New Economics Papers
on Efficiency and Productivity
Issue of 2008‒07‒14
seven papers chosen by

  1. Job Protection Legislation and Productivity Growth in OECD Countries By Bassanini, Andrea; Nunziata, Luca; Venn, Danielle
  2. Industrial Development, Firm Dynamics and Patterns of Productivity Growth: The Case of the Cotton-spinning Industry in Prewar Japan, 1894-1924 By OKAZAKI Tetsuji
  3. Do High-Skill Immigrants Raise Productivity? Evidence from Israeli Manufacturing Firms, 1990-1999 By Paserman, Daniele
  4. Proximate causes of economic growth in Spain, 1850-2000 By Leandro Prados de la Escosura; Joan R. Rosés
  5. A Univariate Model of Aggregate Labour Productivity By Robert Dixon; G. C. Lim
  6. Distance to Frontier and Appropriate Business Strategy By Alexander Coad
  7. The Impact of Agricultural Extension Services: The Case of Grape Production in Argentina By Pedro Cerdán-Infantes; Alessandro Maffioli; Diego Ubfal

  1. By: Bassanini, Andrea (OECD); Nunziata, Luca (University of Padova); Venn, Danielle (OECD)
    Abstract: This paper examines the impact of employment protection legislation on productivity in the OECD, using annual cross-country aggregate data on the degree of regulations and industry-level data on productivity from 1982 to 2003. We adopt a "difference-in-differences" framework, which exploits likely differences in the productivity effect of dismissal regulations in different industries. Our identifying assumption is that stricter employment protection influences worker or firm behaviour, and thereby productivity, more in industries where the policy is likely to be binding than in other industries. The advantage of this approach is that, in contrast with standard cross-country analysis, we can control for unobserved factors that, on average, are likely to have the same effect on productivity in all industries. Our empirical results suggest that mandatory dismissal regulations have a depressing impact on productivity growth in industries where layoff restrictions are more likely to be binding. We present a large battery of robustness checks, including dealing with endogeneity issues, that suggest that our finding is robust.
    Keywords: labour market institutions, EPL, productivity, difference-in-differences
    JEL: J08 J23 J24
    Date: 2008–06
  2. By: OKAZAKI Tetsuji
    Abstract: This paper explores the relationship between patterns of productivity growth and the development stage of an industry, using firm-level data on the cotton-spinning industry in Japan in the late-nineteenth century. It is found that patterns of productivity growth depend on the development stage of the industry. In the earlier stage of industrial development, the productivity growth of each firm, namely the within effect, was the sole major source of aggregate productivity growth. On the other hand, once the industry had matured, resource reallocation across firms became a major source of aggregate productivity growth, along with the within effect. This relationship between patterns of productivity growth and the development stage of an industry is considered to reflect the stage-dependent patterns of innovation and competition.
    Date: 2008–07
  3. By: Paserman, Daniele (Boston University)
    Abstract: During the second part of the 1990s, the Israeli economy experienced a surge in labor productivity and total factor productivity, which was driven primarily by the manufacturing sector. This surge in productivity coincided with the full absorption and integration into the workforce of highly skilled immigrants from the former Soviet Union. The Soviet immigrants were disproportionately employed in manufacturing and, after an initial adjustment period, progressively moved into higher responsibility occupations where their skills could be put to use more efficiently. This has led some observers to comment that the high-skilled immigration wave was one of the main determinants for the fast growth of the Israeli economy in the 1990s. In this paper, I use a unique data set on Israeli manufacturing firms and investigate directly whether firms and industries with a higher concentration of immigrants experienced increases in productivity. The analysis shows that there is no correlation between immigrant concentration and productivity at the firm level in cross-sectional and pooled OLS regressions. First-differences estimates, which control for fixed unobserved differences between firms, reveal, if anything, a negative correlation between the change in output per worker and the change in the immigrant share. A more in-depth analysis reveals that the immigrant share was strongly negatively correlated with output and productivity in low-tech industries. In high-technology industries, the results tend to point to a positive relationship, hinting at complementarities between technology and the skilled immigrant workforce.
    Keywords: immigration, productivity
    JEL: J61 F22 D24
    Date: 2008–06
  4. By: Leandro Prados de la Escosura; Joan R. Rosés
    Abstract: Between 1850 and 2000, Spain’s real output and labor productivity grew at average rates of 2.5 and 2.1 percent. The sources of this long-run growth are investigated here for the first time. Broad capital accumulation and efficiency gains appear as complementary in Spain’s long-term growth. Factor accumulation dominated long-run growth up to 1950, while total factor productivity led thereafter and, especially, during periods of growth acceleration. The main spurts in TFP and capital coincide with the impact of the railroads (1850s-80), the electrification (the 1920s and 1950s) and to the adoption of new vintage technology during the Golden Age.
    Keywords: Total factor productivity, Factor accumulation, Spain
    Date: 2008–06
  5. By: Robert Dixon (Department of Economics, The University Melbourne); G. C. Lim (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
    Abstract: In this paper, we set out a model of labour productivity which distinguishes between shocks which change productivity permanently and shocks which have transient affects on productivity. We show that this model is a type of unobserved components model –a random walk with drift plus noise model. The advantage of this approach is that it provides a coherent framework to identify the deterministic trend growth component and also the productivity-enhancing (or technology-related) stochastic components. The model is applied to aggregate labour productivity in Australia and the time series of technology shocks extracted is used to shed some light on the contributions of policy reforms to productivity.
    Date: 2008–05
  6. By: Alexander Coad
    Abstract: This paper is an empirical test of the hypothesis that the appropriateness of different business strategies is conditional on the firm's distance to the industry frontier. We use data on four 2-digit high-tech manufacturing industries in the US over the period 1972-1999, and apply semi-parametric quantile regressions to investigate the contribution of firm behavior to market value at various points of the conditional distribution of Tobin's q. Among our results, we observe that innovative activity, measured in terms of R&D expenditure or patents, has a strong positive association with market value at the upper quantiles (corresponding to the leader firms) whereas the innovative efforts of laggard firms are valued significantly less. Laggard firms, we suggest, should instead achieve productivity growth through efficient exploitation of existing technologies and imitation of industry leaders. Employment growth in leader firms is encouraged whereas growth of backward firms is not as well received on the stock market.
    Keywords: Distance to frontier, Strategy, Market value, Innovation, Firm Growth Length 37 pages
    JEL: D21 L21 L25 O31
    Date: 2008–06
  7. By: Pedro Cerdán-Infantes (Office of Evaluation and Oversight at the Interamerican Development Bank.); Alessandro Maffioli (Office of Evaluation and Oversight at the Interamerican Development Bank.); Diego Ubfal (Department of Economics, University of California at Los Angeles.)
    Abstract: In this paper we evaluate the impact of the provision of agricultural extension services to grape producers in Mendoza, Argentina, on yield and grape quality. Using fixed effects and matching techniques, we show that despite non-significant average treatment effects on yield, the program has large positive effects on productivity for producers who were in the bottom of the productivity distribution before launching of the program. There is also evidence of increased quality of their grapes, especially for large producers and those in the middle of the yield distribution ex-ante. However, large groups of producers did not see impact on yields or quality. Consistent with a previous qualitative evaluation of the program, these results point to the need to balance flexibility of the program with effective targeting mechanisms. Producers with different characteristics, such as land size, productivity or structure of production seek different objectives and have different needs, so that targeting these types of programs effectively to the different needs of producers would increase their effectiveness.
    Keywords: Technology Adoption, Productivity, Agriculture Sector, Policy Evaluation
    JEL: Q12 Q16 H43
    Date: 2008–06

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