We wish to test whether technical inefficiency depends on observable characteristics of the firm. We consider a two-step procedure in which the second step is a regression of estimated inefficiency on firm characteristics. A valid test of the hypothesis of no effect requires an adjustment to the...

We study the construction of confidence intervals for efficiency levels of individual firms in stochastic frontier models with panel data. The focus is on bootstrapping and related methods. We start with a survey of various versions of the bootstrap. We also propose a simple parametric...