New Economics Papers
on Efficiency and Productivity
Issue of 2007‒09‒24
fifteen papers chosen by

  1. Managers and efficiency in banking By Kauko, Karlo
  2. Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries By Carol Newman; John Rand; Finn Tarp
  3. Explicando as diferenças na produtividade agrícola no Brasil By Ajax R. B. Moreira; Steve M. Helfand; Adriano M. R. Figueiredo
  4. Performance Pay, Sorting, and Outsourcing By Fred Henneberger; Alfonso Sousa-Poza; Alexandre Ziegler
  5. Avaliação da Eficiência Técnica e da Eficiência de Escala do Sistema Nacional de Transplantes By Alexandre Marinho; Simone de Souza Cardoso
  6. Eficiência na Gestão Municipal no Brasil By Ronaldo Seroa da Motta; Ajax Moreira
  7. A Malthusian Model for all Seasons: A Theoretical Approach to Labour Input and Labour Surplus in Traditional Agriculture By Paul Sharp; Jacob Weisdorf
  8. Do Mergers of Potentially Dominant Firms foster Innovation? An Empirical Analysis for the Manufacturing Sector By Elena Cefis; Anna Sabidussi; Hans Schenk
  9. Fixed Effects Estimation of Marginal Railway Infrastructure Costs in Sweden By Andersson, Mats
  10. The Environmental Performance of Firms: The Role of Foreign Ownership, Training, and Experience By Matthew A Cole; Robert R J Elliott; Eric Strobl
  11. Evaluating the Performance of UK Research in Economics By Nicholas Vasilakos; Gauthier Lanot; Tim Worrall
  12. Growth accounting for the Euro area - a structural approach. By Tommaso Proietti; Alberto Musso
  13. The relative efficiency of UEFA Champions League scorers By Papahristodoulou, Christos
  14. Individual and Job-Based Determinants of Performance Appraisal: Evidence from Germany By Christian Grund; Dirk Sliwka
  15. Do Banks Respond to Capital Requirement? Evidence from Indonesia By Rasyad A Parinduri; Yohanes E. Riyanto

  1. By: Kauko, Karlo (Bank of Finland Research)
    Abstract: This paper presents evidence on the impact of managers on cost efficiency in banking. Stochastic frontier analysis is applied to a unique Finnish data set. The paper finds that manager age and education have strong yet complicated effects. University education enhances efficiency if the manager is running a large bank. Managing director changes are systematically followed by efficiency changes. Manager retirement typically causes an efficiency improvement, whereas other manager changes can either improve or weaken efficiency.
    Keywords: efficiency; banking; managers
    JEL: G21 L25 M19
    Date: 2007–09–18
  2. By: Carol Newman (Department of Economics, Trinity College Dublin); John Rand (Department of Economics, University of Copenhagen); Finn Tarp (Department of Economics, University of Copenhagen)
    Abstract: Much of the literature on industry evolution has found firm dynamics to be an important source of sector-level productivity growth. In this paper, we ask whether the delineation of entry and exit firms matters in assessing the impact of firm turnover. Using detailed firm level data from Vietnam, it emerges that efficiency differences between sector switchers and exit/entry firms exist. Distinguishing between switchers and firm entry/exit is crucial for understanding the contribution of firm turnover to overall productivity growth. Moreover, we uncover distinct and illuminating firm and sector-level determinants of firm exit and switching, which need to be carefully considered in the search for effective policy.
    Keywords: Firm dynamics, sector switching, efficiency, Vietnam
    JEL: D21 L6 O14
    Date: 2007–09
  3. By: Ajax R. B. Moreira; Steve M. Helfand; Adriano M. R. Figueiredo
    Abstract: This paper uses the agricultural census micro data of 1995-1996 to calculate, for each of the five Brazilian macro regions, the difference in total factor productivity (TFP), with two cleavages: family farmers and input-intensive farmers. This difference in TFP is explained regarding to variables of size, supply of public goods and access to institutions, and local variables measured directly or through a municipality fixed effect. The results point out to: a) the inverse relationship between land productivity and size, a stylized fact in the literature, is verified in all regions, but the inverse relationship regarding TFP and size is verified only to North, Northeast and Southeast and for the non-intensive in other regions; b) the family farmer has higher land productivity in seven of ten cases but lower TFP in eight of ten cases. Most of this difference is due to non-observable variables; and c) the intensive-type farmer is more productive in regions and non-observable variables explain part of the difference in productivity against their counterparts.
    Date: 2007–01
  4. By: Fred Henneberger (University of St. Gallen); Alfonso Sousa-Poza (University of Hohenheim and IZA); Alexandre Ziegler (University of Lausanne)
    Abstract: Implementing performance pay requires that workers' output be measured. When measurement costs differ among firms, those with a measurement cost advantage choose to implement performance pay. They attract the best workers, and both the level and variability of compensation are higher at these firms than at salary firms. Workers may select firms with different compensation methods at different stages of their work life. Productive workers start at performance pay firms and switch to salary firms once their productivity is revealed. The magnitude of the resulting worker flows depends on the payoff from effort and is therefore related to the age profile of the wage differential between performance pay and salary firms. Advantages in measuring worker productivity constitute a plausible explanation for the emergence of specialized business related service (BRS) firms. Accordingly, BRS firms should make a much wider use of performance pay and employ better workers than diversified corporations. Data from the 1998 Swiss Wage Structure Survey confirm the model's predictions both for the economy at large and for BRS firms.
    Keywords: asymmetric information, sorting, incentives, productivity, outsourcing
    JEL: J22 J29 J50
    Date: 2007–08
  5. By: Alexandre Marinho; Simone de Souza Cardoso
    Abstract: The Brazilian National Transplantation System (SNT) faces great challenges since the mean waiting times are very long, the shortage of organs is acute and a growing backlog of patients has been observed. We use data envelopment analysis (DEA) to realize an exploratory evaluation of the efficiency related to various organ transplantation procedures in Brazil. The inputs are the transplant expenses. The quantities of the various organs transplanted are employed as output measures. Our interest focuses on changes in efficiency over time, and the identification of trends in performance. Consequently, this study provides comparisons over multiple years (1995-2003). Although the overall performance deteriorated, we find out that SNT seemingly improved its performance in the last three years under analysis (2001- 2003). Apparently, SNT improved its efficiency regarding liver transplantation activities along the entire period. That conclusion, however, does not apply to kidneys, where an upward trend is not obvious. Because no previous work exists that used DEA in SNT efficiency evaluation, we believe that our work may be useful to policymakers as well as to the transplant community.
    Date: 2007–02
  6. By: Ronaldo Seroa da Motta; Ajax Moreira
    Abstract: This study analyses how technological, political and institutional factors affect the performance of municipalities in improving welfare in Brazil in the period 1989- 2000. The model adopts a stochastic production frontier conditioned to variables related to the provision costs and those that may explain efficiency. The most stable result indicated that there were scale and density economies as measured by, respectively, total population and urban population, and that the breaking up of municipalities reduced efficiency. The wider is the vote margin against the elected governor the lower is the municipal public expenditure, suggesting a patronage pattern in the allocation of states? free resources. Yet the higher is the participation of resource transferred into total expenditure the lower is the efficiency. However, the competitiveness in the political market, the existence of municipal councils and the degree of computational and outsourcing of services have not affected efficiency.
    Date: 2007–09
  7. By: Paul Sharp (Department of Economics, University of Copenhagen); Jacob Weisdorf (Department of Economics, University of Copenhagen)
    Abstract: It has become popular to argue (e.g. Clark 2007) that all societies were Malthusian until about 1800. At the same time, the phenomenon of surplus labour is well-documented for historical (as well as modern) pre-industrial societies. This study discusses the paradox of surplus labour in a Malthusian economy. Inspired by the work of Boserup (1965) and others, and in contrast to the Lewis (1954) approach, we suggest that the phenomenon of surplus labour is best understood through an acceptance of the importance of seasonality in agriculture. Boserup observed that the harvest season was invariably associated with labour shortages (the high-season bottleneck on production), although there might be labour surplus during the low season. We introduce the concept of seasonality into a stylized Malthusian model, and endogenize the extent of agricultural labour input, which is then used to calculate labour surplus and the rate of labour productivity. We observe the effects of season-specific technological progress, and find that technological progress in the low-season increases labour surplus and labour productivity whilst, perhaps surprisingly, technological progress in the high-season, by relaxing the high-season bottleneck, leads to work intensification and a drop in labour surplus and labour productivity.
    Keywords: Boserup; labour productivity; labour surplus; land productivity; Malthus; seasonality
    JEL: J22 N13 O10
    Date: 2007–09
  8. By: Elena Cefis; Anna Sabidussi; Hans Schenk
    Abstract: We investigate the effects of M&A on innovation in the specific context of potential or realized market dominance. Authorities are challenged by balancing both detrimental and beneficial effects of mergers on innovation, especially when a merger threatens to result in market dominance, while firms would wish to uncover all the potential benefits arising from M&A. The effects of M&As on innovation have been tested on a panel dataset, constructed from the Dutch Community Innovation Survey and the Dutch Business Register, including around 1000 manufacturing companies. We have adopted a comprehensive approach, taking into consideration three dimensions of innovation: innovation inputs, innovation outputs and efficiency. The results show that M&As performed in the previous 3-5 years have a positive and significant effect on innovation except R&D expenses and innovation efficiencies. The results also suggest that technological regimes are critical to understanding the patterns of innovation.
    Keywords: Mergers and Acquisitions, Innovation, Market Dominance
    JEL: C14 D21 L11 L25
    Date: 2007–09
  9. By: Andersson, Mats (VTI)
    Abstract: New railway legislation in Sweden has increased the need for transparent access charges on the Swedish railway network. We estimate cost functions for infrastructure operation, maintenance and renewal in the Swedish national railway network, using unobserved effects models and calculate marginal costs for railway infrastructure wear and tear. We find evidence of unobserved fixed effects at a track section level for infrastructure operation and maintenance costs. The estimated weighted average marginal infrastructure operation cost is SEK 0.12 per train kilometre and the estimated marginal maintenance cost is SEK 0.0073 per gross tonne kilometre. Altogether, the results indicate that the current charge for railway infrastructure wear and tear in Sweden is below marginal cost.
    Keywords: Railway; Infrastructure operation; Maintenance; Renewal; Marginal costs; Fixed effects
    JEL: C23 H54 L92 R48
    Date: 2007–04–25
  10. By: Matthew A Cole; Robert R J Elliott; Eric Strobl
    Abstract: In this paper we extend the debate on the environmental implications of foreign direct investment in developing countries by examining a new mechanism through which foreign influence can affect the environmental performance of firms. We focus on the extent to which key workers who have had previous training or experience in a foreign owned firm transfer and utilise their knowledge gained to the benefit of the local environment. To this end we use detailed firm-level data on manufacturing firms in Ghana. Our econometric results sugggest that the foreign training of a firm's decision maker does reduce fuel use, particularly so in foreign owned firms. Foreign ownership per se does not influence fuel use or total energy use but is found to increase electricity use, perhaps the cleanest form of energy used by Ghanaian firms.
    Keywords: Environment, Spillovers, FOreign Direct Investment
    JEL: Q56 Q52 F21 F23
    Date: 2007–08
  11. By: Nicholas Vasilakos (Economics, Keele University); Gauthier Lanot (Keele University, Department of Economics); Tim Worrall (Economics, Keele University)
    Abstract: This paper reports on available bibliometric evidence on the performance of UK research in economics. It examines some standard and non-standard sources of bibliometric evidence and in particular evidence from the ISI and EconLit databases and the Repository of Papers in Economics (RePEc). It also reports on research capacity of UK economics and some non-bibliometric sources of evidence.
    Keywords: Research evaluation, bibliometrics.
    JEL: A10 I23
    Date: 2007–07
  12. By: Tommaso Proietti (European Central Bank, Kaiserstraße 29, 60311 Frankfurt, Germany.); Alberto Musso (European Central Bank, Kaiserstraße 29, 60311 Frankfurt, Germany.)
    Abstract: This paper is concerned with the estimation of euro area potential output growth and its decomposition according to the sources of growth. The growth accounting exercise is based on a multivariate structural time series model which combines the decomposition of total output according to the production function approach with price and wage equations that embody Phillips type relationships linking inflation and nominal wage dynamics to the output gap and cyclical unemployment, respectively. Assuming a Cobb-Douglas technology with constant returns to scale, potential output results from the combination of the trend levels of total factor productivity and factor inputs, capital and labour(hours worked), which is decomposed into labour intensity (average hours worked), the employment rate, the participation rate, and population of working age. The nominal variables (prices and wages)play an essential role in defining the trend levels of the components of potential output, as the latter should pose no inflationary pressures on prices and wages. The structural model is further extended to allow for the estimation of potential output growth and the decomposition according to the sources of growth at different horizons (long-run, medium run and short run); in particular, we propose and evaluate a model–based approach to the extraction of the low–pass component of potential output growth at different cutoff frequencies. The approach has two important advantages - the signal extraction filters have an automatic adaptation property at the boundaries of the sample period, so that the real time estimates do not suffer from what is often referred to as the ”end–of–sample bias”. Secondly, it is possible to assess the uncertainty of potential output growth estimates with different degrees of smoothness. JEL Classification: C32, C51, E32, O47.
    Keywords: Potential output, Output gap, Euro area, Unobserved components, Production function approach, Low-pass filters.
    Date: 2007–08
  13. By: Papahristodoulou, Christos
    Abstract: The mass media, the football supporters and other experts in many countries are often engaged in the ranking of football players. Given the heterogeneity of various leagues or series in which players play, such a comparison is almost impossible. On the other hand, the performance of players in international tournaments, like the FIFA world cup at the national team level, or the UEFA Champions League at the European Club level, can be measured, if we rely on “objective” measures and statistics. Obviously, since various positions of players are evaluated by different criteria, the heterogeneity is still apparent. In this paper we attempt to evaluate a small subset of a team’s players, namely its scorers, using UEFA:s official match-play statistics from the Champions League tournament 2006/07.
    Keywords: efficiency; scorers; forwards; midfielders; Champions League; DEA
    JEL: C69 L83
    Date: 2007–09–17
  14. By: Christian Grund (University of Wuerzburg and IZA); Dirk Sliwka (University of Cologne and IZA)
    Abstract: We investigate the use of performance appraisal (PA) in German Firms. First, we derive hypotheses on individual and job based determinants of PA usage. Based on a representative German data set on individual employees, we test these hypotheses and also explore the impact of PA on performance pay and further career prospects. The results include that PA is positively linked to an individual’s willingness to take risks. The performance of older employees and woman is evaluated less often. Furthermore, larger firms evaluate the performance of their employees more. We find evidence for a nonmonotonic relation between the hierarchical level and usage of performance appraisal: The performance of employees with very high or very low responsibilities is assessed less often.
    Keywords: performance appraisal, performance evaluation, GSOEP
    JEL: J33 M52
    Date: 2007–08
  15. By: Rasyad A Parinduri (Singapore Centre for Applied and Policy Economics (SCAPE) Department of Economics, National University of Singapore); Yohanes E. Riyanto (Department of Economics, National University of Singapore)
    Abstract: Using dynamic panel data models, we examine the effect of capital requirement on banks’ behavior in Indonesia. We find inconclusive results. Some banks tend to comply with capital requirement: They increase their capital ratio when their CAR is lower than, or falling towards, the eight percent regulatory minimum. However, most of our results are statistically significant at 20-30% level of significance only. Moreover, our results are mostly driven by private domestic banks and heavily-undercapitalized banks that were closely monitored by regulator in the aftermath of the 1998 crisis. Whether, in normal circumstances, banks in developing countries like Indonesia comply with capital requirement, therefore, remains questionable. This implies that, if regulators in developing countries continue relying on capital regulation, they would also need to improve their supervision capacity, increase the transparency of financial reporting, and strengthen market monitoring of banks.
    Keywords: banking crisis, capital requirement, bank regulation, dynamic panel data
    JEL: C23 G21 G28

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