Dynamic Distributions of Productivity Growth in European Railways

This paper derives the exact distribution of productivity growth, using Monte Carlo simulation methods, and explores in detail how the productivity growth distribution shifts as a result of changes in input prices and output. In an empirical application to the cost structure of ten European railways, for about half the decision-making units in the sample, prices and output have not caused median productivity growth but other characteristics of the distribution. This casts some doubt on traditional approaches that simply focus on examining average productivity growth. © The London School of Economics and the University of Bath 2004