Paradoxes of the public sector productivity measurement
This paper critically investigates standard total factor productivity (TFP) measurement in the public sector, where output information is often incomplete or distorted. The analysis reveals fundamental paradoxes under three common output measurement conventions. When cost-based value added is used as the aggregate output, measured TFP may paradoxically decline as a result of genuine productivity-enhancing changes such as technical progress and improved allocative and scale efficiencies, as well…
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