New Economics Papers
on Efficiency and Productivity
Issue of 2006‒09‒30
eight papers chosen by

  1. Is Exporting a Source of Productivity Spillovers? By Roberto Alvarez; Ricardo Lopez
  2. Capacity utilization in a generalized Malmquist index including environmental factors. A decomposition analysis By Torstein Bye, Annegrete Bruvoll and Jan Larsson
  3. Labour Turnover and Labour Productivity in a Retail Organization By W. Stanley Siebert; Nikolay Zubanov; Arnaud Chevalier; Tarja Viitanen
  4. Competition, Firm Turnover and Productivity Growth By Baldwin, John R.; Gu, Wulong
  5. Productivity growth, adjustment costs and variable factor utilisation: the UK case By Charlotta Groth; Soledad NuÏez; Sylaja Srinivasan
  6. Are Canadian Banks Efficient? A Canada–U.S. Comparison By Jason Allen; Walter Engert; Ying Liu
  7. Product market reform and innovation in the EU By Rachel Griffith; Rupert Harrison; Helen Simpson
  8. Labour-Market Reforms and the Beveridge Curve. Some Macro Evidence for Italy By Sergio Destefanis; Raquel Fonseca

  1. By: Roberto Alvarez (Central Bank of Chile); Ricardo Lopez (Indiana University Bloomington)
    Abstract: This paper investigates whether exporting generates positive productivity spillover effects on other plants operating in the same industry and whether exporting affects productivity of plants in vertically related industries. Using plant-level data from Chile we find that exporters improve productivity of their local suppliers but not of plants that purchase intermediate inputs from them. We also find evidence of horizontal spillovers from exporting. Exporting by foreign-owned plants generates positive spillovers in all directions: to their suppliers, customers, and to other plants in the same industry. Domestic exporters increase productivity of their suppliers and, to a lesser extent, that of plants in the same sector.
    Keywords: exporting, spillovers, productivity, vertical linkages, Chile
    JEL: F10 F23
    Date: 2006–09
  2. By: Torstein Bye, Annegrete Bruvoll and Jan Larsson (Statistics Norway)
    Abstract: Productivity measures ignoring environmental effects may give misleading information on total productivity growth. Further, business cycles in the form of capacity utilization may also significantly influence productivity measures. In this paper, we develop an overall Malmquist productivity index and decompose changing efficiency rates into a contribution from environmental factors, capacity utilization and other traditional factors. The capacity utilization element is a contribution to the literature in that it takes into account the capacity for producing negative externalities. We decompose the frontier movements into a contribution from traditional factors and environmental factors and apply the model to a micro data set for two Norwegian industries: the pulp and paper industry and the inorganic chemistry industry. We find frontier improvements over the period included in the analysis, while the distance to the frontier has increased. Capacity utilization increased over the period and contributed to an average approach to the frontier, while environmental indicators contributed negatively. Analysis of the two industries indicates that differences between the traditional and revised efficiency measures changes are ambiguous, except from the capacity utilization element. This indicates that the environment loses when business cycles improve.
    Keywords: Emissions; Productivity change; Pulp and paper; Inorganic chemistry; Malmquist index; Frontier technology; Capacity utilization
    JEL: L73 O12 O14 O33 O41 Q48 R38
    Date: 2006–09
  3. By: W. Stanley Siebert (University of Birmingham Business School and IZA Bonn); Nikolay Zubanov (University of Birmingham Business School); Arnaud Chevalier (Royal Holloway, University of London and IZA Bonn); Tarja Viitanen (University of Sheffield and IZA Bonn)
    Abstract: We study the impact of labour turnover on labour productivity using a panel dataset of 347 shops belonging to a large UK clothing retailer over1995-1999. For the within-shop link – holding constant the shop’s permanent characteristics – we observe an inverted U-shape effect of labour turnover on productivity. The productivity-maximizing rates of FTE-adjusted quits and hires are each about 20% per year, improving productivity by 2.5% compared to the zero turnover level. We explain the difference between this optimal level of labour turnover and its observed average (quits and hires each around 10%) through the costs of hiring estimated at about £600 per hire. By contrast, between shops, there is a positive link between average rates of turnover and average productivity, suggesting that an unobservable management quality factor generates both high turnover and productivity, which we discuss.
    Keywords: labour productivity, labour turnover, matched employee-firm panel data, retailing
    JEL: J63 J24 L81
    Date: 2006–09
  4. By: Baldwin, John R.; Gu, Wulong
    Abstract: This paper investigates the extent to which productivity growth is the result of firm turnover as output is shifted from one firm to another, driven by the competitive process. Turnover occurs as some firms gain market share and others lose it. Some of the resulting turnover is due to entry and exit. Another part arises from growth and decline in incumbent continuing firms. This paper proposes a method for measuring the impact of firm turnover on productivity growth and shows that it is far more important than many previous empirical studies have concluded. It argues that firm turnover associated with competition is the main source of aggregate labour productivity growth in Canadian manufacturing industries.
    Keywords: National accounts, Business enterprises, Productivity, Business conditions
    Date: 2006–09–25
  5. By: Charlotta Groth; Soledad NuÏez; Sylaja Srinivasan
    Abstract: This paper constructs estimates of total factor productivity (TFP) growth for the United Kingdom for the period 1970-2000, using an industry data set that spans the whole economy. The estimates are obtained by controlling for variable utilisation of capital and labour, and costs of adjusting these factors. The analysis is focused on the 1990s. This was a period when the growth rate of the standard measure of TFP growth for the United Kingdom, the Solow residual, did not match the sharp rise in US productivity, even though the macroeconomic environment in both countries was similar. The paper delivers two main results. First, the aggregate Solow residual underestimates TFP growth throughout the 1990s, since it does not account for falling utilisation rates and high capital adjustment costs. Second, the impact of non-technological factors on the Solow residual is similar in the first and the second half of the 1990s. This means that the broad movement in the Solow residual during the 1990s is similar to that of the estimated TFP growth. Potential reasons behind these results are discussed using disaggregated data.
  6. By: Jason Allen; Walter Engert; Ying Liu
    Abstract: The authors compare the efficiency of Canada's largest banks with U.S. commercial banks over the past 20 years. Efficiency is measured in three ways. First, the authors study key performance ratios, and find that Canadian banks are as productive as U.S. banks. Second, they investigate whether there are economies of scale in the production functions of Canadian banks and broadly comparable U.S. bank-holding companies (BHCs). They find larger economies of scale for Canadian banks than for the U.S. BHCs, which suggests that Canadian banks are less efficient in terms of scale, and have more to gain in terms of efficiency benefits from becoming larger. Third, the authors measure cost-inefficiency in Canadian banks and in U.S. BHCs relative to the domestic efficient frontier in each country (the domestic best-practice institution). They find that Canadian banks are closer to the domestic efficient frontier than are the U.S. BHCs. Canadian banks have also moved closer to the domestic efficient frontier than have the U.S. BHCs over time. Finally, the authors examine the dispersion in cost-inefficiency found in Canadian banks and attribute some of the dispersion to differences in information and communication technology investment. Comparisons are made with the U.S. BHC experience.
    Keywords: Financial institutions
    JEL: G21 D24 C33
    Date: 2006
  7. By: Rachel Griffith (Institute for Fiscal Studies); Rupert Harrison (Institute for Fiscal Studies and University College London); Helen Simpson (Institute for Fiscal Studies)
    Abstract: European Union countries have implemented widespread reforms to product markets in order to stimulate competition, innovation and economic growth. We provide empirical evidence that the reforms carried out under the EU Single Market Programme (SMP) were associated with increased product market competition, as measured by a reduction in average profitability, and with a subsequent increase in innovation intensity and productivity growth for manufacturing sectors. In our analysis we exploit exogenous variation in the expected impact of the SMP across countries and industries to identify the effects of reforms on average profitability, and the effects of profitability on innovation and productivity growth.
    JEL: L1 O31 O47
    Date: 2006–09
  8. By: Sergio Destefanis (University of Salerno, CELPE and CSEF); Raquel Fonseca (RAND Corporation)
    Abstract: A matching theory approach is utilised to assess the impact on the Italian labour market of the 1997 legge Treu, which considerably eased the regulation of temporary work and favoured its growth in Italy. We re-parameterise the matching function as a Beveridge Curve and estimate it as a production frontier, finding huge differences in matching efficiency between the South and the rest of the country. The legge Treu appears to have improved matching efficiency in the North of the country, particularly for skilled workers, but also to have strengthened competition among skilled and unskilled workers, especially in the South.
    Keywords: temporary contracts, matching efficiency, regional disparities
    JEL: J64 J69 C24
    Date: 2006–10–01

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.