New Economics Papers
on Efficiency and Productivity
Issue of 2008‒11‒18
23 papers chosen by

  1. Bennet-Bowley Measure for Productivity Anaysis of Georgia Agriculture By Flanders, Archie; White, Fred; McKissick, John
  2. Estimation of Efficiency with the Stochastic Frontier Cost Function and Heteroscedasticity: A Monte Carlo Study By Kim, Taeyoon; Brorsen, Wade; Kenkel, Philip
  3. Measuring Eco-efficiency of Agricultural Activity in European Countries: A Malmquist Index Analyis By Serrao, Amilcar
  4. Impact of Land Reform on Productivity, Land Value and Human Capital Investment: Household Level Evidence from West Bengal By Deininger, Klaus; Jin, Songqing; Yadav, Vandana
  5. Off-farm Work, Technical Efficiency, and Production Risk: Empirical Evidence from a National Farmer Survey in Taiwan By Chang, Hung-Hao; Wen, Fang-I
  6. A Simple Accounting Framework for the Effect of Resource Misallocation on Aggregate Productivity By Aoki, Shuhei
  7. Import Penetration, Intermediate Inputsand Productivity: Evidence from Italian Firms By Altomonte, Carlo; Barattieri, Alessandro; Rungi, Armando
  8. Understanding the Contributions of Reallocation to Productivity Growth: Lessons from a Comparative Firm-Level Analysis By J. David Brown; John S. Earle
  9. The Impact of Agricultural Policy Distortions on the Productivity Gap: Evidence from the Rice Production By Rakotoarisoa, Manitra A.
  10. Economic Efficiency and Growth: Evidence Date Brazil, China, and India By Nazmi, Nader; Revilla, Julio E.
  11. Measuring Environmental Performance of Irrigated Cotton Enterprises By Azad, Md Abdus Samad; Liem, Monkia; Ancev, Tihomir; Lee, Lisa Yu-Ting
  12. An Efficiency Analysis of Nevada and Utah Counties: Region Size Leads Regional Efficiency By Kim, Man-Keun; Harris, Thomas R.
  13. Increasing Cotton Farmers Incomes in Mali West Africa: Eliminate Subsidies in Developed Countries or Productivity Increase in Mali? By BAQUEDANO, Felix G.; SANDERS, John H.
  14. X-efficiency versus Rent Seeking in Chinese banks: 1997-2006 By Matthews, Kent; Guo, Jianguang; Zhang, Xu
  15. Agricultural Productivity, Technological Change, and Deforestation: A Global Analysis By BRADY, Michael; SOHNGEN, Brent
  18. Measuring Regional Productivity Differences in the Australian Wool Industry: A Metafrontier Approach By Villano, Renato; Fleming, Euan; Fleming, Pauline
  19. Do Corporate Taxes Reduce Productivity and Investment at the Firm Level? Cross-Country Evidence from the Amadeus Dataset By Jens Arnold; Cyrille Schwellnus
  20. Linkages between Market Participation and Productivity: Results from a Multi-Country Farm Household Sample By Rios, Ana R.; Masters, William A.; Shively, Gerald E.
  21. Explaining Production Inefficiency in China€ٳ Agriculture using Data Envelope Analysis and Semi-Parametric Bootstrapping By Monchuk, Daniel C.; Zhuo Chen
  22. Migration and Farm Efficiency: Evidence from Northern Thailand By Nonthakot, Phanin; Villano, Renato
  23. Productivity Dynamics and the Role of “Big-Box” Entrants in Retailing By Maican, Florin; Orth, Matilda

  1. By: Flanders, Archie; White, Fred; McKissick, John
    Abstract: Georgia agricultural production continues on an increasing trend and reached a historical high in 2006. Increases in output have been accompanied by relatively lower levels of input increases. The Tornqvist productivity index indicates an average annual productivity increase of 3.0% during 1960-2006. Productivity increases explain how the Georgia agricultural economy is expanding during a period when farm acreage and the number of farms are declining. An alternative to the Tornqvist productivity index is the Bennet-Bowley productivity indicator. A feature of the Bennet-Bowley indicator is that it is a component of normalized profit change. Profit change can be decomposed into a price change component, as well as a productivity component. Declining output prices relative to input prices during 1960-2006 were not favorable for increased profitability. Results show that Georgia farm profit increased from 1960-2006 due to increased agricultural productivity.
    Keywords: Productivity Analysis,
    Date: 2008
  2. By: Kim, Taeyoon; Brorsen, Wade; Kenkel, Philip
    Abstract: The objective of this article is to address heteroscedasticity in the stochastic frontier cost function using aggregated data and verify it using a Monte Carlo study. We find that when the translog form of a stochastic frontier cost function with aggregated data is estimated, all explanatory variables can inversely affect the variation of error terms. Our Monte Carlo study shows that heteroscedasticity is only significant in the random effect and the unexplained error term not in the inefficiency error term. Also, it does not cause biases, which is quite opposite of previous research. These are because our model is approximately defined by first order Taylor series around zero inefficiency area. But, disregarding heteroscedasticity causes the average inefficiency to be overestimated when the variation of inefficiency term dominates the other error terms.
    Keywords: Resource /Energy Economics and Policy,
    Date: 2008
  3. By: Serrao, Amilcar
    Abstract: This paper develops an environmental performance index by applying the benefit of the doubt weighting and the Malmquist index concepts using Kuosmanen and Kortelainen€ٳ approaches. The main difference between these approaches and other methods is that environmental performance is based on the definition of the eco-efficiency as the ratio of economic value added to the environmental damage index. The overall environmental performance index is also decomposed into two components representing changes due to technological progress (or regress) and due to changes in relative eco-efficiency. The dynamic environmental performance analysis is applied to 15 European agricultures from 1990 to 2004. Model results show that technical progress mostly explain overall environmental performance growth, while relative eco-efficiency changes have been minor for most European agricultures for the sample period.
    Keywords: Benefit of the doubt weighting, Data Envelopment Analysis, Eco-efficiency, Environmental performance analysis, Malmquist Index, Agricultural Activity, Environmental Economics and Policy, Research Methods/ Statistical Methods, Q57, C43, C61,
    Date: 2008
  4. By: Deininger, Klaus; Jin, Songqing; Yadav, Vandana
    Abstract: While land reform has been the subject of considerable scholarly debate, most of the analyses have been at the aggregate level and focused on rather short-term effects. We use a listing of more than 90,000 households in some 200 villages in West Bengal to highlight the impact of the state's 1978 land reform program on human capital accumulation and current productivity of land use. While we ascertain a highly significant positive effect on long-term accumulation of human capital, our analysis also suggests that, partly because land that had been received through land reform is still operated under share tenancy arrangements, productivity on such land is significantly lower than the average. The combination of lower productivity of reform land relative to own land and land rental and sale's restriction of reform land is associated with significantly lower purchase and sale's price of reform land compared to own land. Programs to allow land reform beneficiaries to acquire full ownership could thus have significant benefits.
    Keywords: Agricultural and Food Policy, Land Economics/Use,
    Date: 2008
  5. By: Chang, Hung-Hao; Wen, Fang-I
    Abstract: The objective of this paper is to investigate the differences in yield production, production efficiency, and yield risk for farmers with and without off-farm work. Using a nationwide survey of Taiwanese rice farmers, we estimate a stochastic production frontier model accommodating the technical inefficiency and the production risk simultaneously. Applying the stochastic dominance criterion to rank the estimated technical efficiency and yield risk between professional farmers and farmers with off-farm jobs, our empirical analysis shows that off-farm work is significantly associated with lower technical efficiency. Additionally, farmers with off-farm work face higher production risks. Comparing the marginal effects of input uses on technical inefficiency and yield risk between these groups of farmers, we found a substantial heterogeneity of input uses between these two groups of farmers.
    Keywords: Off-farm work, technical efficiency, production risk, Taiwan, Crop Production/Industries, Farm Management,
    Date: 2008
  6. By: Aoki, Shuhei
    Abstract: This paper develops a simple accounting framework that measures the effect of resource misallocation on aggregate productivity. This framework is based on a multi-sector general equilibrium model with sector-specific frictions in the form of taxes on sectoral factor inputs. Our framework is flexible for the assumption on preferences or aggregate production functions. Moreover, this framework is consistent with that commonly used in productivity analysis. I apply this framework to measure to what extent resource misallocation explains the differences in aggregate productivity across developed countries. I find that resource misallocation explains, on average, about 25% of the differences in the measured aggregate productivity among developed countries. I also provide methods to decompose the causes of the misallocation effect.
    Keywords: distortions; frictions; productivity; resource allocation
    JEL: O11 O41 O47 E23
    Date: 2008–10–26
  7. By: Altomonte, Carlo; Barattieri, Alessandro; Rungi, Armando
    Abstract: We test the impact of import penetration on the productivity of a sample of roughly 35,000 Italian manufacturing firms operating in the period 1996-2003, considering the impact on productivity of both import penetration in the same industry and import penetration in the up-stream industries. We find that import penetration has a positive eect on productivity, but the eects are three times as large for import penetration in up-stream industries. Trade-related variables do not account however for the bulk of variation in individual firms' TFP.
    Keywords: DYNREG, import penetration, intermediate inputs, productivity
    Date: 2008
  8. By: J. David Brown (Heriot-Watt University); John S. Earle (W.E. Upjohn Institute for Employment Research and Central European University)
    Abstract: We analyze comprehensive manufacturing firm data to measure the contribution of inter-firm employment reallocation to aggregate productivity growth during the socialist and reform periods in six transition economies. Modifying a standard decomposition technique to better reflect the role of firm entry, we find that reallocation rates and productivity contributions are very low under socialism, but they rise dramatically after reforms, and productivity contributions greatly exceed those observed in market economies. Early in transition, more reform is associated with larger contributions from reallocation, but later, and on average over the whole transition, this relationship is reversed. Though reallocation rates are larger in faster reforming economies, higher productivity dispersion in slower reformers creates higher productivity gains for a given volume of reallocation. The results imply that reallocation should be viewed as necessary regular maintenance for a well-functioning economy, and patticularly large productivity contributions tend to reflect previous neglect more than current virtue.
    Keywords: productivity, reallocation, industry dynamics, entry, exit, creative destruction, reform, transition, Georgia, Hungary, Lithuania, Romania, Russia, Ukraine
    JEL: E32 O47 P23
    Date: 2008–08
  9. By: Rakotoarisoa, Manitra A.
    Abstract: This study determines how production and trade policy distortions affected rice productivity in thirty-three rice-producing countries. A rice-productivity index for each country is constructed, and a model linking the productivity gap with policy distortions is presented. After controlling for the differences in infrastructure, openness, and human capital, this article shows that high subsidies and protection in developed countries combined with taxation of rice farming in poor countries have widened the gap in rice productivity between rich and poor rice countries.
    Keywords: agricultural policy distortions, trade policies, productivity, rice, Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade, Productivity Analysis,
    Date: 2008
  10. By: Nazmi, Nader; Revilla, Julio E.
    Abstract: We compare economic efficiencies in Brazil, India, and China, where economic efficiency measures the gap between potential and actual output for a given input combination and technological fac-Dater. We use s-Datechastic production frontier models -Date measure the contributions of fac-Daters of production and technology -Date growth and estimate non-positive error terms that capture production inefficiencies in each country. The results suggest that China and India had relatively inefficient production in the early 1980s but have since improved production efficiency substantially. In the same period, production efficiency in Brazil has declined somewhat Date relatively high initial levels and the gap between production efficiency between these countries has narrowed substantially, supporting more rapid growth in China and India relative -Date Brazil.
    Keywords: growth, trade, production
    Date: 2008
  11. By: Azad, Md Abdus Samad; Liem, Monkia; Ancev, Tihomir; Lee, Lisa Yu-Ting
    Abstract: Irrigation enterprises can be evaluated from a perspective of technical and environmental efficiency. This study determines the technical and environmental efficiency in irrigated cotton enterprises. This is achieved by investigating efficiency at cotton enterprise in the case study area of the Mooki Catchment, located in northern New South Wales. Deep drainage loss which contributes to salinity is considered as an environmental detrimental output. Using four different specifications of Data Envelopment Analysis relative efficiency rankings are determined for each agricultural area in the catchment. This result is then compared to biophysical characteristics from previous studies to help identify the particular features of an area which may influence outcomes that are both environmentally sound and economically efficient. With the identification of the most and least efficient cotton irrigating areas in the region, policymakers can construct a relative ranking system to best determine policy directions in order to achieve economic and environmental objectives.
    Keywords: Cotton, Irrigation, Deep Drainage, Environmental Efficiency, Crop Production/Industries, Environmental Economics and Policy, Land Economics/Use,
    Date: 2008
  12. By: Kim, Man-Keun; Harris, Thomas R.
    Abstract: The hypothesis that regional size increases regional efficiency is tested in this study. Data Envelopment Analysis and the Directed Acyclic Graph were used to reveal the causal relationship between regional efficiency and region size in terms of population density. Region size and the infrastructure directly cause regional efficiency, and regional efficiency affects regional income indirectly via formulation of Metropolitan area
    Keywords: Community/Rural/Urban Development,
    Date: 2008
  13. By: BAQUEDANO, Felix G.; SANDERS, John H.
    Abstract: Replaced with revised version of paper 07/21/08.
    Keywords: Agricultural and Food Policy, Crop Production/Industries, Productivity Analysis,
    Date: 2008
  14. By: Matthews, Kent (Cardiff Business School); Guo, Jianguang; Zhang, Xu
    Abstract: This study demarcates cost-inefficiency in Chinese banks into X-inefficiency and rent-seeking-inefficiency. A protected banking market not only encourages weak management and X-inefficiency but also public ownership and state directed lending encourages moral hazard and bureaucratic rent seeking. This paper uses bootstrap non-parametric techniques to estimate measures of X-inefficiency and rent-seeking inefficiency for the 4 state owned banks and 10 joint-stock banks over the period 1997-2006. The paper adjusts for the quality of loans by treating NPLs as a negative output. The paper shows that Chinese banks have reduced cost inefficiency and reduced X-inefficiency at a faster rate than rent-seeking inefficiency.
    Keywords: Bank Efficiency; China; X-inefficiency; DEA; Bootstrapping
    JEL: D23 G21 G28
    Date: 2008–11
  15. By: BRADY, Michael; SOHNGEN, Brent
    Abstract: This study takes advantages of recent developments in measuring total factor productivity in output specific directions to examine the influence of technological change in different agricultural sectors on land-use decisions in a cross-section of countries from 1969 to 2001. Results demonstrate a positive relationship between productivity and land in agriculture in most cases. The ruminant sector is an exception where an increase in productivity was negatively associated with amount of pastureland. The analysis also includes variables that have been found to be important determinants in other studies of land-use change. Population is clearly the dominant factor over the time period analyzed, although it is argued that other factors are likely to become more important in upcoming years since population growth has slowed significantly in many countries.
    Keywords: Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,
    Date: 2008
  16. By: Mugera, Amin W.; Langemeier, Michael
    Abstract: The objective of this paper is to analyze sources of labor productivity growth in the Kansas farm sector over the period 1993-2006 for a sample of 668 farms. The nonparametric production frontier method is used to decompose labor productivity growth into three components: (1) technological catch-up, (2) technological change, and (3) capital deepening. Kernel estimation methods are used to analyze the evolution of the entire distribution of labor productivity in the sample period. We find that labor productivity is primarily driven by capital deepening. On average, capital deepening is the main source of convergence in productivity and technical change is a source of divergence. We find little evidence of technological catch-up. The impact of the three components of labor productivity varies by farm size.
    Keywords: labor productivity, growth, technological catch-up, technological change, capital deepening, Labor and Human Capital,
    Date: 2008
  17. By: Stein, Steve
    Keywords: wine industry, Argentina, Crop Production/Industries, Production Economics, Productivity Analysis, Q1,
    Date: 2008–08
  18. By: Villano, Renato; Fleming, Euan; Fleming, Pauline
    Abstract: Using panel data, we estimate technology gaps for four distinct sheep-producing regions in Eastern Australia (Northern New South Wales, Central and South-Eastern New South Wales, South-Western New South Wales and South-West Victoria) that reflect spatial environmental and technological differences in wool production. A deterministic stochastic metafrontier production function model is estimated that envelops the stochastic frontiers of the four regions. This metafrontier approach enables us to estimate the environment-technology gap ratio that reflects these spatial differences in the environment and variations in production technologies in the wool enterprise for benchmarked farmers in each region. As a result, a more accurate estimation is possible of changes in total factor productivity on farms in the different regions. The major findings are that environment-technology gaps do exist between regions but they are relatively small. Greater variation is apparent within regions. Variation in technical efficiency seems to depend on the harshness of the production environment and whether consultancy advice is regularly received by the benchmarking group.
    Keywords: Efficiency, Productivity, Metafrontier, Technology Gaps, Wool Production, Spatial, Livestock Production/Industries, Productivity Analysis, Research Methods/ Statistical Methods,
    Date: 2008
  19. By: Jens Arnold; Cyrille Schwellnus
    Abstract: This paper uses a stratified sample of firms across OECD economies over the period 1996-2004 to analyse the effects of corporate taxes on productivity and investment. Applying a differences-in-differences estimation strategy which exploits differential effects of corporate taxes on firms with different profitability, it is found that corporate taxes have a negative effect on productivity at the firm level. The effect is negative across firms of different size and age classes except for the small and young, which may be attributable to the relatively low profitability of small and young firms. The negative effect of corporate taxes is particularly pronounced for firms that are catching up with the technological frontier. In the investment analysis, the results suggest that corporate taxes reduce investment through an increase in the user cost of capital. This may partly explain the negative productivity effects of corporate taxes if new capital goods embody technological change.
    Keywords: Productivity; growth; corporate income tax; firm level data; fiscal policy
    JEL: D21 D24 E22 E62 H25 H32
    Date: 2008–09
  20. By: Rios, Ana R.; Masters, William A.; Shively, Gerald E.
    Abstract: We build upon international trade literature to analyze the direction of causality between market participation and productivity. Cross-country household data from Tanzania, Vietnam and Guatemala are used in a 2SLS approach with market participation and productivity as endogenous variables. Results indicate that households with higher productivity tend to participate in agricultural markets regardless of market access factors. In contrast, having better market access does not necessarily lead to higher productivity. This finding suggests that investments in market access infrastructure provide minimal, if any, improvements in agricultural productivity; whereas programs targeted at enhancements in farm structure and capital have the potential to increase both productivity and market participation.
    Keywords: International Relations/Trade, Marketing, Productivity Analysis,
    Date: 2008
  21. By: Monchuk, Daniel C.; Zhuo Chen
    Abstract: In this paper we examine more closely the factors associated with production inefficiency in China€ٳ agriculture. The approach we take involves a two-stage process where output efficiency scores are first estimated using data envelope analysis (DEA), and then in the second stage, variation in the resulting efficiency scores are explained using a truncated regression model with inference based on a semi-parametric bootstrap routine. Among the results we find a heavy industrial presence is associated with reduced agricultural production efficiency and may be an indication that externalities from the industrial process, like air and ground water pollution, affect agricultural production. We also find evidence that counties with a large percentage of the rural labor force engaged in agriculture tend to be less efficient, which suggests that policies to facilitate the removal of labor from agriculture, but not necessarily from the rural areas, would bring about enhanced agricultural efficiency and calls into question policies that promote wholesale migration from rural areas. Sensitivity analysis indicates results are robust to influential observations and outliers.
    Keywords: China's agriculture, DEA, bootstrapping, technical efficiency, Production Economics, C14, Q1, R5,
    Date: 2008
  22. By: Nonthakot, Phanin; Villano, Renato
    Abstract: This paper investigates the relationship between labour migration and agricultural productivity in the Northern Province of Thailand. Drawing on maize production data from a household survey, we estimate a stochastic production function to evaluate the effects of migration, remittances and salient characteristics of migrants on the mean maize output and levels of technical efficiency. Evidence shows that remittances and number of migrant workers facilitate maize production. It was also found that remittances, duration of migration, gender and education of migrants enhance the productive capacity of maize farmers.
    Keywords: Migration, stochastic frontier, technical efficiency, maize, Thailand, Crop Production/Industries, Labor and Human Capital,
    Date: 2008
  23. By: Maican, Florin (Department of Economics, School of Business, Economics and Law, Göteborg University); Orth, Matilda (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Entry of large (“big-box”) stores along with a drastic fall in the total number of stores is a striking trend in retail markets. In this paper we provide a dynamic structural model, controlling for unobserved prices and local market characteristics, to estimate total factor productivity in retail markets. Then we evaluate how increased competition from large entrants influences incumbents’ productivity in local markets. Using detailed data on retail food stores in Sweden, we find that net entry substantially contributes to industry productivity growth. In local markets, productivity dispersion increases as a consequence of large entrants, i.e., low productive incumbents become less productive whereas high productive incumbents become more productive. We conclude that large entrants play a central role in explaining productivity differences across stores.
    Keywords: Retail markets; Imperfect competition; Industry dynamics; TFP; Space productivity; Dynamic structural model
    JEL: C24 L11 O30
    Date: 2008–11–12

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