Measuring productivity of construction industry in Europe with Data Envelopment Analysis

Abstract

The purpose of the article is to present the use of DEA and Tobit regression for analysing productivity of the construction industry in Europe. Differences and similarities between construction sectors in various European countries are discussed. Labour productivity was calculated with DEA method. Changes in the efficiency score over the period of 2006-2012 were estimated using Malmquist index. Tobit regression was applied to explore the impact of the economic performance of a country on the labour productivity in its construction industry. The results reveal huge differences in the productivity of the construction industry across Europe. Trends in productivity change are also explored. On the basis of regression analysis it was proven that the interpretation of the efficiency scores without taking into account the general economic conditions of a country may lead to false conclusions.