New Economics Papers
on Efficiency and Productivity
Issue of 2009‒08‒02
ten papers chosen by

  1. Robust, dynamic nonparametric benchmarking: the evolution of cost-productivity and efficiency among U.S. credit unions By David C. Wheelock; Paul Wilson
  2. Winners and Losers: Spatial variations in labour productivity in England and Wales By Don J. Webber; Michael Horswell
  3. The Efficiency of German Public Theaters: A Stochastic Frontier Analysis Approach By Anne-Kathrin Last; Heike Wetzel
  4. Markups and firm-level export status By Jan De Loecker; Frederic Warzynski
  5. Capital misallocation and aggregate factor productivity By Costas Azariadis; Leo Kaas
  6. Japan and her dealings with offshoring: An empirical analysis with aggregate data By Pablo , Agnese
  7. Measuring Economic Growth from Outer Space By J. Vernon Henderson; Adam Storeygard; David N. Weil
  8. Ownership and Financial Performance in the German Hospital Sector By Boris Augurzky; Dirk Engel; Christoph M. Schmidt; Christoph Schwierz
  9. How Do Different Motives for R&D Cooperation Affect Firm Performance? – An Analysis Based on Swiss Micro Data By Spyros Arvanitis
  10. How Do Young Innovative Companies Innovate? By Pellegrino, Gabriele; Piva, Mariacristina; Vivarelli, Marco

  1. By: David C. Wheelock; Paul Wilson
    Abstract: This paper develops a new methodology for estimating cost-productivity and efficiency change that benchmarks the performance of individual firms against an estimated a-quantile. We adapt the estimators of Daouia and Simar (2007) and Wheelock and Wilson (2008a) to the estimation of cost efficiency where input prices and some outputs are fixed. Theoretical results demonstrate that our new estimator retains the root-n convergence, asymptotic normality, and other desirable properties of the original estimators. We show how the estimator can be used to construct a cost analog of the widely-used Malmquist productivity index. In addition, we propose a new decomposition of the Malmquist index to reveal the sources of changes in scale efficiency that affect changes in cost-productivity. We examine changes in the efficiency and productivity of U.S. credit unions between 1989 and 2006. We find that productivity increased among the largest 20-percent of credit unions, as well as for credit unions that grew substantially in size during 1989-2006.
    Keywords: Credit unions
    Date: 2009
  2. By: Don J. Webber (Department of Business Economics, Auckland University of Technology and Department of Economics, UWE, Bristol); Michael Horswell (Faculty of the Built and Natural Environment, University of the West of England, UK)
    Abstract: This paper presents an investigation into the static and dynamic spatial pattern of aggregate labour productivity across England and Wales at the district and unit authority level. This analysis is complemented by plant-level regressions to identify the contribution of industrial sectors to each NUTS1 region’s average labour productivity. Using data for 1998 and 2005, our exploratory data analysis illustrates that there are stable spatial patterns in levels of labour productivity and that labour productivity change does not appear to be spatially dependent, at least not at this spatial scale. Furthermore the economic importance of different sectors to different regions evolves over time, which makes regional industrial policy formation problematic.
    Keywords: Labour productivity; districts and local authorities; sectors; spatial autocorrelation
    JEL: R39
    Date: 2009–07
  3. By: Anne-Kathrin Last (Institute of Economics, University of Lüneburg); Heike Wetzel (Institute of Economics, University of Lüneburg)
    Abstract: In recent years the economic performance of public non-profit sectors such as cultural services has become an interesting economic issue. This is due to the high dependence of cultural institutions on public funding on the one hand and the increasing cost-pressure on public budgets on the other hand. In order to achieve an efficiently, cost-minimizing resource allocation public authorities who decide on the distribution of public budgets need reliable performance indicators. Against this background, this paper analyzes the efficiency of German public theaters for the seasons 1991/1992 to 2005/2006. Using a stochastic frontier analysis approach, we test whether the assumption of cost-minimizing behavior is reliable in this sector. Moreover, several panel data models that differ in their ability to account for unobserved heterogeneity are applied to evaluate the impact of unobserved heterogeneity on the efficiency estimates. The results indicate that the cost-minimizing assumption cannot be maintained. Consequently, an efficiency analysis based on a cost function approach seems inappropriate in the case of German public theaters. Further, we find a considerably unobserved heterogeneity across the theaters, which causes a significant variation in the models’ efficiency estimates. This implies that failing to account for unobserved heterogeneity leads to biased efficiency values. Overall, our results suggest that there is still space for improvement in the employment of resources in the sector.
    Keywords: Public theaters, efficiency, stochastic frontier analysis, input distance function, cultural economics
    JEL: L82 D24 Z10
    Date: 2009–07
  4. By: Jan De Loecker; Frederic Warzynski
    Abstract: Estimating markups has a long tradition in industrial organization and international trade. Economists and policy makers are interested in measuring the effect of various competition and trade policies on market power, typically measured by markups. The empirical methods that were developed in empirical industrial organization often rely on the availability of very detailed market-level data with information on prices, quantities sold, characteristics of products and more recently supplemented with consumer-level attributes. Often, both researchers and government agencies cannot rely on such detailed data, but still need an assessment of whether changes in the operating environment of firms had an impact on markups and therefore on consumer surplus. In this paper, we derive an estimating equation to estimate markups using standard production plant-level data based on the insight of Hall (1986) and the control function approach of Olley and Pakes (1996). Our methodology allows for various underlying price setting models, dynamic inputs, and does not require measuring the user cost of capital or assuming constant returns to scale. We rely on our method to explore the relationship between markups and export behavior using plant-level data. We find that i) markups are estimated significantly higher when controlling for unobserved productivity, ii) exporters charge on average higher markups and iii) firms’ markups increase (decrease) upon export entry (exit).We see these findings as a first step in opening up the productivity-export black box, and provide a potential explanation for the big measured productivity premia for firms entering export markets.
    JEL: F10 L10
    Date: 2009–07
  5. By: Costas Azariadis; Leo Kaas
    Abstract: We propose a sectoral–shift theory of aggregate factor productivity for a class of economies with AK technologies, limited loan enforcement, a constant production possibilities frontier, and finitely many sectors producing the same good. Both the growth rate and total factor productivity in these economies respond to random and persistent endogenous fluctuations in the sectoral distribution of physical capital which, in turn, responds to persistent and reversible exogenous shifts in relative sector productivities. Surplus capital from less productive sectors is lent to more productive ones in the form of secured collateral loans, as in Kiyotaki–Moore (1997), and also as unsecured reputational loans suggested in Bulow–Rogoff (1989). Endogenous debt limits slow down capital reallocation, preventing the equalization of risk– adjusted equity yields across sectors. Economy–wide factor productivity and the aggregate growth rate are both negatively correlated with the dispersion of sectoral rates of return, sectoral TFP and sectoral growth rates. If sector productivities follow a symmetric two–state Markov process, many of our economies converge to a limit cycle alternating between mild expansions and abrupt contractions. We also find highly periodic and volatile limit cycles in economies with small amounts of collateral.
    Keywords: Industrial productivity
    Date: 2009
  6. By: Pablo , Agnese
    Abstract: First moves towards a real understanding of the offshoring phenomenon date back to very recent times, with employment and productivity effects occupying much of the literature around the subject. In particular for Japan, the studies conducted so far focus on the disaggregate level and put the stress on the productivity side alone. Here I carry out both the analyses of the employment and productivity effects at the aggregate level of the industry, covering the years 1980-2005. Moreover, I consider all industries within the economy and take account of both materials and services offshoring. The results presented here suggest that we can expect a positive effect of services offshoring on employment, and a positive effect of materials offshoring on the growth rate of productivity.
    Keywords: offshoring; Japan; employment; productivity
    JEL: F16 O47 J23
    Date: 2009–07–07
  7. By: J. Vernon Henderson; Adam Storeygard; David N. Weil
    Abstract: GDP growth is often measured poorly for countries and rarely measured at all for cities. We propose a readily available proxy: satellite data on lights at night. Our statistical framework uses light growth to supplement existing income growth measures. The framework is applied to countries with the lowest quality income data, resulting in estimates of growth that differ substantially from established estimates. We then consider a longstanding debate: do increases in local agricultural productivity increase city incomes? For African cities, we find that exogenous gricultural productivity shocks (high rainfall years) have substantial effects on local urban economic activity.
    JEL: E01 O47 Q1 R11
    Date: 2009–07
  8. By: Boris Augurzky; Dirk Engel; Christoph M. Schmidt; Christoph Schwierz
    Abstract: This paper considers the role of ownership form for the financial performance of German acute care hospitals and its development over time.We measure financial performance by a hospital-specific yearly probability of default (PD). Using a panel of hospital data, our models allow for state dependence in the PD as well as unobserved individual heterogeneity. We find that private ownership is more likely to be associated with sound levels in financial performance than public ownership. Moreover, state dependence in the PD is substantial, albeit not ownership-specific.Finally, our evidence suggests that overall efficiency may be enhanced most by closing down some loss-making public hospitals rather than by their restructuring, especially because the German hospital market has substantial excess capacities.
    Keywords: Hospitals ownership, financial performance, state dependence
    JEL: I11 I18
    Date: 2009–07
  9. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Starting point of our analysis is the empirical fact that firms pursue different goals when getting engaged in R&D collaborations, often more than one goal at the same time. Given that firms are driven by different motives for R&D cooperation, the aim of this article is to investigate the differences related to different motives with respect (a) to the factors influencing the likelihood of R&D cooperation as postulated by theory; and (b) to the impact of R&D cooperation on firm innovativeness and firm productivity. On the whole, distinguishing various cooperation motives appears to be fruitful because it allows more differentiated insights with respect to the importance of factors determining cooperation that would remain hidden behind the overall variable “R&D cooperation yes/no”. Not only R&D cooperation in general but also cooperation driven by each of the seven motives considered in this paper correlate positively with the sales share of innovative products. With respect to innovativeness the characterization of cooperation by the driving motive did not add much more insights that it could be gained through the overall variable ‘R&D cooperation yes/no’. Technology-motivated collaborative activities show a weaker tendency to positive direct effects on productivity than cost-motivated cooperation. In this case, the distinction of several cooperation motives yields some additional insights as compared to the overall cooperation variable.
    Keywords: R&D cooperation, absorptive capacity, incoming spillovers, innovation
    JEL: O30
    Date: 2009–07
  10. By: Pellegrino, Gabriele (Università Cattolica del Sacro Cuore); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: This paper discusses the determinants of product innovation in young innovative companies (YICs) by looking at in-house and external R&D and at the acquisition of external technology in embodied and disembodied components. These input-output relationships are tested on a sample of innovative Italian firms. A sample-selection approach is applied. Results show that in-house R&D is linked to the propensity to introduce product innovation both in mature firms and YICs; however, innovation intensity in the YICs is mainly dependent on embodied technical change from external sources, while − in contrast with the incumbent firms − in-house R&D does not play a significant role.
    Keywords: R&D, product innovation, embodied technical change, CIS 3, sample selection
    JEL: O31
    Date: 2009–07

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