New Economics Papers
on Efficiency and Productivity
Issue of 2009‒05‒16
twenty-two papers chosen by

  1. Productivity growth, Technical Efficiency and Technical Change on Minnesota farms By Olson, Kent; Vu, Linh
  2. Brazil's Rising Agricultural Productivity and World Competitiveness By Rada, Nicholas E.; Buccola, Steven T.; Fuglie, Keith O.
  3. Technical, Environmental and Economic Efficiency of Ethanol Plants in the US North-Central Region By Sesmero, Juan P.; Perrin, Richard K.; Fulginiti, Lilyan E.
  4. Sources of Agricultural Productivity Growth in Central Asia By Lerman, Zvi; Sedik, David J.
  5. Impact of local public goods on agricultural productivity growth in the U.S. By Sun, Ling; Ball, Eldon; Fulginiti, Lilyan; Plastina, Alejandro
  6. Productive Efficiency in Water Usage: An Analysis of Differences among Farm Types and Sizes in Georgia By Moore, Rebecca; Price, Joseph
  7. The Effect of Climate Change over Agricultural Factor Productivity: Some Econometric Considerations By McCarl, Bruce; Villavicencio, Xavier; Wu, Ximing
  8. Modelling and predicting labor force productivity By Kitov, Ivan; Kitov, Oleg
  9. An Evaluation of the Organic Cotton Marketing Opportunity By Funtanilla, Margil; Lyford, Conrad; Wang, Chenggang
  10. Does employment affect productivity? By Albert van der Horst; Hugo Rojas-Romagosa; Leon Bettendorf
  11. Banking Sector Performance in Latin America: Market Power versus Efficiency By Georgios E. Chortareas; Jesus G. Garza-Garcia; Claudia Girardone
  12. Relation entry, exit and productivity By Viktoria Kocsis; Ruslan Lukach; Bert Minne; Victoria Shestalova; Nick Zubanov; Henry van der Wiel
  13. A Cost Function Analysis of Crop Insurance Moral Hazard and Agricultural Chemical Use By Liang, Yan; Coble, Keith H.
  14. Agglomeration Economies in the Netherlands By Joeri Gorter; Suzanne Kok
  15. A Note on Productivity and Per Capita GDP Growth: the Role of the Forgotten Factors By L. Marattin; S. Salotti
  16. Agriculture and Economic Growth: Embodied Technical Change and Nonconvex Production By Knapp, Keith C.
  17. Assessing Recent Trends in Pesticide Use in U.S. Agriculture By Fernandez-Cornejo, Jorge; Nehring, Richard; Newcomb Sinha, Elizabeth; Grube, Arthur; Vialu, Alexandre
  18. Detecting Technological Heterogeneity in New York Dairy Farms By del Corral, Julio; Alvarez, Antonio; Tauer, Loren
  19. Organizational Change, Skill Formation, Human Capital Measurement: Evidence From Italian Manufacturing Firms By G. Antonelli; R. Antonietti; G. Guidetti
  20. Comparing and selecting performance measures for ranking assets By Massimiliano Caporin; Francesco Lisi
  21. Subtherapeutic Antibiotics and U.S. Broiler Production By MacDonald, James M.; Wang, Sun-Ling
  22. Productivity of Nanobiotechnology Research and Education in U.S. Universities By Xia, Yin

  1. By: Olson, Kent; Vu, Linh
    Abstract: Changes and trends in farm productivity have been of intense interest to many involved with agriculture. This study used data envelopment analysis (DEA) to estimate the output-oriented Malmquist total factor productivity (TFP) index from panel data for 1993-2006 for farms in Southern Minnesota. Bootstrap methods were used to estimate confidence intervals for the productivity, efficiency change and technical change indices. The model included three inputs (labor, land and immediate expenditures) and six outputs (corn, soybean, milk, hog, beef, and nonfarm income). Productivity growth was found to be positive during the period, with an average annual productivity growth of 6.6 percent. However, TFP growth has been slowing down in recent years and indeed negative in 2000/01, 2002/03 and 2005/06. In the second stage of the analysis, the significance of various factors that might affect farm performance was estimated. Farm size (as measured by the log of farm income) was correlated with higher productivity which may help explain the increase in farm size in Minnesota farms in recent years. Government subsidies were found to have a negative impact on farm performance supporting the argument that agricultural subsidies may create disincentives for farmers to improve their productivity and efficiency. A higher nonfarm income ratio was positively related with higher productivity growth. A higher proportion of hired labor has a negative effect implying family labor is more crucial than hired labor in improving productivity.
    Keywords: total factor productivity, farms, Malmquist index, data envelopment analysis, DEA, bootstrap, government subsidies, Farm Management, Productivity Analysis, Q12, C14,
    Date: 2009
  2. By: Rada, Nicholas E.; Buccola, Steven T.; Fuglie, Keith O.
    Abstract: Brazil now is the largest coffee, sugar, and fruit juice producer, second-largest soybean and beef producer, and third-largest corn and broiler producer. It has overtaken the U.S. in poultry exports, nearly matches the U.S. in soybean exports, and dominates global trade in frozen orange juice. To test and better understand these advances, we draw on decennial farm censuses to examine technical change and efficiency in Brazilian agriculture. Our approach is to estimate a stochastic, multi-product, output distance frontier, using a translog functional form and data disaggregated to the micro-region (sub-state) level. Using two consecutive decennial farm censuses, we combine state-level Fisher productivity-change indexes with state-level translog distance function estimates of technical efficiency change to impute state-level technical shifts. We find, leading up to the soon-to-be-released 2006 agricultural census, that Brazilâs multi-factor productivity growth rate between 1985 and 1996 was 20.2%. Mean state-level technical efficiency was 91.2%, which implies the production frontier expanded 22.2% over the reference time period.
    Keywords: Brazil, Shephard distance function, stochastic frontier, technical change, technical efficiency, International Development, Production Economics, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,
    Date: 2009
  3. By: Sesmero, Juan P.; Perrin, Richard K.; Fulginiti, Lilyan E.
    Abstract: Continuation of policy support for the U.S. corn ethanol industry will depend upon the greenhouse gas (GHG) effects of the industry, and its economic viability. The environmental and economic performance of ethanol plants is determined by the productivity of new technologies and, in addition, by the efficiency with which technologies are used (technical efficiency) and output and inputs are combined (economic efficiency). This study estimates the technical and economic efficiencies of seven recentlyâconstructed ethanol plants in the North Central region of the US during 2006-2007 using a nonparametric, data envelopment analysis (DEA) and investigates both the drivers and implications of inefficiencies. In terms of drivers, our results are consistent with the hypothesis that economic (profit) efficiency of productive units tends to be positively correlated with their size. Regarding implications of inefficiencies, results show that, in average, the maximum feasible reduction in Greenhouse Gases (GHG) emissions that can be achieved by ethanol plants is very limited (7,769 milligrams). Second, we calculate a potential increase in returns over operating costs per gallon of ethanol produced (through elimination of technical and allocative inefficiency) of about 12 cents a gallon (17%). Therefore, plants can significantly increase their returns over operating costs improving their economic viability and probably, the effectiveness of public policies supporting them.
    Keywords: Ethanol, Efficiency, DEA, Production Economics, Resource /Energy Economics and Policy,
    Date: 2009
  4. By: Lerman, Zvi; Sedik, David J.
    Abstract: The paper examines agricultural production and productivity growth in two Central Asian countries â Tajikistan and Uzbekistan. Both countries are characterized by a significant shift of resources from the traditional Soviet model of collective agriculture to more market-compliant individual and family farming. In both countries, the beginning of the policy-driven switch to family farming around 1997 coincided with the beginning of recovery in agriculture, namely resumption of agricultural growth after a phase of transition decline since 1991. In addition to growth in total agricultural production, we also observe significant increases in productivity of both land and labor since 1997. These observations suggest that productivity growth may be attributable to the changes in farming structure in Central Asia. To check this conjecture we assess the sources of growth by applying the standard Solow growth accounting methodology. Using time series of country statistics for farms of different organizational forms, we decompose the growth in output into growth in the resource base (extensive growth) and growth in productivity (intensive growth). Solow growth accounting clearly shows that, first, much of the growth at the country level is attributable to increases in productivity rather than increases in resources and, second, the increases in productivity in family farms (especially household plots) outstrip the increases in productivity in former collective and state farms. These findings confirm that the recovery of agricultural production in Central Asia has been driven largely by productivity increases, and it is the individual farms that are the main source of agricultural productivity increases.
    Keywords: agricultural productivity, agricultural growth, family farms, corporate farms, comparative performance, agrarian reforms, transition countries, Central Asia, Tajikistan, Uzbekistan, Agricultural and Food Policy, Institutional and Behavioral Economics, Land Economics/Use, Productivity Analysis, P27, P31, P32, Q15, R14,
    Date: 2009
  5. By: Sun, Ling; Ball, Eldon; Fulginiti, Lilyan; Plastina, Alejandro
    Abstract: In this paper we revisit the issue on the impact of public R&D expenditure on US agricultural productivity growth. We estimate a dual cost function using a state-by-year panel data set. We construct the potential R&D âspillinsâ based on both geographical location and production mix. We also examine the role of the extension service, transportation network, and human capital in the process of technology dissemination. The results indicate that higher levels of local public goods, R&D spillins, extension activities, and an intensive transportation network decrease costs. The contributions to agricultural productivity from all series of R&D spillins are positive even though the social rate of return may differ.
    Keywords: productivity, public R&D expenditure, cost function, extension services, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies, O3, O4,
    Date: 2009
  6. By: Moore, Rebecca; Price, Joseph
    Abstract: In Georgia, the price of irrigation water is equal to the cost of extraction, including pumping and diversion, storage, treatment, and delivery costs. These water-pricing conditions are repeated in locales around the world. In lieu of established water markets, water use and its efficient use are driven more by farm-level characteristics and management strategies than by the resource price. The purpose of the research presented herein is to examine what factors guide Georgia farmersâ water use decisions. Using data envelopment analysis (DEA) to calculate technical water use efficiency scores, a second step Tobit model is estimated to determine the effect of farm type and farm size. A farmsâ use of conservation tillage or organic farming positively affected their water use efficiency, while farms of smaller size or solely owned were more inefficient in water use.
    Keywords: technical/productive water use efficiency, organic agriculture, DEA, Production Economics, Productivity Analysis, Resource /Energy Economics and Policy,
    Date: 2009
  7. By: McCarl, Bruce; Villavicencio, Xavier; Wu, Ximing
    Abstract: This paper examines the role that climate change might be playing in the declining returns to agricultural research. For this purpose, we estimate a cross-section time-series model of agricultural total factor productivity for the U.S. states over the period 1970â1999, with the inclusion of climatic variables, and controlling for non stationarity of the data. Our findings suggest that after controlling for climatic variables and non stationarity, the effect of Public Agricultural Research Capital over Total Factor Productivity is reduced.
    Keywords: Climate Change, Factor Productivity, Returns to Research, Panel Data, Environmental Economics and Policy, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy, C33, O13, Q16,
    Date: 2009
  8. By: Kitov, Ivan; Kitov, Oleg
    Abstract: Labor productivity in Turkey, Spain, Belgium, Austria, Switzerland, and New Zealand has been analyzed and modeled. These counties extend the previously analyzed set of the US, UK, Japan, France, Italy, and Canada. Modelling is based on the link between the rate of labor participation and real GDP per capita. New results validate the link and allow predicting a drop in productivity by 2010 in almost all studied countries.
    Keywords: productivity; labor force; real GDP; prediction; modelling
    JEL: J21 O4
    Date: 2009–05–10
  9. By: Funtanilla, Margil; Lyford, Conrad; Wang, Chenggang
    Abstract: The organic cotton market has been growing internationally and presents a potential opportunity for producers. This article evaluates prices and returns for organic cotton production in Texas using a stochastic frontier approach. Organic producers were found to be more profitable relative to conventional production, but the analysis showed that organic producers were relatively less technically efficient.
    Keywords: organic cotton, production frontier, technical efficiency, Production Economics,
    Date: 2009
  10. By: Albert van der Horst; Hugo Rojas-Romagosa; Leon Bettendorf
    Abstract: We investigate the trade-o¤ between employment and labour productivity in a panel of OECD countries in 1970-2003. The endogeneity of employment is shown to matter crucially for assessing its e¤ect on productivity. Estimating a structural model with 3SLS, where employment depends on demographic variables and labour market institutions, we .nd that employment tends to boost productivity. Literature ignoring the endogeneity of employment, including our own OLS results, incorrectly .nds a negative or insigni.cant e¤ect from employment on productivity. The productivity gain is, however, not a guaranteed by-product of additional employment, as regressions with rolling windows reveal.
    Keywords: labour productivity; employment
    JEL: E20 J24 O41
    Date: 2009–02
  11. By: Georgios E. Chortareas (University of Athens); Jesus G. Garza-Garcia (UWE, Bristol); Claudia Girardone (University of Essex)
    Abstract: TSince the mid-1990s the banking sector in the Latin American emerging markets has experienced profound changes due to financial liberalisation, a significant increase in foreign investments and greater mergers activities often occurring following financial crises. The wave of consolidation and the rapid increase in market concentration that took place in most countries has generated concerns about the rise in banks’ market power and its potential effects on consumers. This paper advances the existing literature by testing the market power (Structure-Conduct-Performance and Relative Market Power) and efficient structure (X- and scale efficiency) hypotheses for a sample of over 2,500 bank observations in nine Latin American countries over 1997-2005. We use the Data Envelopment Analysis technique to obtain reliable efficiency measures. We produce evidence supporting the efficient structure hypotheses. The findings are particularly robust for the largest banking markets in the region, namely Brazil, Argentina and Chile. Finally, capital ratios and bank size seem to be among the most important factors in explaining higher than normal profits for Latin American banks.
    Keywords: Structure-Conduct-Performance; Efficient Structure; Latin American banking; Data Envelopment Analysis (DEA).
    JEL: G21 D24
    Date: 2009–04
  12. By: Viktoria Kocsis; Ruslan Lukach; Bert Minne; Victoria Shestalova; Nick Zubanov; Henry van der Wiel
    Abstract: This document provides a review of recent theoretical and empirical literature on the relationship between entry, exit and productivity. Decomposition methods show that entry and exit considerably contribute to productivity growth, but are unable to shed any light on the ultimate sources of productivity growth. However, the theories discussed do provide options for effective policy instruments. We argue that productivity or welfare should be the aim of policy and not the number of entrants, the intensity of competition or the amount of innovation expenditures. Taking a welfare approach, we address market failures with respect to entry. The most eminent market failure is market power of dominant incumbents. Lowering institutional entry barriers economy-wide is a promising policy option for further consideration. Whether such a policy measure actually improves social welfare depends also on the extent of other failures. Therefore, an ex ante cost-benefit analysis needs to precede intervention.
    Keywords: entry; exit; productivity
    JEL: B41 O30
    Date: 2009–03
  13. By: Liang, Yan; Coble, Keith H.
    Abstract: This paper employs a cost function analysis method to investigate the existence of moral hazard in cotton buy-up insurance. The trans-log cost function estimates of the own-price elasticity of fertilizer, herbicide, and insecticide is -0.222, -0.143, and -0.121, respectively for Mississippi cotton production. Our results found statistically significant relationship between per acre direct cost and cotton buy-up insurance for year 2001 and 2005 in Mississippi. Our results also indicate that moral hazard can either decrease or increase agricultural input usage depending specific production condition in an individual year. But in general the results support effects smaller than anecdotal evidence would suggest.
    Keywords: crop insurance, moral hazard, agricultural input use, cost function analysis, cotton, Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, Production Economics, Risk and Uncertainty,
    Date: 2009
  14. By: Joeri Gorter; Suzanne Kok
    Abstract: The drift to the city has been going on for hundreds of years. As a result, most economic activity is concentrated in small geographical areas. The advantages of proximity of people and firms go under the name ‘agglomeration economies’. In this paper, we measure their strength on the basis of Dutch regional data. We regress regional labour productivity on a set of agglomeration indices, and find evidence for a productivity effect of concentration of production with a malus for industrial variety. Thus, the evidence supports Marschall-Arrow- Romer economies. The evidence does not support, however, Jacobs economies, nor variants of the Creative Class Hypothesis.
    Keywords: Agglomeration externalities; labour productivity; industrial concentration
    JEL: O18 R11 R12
    Date: 2009–04
  15. By: L. Marattin; S. Salotti
    Date: 2009–04
  16. By: Knapp, Keith C.
    Abstract: The role of agricultural production in economic growth has long been of interest to agricultural economists, including questions related to poverty traps and the measurement of technical change. This work investigates these issues, with particular emphasis on embodied vs. disembodied technical change, technical issues related to the standard C-D model and its realism, and the possible role of non-convex production technologies. The first set of simulations is for a C-D economy. The results suggest general convergence to a positive steady-state regardless of agricultural productivity (with one possible - although unlikely - exception), and that convergence happens very fast. A variety of reasons are given why this is not likely to be a complete model of growth and development. An activity analysis model of growth is proposed, with the key result so far being that one can generate qualitatively similar time paths to observed data over some time horizons without appeal to disembodied technical change and while remaining in the neoclassical framework. There is also reasoning from the literature to support non-classical production. The key result there is the possibility of convergence to a zero steady-state depending on initial conditions. Work in progress investigates the possibility of agriculturally-induced poverty traps and implications for productivity measurement utilizing these frameworks.
    Keywords: Economic growth, agricultural productivity, dynamic programming., International Development, Production Economics, Resource /Energy Economics and Policy,
    Date: 2009
  17. By: Fernandez-Cornejo, Jorge; Nehring, Richard; Newcomb Sinha, Elizabeth; Grube, Arthur; Vialu, Alexandre
    Abstract: The paper discusses recent national trends in pesticide use in major crop production, identifying major national shifts in pesticide use between 1960 and 2007 by commodity and specific trends in herbicide and insecticide use in corn, cotton, and soybeans. The paper also shows how hedonic methods are used to calculate quality-adjusted price changes and implicit prices of the quality characteristics of pesticides for 1960 through 2007. In addition, the paper examines quality-adjusted price and quality trends in key corn and cotton states, and examines the major forces driving the pesticide trends.
    Keywords: pesticides, herbicides, insecticides, hedonic models, genetically engineered crops, corn, soybeans, cotton, Crop Production/Industries, Environmental Economics and Policy, Farm Management, Production Economics, Productivity Analysis, Research Methods/ Statistical Methods,
    Date: 2009
  18. By: del Corral, Julio; Alvarez, Antonio; Tauer, Loren
    Abstract: Agricultural studies have often differentiated and estimated different technologies within a sample of farms. The common approach is to use observable farm characteristics to split the sample into several groups and subsequently estimate different functions for each group. Alternatively, unique technologies can be determined by econometric procedures such as latent class models. This paper compares the results of a latent class model with the use of a priori information to split the sample using dairy farm data in the application. Latent class separation appears to be a superior method of separating heterogeneous technologies.
    Keywords: parlor milking system, stanchion milking system, latent class model, stochastic frontier, Production Economics,
    Date: 2009–04–29
  19. By: G. Antonelli; R. Antonietti; G. Guidetti
    Date: 2009–03
  20. By: Massimiliano Caporin (University of Padua); Francesco Lisi (University of Padua)
    Abstract: Within an asset allocation framework, when the number of assets is larger than the sample dimension, mean-variance approaches cannot be used due to the limited number of degrees of freedom. In such a situation, performance measures could be used to rank assets, and then select a subset of them for further analysis. However, the financial economics literature proposes dozens of measures, and there is thus a problem: which measures should be considered? Some authors already discussed this topic. We extend the current literature by enlarging the set of analyzed measures and also by exploiting the possible dynamic evolution of rank correlations. Our analysis is mainly empirical, based on the S&P 1500 constituents, and includes an example of the optimal combination of performance measures for allocating an equity portfolio.
    Keywords: performance measurement, rank correlations, selecting performance measures, comparing performance measures, combining performance measures.
    JEL: C10 G11 C40
    Date: 2009–04
  21. By: MacDonald, James M.; Wang, Sun-Ling
    Abstract: We use data from a recent national survey to analyze the use of subtherapeutic antibiotics (STAs) among producers of broilers. STAs are included in feed or water and are intended to prevent disease or promote growth. Producers who do not use STAs instead rely on a set of other practices, including pathogen testing, expanded sanitary protocols, altered feeding regimens, and HACCP plans, to maintain production. We find that producers who do not use STAs realize levels of production that are slightly lower, given other inputs, than STA users, but the differences are not statistically significant. STA users realize lower payments per pound than those who are not users. The 4 percent difference, which is statistically significant, suggests that STA users have lower costs.
    Keywords: Antibiotics, broilers, production, Industrial Organization, Livestock Production/Industries, Production Economics, Q12,
    Date: 2009
  22. By: Xia, Yin
    Abstract: The National Science Foundation (NSF) estimates that nanotechnology will become a trillion-dollar industry by 2015 and that 800,000 workers will be needed in this field in the United States. Nanobiotechnology â the interface of nanotechnology and the life sciences â is one of the most active and promising application frontiers in nanotechnology. To assess the productivity of basic and applied research and education in this field, I construct a structural model composed of a system of three equations which respectively represent the productions of a universityâs scientific publications, patents, and graduate training outputs. The model is estimated using a unique data set on thirty universities that participated in nanobiotechnology during the 1990-2005 period. Ten of them are private universities, ten are public land-grant universities, and ten are public non-land-grant universities. Universities indeed serve as a principal seedbed for future development of the cutting-edge nanobiotechnology. NSF investment in nanobiotechnology strongly affects the universityâs basic science research and graduate education. The universityâs research expenditures in life sciences, engineering, and physical sciences contribute to its nanobiotechnology fields. Importantly, there is no evidence that science and graduate training compete strongly with one another. Rather, basic science research and graduate education serve as strong complements to one another, while basic science and applied research, and applied research and graduate education serve as weak complements. On average, public non-land-grant universities are more efficient in applied research. Such characteristics of universities, however, do not significantly affect the universitiesâ efficiencies in basic research and graduate education in nanobiotechnology. Presence of a nanotechnology research center on campus enhances the universityâs basic science research and a formal nanotechnology education program promotes the universityâs graduate education.
    Keywords: nanotechnology, graduate education, university research, productivity, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,
    Date: 2009

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