New Economics Papers
on Efficiency and Productivity
Issue of 2009‒03‒22
fourteen papers chosen by

  1. Farm performance and support in Central and Western Europe: A comparison of Hungary and France By Laure Latruffe; Jozsef Fogarasi
  2. Evaluating cost and profit efficiency: a comparison of parametric and nonparametric methodologies By Delis, Manthos D; Koutsomanoli-Filippaki, Anastasia; Staikouras, Christos; Gerogiannaki, Katerina
  3. Firms'productive performance and the investment climate in developing economies : an application to MENA manufacturing By Kinda, Tidiane; Plane, Patrick; Veganzones-Varoudakis, Marie-Ange
  4. Rigid labour compensation and flexible employment ? Firm-level evidence with regard to productivity for Belgium By Catherine Fuss; Ladislav Wintr
  5. Blaming the exogenous environment? Conditional efficiency estimation with continuous and discrete exogenous variables By De Witte, Kristof; Mika, Kortelainen
  6. Revisions to Canada and United States Annual Estimates of Labour Productivity in the Business Sector, 2004 to 2007 By Kaci, Mustapha; Maynard, Jean-Pierre
  7. Productivity, Returns to Scale and Product Differentiation in the Retail Trade Industry: An empirical analysis using Japanese firm-level data By KATO Atsuyuki
  8. How Do Firms Organize Trade? Evidence from Ghana By Jens Krüger
  9. The role of public subsidies on farms’ managerial efficiency: An application of a five-stage approach to France By Laure Latruffe; Hervé Guyomard; Chantal Le Mouël
  10. Imports and TFP at the Firm Level: The Role of Absorptive Capacity By Augier, Patricia; Cadot, Olivier; Dovis, Marion
  11. The Effects of Population Structure on Employment and Productivity By Hervé Boulhol
  12. Does structure influence growth? A panel data econometric assessment of ‘relatively less developed’ countries, 1979-2003 By Ester Gomes da Silva; Aurora A.C. Teixeira
  13. Wage Dispersion and Firm Productivity in Different Working Environments By Mahy, Benoît; Rycx, Francois; Volral, Mélanie
  14. On the measurement of market power in the banking industry By Delis, Manthos D; Staikouras, Christos; Varlagas, Panagiotis

  1. By: Laure Latruffe; Jozsef Fogarasi
    Abstract: The paper investigates the difference in technical efficiency and in productivity change, and the technology gaps, between French and Hungarian farms in the dairy and cereal, oilseeds and proteinseeds (COP) sectors during the period 2001-2004. The analyses are performed with national FADN data and the Data Envelopment Analysis (DEA) approach under each country’s respective frontier and under a metafrontier. Results revealed that in both the dairy and the COP sectors, Hungarian farms’ technology was the more productive, despite a technological deterioration. This suggests technological advantages for large-scale (Hungarian) over small-scale (French) farming in these two sectors. These findings may also be explained by the higher policy support in France. Subsidies received by farms have indeed a stronger negative impact on technical efficiency for French farms than for Hungarian farms, and a negative impact on the ability to lead the technology only for French farms.
    Keywords: technology gap, technical efficiency, Malmquist indices, subsidies, farms
    JEL: P51 D24 Q12
    Date: 2009
  2. By: Delis, Manthos D; Koutsomanoli-Filippaki, Anastasia; Staikouras, Christos; Gerogiannaki, Katerina
    Abstract: The objective of this article is 2-fold. First, it provides an empirical assessment of the cost and profit stochastic frontiers based on a panel dataset of Greek commercial banks over the period 1993 to 2005. Second, on the basis of the same sample, it also compares the most widely used parametric and nonparametric techniques to cost efficiency measurement, namely, the Stochastic Frontier Approach and Data EnvelopmentAnalysis. The results suggest greater similarities between the predictions of cost and profit efficiency methods than between parametric and nonparametric techniques. Such evidence is new in the literature and calls for a more technically level playing field for estimating bank efficiency.
    Keywords: Bank cost and profit efficiency; Parametric and non-parametric methods
    JEL: L25 C14 G21
    Date: 2008–01–08
  3. By: Kinda, Tidiane; Plane, Patrick; Veganzones-Varoudakis, Marie-Ange
    Abstract: Drawing on the World Bank Investment Climate Assessment surveys, this paper investigates the relationship between firm-level technical efficiency and the investment climate for 22 developing economies and eight manufacturing industries. The authors first propose three measures of firms'productive performance: labor productivity, total factor productivity, and technical efficiency. They show that, on average, enterprises in the Middle East and North Africa have performed poorly compared with other countries in the sample. The exception is Morocco, whose various measures of firm-level productivity rank close to the ones of the most productive economies. The analysis also reveals that the competitiveness of countries in the region has been handicapped by high unit labor cost, compared with main competitors like China and India. The empirical results show then? that the investment climate matters for firms'productive performance. This is true (depending on the industry) for the quality of various infrastructure, the experience and education level of the labor force, the cost of and access to financing, as well as different dimensions of the government-business relation. The analysis reveals that some industries, more exposed to international competition, are more sensitive to investment climate deficiencies. For some industries, this is also true for small and medium domestic enterprises that do not have the possibility to influence their investment climate or choose their location. These findings bear clear policy implications by showing that increasing firms'size and improving the investment climate (in particular of small and medium firms and industries more exposed to international competition) could constitute a powerful means of industrial development and competitiveness, in the Middle East and North Africa region in particular.
    Keywords: Economic Theory&Research,Political Economy,Labor Policies,,Investment and Investment Climate
    Date: 2009–03–01
  4. By: Catherine Fuss (National Bank of Belgium, Research Department); Ladislav Wintr (Central Bank of Luxembourg, Economics and Research Department)
    Abstract: Using firm-level data for Belgium over the period 1997-2005, we evaluate the elasticity of firms' labour and real average labour compensation to microeconomic total factor productivity (TFP). Our results may be summarised as follows. First, we find that the elasticity of average labour compensation to firm-level TFP is very low contrary to that of labour, consistent with real wage rigidity. Second, while the elasticity of average labour compensation to idiosyncratic firm-level TFP is close to zero, the elasticity with respect to aggregate sector-level TFP is high. We argue that average labour compensation adjustment mainly occur at the sector level through sectoral collective bargaining, which leaves little room for firm-level adjustment to firm-specific shocks. Third, we report evidence of a positive relationship between hours and idiosyncratic TFP, as well as aggregate TFP within the year
    Keywords: labour compensation, employment, hours, Total Factor Productivity
    JEL: J30 J60
    Date: 2009–03
  5. By: De Witte, Kristof; Mika, Kortelainen
    Abstract: This paper proposes a fully nonparametric framework to estimate relative efficiency of entities while accounting for a mixed set of continuous and discrete (both ordered and unordered) exogenous variables. Using robust partial frontier techniques, the probabilistic and conditional characterization of the production process, as well as insights from the recent developments in nonparametric econometrics, we present a generalized approach for conditional efficiency measurement. To do so, we utilize a tailored mixed kernel function with a data-driven bandwidth selection. So far only descriptive analysis for studying the effect of heterogeneity in conditional efficiency estimation has been suggested. We show how to use and interpret nonparametric bootstrap-based significance tests in a generalized conditional efficiency framework. This allows us to study statistical significance of continuous and discrete exogenous variables on production process. The proposed approach is illustrated using simulated examples as well as a sample of British pupils from the OECD Pisa data set. The results of the empirical application show that several exogenous discrete factors have a statistically significant effect on the educational process.
    Keywords: Nonparametric estimation; Conditional efficiency measures; Exogenous factors; Generalized kernel function; Education
    JEL: C14 I21 C25
    Date: 2009–03–04
  6. By: Kaci, Mustapha; Maynard, Jean-Pierre
    Abstract: This paper examines the impact of the revisions to labour productivity estimates and related variables covering the revision cycle of the National Accounts from 2004 to 2007 for Canada and from 2005 to 2007 for the United States.
    Keywords: Labour, Economic accounts, Hours of work and work arrangements, Productivity accounts
    Date: 2009–03–11
  7. By: KATO Atsuyuki
    Abstract: This paper examines productivity and returns to scale under the assumption of monopolistic competition using Japanese firm-level data. Although differentiating products (services) is considered important in firms' strategies and productivity growth, it has not been sufficiently investigated in previous studies. In this paper, we study this issue in two retail trade industries, department stores and supermarkets, applying the model of Melitz (2000). Our results indicate that the retail trade industries possibly follow increasing returns to scale if we consider the effects of product differentiation. In addition, product differentiation has a positive effect on firms' revenue. Thus, policy measures that promote economies of scale and product differentiation should contribute to further growth in these industries. In addition, the results indicate that the regulatory reform of the retail trade industry in 2000 made a positive contribution.
    Date: 2009–03
  8. By: Jens Krüger
    Abstract: The literature on firm heterogeneity in international trade posits that only the most productive firms become exporters (Melitz 2003). However, empirical findings suggest that also firms that are not highly productive export. This paper investigates empirically how firms organize their export trade. If selling directly, sunk costs of foreign market entry are arguably very high, so only productive firms can achieve this (Schroeder et al. 2003). Low productivity firms, by contrast, may prefer to export through trading companies, which involves lower sunk costs. Using a firm level panel data set of Ghanaian firms we investigate the relationship between firm productivity and the use of export intermediaries. Our estimation results take simultaneity problems into account and reveal that indeed low productivity firms tend to export through intermediaries
    Keywords: export intermediation, firm productivity
    JEL: D21 F14 L22
    Date: 2009–02
  9. By: Laure Latruffe; Hervé Guyomard; Chantal Le Mouël
    Abstract: This paper applies a five-step approach to the investigation of the relationship between public subsidies, namely CAP direct payments, and managerial efficiency for French COP and beef farms in 2000. Managerial efficiency scores are calculated using a four-step approach that allows disentangling managerial inefficiency from unfavourable external conditions. Then, in a fifth stage, managerial efficiency scores are regressed over a set of explanatory variables, including CAP direct payments. Using individual farm data and meteorological data at the municipality level, we show that there is a non negligible component of inefficiency that is due to unfavourable conditions, and there is a strong significant negative relationship between managerial efficiency and CAP direct payments.
    Keywords: technical efficiency, managerial efficiency, direct payments, farms, France
    Date: 2009
  10. By: Augier, Patricia; Cadot, Olivier; Dovis, Marion
    Abstract: This paper estimates the effect of the decision to import intermediate goods and capital equipment on Total Factor Productivity (TFP) at the firm level on a panel of Spanish firms covering the period between 1991 and 2002. We use two alternative approaches. In the first, we estimate TFP using the Olley-Pakes semi-parametric method and apply a diff-in-diff estimator with a control group constructed by propensity-score matching. In the second, direct method, we estimate TFP with imported inputs as a state variable in one stage. Both approaches show that the effect of a firm’s decision to source intermediates and capital equipment abroad on its TFP depends critically on its capacity to absorb technology, measured by the proportion of skilled labor. This provides indirect evidence that imported capital equipment may embody new or different technologies that require adaptation at which some firms are better than others. If skilled labor proxies for adaptability, it is how firms adapt their production processes to the foreign inputs that seems to determine whether or not they benefit from them.
    Keywords: absorptive capacity; imports; Olley-Pakes; TFP
    JEL: F2 O1 O2
    Date: 2009–03
  11. By: Hervé Boulhol
    Abstract: The composition of the working-age population can influence aggregate employment and average productivity because both employment rates and productivity levels vary across population groups. This paper assesses the quantitative importance of the working-age population broken down by age, gender and education in explaining differences in employment and productivity levels across countries. Differences in population structure are found to contribute importantly to variations in both labour utilisation and productivity performances. Combining these effects in a mechanical way, differences in the composition of the working-age population account for around a third of the gap in GDP per capita for Europe (EU15) vis-à-vis the United States, mainly due to differences in educational attainment.<P>Les effets de la structure de la population sur l’emploi et la productivité<BR>La composition de la population d’âge actif peut influer sur le niveau global de l’emploi et sur la productivité moyenne car aussi bien les taux d’emploi que les niveaux de la productivité varient selon les groupes de population. Cette étude a pour objectif d’évaluer dans quelle mesure la structure de la population d’âge actif, en fonction de l’âge, du sexe et du niveau d’éducation, peut expliquer les différences de niveau d’emploi et de productivité entre pays. Les différences dans la structure de la population contribuent pour beaucoup aux écarts entre pays tant des niveaux d’utilisation de la main d’oeuvre que de la productivité. En combinant ces effets mécaniques, on observe que les différences dans la composition de la population d’âge actif expliquent pour environ un tiers l’écart de PIB par habitant de l’Europe (UE15) par rapport aux États-Unis, principalement du fait des différences de niveau d’éducation.
    Keywords: démographie, aggregate employment, emploi agrégé, qualité de l'emploi, quality of labour, labour productivity, productivité du travail, demographics
    JEL: E24 J10 J21 J31
    Date: 2009–03–17
  12. By: Ester Gomes da Silva (Faculdade de Letras/ISFLUP, Universidade do Porto); Aurora A.C. Teixeira (CEMPRE, Faculdade de Economia, Universidade do Porto; INESC Porto)
    Abstract: Neo-Schumpeterian streams of research emphasize the close relationship between changes in economic structure in favour of high-skill and high-tech branches and rapid economic growth. They identify the emergence of a new technological paradigm, strongly based on the application of information and communication technologies (ICTs), in the 1970s, arguing that in such periods of transition and emergence of new techno-economic paradigms the relatively less developed countries have higher opportunities to catch-up. Although this debate is theoretically well documented, the empirics seem to lag behind the theory. In this paper, we contribute to this literature by adding illuminating evidence on the issue. More precisely, we relate the growth experiences of countries which had relatively similar economic structures in the late 1970s, with changes occurring in these countries’ structures between 1979 and 2003. The results reveal a robust relationship between structure and (labour) productivity growth, and lend support to the view that producing (though not user) ICT-related industries are strategic branches of economic activity.
    Keywords: Structural change, Economic growth, Technical change
    JEL: O10 O30
    Date: 2009–03
  13. By: Mahy, Benoît (University of Mons-Hainaut); Rycx, Francois (Free University of Brussels); Volral, Mélanie (University of Mons-Hainaut)
    Abstract: This paper investigates the impact of wage dispersion on firm productivity in different working environments. More precisely, it examines the interaction with: i) the skills of the workforce, using a more appropriate indicator than the standard distinction between white- and blue collar workers, and ii) the uncertainty of the firm economic environment, which has, to our knowledge, never been explored on an empirical basis. Using detailed LEED for Belgium, we find a hump-shaped relationship between (conditional) wage dispersion and firm productivity. This result suggests that up to (beyond) a certain level of wage dispersion, the incentive effects of “tournaments” dominate (are dominated by) “fairness” considerations. Findings also show that the intensity of the relationship is stronger for highly skilled workers and in more stable environments. This might be explained by the fact that monitoring costs and production-effort elasticity are greater for highly skilled workers and that in the presence of high uncertainty workers have less control over their effort-output relation and associate higher uncertainty with more unfair environments.
    Keywords: linked employer-employee data, personnel economics, working environments, labour productivity, wage dispersion
    JEL: J31 J24 M52
    Date: 2009–02
  14. By: Delis, Manthos D; Staikouras, Christos; Varlagas, Panagiotis
    Abstract: This paper compares the estimates of the two most widely used non-structural models for market power measurement in banking, namely the conduct parameter method and the revenue test, as applied to a panel of Greek banks over the period 1993-2004. We also propose a dynamic reformulation of these models within a panel data context, in order to address possible statistical problems associated with the dynamic nature of bank-level data. The results suggest that both static methods provide lower estimates of market power relative to their dynamic counterparts. Therefore, the inclusion of some dynamics in the models, even though it increased estimation complexity, helped to reveal some collusive behavior of banks.
    Keywords: Market power estimation; Conduct parameter method; Revenue test; Greek banking sector
    JEL: L10 P20 G21
    Date: 2008–06–12

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