A Comparison of TFP Estimates via Distribution Dynamics: Evidence from Light Manufacturing Firms in Brazil

This article compares the distribution dynamics of two commonly used TFP estimation frameworks: the control function approach of Levinsohn and Petrin (2003) (LP for short) and the corrected control function approach of Ackerberg et al. (2015) (ACF for short). Using Brazilian firm-level data for the textile and furniture sectors, we estimate the transitional dynamics and long-run equilibrium of the TFP distribution for each framework over the 2003-2009 period. In the textile sector, the distribution dynamics for both frameworks are to some extent qualitatively similar.

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