New Economics Papers
on Efficiency and Productivity
Issue of 2007‒06‒18
seven papers chosen by

  1. Estimating Inefficiency and Total Factor Productivity: An Application to Irish Dairy Farming By James Carroll; Carol Newman; Fiona Thorne
  2. Productivity Growth: The Effect of Market Regulations By Christopher Kent; John Simon
  3. What Happened to the Knowledge Economy? ICT, Intangible Investment and Britain’s Productivity Record Revisited By Mauro Giorgio Marrano; Jonathan Haskel; Gavin Wallis
  4. Improving the Efficiency of Health Care Spending: Selected Evidence on Hospital Performance By Espen Erlandsen
  5. Information, Technology and Information Worker Productivity: Task Level Evidence By Sinan Aral; Erik Brynjolfsson; Marshall Van Alstyne
  6. Passing on Success? Productivity Outcomes for Quarterbacks Chosen in the 1999-2004 National Football League Player Entry Drafts By Kevin G. Quinn; Melissa Geier; Anne Berkovitz
  7. Accelerated Technological Progress - An Explanation for Wage Dispersion and a Possible Solution to the Productivity Paradox By Nikutowski, Oliver

  1. By: James Carroll (Department of Economics, Trinity College Dublin); Carol Newman (Department of Economics, Trinity College Dublin); Fiona Thorne (Rural Economy Research Centre, Teagasc, Dublin, Ireland)
    Abstract: This paper compares standard stochastic frontier models for panel data with a number of recently developed models designed to remove unobserved heterogeneity from the inefficiency component. Results are used to construct a generalised Malmquist total factor productivity (TFP) index. We conclude that the choice of approach makes little difference where the purpose of the study is to analyse aggregate trends in TFP and its components. However, where inefficiency estimates and their dispersion are of interest, attention should be paid to how the analyst’s interpretation of inefficiency relates to the underlying assumptions of the model that is used.
    Keywords: Efficiency, panel data, total factor productivity, stochastic production frontier, ‘true’ effects models, dairy sector
    JEL: D24 Q12
    Date: 2007–06
  2. By: Christopher Kent (Reserve Bank of Australia); John Simon (Reserve Bank of Australia)
    Abstract: This paper explores the effects of product and labour market regulation on growth in total factor productivity (TFP) using panel data from 1974–2003 for 18 OECD countries. Our regressions are specified so that labour and product market regulations can affect productivity both individually and in combination. While noting that the results are sensitive to the measure of labour market regulation used, we find some support for the hypothesis that lower initial levels of regulation are associated with higher TFP growth over subsequent years, and that labour and product market deregulation have more of an effect in combination. It also appears that product market deregulation has a larger positive effect on productivity growth the further a country is from the technological frontier.
    Keywords: structural reform; TFP growth; OECD; panel regression
    JEL: C33 J01 L50 O43 O57
    Date: 2007–06
  3. By: Mauro Giorgio Marrano (Queen Mary, University of London and CeRiBA); Jonathan Haskel (Queen Mary, University of London, AIM, CeRiBA, CEPR and IZA); Gavin Wallis (University College London)
    Abstract: A major puzzle is that despite the apparent importance of innovation around the “knowledge economy”, UK macro performance appears unaffected: investment rates are flat, and productivity has slowed down. We investigate whether measurement issues might account for the puzzle. The standard National Accounts treatment of most spending on “knowledge” or “intangible” assets is as intermediate consumption. Thus they do not count as either GDP or investment. We ask how treating such spending as investment affects some key macro variables, namely, market sector gross value added (MGVA), business investment, capital and labour shares, growth in labour and total factor productivity, and capital deepening. We find (a) MGVA was understated by about 6% in 1970 and 13% in 2004 (b) instead of the nominal business investment/MGVA ratio falling since 1970 it is has been rising (c) instead of the labour compensation/MGVA ratio being flat since 1970 it has been falling (d) growth in labour productivity and capital deepening has been understated and growth in total factor productivity overstated (e) total factor productivity growth has not slowed since 1990 but has been accelerating.
    Keywords: Intangible assets, Productivity, R&D, Training, Organisational capital, Investment
    JEL: O47 E22 E01
    Date: 2007–06
  4. By: Espen Erlandsen
    Abstract: There are no ready-made data on hospital outputs and inputs which would allow comprehensive international comparisons of hospital efficiency to be carried out. This paper, therefore, relies on selected evidence to compare hospital efficiency in a subset of OECD countries, based on three different approaches relying on, respectively: i) unit costs for standard hospital treatments; ii) overall efficiency levels in a set of paired countries; iii) within-country dispersion in individual hospital efficiency. The analysis suggests substantial cross-country differences in hospital performance. Although country coverage varies between the different approaches, making it difficult to assess the extent to which comparisons provide a consistent picture of national efficiency levels, cross-checks between the different indicator sets tend to support the robustness of the country rankings. <P>Améliorer l’efficacité des dépenses de santé : Indicateurs sélectifs de la performance des hôpitaux <BR>Il n’existe pas de données toutes faites sur les services fournis par les hôpitaux et les ressources qu’ils consomment qui permettraient d’effectuer des comparaisons internationales d’ensemble de l’efficacité des hôpitaux. Ce document s’appuie donc sur des indicateurs sélectifs pour comparer l’efficacité des hôpitaux dans un échantillon de pays de l’OCDE, sur la base de trois approches différentes, à savoir : i) les coûts unitaires pour des interventions hospitalières types ; ii) les niveaux d’efficacité globale entre pays pris deux à deux ; iii) la variabilité de l’efficacité entre hôpitaux d’un même pays. L’analyse montre des différences substantielles de performance entre pays. S’il est difficile d’évaluer dans quelle mesure ces comparaisons donnent une image cohérente des niveaux d’efficacité nationaux, car le nombre de pays couverts varie d’une approche à l’autre, des vérifications par recoupement des différents jeux d’indicateurs tendent à confirmer la robustesse du classement des pays.
    Keywords: health care, services de santé, méthodes non paramétriques, hospital efficiency, efficacité des hôpitaux, unit costs, coûts unitaires, diagnosis related groups, groupes homogènes de malades, non-parametric methods
    JEL: C14 D24 H41 H51 I11 I12 I18
    Date: 2007–06–11
  5. By: Sinan Aral; Erik Brynjolfsson; Marshall Van Alstyne
    Abstract: In an effort to reveal the fine-grained relationships between IT use, patterns of information flows, and individual information-worker productivity, we study task level practices at a midsize executive recruiting firm. We analyze both project-level and individual-level performance using: (1) detailed accounting data on revenues, compensation, project completion rates, and team membership for over 1300 projects spanning 5 years, (2) direct observation of over 125,000 email messages over a period of 10 months by individual workers, and (3) data on a matched set of the same workers' self-reported IT skills, IT use and information sharing. These detailed data permit us to econometrically evaluate a multistage model of production and interaction activities at the firm, and to analyze the relationships among key technologies, work practices, and output. We find that (a) IT use is positively correlated with non-linear drivers of productivity; (b) the structure and size of workers' communication networks are highly correlated with performance; (c) an inverted-U shaped relationship exists between multitasking and productivity such that, beyond an optimum, more multitasking is associated with declining project completion rates and revenue generation; and (d) asynchronous information seeking such as email and database use promotes multitasking while synchronous information seeking over the phone shows a negative correlation. Overall, these data show statistically significant relationships among technology use, social networks, completed projects, and revenues for project-based information workers. Results are consistent with simple models of queuing and multitasking and these methods can be replicated in other settings, suggesting new frontiers for IT value and social network research.
    JEL: D2 D8 J44 L8 M0 O30
    Date: 2007–06
  6. By: Kevin G. Quinn (St. Nobert College); Melissa Geier (St. Nobert College); Anne Berkovitz (St. Nobert College)
    Abstract: Seventy quarterbacks were selected during six NFL drafts held 1999-2004. This paper analyzes information available prior to the draft (college, college passing statistics, NFL Combine data) and draft outcomes (overall number picked and signing bonus). Also analyzed for these players are measures of NFL playing opportunity (games played, games started, pass attempts) and measures of productivity (Pro Bowls made, passer rating, DVOA, and DPAR) for up to the first seven years of each drafted player’s NFL career. We find that more highly-drafted QBs get significantly more opportunity to play in the NFL. However, we find no evidence that more highly-drafted QBs become more productive passers than lower-drafted QBs that see substantial playing time. Furthermore, QBs with more pass attempts in their final year of more highly-ranked college programs exhibit lower NFL passing productivity.
    Keywords: Sports, NFL, Draft, Quarterback, Productivity
    JEL: L83 J23 J42
    Date: 2007–06
  7. By: Nikutowski, Oliver
    Abstract: Due to scarcity considerations an increase in the supply of college graduates should reduce the premium for this kind of qualification. Therefore it seems quite contradictory that a tremendous educational expansion in the USA is accompanied by rising wage dispersion (overall and between educational groups). A second seemingly paradox development, which occured simultaneously, is the reduction of the total factor productivity during the emergence of the computerage - the so called productivity paradox. This contribution offers a simple unified solution to both of these puzzles and explains the educational expansion by assuming accelerated technological progress: An increase in the speed of technological progress raises the economic value of prospective periods and therefore works in favor of timeconsuming higher qualifications. The resulting educational expansion firstly goes along with a composition effect which leads to wage dispersion. Secondly the additional absence from the labor market of some more able individuals, due to the longer qualification, as well as an increasing share of individuals who choose a less productive qualification may lead to a transitory slowdown of the productivity growth rate.
    Keywords: Wage Dispersion; Productivity Paradox; Inequality; Distribution; Technological Progress; Technological Change; SBTC; Educational Expansion; Total Factor Productivity; Educational Signaling; Real Wage Losses
    JEL: J21 J22 J23 J24 J31 J82 O15 O33 O47
    Date: 2007–05

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