Working Paper: NBER ID: w25471
Authors: David Atkin; Amit Khandelwal; Adam Osman
Abstract: We use tailored surveys and benchmarking in the flat-weave rug industry to better understand the shortcomings of standard productivity measures. TFPQ performs poorly because of variation in product specifications across firms. Controlling for specifications aligns TFPQ with lab benchmarks. We also collect quality metrics to construct quality productivity (the ability to produce quality given inputs) and find substantial dispersion across firms. This motivates interest in multi-dimensional productivity, or capability. As quality productivity is negatively correlated with TFPQ, TFPR may perform better at capturing capabilities in settings where better firms make products with more demanding specifications that have greater input requirements.
Keywords: Productivity; Benchmarking; Surveys; Flatweave Rug Industry
JEL Codes: D2; F0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| TFPQ (F16) | Poor Measurement of Quantity Productivity (D20) |
| Quality Productivity (D24) | TFPQ (F16) |
| Controlling for Specifications (C51) | Correlation Improvement between TFPQ and Laboratory Benchmarks (C59) |
| Quality Productivity (TFPZ) (D24) | Broader Capabilities of Firms (L25) |
| TFPR (F16) | Better Proxy for Firm Capabilities than TFPQ (D25) |
| TFPR (F16) | Quality Goods Production (L60) |