New Economics Papers
on Efficiency and Productivity
Issue of 2007‒12‒19
eleven papers chosen by

  1. Boosting Manufacturing Productivity Through R&D: International Comparisons with Special Focus on Italy By Alessandro STERLACCHINI; Francesco VENTURINI
  2. The Contribution of Sectoral Productivity Differentials to Inflation in Greee By Heather D. Gibson; Jim Malley
  3. Labor Productivity in Spain: 1977-2002 By Rosella Nicolini
  4. Estimating Production Functions with R&D Investment and Endogeneity By Young Gak Kim
  5. Learning by Exporting: Do Firm Characteristics Matter? Evidence from Argentinian Panel Data By Facundo Albornoz; Marco Ercolani
  6. Racial Diversity and Aggregate Productivity in US Industries: 1980-2000” By Sparber, Chad
  7. The Impact of Teams on Output, Quality and Downtime: An Empirical Analysis Using Individual Panel Data By Jones, Derek C.; Kato, Takao
  9. Using Firm Optimization to Evaluate and Estimate Returns to Scale By Yuriy Gorodnichenko
  10. The need to reconstruct performance indicators By Nathalie Rey
  11. A Theory of Racial Diversity, Segregation, and Productivity By Sparber, Chad

  1. By: Alessandro STERLACCHINI (Universita' Politecnica delle Marche, Dipartimento di Management ed Organizzazione Aziendale); Francesco VENTURINI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: Using data for twelve manufacturing industries of five developed countries over the period 1980-2002, we perform a dynamic panel estimation - based on a ECM model - of the long-run elasticity of TFP with respect to the stock of R&D capital. The highest elasticity is found for the US (0.51) while lower values arise for Germany (0.29), France (0.23) and Spain (0.22); the latter, in turn, are higher than that estimated for Italy (0.14). The unsatisfactory performance of Italian manufacturing industries is confirmed by further analyses in which a better measurement of TFP is provided and the time period extended. The above findings and their policy implications are discussed firstly in the light of the US-EU divide in terms of R&D-induced productivity growth and, subsequently, by focussing on the Italian case.
    Keywords: R&D capital stock, manufacturing industries, productivity growth
    JEL: L6 O3 O4
    Date: 2007–12
  2. By: Heather D. Gibson (Bank of Greece); Jim Malley (University of Glasgow and CESifo)
    Abstract: This paper estimates the magnitude of the Balassa-Samuelson effect for Greece. We calculate the effect directly, using sectoral national accounts data, which permits estimation of total factor productivity (TFP) growth in the tradeables and nontradeables sectors. Our results suggest that it is difficult to produce one estimate of the BS effect. Any particular estimate is contingent on the definition of the tradeables sector and the assumptions made about labour shares. Moreover, there is also evidence that the effect has been declining through time as Greek standards of living have caught up on those in the rest of the world and as the non-tradeables sector within Greece catches up with the tradeables.
    Keywords: Balassa-Samuelson effect, inflation, productivity
    JEL: E31 F36 F41
    Date: 2007–11
  3. By: Rosella Nicolini
    Abstract: This study examines the evolution of labor productivity across Spanish regions during the period from 1977 to 2002. By applying the kernel technique, we estimate the effects of the Transition process on labor productivity and its main sources. We find that Spanish regions experienced a major convergence process in labor productivity and in human capital in the 1977-1993 period. We also pinpoint the existence of a transition co-movement between labor productivity and human capital. Conversely, the dynamics of investment in physical capital seem unrelated to the transition dynamics of labor productivity. The lack of co-evolution can be addressed as one of the causes of the current slowdown in productivity. Classification-JEL: J24, N34, N940, O18, O52, R10
    Keywords: Labor productivity, employment, human capital, physical capital, Spanish regions.
    Date: 2007–12–10
  4. By: Young Gak Kim
    Abstract: This study analyses the production function estimation when there is an unobservable idiosyncratic productivity shock and the series of the productivity shock follows a first-order endogenous Markov process which is controlled by R&D investment. The production function approach, in general, suffers from endogeneity problems when there are determinants of production which are not observed by the econometrician but are observed by the manager of a firm. To control for this problem, recently developed econometric methods are applied to the production function estimation. The results show that there is a possibility that other estimation methods such as OLS estimation and fixed effect estimation underestimates the contribution of capital. The results also suggest that the rate of return to R&D varies considerably across industries and within an industry.
    JEL: D24 O32
    Date: 2007–12
  5. By: Facundo Albornoz; Marco Ercolani
    Abstract: We identify characteristics that affect firms' ability to learn from their export activities. Our analysis is based on a panel of Argentinian firms spanning 1992-2001 and we employ Granger causality tests, propensity score matching techniques and GMM regressions. The characteristics we find to be important are: foreign ownership, intensive use of imported inputs, a skilled workforce and small firm size. Finally, firms that are new to exporting seem to experience particularly high productivity gains but begin enjoying them before entering into the export market.
    Keywords: Exporting, Learning by Exporting, Productivity, Absorptive Capacity, Argentina
    JEL: F14 D21 D24
    Date: 2007–09
  6. By: Sparber, Chad (Department of Economics, Colgate University)
    Abstract: This paper employs industry-level US Census data from 1980-2000 to assess the aggregate effects of racial diversity. While most international accounts find that diversity reduces productivity, I argue that the US experience is more nuanced. Unqualified statements about the costs and merits of diversity are unwarranted, as racial heterogeneity increases productivity within many, but not all, industries. Sectors employing a large number of workers responsible for creative decision-making and customer service experience gains from diversity, while industries characterized by high levels of group effort suffer losses. The results thus reconcile two competing literatures by suggesting that diversity improves decision-making and problem solving, but also encumbers common action and public goods provision.
    Keywords: Racial Diversity, Productivity
    JEL: O40 J24 O51
    Date: 2007–11–30
  7. By: Jones, Derek C. (Hamilton College); Kato, Takao (Department of Economics, Colgate University)
    Abstract: To investigate the size and the timing of the direct impact of participatory arrangements on business performance, we assemble and analyze extraordinary daily data-- for rejection, production and downtime rates for all operators in a single plant during a 35 month period, more than 77,000 observations. Consistent with core hypotheses that employee involvement enhances productivity and quality through mechanisms including employees becoming better motivated, more informed and paying greater attention to product details, we find that membership in offline teams: (i) initially enhances individual productivity by about 3%; (ii) and lowers rejection rates by about 27%. We also find that: (iii) these improvements are dissipated, typically at 10 to 16% per 100 days in a team; (iv) while initially teams lead to more downtime, these costs diminish over time; (v) the performance-enhancing effects of team membership are generally greater and more long-lasting for team members who are solicited by management; (vi) similar relationships exist for more educated team members. These findings square with diverse hypotheses concerning predicted gains from complementarities in organizational design, the benefits that flow from management solicitation and enhanced education, but are inconsistent with hypotheses based on Hawthorne effects.
    JEL: M54 J50 J41 D20
    Date: 2007–07–07
  8. By: Sergio Lodde
    Abstract: The paper examines the relationship between human capital and productivity growth with reference to the Italian regions. Two approaches can be distinguished. One belonging to the neoclassical tradition stresses the accumulation of human capital as a determinant of growth, while the other, inspired by Nelson and Phelps, emphasizes the role of the stock in developing endogenous technology and catching up with more advanced economies. These hypotheses have been tested at an aggregate level but results might be the overall outcome of different processes across sectors due to the different catching-up potential. In particular we expect the Nelson-Phelps hypothesis to be more relevant in the industrial sector where innovation is the most important growth determinant. A model is estimated which allows to test both the neoclassical and the Nelson-Phelps hypotheses breaking down the analysis by sector. The results do not confirm our expectations. In the industrial sector the neoclassical hypothesis is clearly rejected by the data. Some evidence supporting the Schumpeterian one can be detected when the technical component of human capital is taken into account but it is not robust to changes in the model specification. In the service sector the results are inconclusive as well. A positive and significant effect of human capital accumulation has been found for the whole sector but the explanatory power of this variable decreases considerably in the marketable services branch.
    Keywords: growth, human capital, regions, sectors
    JEL: J24 O40 R11
    Date: 2007
  9. By: Yuriy Gorodnichenko
    Abstract: At the firm level, revenue and costs are well measured but prices and quantities are not. This paper shows that because of these data limitations estimates of returns to scale at the firm level are for the revenue function, not production function. Given this observation, the paper argues that, under weak assumptions, micro-level estimates of returns to scale are often inconsistent with profit maximization or imply implausibly large profits. The puzzle arises because popular estimators ignore heterogeneity and endogeneity in factor/product prices, assume perfect elasticity of factor supply curves or neglect the restrictions imposed by profit maximization (cost minimization) so that estimators are inconsistent or poorly identified. The paper argues that simple structural estimators can address these problems. Specifically, the paper proposes a full-information estimator that models the cost and the revenue functions simultaneously and accounts for unobserved heterogeneity in productivity and factor prices symmetrically. The strength of the proposed estimator is illustrated by Monte Carlo simulations and an empirical application. Finally, the paper discusses a number of implications of estimating revenue functions rather than production functions and demonstrates that the profit share in revenue is a robust non-parametric economic diagnostic for estimates of returns to scale.
    JEL: D24 D4 E23 L11
    Date: 2007–11
  10. By: Nathalie Rey (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII)
    Abstract: L'objectif de cet article est de montrer les limites des principaux indicateurs de performance des banques et de proposer une approche en terme de rendement et de risque calculés pour chaque banque à partir de plusieurs facteurs de risque.
    Keywords: Performance indicators; profitability, risk factors, multifactorial approach
    Date: 2007
  11. By: Sparber, Chad (Department of Economics, Colgate University)
    Abstract: Empirical evidence illustrates that diversity generates both economic costs and benefits. This paper develops a theoretical model that accounts for the positive and deleterious effects of heterogeneity. First, an expanded Solow Growth Model demonstrates that the direct effects of diversity can be positive or negative, and depend upon the size of fixed parameter values. Second, diversity also influences individuals' location decisions. Segregation (variation of diversity across regions) always reduces national output per worker, so if diversity induces integration, it indirectly augments productivity as well. Finally, political policies aimed at reducing interaction costs across groups may actually reduce aggregate output per worker by encouraging segregation.
    Keywords: Racial Diversity, Macroeconomic Productivity
    JEL: O40 J24 O51 J10
    Date: 2007–11–30

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