ABSTRACT
This chapter reviews some state-of-the-art methods for estimating productivity, always adopting a practitioner's perspective. It details the state-of-the-art methods to Chinese manufacturing data over the 2000–2006 period. The chapter estimates dozens of different specifications for 28 industries for a total of 672 production function estimates. It compares results across specifications and draws the strengths and pitfalls of each. The chapter describes the basic model underlying the estimation routine. It provides a line-by-line guide to all of the details that practitioners need, including some common extensions such as correcting for attrition bias and the impact of exporting on productivity. The magnitude of productivity dispersion within an industry is a question of substantive economic interest since industries with greater productivity dispersion have a greater scope for across-firm allocative productivity gains. The chapter examines the correlation between sales and productivity. One can assess the impact of exporting on productivity by examining the export dummy coefficient in the evolution-of-productivity equation.
