New Economics Papers
on Efficiency and Productivity
Issue of 2007‒01‒02
eight papers chosen by

  1. Relative Efficiency of Health Provision: a DEA Approach with Non-discretionary Inputs By António Afonso; Miguel St. Aubyn
  2. Enforcement of Regulation, Informal Labour, Firm Size and Firm Performance By Almeida, Rita; Carneiro, Pedro
  3. Wages, Productivity and Aging By Benoit Dostie
  4. Are Financial Distortions an Impediment to Economic Growth? Evidence from China By Alessandra Guariglia; Sandra Poncet
  5. Quantitative selection of hedge funds using data envelopment analysis By Huyen Nguyen-Thi-Thanh
  6. Decentralization and the Productive Efficiency of Government: Evidence from Swiss Cantons By Iwan Barankay; Ben Lockwood
  7. On the Use of Data Envelopment Analysis in Hedge Fund Performance Appraisal By Huyen Nguyen-Thi-Thanh
  8. Does Manager Turnover Improve Firm Performance? New Evidence Using Information from Dutch Soccer, 1986-2004 By Bas ter Weel

  1. By: António Afonso; Miguel St. Aubyn
    Abstract: We estimate a semi-parametric model of health production process using a two-stage approach for OECD countries. By regressing data envelopment analysis output efficiency scores on non-discretionary variables, both using Tobit analysis and a single and double bootstrap procedure, we show that inefficiency is strongly related to GDP per head, the education level, and health behaviour such as obesity and smoking habits. The used bootstrapping procedure corrects likely biased DEA output scores taking into account that environmental variables are correlated to output and input variables.
    Keywords: technical efficiency; health; DEA; bootstrap; semi-parametric.
    JEL: C14 C61 H52 I11
  2. By: Almeida, Rita; Carneiro, Pedro
    Abstract: This paper investigates how enforcement of labour regulation affects the firm's use of informal labour, firm size and firm performance. Using firm level data on employment, capita, and output, census data on informal employment at the city level, and administrative data on enforcement of regulation at the city level, we show that in areas where law enforcement is stricter firms employ a smaller proportion of informal workers. Furthermore, by reducing the firm's access to unregulated labour stricter enforcement is also associated with smaller firms, less fluid labour markets, and (possibly) lower labour productivity. We control for different regional and firm characteristics, and we instrument enforcement with the distance between firm location and the location of an enforcement office, a measure of access of labour inspectors to firms. Taken together, our findings suggest that increased access to labour flexibility frees the firm from growth constraints, and it is likely to contribute to an improvement in productivity.
    Keywords: employment; informal sector; labour demand; labour markets; productivity; regulation
    JEL: H00 H10 J50 K20 L50 L60 O17 O40
    Date: 2006–12
  3. By: Benoit Dostie (HEC Montréal, CIRANO, CIRPÉE and IZA Bonn)
    Abstract: In this article, we estimate age based wage and productivity differentials using linked employer-employee Canadian data from the Workplace and Employee Survey 1999-2003. Data on the firm side is used to estimate production functions taking into account the age profile of the firm’s workforce. Data on the workers’ side is used to estimate wage equations that also depend on age. Results show concave age-wage and age-productivity profiles. Wage-productivity comparisons show that the productivity of workers aged 55 and more with at least an undergraduate degree is lower than their wages. For other groups, we find that wages do not deviate significantly from productivity estimates.
    Keywords: wage determination, productivity, production function, linked employer-employee data
    JEL: J31
    Date: 2006–12
  4. By: Alessandra Guariglia; Sandra Poncet
    Abstract: Using data for 30 Chinese provinces over the period 1989-2003, this study examines the relationship between the level of financial intermediary development, and real GDP growth, physical capital accumulation, and total factor productivity (TFP) growth. We find that traditionally used indicators of financial development and China-specific indicators measuring the level of state interventionism in finance are generally negatively associated with growth and its sources, while indicators measuring the degree of market driven financing in the economy are positively associated with GDP and TFP growth, and capital accumulation. These effects have gradually declined over time and are weaker for high FDI recipients.
    Keywords: Financial intermediation; economic growth; capital accumulation; productivity growth; China
    JEL: E44 G21 N15 O16 O40
    Date: 2006–12
  5. By: Huyen Nguyen-Thi-Thanh
    Abstract: Previous studies have documented that Data Envelopment Analysis<br />(DEA) could be a good tool to evaluate fund performance,<br />especially the performance of hedge funds as it can incorporate<br />multiple risk-return attributes characterizing hedge fund's non<br />normal return distribution in an unique performance score. The<br />purpose of this paper is to extend the use of DEA to the context<br />of hedge fund selection when investors must face multi-dimensional<br />constraints, each one associated to a relative importance level.<br />Unlike previous studies which used DEA in an empirical framework,<br />this research puts emphasis on methodological issues. I showed<br />that DEA can be a good tailor-made decision-making tool to assist<br />investors in selecting funds that correspond the most to their<br />financial, risk-aversion, diversification and investment horizon<br />constraints.
    Keywords: hedge funds, data envelopment analysis, fund selection, performance measurement, alternative investment
    Date: 2006–12–14
  6. By: Iwan Barankay (University of Warwick, CEPR and IZA Bonn); Ben Lockwood (University of Warwick and CEPR)
    Abstract: Advocates of fiscal decentralization argue that amongst other benefits, it can increase the efficiency of delivery of government services. This paper is one of the first to evaluate this claim empirically by looking at the association between expenditure decentralization and the productive efficiency of government using a data-set of Swiss cantons. We first provide careful evidence that expenditure decentralization is a powerful proxy for legal local autonomy. Further panel regressions of Swiss cantons provide robust evidence that more decentralization is associated with higher educational attainment. We also show that these gains lead to no adverse effects across education types but that male students benefited more from educational decentralization closing, for the Swiss case, the gender education gap.
    Keywords: decentralization, productive efficiency, local public goods
    JEL: H40 H52 H70 I20
    Date: 2006–12
  7. By: Huyen Nguyen-Thi-Thanh
    Abstract: This paper aims to show that Data Envelopment Analysis (DEA) is an efficient tool to assist investors in multiple criteria decision-making tasks like assessing hedge fund performance. DEA has the merit of offering investors the possibility to consider simultaneously multiple evaluation criteria with direct control over the priority level paid to each criterion. By addressing main methodological issues regarding the use of DEA in evaluating hedge fund performance, this paper attempts to provide investors sufficient guidelines for tailoring their own performance measure which reflect successfully their own preferences. Although these guidelines are formulated in the hedge fund context, they can also be applied to other kinds of investment funds.
    Keywords: hedge fund, mutual fund, alternative investment, data envelopment analysis, performance<br />measures, Sharpe ratio
    Date: 2006–12–14
  8. By: Bas ter Weel (MERIT, Maastricht University and IZA Bonn)
    Abstract: This research examines the impact of manager turnover on firm performance using information from the Dutch soccer league in the period 1986-2004. The advantage of using sports data is that both manager characteristics and decisions and firm outcomes are directly observable. Both difference-in-difference and 2SLS estimates suggest no improvements in firm performance after manager turnover, whereas previous research based on publicly traded firm data has found positive but very small effects of manager turnover on firm performance. In addition, manager quality does not seem to matter in predicting turnover. These estimates are compared and contrasted with studies using publicly traded firm data.
    Keywords: management turnover, firm performance
    JEL: J24
    Date: 2006–12

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