Occupancy Level and Productivity in Rural Tourism Establishments: The Case of Galicia, Spain

Abstract

The degree of capacity utilization affects the measurement of total productivity. This paper uses establishment occupancy level as a proxy for establishment capacity utilization. Accordingly, the authors decompose total factor productivity (TFP) growth into technical progress, changes in allocative efficiency, changes in occupancy levels, changes in technical efficiency and scale effects. The empirical results show that the occupancy level component offers the most important contribution to TFP. Policy implications are offered in light of the results.