Work effort, technical efficiency and productivity growth

Abstract

This paper develops a model to examine labor-use efficiency associated with the effieciency wage theory and technical effieciency associated with the frontier production model. The generalixed modelcombines these two approaches and derives measures of technical and labor-use efficiency as well as their effects on productivity growth. It also seperates technical inefficiency from industry heterogenity. the model is applied to estimate loss of output due to technical and labor-use inefficiency for 18 two-digit U.S manufacturing industries using time series and cross-sectional data.

Keywords:

• Work Effort
• labor-use efficiency
• technical efficiency
• production frontier
• effieciency wage