Intra-Sectoral Structural Change and Aggregate Productivity Development. A Robust Stochastic Nonparametric Frontier Function Approach

This paper investigates the sources of total factor productivity growth in the German manu- facturing sector, 1981-1998. Decomposition formulae for aggregate productivity growth are used to identify the effects of structural change and entry-exit on aggregate productivity growth. Documented is a substantial rise of productivity growth after the German reunifica- tion. The bulk of this rise can be attributed to structural change and entry-exit. Two methodo- logical refinements are implemented, the first is the application of a robust stochastic non- parametric approach to frontier function analysis and the second is the calculation of boot- strap confidence intervals for the components of the productivity decompositions.