New Economics Papers
on Efficiency and Productivity
Issue of 2009‒03‒28
nine papers chosen by

  3. Rigid labour compensation and flexible employment? Firm-level evidence with regard to productivity for Belgium. By Catherine Fuss; Ladislav Wintr
  4. Does deflation method matter for productivity measures? By Giorgio Garau; Patrizio Lecca; Lucia Schirru
  5. The EU-US total factor productivity gap : An industry-level perspective By McMorrow, Kieran; Röger, Werner; Turrini, Alessandro Antonio
  6. Bank Efficiency in Sub-Saharan African Middle Income Countries By Chuling Chen
  7. Environmental policy and profitability. Evidence from Swedish industry By Brännlund, Runar; Lundgren, Tommy
  8. Assessing potential efficiency gains in irrigated water use in New Zealand. By Ford, Stuart; Harris, Simon; Doak, Murray
  9. Uncertainty and technical efficiency in Finnish Agriculture By Nauges, Celine; O'Donnell, Christopher; Quiggin, John

  1. By: Hoang, Viet-Ngu; Coelli, Tim
    Abstract: This paper develops a new measure of total factor productivity growth in agricultural production which incorporates environmental effects. The new measure is called the Total Factor Nutrient-Orientated Productivity (TFNP) Index, and incorporates a materials balance condition. TFNP measures changes in nutrient-orientated efficiency and can be decomposed into efficiency change (EC), technological change (TC) and nutrient-orientated technological change (NTC) components. An empirical analysis, involving country-level data from OECD countries during 1990-2003, is provided using DEA methods. Estimates of mean technical and nutrient-orientated efficiency are 0.798 and 0.526, respectively. Estimated mean TFNP growth is 1.5% per year, with nutrient-orientated technological progress contributing 0.8%.
    Keywords: Total factor productivity, environment, nutrient balance, DEA,
    Date: 2009
  2. By: O'Donnell, Chris J.
    Abstract: The total factor productivity (TFP) of a multiple-output multiple-input firm can be defined as the ratio of an aggregate output to an aggregate input. With this definition, index numbers that measure changes in TFP can be expressed as the ratio of an output quantity index to an input quantity index. This paper uses the term multiplicatively complete to describe TFP index numbers that are constructed in this way. O'Donnell (2008) shows that, irrespective of the returns to scale and/or scope properties of the production technology, all multiplicatively complete TFP index numbers can be decomposed into widely-used measures of technical change and technical efficiency change, as well as unambiguous measures of scale and mix efficiency change. Members of the class of multiplicatively complete TFP index numbers include the Fisher, Tornquist and Moorsteen-Bjurek indexes, but not the popular Malmquist index of Caves, Christensen and Diewert (1982a). This paper uses data envelopment analysis (DEA) to compute and decompose Moorsteen-Bjurek indexes of world agricultural TFP change for the period 1970- 2001. In a DEA model that prohibits technical regress, only two countries are found to maximize TFP during the study period: Nepal from 1970 to 1995, and Thailand for several years in the late 1990s. The paper explains how changes in the agricultural terms of trade have drawn other larger agricultural producers away from TFP-maximizing input-output points. The annual rate of technical progress in global agriculture is estimated to be less than 1% per annum.
    Date: 2009
  3. By: Catherine Fuss (National Bank of BelgiumNational Bank of Belgium, Research Department, 14, bd. de Berlaimont, 1000 Brussels, Belgium.); Ladislav Wintr (Central Bank of Luxembourg, Economics and Research Department, 2 boulevard Royal, L – 2983 Luxembourg, Luxembourg.)
    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. JEL Classification: J30, J60.
    Keywords: labour compensation, employment, hours, Total Factor Productivity.
    Date: 2009–03
  4. By: Giorgio Garau; Patrizio Lecca; Lucia Schirru
    Abstract: In this paper, we disagree on the opportunity to use the double deflation method to produce an equilibrating system of account at a constant price. In fact, by relaxing such a condition, by means of the single deflation method, we obtain a measure of purchasing power transfer that can be decomposed in productivity and market distortion. Results are presented for the evolution of the Italian economy for the periods 1995-2002.
    Keywords: National Account, Prices Index, Total Factor Productivity, Input Output.
    JEL: C67 L16 O41
    Date: 2009
  5. By: McMorrow, Kieran; Röger, Werner; Turrini, Alessandro Antonio
    Abstract: The EU-US total factor productivity (TFP) growth gap since the mid-1990's is concentrated in a handful of market service industries (most notably retail trade) and in ICT-producing manufacturing, whilst the EU exhibits a stronger performance in a number of the network utilities. This paper explores the industry-specific determinants of the EU-US TFP growth gap using the EU KLEMS database. As found in previous analyses (e.g., Nicoletti and Scarpetta (2003); Griffith, Redding, and Van Reenen (2004); Inklaar, Timmer and Van Ark (2008)), TFP growth appears to be driven by catching-up phenomena associated with the gradual adoption of new-vintage technologies. Compared with previous analyses, TFP growth is also significantly driven by developments taking place at the "technological frontier," increasingly so since the mid-1990's. Industries with higher R&D expenditures and higher adoption rates for ICT-intensive technologies appear to exhibit higher TFP growth rates, whilst human capital has mostly a significant effect across countries. Regarding industry specific determinants, ICT producing industries appear to benefit from R&D in terms of stronger spillovers from TFP gains at the frontier; network utilities are strongly affected by improvements associated with reduced product market regulations; whilst the retail trade industry is significantly influenced by consumption dynamics which permit a better exploitation of scale economies.
    Keywords: European Union; growth determinants; total factor productivity
    JEL: D24 O47 O52
    Date: 2009–03
  6. By: Chuling Chen
    Abstract: We use bank level data to study the efficiency of banks in Sub-Saharan African middle-income countries and provide possible explanations for the difference in the efficiency levels of banks. We find that banks, on average, could save 20-30 percent of their total costs if they were operating efficiently, and that foreign banks are more efficient than public banks and domestic private banks. Among the factors that could affect the efficiency levels are macroeconomic stability, depth of financial development, the degree of market competition, strong legal rights and contract laws, and better governance, including political stability and government effectiveness. Our findings point to the importance of policies that aim to build stronger institutions, promote more competition, and improve governance.
    Keywords: Banks , Africa , Developing countries , Economic conditions , Political economy , Banking sector , Profits , Cross country analysis ,
    Date: 2009–01–28
  7. By: Brännlund, Runar (Umeå University); Lundgren, Tommy (Umeå School of Business)
    Abstract: The purpose of this paper is to investigate the existence of a “Porter effect” using firm level data on output and inputs from Swedish industry between 1990 and 2004. By utilizing a factor demand modeling approach, and specifying a profit function which has a technology component dependent upon firm specific effective tax on CO2, we are able to separate out the effect of regulatory pressure on technological progress. The results indicate that there is evidence of a reversed “Porter effect” in most industrial sectors, specifically energy intensive industries.
    Keywords: CO2 tax; factor demands; induced technological change; Porter argument
    Date: 2009–03–21
  8. By: Ford, Stuart; Harris, Simon; Doak, Murray
    Abstract: This paper reports a research project carried out on behalf of the Ministry of Agriculture and Forestry New Zealand designed to scope the issue of water efficiency in New Zealand and demonstrate where the most significant gains in efficiency can occur. The paper describes the efficiency framework developed based on the key areas of allocative, technical and dynamic efficiency. The areas of significant gains based on the theoretical analysis are tested against three community irrigation schemes. Although the case study findings support the theoretical conclusions there is a significant range of potential areas of improvement according to the nature of each case study.
    Keywords: Technical, allocative, dynamic efficiency, framework, case studies.,
    Date: 2009
  9. By: Nauges, Celine; O'Donnell, Christopher; Quiggin, John
    Date: 2009

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.