New Economics Papers
on Efficiency and Productivity
Issue of 2006‒01‒29
eleven papers chosen by

  1. Foreign-owned Firms and Productivity-enhancing Restructuring in Finnish Manufacturing Industries By Mika Maliranta
  2. Informational Mobility and Productivity - Finnish Evidence By Mika Maliranta; Petri Rouvinen
  3. Catching up or getting stuck? Europe's troubles to exploit ICT's productivity potential By van Ark, Bart; Inklaar, Robert
  4. Performance Related Pay and Labour Productivity By Gielen, Anne; Kerkhofs, Marcel J M; van Ours, Jan C
  5. Input Aggregation in Models of Data Envelopment Analysis: A Statistical Test with an Application to Indian Manufacturing By Subhash C. Ray
  6. Decomposing productivity and wage effects of intra-establishment labor restructuring By Mika Maliranta; Pekka Ilmakunnas
  7. Top Research Productivity and its Persistence By Kelchtermans, Stijn; Veugelers, Reinhilde
  8. Productivity and participation: an international comparison By McGuckin, Robert; Ark, Bart van
  9. Service Offshoring, Productivity and Employment: Evidence from the US By Amiti, Mary; Wei, Shang-Jin
  10. Unit labour costs, productivity and international competitiveness By Ark, Bart van; Stuivenwold, Edwin; Ypma, Gerard
  11. Extracting Leading Indicators of Bank Fragility from Market Prices – Estonia Focus By Yu-Fu Chen; Michael Funke; Kadri Männasoo

  1. By: Mika Maliranta
    Keywords: foreign ownership, productivity decomposition, productivity-enhancing restructuring
    JEL: F23 O33 O47
    Date: 2005–01–19
  2. By: Mika Maliranta; Petri Rouvinen
    JEL: D24 J24 L23 O33
    Date: 2004–08–02
  3. By: van Ark, Bart; Inklaar, Robert (Groningen University)
    Abstract: In this paper we extend our previous analysis of the comparative productivity performance of Europe and the U.S. to 2004, thereby covering the latest full business cycle. Our main finding is that the slower contribution of ICT to productivity growth in the EU compared to the U.S. has persisted into the early part of the 21st century. The growth differential even increased since 2000, as the U.S. shows strong labour productivity advances in market services. This may be related to a more productive use of ICT in the U.S.. However, at industry level we find no support for significant TFP (total factor productivity) spillovers from ICT investment, neither in the U.S. nor in European countries. In the 1980s we even find that ICT investment and TFP growth are negatively related, with at best normal returns in the 1970s and 1990s. We speculate that this U-shaped pattern is driven by ?hard savings? from ICT investment that first lead to earning normal returns, followed by a period of experimentation during which ICT and TFP growth are negatively related. Ultimately, ?soft savings? lead to productivity gains from ICT in line with the marginal cost of ICT. We argue that the realization of productivity effects from soft savings is highly dependent on the competitive process that stimulates complementary innovations and weeds out inefficient users of ICT technology. Europe risks getting stuck in an environment where the productivity gains from soft savings from ICT remain unrealized.
    Date: 2006
  4. By: Gielen, Anne; Kerkhofs, Marcel J M; van Ours, Jan C
    Abstract: This paper uses information from a panel of Dutch firms to investigate the labour productivity effects of performance related pay (PRP). We find that PRP increases labour productivity at the firm level with about 9%.
    Keywords: labour productivity; performance related pay
    JEL: C41 H55 J64 J65
    Date: 2006–01
  5. By: Subhash C. Ray (University of Connecticut)
    Abstract: A problem frequently encountered in Data Envelopment Analysis (DEA) is that the total number of inputs and outputs included tend to be too many relative to the sample size. One way to counter this problem is to combine several inputs (or outputs) into (meaningful) aggregate variables reducing thereby the dimension of the input (or output) vector. A direct effect of input aggregation is to reduce the number of constraints. This, in its turn, alters the optimal value of the objective function. In this paper, we show how a statistical test proposed by Banker (1993) may be applied to test the validity of a specific way of aggregating several inputs. An empirical application using data from Indian manufacturing for the year 2002-03 is included as an example of the proposed test.
    Keywords: Efficiency distribution, F Tests
    JEL: C61 C43
    Date: 2005–10
  6. By: Mika Maliranta; Pekka Ilmakunnas
    Keywords: employer-employee data, labor productivity, productivity decomposition, wage determination, worker turnover
    Date: 2005–11–02
  7. By: Kelchtermans, Stijn; Veugelers, Reinhilde
    Abstract: The paper contributes to the debate on cumulative advantage effects in academic research by examining top performance in research and its persistence over time, using a panel dataset comprising the publications of biomedical and exact scientists at the KU Leuven in the period 1992-2001. We study the selection of researchers into productivity categories and analyse how they switch between these categories over time. About 25% achieves top performance at least once, while 5% is persistently top. Analysing the hazard to first and subsequent top performance shows strong support for an accumulative process. Rank, gender, hierarchical position and past performance are highly significant explanatory factors.
    Keywords: economics of science; hazard models; research productivity
    JEL: J24 L31 O31 O32
    Date: 2006–01
  8. By: McGuckin, Robert; Ark, Bart van (Groningen University)
    Abstract: The purpose of this project is to increase our knowledge about trade-offs between productivity and labour market participation across the OECD, and more specifically in the European Union. The inquiry is focused around the question whether there is a trade-off between labour participation and productivity and, if so, how big it is and how long does it last. In particular, through a series of panel regressions we isolate the structural or long-term relationships, as well as identify how long the ?longterm? is. We also investigate the extent to which the trade-offs can be associated with particular types of workers (in terms of age or gender). Our main findings are, firstly, that the negative productivity response elasticity to a 1% rise in participation (measured as the employment rate) is less than 0.3 and peters out in less than 5 years. Secondly, increased participation is the key factor related to this productivity growth tradeoff. We find little effect of hours per worker on productivity. Thirdly, female participation has the strongest negative impact on productivity growth, but it is associated with specific age and/or cohort effects that are likely to diminish in the longer run. Finally, we investigate simple scenarios to look at the effect of increases in participation on productivity and per capita income, showing the large potential for income gains without much loss in productivity.
    Date: 2005
  9. By: Amiti, Mary; Wei, Shang-Jin
    Abstract: The practice of sourcing service inputs from overseas suppliers has been growing in response to new technologies. This paper estimates the effects of offshoring on productivity in US manufacturing industries between 1992 and 2000, using instrumental variables estimation to address the potential endogeneity of offshoring. It finds that service offshoring has a significant positive effect on productivity in the US, accounting for around 11% of productivity growth during this period. Offshoring material inputs also has a positive effect on productivity, but the magnitude is smaller accounting for approximately 5% of productivity growth. There is a small negative effect of less than half a percent on employment when industries are finely disaggregated (450 manufacturing industries). However, this affect disappears at more aggregate industry level of 96 industries indicating that there is sufficient growth in demand in other industries within these broadly defined classifications to offset any negative effects.
    Keywords: employment; offshoring; outsourcing; productivity; services
    JEL: F1 F2
    Date: 2006–01
  10. By: Ark, Bart van; Stuivenwold, Edwin; Ypma, Gerard (Groningen University)
    Abstract: This paper provides international comparisons of relative levels of unit labour costs (ULC) for several OECD countries relative to the United States. The estimates are based on the Total Economy Database and the 60-Industry Database of the Groningen Growth and Development Centre (GGDC), and are also included in the Key Indicators of the Labour Market of the International Labour Office (ILO). The paper discusses the concept of relative ULC measures in comparison to other measures of competitiveness. It presents the main results for manufacturing and total economy measures of ULC, and makes two digressions, firstly by also presenting results for some major manufacturing sectors for a few large European countries and the U.S. and, secondly, by showing some comparable results for developing countries. An important observation from this paper is that relative productivity levels tend to move more or less in tandem with relative labour cost levels so that unit labour cost levels are closer between countries than labour cost levels per se. However, unit labour cost levels are certainly not identical between countries, as there are important deviations due to short term movements in relative prices (related to fluctuation in the nominal exchange rate) and differences in industrial structure. Whereas some of the differences cancel out at the aggregate level, differences in industry and product composition are quite important at a more detailed level.
    Date: 2005
  11. By: Yu-Fu Chen; Michael Funke; Kadri Männasoo
    Abstract: Banking reform has proved to be one of the most problematic elements of economic transition in central and Eastern Europe. Therefore the paper considers the development of the Estonian banking sector and derives individual banks´ fragility scores during transition. To this end we use option-based tools and equity prices to estimate distance-to-default measures of banks´ distress probabilities. Overall, the results suggest that market indicators are moderately useful for anticipating future financial distress and rating changes in transition economies. The implication for an effective supervisory framework is to use a plurality of risk scores when assessing bank vulnerability.
    Keywords: banking, financial stability, bank fragility, options, Estonia
    JEL: E44 E58 G21
    Date: 2006

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.