International Journal of
Physical Sciences

  • Abbreviation: Int. J. Phys. Sci.
  • Language: English
  • ISSN: 1992-1950
  • DOI: 10.5897/IJPS
  • Start Year: 2006
  • Published Articles: 2525

Full Length Research Paper

Wage augmented stochastic frontier model with truncated normal distribution

Kanis Fatama Ferdushi1, Md. Azizul Baten1,2*, Anton Abdulbasah Kamil1 and Adli Mustafa1
  1Mathematics Section, School of Distance Education, Universiti Sains Malaysia 11800 USM, Penang, Malaysia. 2Department of Statistics, School of Physical Sciences, Shahjalal University of Science and Technology, Sylhet-3114, Bangladesh.
Email: [email protected]

  •  Accepted: 10 June 2011
  •  Published: 31 July 2011

Abstract

 

This study considered wage augmented production frontiers with inefficiency effects model proposed by Battese and Coelli (1992) where the efficiency wage hypotheses was tested. An unbalanced panel data on 31 manufacturing firm for the period 1989 to 2000 was used in this study. The wage augmented Cobb-Douglas production function was originated to be an unsatisfactory representation of the data compared to wage augmented Translog frontier model. The results showed that the wage level was one of the significant factors contributing to the output and technical efficiency in truncated normal distribution which was found to be of inferior quality in manufacturing industry in Bangladesh.

 

Key words: Inefficiency effects, production model, truncated normal distribution.