Which Matters Most to the Estimation of Efficiency and Productivity Growth in State Manufacturing: Method or Measurement?

The measurement of efficiency and productivity growth at the regional level requires the researcher to select among several choices for capital estimation and methodology. We look at two capital estimation techniques, by Munnell and by Garofalo and Yamarik, and two methodologies, data envelopment analysis and stochastic frontier estimation. The measurement of efficiency does not appear to be very sensitive to the choice of capital or technique. However, the measurement of productivity is sensitive to the choice of an estimation technique for a given measure of capital.