Estimation of Productivity in the KoreanElectricity Generation Sector:A Semi-Parametric Approach

Abstract

This study estimated the level and growth of total factor productivity in the Korean electricity generation sector using plant-level panel data from over the period 2002-2019. In particular, we compared the productivity differences across different plant types. This study used a semiparametric estimation method that enables the control for the endogeneity of productivity shocks without using instrumental variables (IVs). It was found that steam power plants presented the highest total factor productivity, followed by internal combustion and combined cycle. The productivity growth fluctuated over time, ranging from -0.285% to 0.203%, and presented a declining trend during the sample period. The results also indicated that the load and plant factors significantly affected the total factor productivity of the plants. However, the age variable that may reflect the learning-by-doing effect did not affect plant productivity.