New Economics Papers
on Efficiency and Productivity
Issue of 2005‒10‒29
twelve papers chosen by

  1. Twin - Peaks in E.U. Regional Productivity Dynamics: a nonparametric analysis By Georgios Fotopoulos
  2. The Effects of Structural Reforms on Productivity and Profitabality Enhancing Reallocation: Evidence from Colombia By Eslava, Marcela; Haltiwanger, John; Kugler, Adriana; Kugler, Maurice
  3. Does Labour Productivity Flow Across Industries?: Estimation Robust to Panel Heterogeneity and Cross Sectional Correlation By Joseph Byrne; Michela Vecchi
  4. Evaluating the German Bank Merger Wave By Michael Koetter
  5. The Productivity impact of E-Commerce in the UK, 2001: Evidence from microdata By Ana Rincon-Aznar; Catherine (Kate) Robinson; Michela Vecchi
  6. Accounting for Background Variables in Stochastic Frontier Analysis By Philip Stevens
  7. The Provision of Library Services by English Local Authorities By Philip Stevens
  8. The dynamic impact of ICT spillovers on companies' productivity performance By Ana Rincon-Aznar; Michela Vecchi
  9. The Effects Of Employment Protection and Product Market Regulations on The Italian Labor Market By Kugler, Adriana; Pica, Giovanni
  10. Privatisation, regulation and productivity in the Italian motorway industry By Luigi Benfratello; Alberto Iozzi; Paola Valbonesi
  11. Sources of TFP Growth: Occupational Choice and Financial Deepening By Hyeok Jeong; Robert M. Townsend
  12. Regional integration and economic development: An empirical approach By David-Pascal Dion

  1. By: Georgios Fotopoulos
    Abstract: Working within the 'distributional approach', this research offers evidence, based on empirical density estimates and modality tests, of past polarization in regional labour productivity in EU-15. Most importantly, it provides evidence on the related ergodic density which suggests that this polarization may persist in the future. This past and probably future polarization is primarily related to the service sector of the regional economies and not to manufacturing industries sector.
    Keywords: regional labour productivity, EU, distributional analysis, nonparametric methods, stochastic processes
    JEL: D39 O18 C14
    Date: 2005–10
  2. By: Eslava, Marcela; Haltiwanger, John; Kugler, Adriana; Kugler, Maurice
    Abstract: Estimates for the U.S. suggest that in some sectors productivity enhancing reallocation is the dominant factor in accounting for productivity growth. An open question is whether reallocation is always productivity enhancing. Specifically, in developing countries, market concentration, or barriers to competition, may imply that the reallocation process is not fully efficient. Using a unique plant-level longitudinal dataset for Colombia for the period 1982-1998, we use plant-level quantities and prices to implement a novel sequential methodology to estimate productivity and demand shocks at the plant level. First, we estimate total factor productivity (TFP) with plant-level physical output data, where we use downstream demand to instrument inputs. We then turn to estimating demand shocks and mark-ups with plant-level price data, using TFP to instrument for output in the inverse-demand equation. Market reforms, introduced in the early 1990's, are associated with rising overall productivity that is largely driven by reallocation away from low- and towards high-productivity businesses. Our evidence also points to allocation of activity across businesses being less driven by demand factors after reforms. JEL Classification: F43, L16, O14, O40.
    Keywords: Productivity growth, structural reforms, reallocation, profitability, entry and exit.
    Date: 2004–05–24
  3. By: Joseph Byrne; Michela Vecchi
    Abstract: We consider labour productivity convergence between the US and the UK and France, using industry level data. We find evidence of panel heterogeneity, cross sectional correlation and weak evidence of productivity convergence at the industry level.
    Date: 2005–05
  4. By: Michael Koetter
    Abstract: German banks experienced a merger wave throughout the 1990's. However, the success of bank mergers remains a continuous matter of debate. In this paper we suggest a taxonomy as how to evaluate post-merger performance on the basis of cost efficiency (CE). We categorise mergers a success that fulfill simultaneously two criteria. First, merged institutes must exhibit CE levels above the average of non-merging banks. Second, banks must exhibit CE changes between merger and evaluation year above efficiency changes of non-merging banks. We employ this taxonomy to characterise (successful) mergers in terms of various key-performance and structural indicators and investigate the implications for four prominent policy issues particular to German banking. Our main conclusions are threefold. First, roughly every second merger is a success. Second, the margin of success is narrow, as the CE difference amounts to approximately 1 percentage point. Third, it takes around seven years after a transaction until maximum mean CE differentials materialise.
    Keywords: Bank mergers, cost efficiency.
    Date: 2005–03
  5. By: Ana Rincon-Aznar; Catherine (Kate) Robinson; Michela Vecchi
    Abstract: This paper considers the impact of e-commerce on establishment level productivity for all sectors of the economy, using data from the UK E-commerce survey. E-Commerce represents the operational application of technology in the production process and may be regarded as an innovation driven change in workplace practice.Using a production function approach to measuring productivity, we find that OLS estimation fails to adequately account for the selectivity bias amongst enterprises that use e-commerce. Using a treatment effect estimator, we find that both e-buying and e-selling have significant and positive impacts on productivity.
    Date: 2005–05
  6. By: Philip Stevens
    Abstract: The question of how to model background variables in stochastic frontier analysis is seldom discussed in the literature. Some studies, following on from a long history of two-step TFP studies, include them in the determinants of efficiency. Others include them in the frontier itself. We propose a statistical method to obtain the appropriate specification of the influences on costs and inefficiency. We provide the example of a stochastic cost frontier for a panel of English and Welsh universities.
    Date: 2004–05
  7. By: Philip Stevens
    Abstract: In this paper we examine the cost and efficiency with which library services are provided by English local authorities using stochastic frontier analysis. We test our results using four commonly used assumptions regarding the distribution of the efficiency scores. We find that costs are higher for authorities operating in regions where a higher proportion of the population have low incomes or are of working age. The efficiency scores net of environmental factors, however, are affected by the choice of whether they are considered as quasi fixed factors in the cost frontier or as determinants of inefficiency.
    Date: 2005–07
  8. By: Ana Rincon-Aznar; Michela Vecchi
    Abstract: Using company account data for the US and four European countries this paper analyses the impact of ICT spillovers on companies’ performance. We use different definitions of spillovers to account for inter and intra-industry spillover effects, as well as assessing the presence of spillovers from the US to Europe. We also look at the possibility that spillovers might take some time to materialise, by comparing their short and long run impact. Our results show that ICT spillovers affect productivity differently in the US and in Europe in the short run but in the long run such differences are less profound.
    Date: 2004–05
  9. By: Kugler, Adriana; Pica, Giovanni
    Abstract: Labor market regulations have often been blamed for high and persistent unemployment in Europe, but evidence on their impact remains mixed. This paper analyzes how labor and product market regulations interact to affect turnover and unemployment. We present a matching model which illustrates how barriers to entry in the product market mitigate the impact of labor market deregulation. We, then, use the Italian Social Security employer-employee panel to study the interaction between barriers to entry and dismissal costs. We exploit the fact that costs for unjust dismissals in Italy increased for firms below 15 employees relative to bigger firms after 1990. We find that the increase in dismissal costs after 1990 decreased accessions and separations in small relative to big firms, especially for women. Moreover, consistent with our model, we find evidence that the reduction in dismissal costs had smaller effects on turnover for women in sectors faced with strict product market regulations.
    Date: 2003–11–01
  10. By: Luigi Benfratello (University of Torino and Ceris-CNR); Alberto Iozzi (University of Rome "Tor Vergata" and University of Leicester); Paola Valbonesi (University of Padua)
    Abstract: The Italian highway industry has undergone an institutional and regulatory reform through the last decade, characterised by changes in ownership and a new price cap framework. To assess the effect of the reforms on firms’ performance, we use information on all the 20 Italian concessionaires over the 1992-2003 period and 1) estimate the technical progress in the industry, thereby providing a reference value for the X factor in the price cap formula; 2) assess the relative productivity of private vs. public concessionaires; 3) evaluate whether price cap regulation has induced firms to use resources efficiently, 4) determine the possible effect of the inclusion of the quality index in the price cap formula. We find that the introduction of a price cap regime does not increase firms’ productivity whereas a sharp increase in maintenance costs is recorded, arguably due to the quality indicator in the price cap formula. Furthermore, firms appear to have gained from the privatisation process and from a technical progress occurred in the period. We also find high density economies and a steady and large increase in traffic. Overall, these results suggest that the X factor has been set too conservatively in past years which in turn explains the high profits recorded by franchisees under price cap regulation.
    Keywords: Price Cap Regulation, Motorways
    JEL: L51 L92
    Date: 2005–05
  11. By: Hyeok Jeong; Robert M. Townsend
    Abstract: We develop a method of growth accounting based on the integrated use of transitional growth models and micro data. We decompose total factor productivity (TFP) growth into the occupational-shift effect, financial-deepening effect, capital-heterogeneity effect, and sectoral-Solow-residuals. Applying this method to Thailand, which experienced rapid growth with enormous structural changes between 1976 and 1996, we find that 73 percent of TFP growth is explained by occupational shifts and ?nancial deepening, without presuming exogenous technical progress. Expansion of credit is a major part. We also show the role of endogenous interaction between factor price dynamics and the wealth distribution for TFP.
    Keywords: Total Factor Productivity, Occupation Choice, Financial Deepening
    JEL: O47 O16 J24 D24
    Date: 2005–03
  12. By: David-Pascal Dion (Department of Economics, University of Mannheim)
    Abstract: This paper contributes to the empirical literature by providing a quantitative measurement of the influence of regional trade integration on productivity. For this purpose we address the link between trade and productivity thanks to knowledge spillovers in a multi-country model. The interdependence that connects countries in an international web promotes exchanges of goods, services, people, capital and hence ideas, knowledge, innovation, and technology. Economic integration encourages thus both new ideas and their diffusion. We observe that a country's productivity depends on its own R&D efforts as well as the R&D efforts of its trading partners. These R&D spillovers can then spread across countries and sectors. Thanks to the transfer of technology allowed by bilateral trade and investment, regional trade integration has a positive impact on long-term growth.
    Keywords: regional economic integration, endogenous growth, economic geography
    JEL: F12 F15 F43 O18 O30 O41 R11 R12 R13
    Date: 2004–03

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