classical assumptions
and acknowledge the role of profits. Applying the productivity growth index framework to farm
level Flemish FADN data (1990–2003), we show that the estimated percentage growth of
productivity is sensitive to the input–output concept under consideration. The empirical
practicability of these complementary productivity growth measures depends on the purpose of
measurement.