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Journal of Productivity Analysis

, Volume 34, Issue 2, pp 83–97 | Cite as

Estimates of technical inefficiency in stochastic frontier models with panel data: generalized panel jackknife estimation

  • Panutat Satchachai
  • Peter Schmidt
Article

Abstract

Estimates of technical inefficiency based on fixed effects estimation of the stochastic frontier model with panel data are biased upward. Previous work has attempted to correct this bias using the bootstrap, but in simulations the bootstrap corrects only part of the bias. The usual panel jackknife is based on the assumption that the bias is of order T −1 and is similar to the bootstrap. We show that when there is a tie or a near tie for the best firm, the bias is of order T −1/2, not T −1, and this calls for a different form of the jackknife. The generalized panel jackknife is quite successful in removing the bias. However, the resulting estimates have a large variance.

Keywords

Technical inefficiency Stochastic frontier Panel data Jackknife Bootstrap 

JEL Classification

C10 C15 

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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Chulalongkorn UniversityBangkokThailand
  2. 2.Michigan State UniversityEast LansingUSA
  3. 3.Yonsei UniversitySeoulSouth Korea

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