<p>While there are a lot of methods one can think of, like computing the ratio of profits to assets or profits to sales, apparently it is a difficult problem. </p>

<p>It would be useful to know how effectively are firms using their inputs in a marginal or an average sense, say by looking at the cost of labor, capital inputs, electricity, etc, and comparing that with the output of a plant or a firm.</p>

<p>Some methods assume a Cobb'Douglas function and also assume which factors are fixed and which are variable over which periods, etc. Is there a typically accepted method yet? </p>

CC BY-SA 3.0
2016-06-01T10:33:04.210Z
Olley and Pakes, “The Dynamics of Productivity in the Telecommunications Equipment Industry,” (1996) is the standard reference for TFP.
Anton Tarasenko
CC BY-SA 3.0
2016-06-01T14:36:30.827Z
Thanks @Anton Tatasenko. Since that was in 1996, I'm wondering if there is something newer or if there is a consensus about the ability of that method to actually recover productivity.
Fix.B.
CC BY-SA 3.0
2016-06-01T15:09:08.310Z
Before computing anything, it would be helpful to first _define_ "firm's productivity". Then this definition would be the one to guide empirical implementation.
Alecos Papadopoulos
<microeconomics><econometrics><productivity>
What are the currently accepted methods to estimate a firm's productivity?
Fix.B.
# What are the currently accepted methods to estimate a firm's productivity?

(Asked by: username_0 on 2016-06-01)

While there are a lot of methods one can think of, like computing the ratio of profits to assets or profits to sales, apparently it is a difficult problem.

It would be useful to know how effectively are firms using their inputs in a marginal or an average sense, say by looking at the cost of labor, capital inputs, electricity, etc, and comparing that with the output of a plant or a firm.

Some methods assume a Cobb'Douglas function and also assume which factors are fixed and which are variable over which periods, etc. Is there a typically accepted method yet?

**Tags:** microeconomics, econometrics, productivity
> **Comments:**
> **username_1**: Olley and Pakes, “The Dynamics of Productivity in the Telecommunications Equipment Industry,” (1996) is the standard reference for TFP.  
> **username_0**: Thanks @Anton Tatasenko. Since that was in 1996, I'm wondering if there is something newer or if there is a consensus about the ability of that method to actually recover productivity.  
> **username_2**: Before computing anything, it would be helpful to first _define_ "firm's productivity". Then this definition would be the one to guide empirical implementation.  

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## 0 answers

