Sources of productivity change: a Malmquist total factor productivity approach

Abstract

Urban transit systems are faced with declining ridership and increasing deficits in recent years. Improving the productivity of transit systems in such unfavourable operating conditions is unquestionable. The sources of productivity change in bus transit systems in the USA between 1985 and 1997 are investigated by using the non‐parametric Malmquist total factor productivity index. Technical change and efficiency change improved transit productivity. In addition, government subsidy has negative and statistically significant correlations with the efficiency of transit systems, and positive and significant relationships with technical change. No statistically significant correlation was found between subsidies and the Malmquist total factor productivity.

Notes

Correspondence Address: K. A. Boame, Aerospace and Automotive Branch, Industry Canada, Room 751A, East Tower, 235 Queen Street, Ottawa, ON K1A 0H5, Canada. Email: [email protected]

The views expressed here are those of the authors and do not necessarily reflect their affiliated institutions’ positions.

The term ‘DMU’ is borrowed from the DEA literature.

Grifell‐Tatjé and Lovell (1995), however, showed that a Malmquist TFP index might not correctly measure TFP changes when VRS is assumed for the technology.

These distance functions can be calculated using linear programming software, e.g. GAMS, GAUSS, DEAP, FRONTIER ANALYST, with FORTRAN code, as well as frontier econometric software packages.

The linear programming software DEAP was used to calculate the Malmquist index and its components. The authors thank Dr Tim Coelli, University of New England, Australia, for providing the software.

Additional information

Notes on contributors

K. A. BOAME

Correspondence Address: K. A. Boame, Aerospace and Automotive Branch, Industry Canada, Room 751A, East Tower, 235 Queen Street, Ottawa, ON K1A 0H5, Canada. Email: [email protected]