New Economics Papers
on Efficiency and Productivity
Issue of 2006‒04‒22
ten papers chosen by

  1. The impact of training on productivity and wages: evidence from British panel data By Lorraine Dearden; Howard Reed; John Van Reenen
  2. Lumpy Investments, Factor Adjustments and Productivity By Øivind A. Nilsen, Arvid Raknerud, Marina Rybalka and Terje Skjerpen
  3. Productivity and Market Selection of French Manufacturing Firms in the Nineties By Flora Bellone; Patrick Musso; Lionel Nesta; Michel Quéré
  4. Productivity, Exporting and the Learning-by-Exporting Hypothesis: Direct Evidence from UK Firms By Gustavo Crespi; Chiara Criscuolo; Jonathan Haskel
  5. Does Social Capital Improve Labour Productivity in Small and Medium Enterprises? By Fabio Sabatini
  6. Age, Technology and Labour Costs By Francesco Daveri; Mika Maliranta
  7. Information Technology, Organisational Change and Productivity Growth: Evidence from UK Firms By Gustavo Crespi; Chiara Criscuolo; Jonathan Haskel
  8. Incentives for Managers and Inequality Among Workers: Evidence from a Firm Level Experiment By Oriana Bandiera; Iwan Barankay; Imran Rasul
  9. Developing new approaches to measuring NHS outputs and productivity By Diane Dawson; Hugh Gravelle; Mary O'Mahony; Andrew Street; Martin Weale; Adriana Castelli; Rowena Jacobs; Paul Kind; Pete Loveridge; Stephen Martin; Philip Stevens; Lucy Stokes
  10. Entry, Costs Reduction, and Competition in the Portuguese Telephony Industry By Philippe Gagnepain; Pedro Pereira

  1. By: Lorraine Dearden (Institute for Fiscal Studies and Bedford Group, Institute of Education, University of London); Howard Reed (Institute for Fiscal Studies); John Van Reenen
    Abstract: It is standard in the literature on training to use wages as a sufficient statistic for productivity. This paper examines the effects of work-related training on direct measures of productivity. Using a new panel of British industries 1983-1996 and a variety of estimation techniques we find that work-related training is associated with significantly higher productivity. A one percentage point increase in training is associated with an increase in value added per hour of about 0.6% and an increase in hourly wages of about 0.3%. We also show evidence using individual level datasets that is suggestive of training externalities.
    Keywords: Productivity, training, wages, panel data
    JEL: J31 C23 D24
    Date: 2005–08
  2. By: Øivind A. Nilsen, Arvid Raknerud, Marina Rybalka and Terje Skjerpen (Statistics Norway)
    Abstract: This paper describes firms' output and factor demand before, during and after episodes of lumpy investments using a rich employer-employee panel data set for two manufacturing industries and one service industry. We focus on the simultaneous adjustment of capital, materials, man-hours, as well as the skill composition and hourly cost of labour. The investment spikes lead to roughly proportional changes in sales, labour and materials, while capital intensity increases significantly. Capital adjustments are found to be smoother in the service industry than in the two manufacturing industries, a difference that may be related to the labour intensity in the service industry. Finally, the changes in productivity associated with episodes of investment spikes are small, indicating that productivity improvements are related to learning-by-doing rather than instantaneous technological changes through investment spikes.
    Keywords: Lumpy investments; Adjustment costs; Productivity; Panel data
    JEL: C13 C33 D21 D24
    Date: 2005–12
  3. By: Flora Bellone (Observatoire Français des Conjonctures Économiques); Patrick Musso (Observatoire Français des Conjonctures Économiques); Lionel Nesta (Observatoire Français des Conjonctures Économiques); Michel Quéré (Observatoire Français des Conjonctures Économiques)
    Date: 2006
  4. By: Gustavo Crespi (University of Sussex, AIM and CeRiBA); Chiara Criscuolo (CEP, LSE, AIM and CeRiBA); Jonathan Haskel (Queen Mary, University of London)
    Abstract: Case study evidence suggests that exporting firms learn from their clients. But econometric evidence, mostly using exporting and TFP growth, is mixed. We use a UK panel data set with firm-level information on exporting and productivity. Our innovation is that we also have direct data on the sources of learning (in this case about new technologies). Controlling for fixed effects we have two main findings. First, we find firms who exported in the past are more likely to then report that they learnt from buyers (relative to learning from other sources). Second, firms who had learned from buyers (more than they learnt from other sources) in the past are more likely to then have productivity growth. This suggests some support for the learning-by-exporting hypothesis, though is not clear whether firms deserve an exporting subsidy.
    Keywords: Productivity, Exporting, Learning
    JEL: F12 L1
    Date: 2006–04
  5. By: Fabio Sabatini
    Abstract: This paper carries out an empirical assessment of the relationship between social capital and labour productivity in small and medium enterprises in Italy. By means of structural equations models, the analysis investigates the effect of different aspects of the multifaceted concept of social capital. The bonding social capital of strong family ties and the bridging social capital shaped by informal ties connecting friends and acquaintances are proved to exert a negative effect on labour productivity, the economic performance, and human development. On the contrary, the linking social capital of voluntary organizations positively influences such outcomes.
    Keywords: Labour productivity, Small and medium enterprises, Social capital, Social networks, Structural equations models
    JEL: J24 R11 O15 O18 Z13
    Date: 2006–02
  6. By: Francesco Daveri; Mika Maliranta
    Abstract: Is the process of workforce aging a burden or a blessing for the firm? Our paper seeks to answer this question by providing evidence on the age-productivity and age-earnings profiles for a sample of plants in three manufacturing industries (“forest”, “industrial machinery” and “electronics”) in Finland. Our main result is that exposure to rapid technological and managerial changes does make a difference for plant productivity, less so for wages. In electronics, the Finnish industry undergoing a major technological and managerial shock in the 1990s, the response of productivity to age-related variables is first sizably positive and then becomes sizably negative as one looks at plants with higher average seniority and experience. This declining part of the curve is not there either for the forest industry or for industrial machinery. It is not there either for wages in electronics. These conclusions survive when a host of other plausible productivity determinants (notably, education and plant vintage) are included in the analysis. We conclude that workforce aging may be a burden for firms in high-tech industries and less so in other industries.
  7. By: Gustavo Crespi (University of Sussex, AIM and CeRiBA); Chiara Criscuolo (CEP, LSE, AIM and CeRiBA); Jonathan Haskel (Queen Mary, University of London)
    Abstract: We examine the relationships between productivity growth, IT investment and organisational change (Δ<i>O</i>) using UK firm panel data. Consistent with the small number of other micro studies we find (a) IT appears to have high returns in a growth accounting sense when Δ<i>O</i> is omitted; when Δ<i>O</i> is included the IT returns are greatly reduced, (b) IT and Δ<i>O</i> interact in their effect on productivity growth, (c) non-IT investment and Δ<i>O</i> do not interact in their effect on productivity growth. Some new findings are (a) Δ<i>O</i> is affected by competition and (b) we also find strong effects on the probability of introducing Δ<i>O</i> from ownership. US-owned firms are much more likely to introduce Δ<i>O</i> relative to foreign owned firms who are more likely still relative to UK firms.
    Keywords: Information technology, Productivity growth, Organisational change
    JEL: D24 E22 L22 O31
    Date: 2006–04
  8. By: Oriana Bandiera (London School of Economics and CEPR); Iwan Barankay (University of Essex and IZA Bonn); Imran Rasul (University College London and CEPR)
    Abstract: We present evidence from a firm level experiment in which we engineered an exogenous change in managerial compensation from fixed wages to performance pay based on the average productivity of lower-tier workers. Theory suggests that managerial incentives affect both the mean and dispersion of workers’ productivity through two channels. First, managers respond to incentives by targeting their efforts towards more able workers, implying that both the mean and the dispersion increase. Second, managers select out the least able workers, implying that the mean increases but the dispersion may decrease. In our field experiment we find that the introduction of managerial performance pay raises both the mean and dispersion of worker productivity. Analysis of individual level productivity data shows that managers target their effort towards high ability workers, and the least able workers are less likely to be selected into employment. These results highlight the interplay between the provision of managerial incentives and earnings inequality among lower-tier workers.
    Keywords: managerial incentives, targeting, selection, earnings inequality
    JEL: J33 M52
    Date: 2006–04
  9. By: Diane Dawson (Centre for Health Economics, University of York); Hugh Gravelle (National Primary Care Research and Development Centre, Centre for Health Economics, University of York); Mary O'Mahony (National Institute for Economic and Social Research); Andrew Street (Centre for Health Economics, University of York); Martin Weale (National Institute for Economic and Social Research); Adriana Castelli (Centre for Health Economics, University of York); Rowena Jacobs (Centre for Health Economics, University of York); Paul Kind (Centre for Health Economics, University of York); Pete Loveridge (National Institute for Economic and Social Research); Stephen Martin (Department of Economics and Related Studies, University of York); Philip Stevens (National Institute for Economic and Social Research); Lucy Stokes (National Institute for Economic and Social Research)
    Abstract: The Centre for Health Economics and National Institute of Economic and Social Research have recently completed a project funded by the Department of Health to improve measurement of the productivity of the NHS. The researchers have suggested better ways of measuring both outputs and inputs to improve estimates of productivity growth. Past estimates of NHS output growth have not taken account of changes in quality. The CHE/NIESR team conclude that the routine collection of health outcome data on patients is vital to measure NHS quality. They also propose making better use of existing data to quality adjust output indices to capture improvements in hospital survival rates and reductions in waiting times. With these limited adjustments the team estimate that annual NHS output growth averaged 3.79% between 1998/99 and 2003/04.The research team has also developed improved ways of measuring NHS inputs, particularly by drawing on better information about how many people are employed in the NHS and by recognising that staff are becoming increasingly better qualified. There have been substantial increases in staffing levels, pharmaceutical use and investment in equipment and buildings since 1998/99. The net effect of this growth in both outputs and inputs is that, according to the research team’s estimates, NHS productivity declined by about 1.59% a year since 1998/99. This is not out of line with estimates of growth rates in other UK and US service sectors, including insurance and business services. Nor is it surprising that recent years have seen negative growth in the NHS. There are at least two reasons. First, there has been an unprecedented increase in NHS expenditure. The NHS has had to employ more staff to meet the requirements of the European Working Time Directive and hospital consultants and general practitioners, in particular, have benefited from new pay awards.Second, the NHS collects very little information about what actually happens to patients as a result of their contact with the health service. Until there is routine collection of health outcomes data, measurement of the quality of NHS output will remain partial and productivity growth is likely to be underestimated.
    Date: 2005–09
  10. By: Philippe Gagnepain (Universidad Carlos III de Madrid); Pedro Pereira (Autoridade da Concorrência)
    Keywords: Mobile Telephony, Entry, Competition, Efficiency, Empirical Analysis
    JEL: L13 L43 L93
    Date: 2005–02

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