New Economics Papers
on Efficiency and Productivity
Issue of 2009‒09‒05
fifteen papers chosen by

  1. Bank Productivity in China 1997-2007: An Exercise in Measurement By Matthews, Kent; Zhang, Nina
  2. The effects of privatization and consolidation on bank productivity: comparative evidence from Italy and Germany By Fiorentino, Elisabetta; Vincenzo, Alessio De; Heid, Frank; Karmann, Alexander; Koetter, Michael
  3. Linking Investment Spikes and Productivity Growth: U.S. Food Manufacturing Industry By Pinar Celikkol Geylani; Spiro E. Stefanou
  4. Profit Shifting and Measured Productivity of Multinational Firms By Giorgia Maffini; Socrates Mokkas
  5. Rational Cost Inefficiency in Chinese Banks By Matthews, Kent; Xiao, Zhiguo; Zhang, Xu
  6. Age and productivity: evidence from linked employer employee data By Göbel , Christian; Zwick, Thomas
  7. Misallocation and Manufacturing TFP in China and India By Chang-Tai Hsieh; Peter Klenow
  8. The age-productivity gradient: evidence from a sample of F1 drivers By Fabrizio Castellucci; Mario Padula; Giovanni Pica
  9. Is there a trade-off between academic research and faculty entrepreneurship?: evidence from U.S. NIH supported biomedical researchers By Czarnitzki , Dirk; Toole, Andrew A.
  10. Assessing the Localization Pattern of German Manufacturing & Service Industries - A Distance Based Approach By Hyun-Ju Koh; Nadine Riedel
  11. Factor Decomposition of Sectoral Growth in South Africa, 1970-2007 By Tregenna, F.
  12. Internal Debt and Multinationals' Profit Shifting - Empirical Evidence from Firm-Level Panel Data By Thiess Buettner; Georg Wamser
  13. Firms' Exporting Behavior under Quality Constraints By Juan Carlos Hallak; Jagadeesh Sivadasan
  14. Impact of Institutional Credit on Aggregate Agricultural Production in India during Post Reform Period By Izhar , Ahmad; Tariq , Masood
  15. Quality of Supply in Energy Regulation Measurement,Assessment and Experience from Norway By Growitsch, C.; Jamasb, T.; Mueller, C.; Wissner, M.

  1. By: Matthews, Kent (Cardiff Business School); Zhang, Nina
    Abstract: This study examines the productivity growth of the nationwide banks of China and a sample of city commercial, banks for the eleven years to 2007. Estimates of total factor productivity growth are constructed with appropriate confidence intervals, using a bootstrap method for the Malmquist index. The study adjusts for the quality of the output by accounting for the non-performing loans on the balance sheets of the banks and tests for the robustness of the results by examining alternative sets of outputs. The productivity growth of the state-owned commercial banks (SOCBs) is compared with the joint-stock banks (JSCBs) and city commercial banks (CCBs). The results show that average total factor productivity for the joint-stock banks was better than that of the state-owned banks for some models of measurement but not others. But the average city commercial banks improved its productivity growth both in terms of frontier shift and efficiency gain throughout the whole period. The study also shows that individual state-owned and joint-stock banks did improve their productivity growth and defined an improving production frontier. Most other banks lagged behind so that the gap between the inefficient banks and the most efficient banks widened. While individual banks improved their productivity growth there is no evidence that the average productivity growth of Chinese banks as a whole improved in the run-up to WTO.
    Keywords: Bank Efficiency; Productivity; Malmquist index; Bootstrap
    JEL: D24 G21
    Date: 2009–09
  2. By: Fiorentino, Elisabetta; Vincenzo, Alessio De; Heid, Frank; Karmann, Alexander; Koetter, Michael
    Abstract: The Italian and German banking systems shared similar characteristics early in the 1990s but have evolved in different directions since then: Italy privatized its publicly-owned banks while Germany has maintained a large share of state-owned savings banks. Contemporaneously, banks in both markets engaged heavily in mergers and acquisitions. We analyze how these activities have affected banks' productivity in the period 1994-2004, differentiating between technical change, efficiency change and scale economies. We find that privatized banks experienced a significant increase in productivity, especially if they subsequently merged with other banks. German banks were still able to increase their productivity through consolidation.
    Keywords: Banking market integration,deregulation,total factor productivity,Italy,Germany
    JEL: D24 G21 G28 L33
    Date: 2009
  3. By: Pinar Celikkol Geylani; Spiro E. Stefanou
    Abstract: We investigate the relationship between productivity growth and investment spikes using Census Bureau's plant-level data set for the U.S. food manufacturing industry. We find that productivity growth increases after investment spikes suggesting an efficiency gain or plants' learning effect. However, efficiency and the learning period associated with investment spikes differ among plants' productivity quartile ranks implying the differences in the plants' investment types such as expansionary, replacement or retooling. We find evidence of both convex and non-convex types of adjustment costs where lumpy plant-level investments suggest the possibility of non-convex adjustment costs and hazard estimation results suggest the possibility of convex adjustment costs. The downward sloping hazard can be due to the unobserved heterogeneity across plants such as plants' idiosyncratic obsolescence caused by different R&D capabilities and implies the existence of convex adjustment costs. Food plants frequently invest during their first few years of operation and high productivity plants postpone investing due to high fixed costs.
    Date: 2008–10
  4. By: Giorgia Maffini (Centre for Business Taxation, Said Business School, University of Oxford); Socrates Mokkas (Centre for Business Taxation, Said Business School, University of Oxford)
    Abstract: This paper examines the differences in total factor productivity (TFP) between multinationals and domestic firms before and after tax rate changes to investigate whether the host country corporate tax rate has a significant in fluence on the measured TFP advantage of multinational companies. Using a sample of approximately 16,000 European firms (1998-2004), we find that a 10 percentage points cut in the statutory corporate tax rate would increase multinationals' measured TFP by about 10 per cent relative to domestic firms, consistent with profit-shifting by multinationals. At the sample mean, this would imply a 44 per cent increase in the TFP advantage of multinationals.
    Keywords: profit shifting, multinationals, productivity
    JEL: D24 F23 H25
    Date: 2009
  5. By: Matthews, Kent (Cardiff Business School); Xiao, Zhiguo; Zhang, Xu
    Abstract: According to a frequently cited finding by Berger et al (1993), X-inefficiency contributes 20% to cost-inefficiency in western banks. Empirical studies of Chinese banks tend to place cost-inefficiency in the region of 50%. Such estimates would suggest that Chinese banks suffer from gross cost inefficiency. Using a non-parametric bootstrapping method, this study decomposes cost-inefficiency in Chinese banks into X-inefficiency and allocative-inefficiency. It argues that allocative inefficiency is the optimal outcome of input resource allocation subject to enforced employment constraints. The resulting analysis suggests that allowing for rational allocative inefficiency; Chinese banks are no better or worse than their western counterparts.
    Keywords: Bank Efficiency; China; X-inefficiency; DEA; Bootstrapping
    JEL: D23 G21 G28
    Date: 2009–09
  6. By: Göbel , Christian; Zwick, Thomas
    Abstract: In most Western, industrialised countries the workforce is ageing rapidly. In order to assess the possible consequences of an ageing workforce, this paper measures the impact of changes in the age structure of establishments on productivity using representative linked employer-employee panel data. We take into account that the levels as well as the changes in the age structure of establishments and their production are likely to be simultaneously determined and apply dynamic GMM methods. We find that establishment productivity increases with the share of employees until the age of 50-55 and only decreases slightly afterwards. Our findings suggest that previous estimations are biased because they either do not take into account endogeneity, time dependencies, or crucial information correlated with age shares and productivity. Large standard deviations point to important variation in the age productivity profile among establishments.
    Keywords: ageing workforce,age,productivity,LEED,system GMM
    JEL: J11 J14 J21
    Date: 2009
  7. By: Chang-Tai Hsieh; Peter Klenow
    Abstract: Resource misallocation can lower aggregate total factor productivity (TFP). We use micro data on manufacturing establishments to quantify the potential extent of misallocation in China and India compared to the U.S. Compared to the U.S., we measure sizable gaps in marginal products of labor and capital across plants within narrowly-defined industries in China and India. When capital and labor are hypothetically reallocated to equalize marginal products to the extent observed in the U.S., we calculate manufacturing TFP gains of 30-50% in China and 40-60% in India.
    Date: 2009–02
  8. By: Fabrizio Castellucci (Bocconi University); Mario Padula (Department of Economics, University Of Venice Cà Foscari); Giovanni Pica (Department of Economics, University of Salerno)
    Abstract: Estimating the effect of aging on productivity is a daunting task. First, it requires clean measures of productivity. Second, unobserved heterogeneity at workers, firms and workers/firms level challenges the identification of the age-productivity gradient in cross-sectional data. Finally, the study of the age-productivity link requires to partial out the role of experience and to account for the selection bias that arises if less able people drop out faster than more able ones. We tackle these issues by focussing on a panel of Gran Prix Formula One drivers and show that the age-productivity link has an inverted U-shape profile, with a peak at around the age of 30-32.
    Keywords: Aging, individual effects, firm effects, match effects, Formula One
    JEL: J24 C23 L83
    Date: 2009
  9. By: Czarnitzki , Dirk; Toole, Andrew A.
    Abstract: Is there a trade-off of scholarly research productivity when faculty members found or join for-profit firms? This paper offers an empirical examination of this question for a subpopulation of biomedical academic scientists who received research funding from the U.S. National Institutes of Health (NIH). In this study, we are able to distinguish between permanent versus temporary employment transitions by entrepreneurial faculty members and examine how their journal article publication rates change using individual-level panel data. We find that the biomedical scientists who eventually choose to found or join a for-profit firm were more productive during their careers in academe than a randomly selected control group of their NIH peers. When they pursue entrepreneurship in the private sector, however, their scholarly productivity falls. Those entrepreneurial faculty members who return to academe are not as productive as they were before their entrepreneurial experience in terms of journal publications.
    Keywords: academic entrepreneurship,SBIR,NIH,biomedical research,life scientist productivity
    JEL: O38 O31 L53
    Date: 2009
  10. By: Hyun-Ju Koh (University of Munich); Nadine Riedel (Oxford University Centre for Business Taxation)
    Abstract: This paper assesses the agglomeration pattern of four-digit industries in Germany using a rich data set on the population of German firms. To identify geographical agglomeration, we follow the distance based approach of Duranton and Overman (2005) and find that the location pattern of 78% of our industries departs from randomness in the sense that firms exhibit significant geographical localization. In line with previous studies on manufacturing firms in the UK and France, our analysis suggests that especially traditional manufacturing industries exhibit strong localization patterns. Moreover, we find that geographical localization is not restricted to the manufacturing sector but that it plays an equally, or even more important role in service industries.
    Keywords: Geographic concentration, agglomeration
    JEL: R12
    Date: 2009
  11. By: Tregenna, F.
    Abstract: Chenery’s factor decomposition method is used to analyse the sources of growth, by sector, in South Africa from 1970 to 2007. Using input-output data, the growth of each sector is decomposed into components associated with export growth; import substitution; growth in domestic demand; and growth in intermediate demand. The results highlight the dependence on domestic demand expansion as a source of growth in the period since 2000, especially for manufacturing. However, subsectors which relied exclusively or primarily on domestic demand expansion generally performed relatively poorly. The technological change component of growth is the only component with a consistently positive and statistically significant correlation with sectoral growth. The only two manufacturing subsectors for which all four components were positive in the period since 2000, were also the two fastest growing subsectors of the whole economy. The analysis also enables a typology of the subsectors of each of manufacturing and services, according to the relative importance of each of the four components.
    Keywords: growth, sectors, factor decomposition, South Africa
    JEL: E20 O11 O14 O40
    Date: 2009–07–30
  12. By: Thiess Buettner (Ifo Institute and Munich University (LMU)); Georg Wamser (Ifo Institute)
    Abstract: This paper is concerned with the shifting of taxable profits by means of borrowing and lending between affliates of multinational corporations. Empirical evidence is provided using microlevel panel data of virtually all German multinationals made available by the German Central Bank (Bundesbank). This comprehensive dataset allows us to exploit differences in taxing conditions in more than 150 countries over a period of ten years. The empirical results confirm a robust impact of tax-rate differences within the multinational group on the use of internal debt, supporting the view that internal debt is used to shift profits to low-tax countries. However, the tax effects are rather small. Given that the empirical literature finds profit shifting to be substantial, our estimates suggest that other strategies to shift income to low-tax countries are relatively more important.
    Keywords: Capital Structure; Multinational Corporations; Internal Debt; Corporate Taxation; Tax Planning; Profit Shifting
    JEL: H25 G32 F23
    Date: 2009
  13. By: Juan Carlos Hallak; Jagadeesh Sivadasan
    Abstract: We develop a model of international trade with export quality requirements and two dimensions of firm heterogeneity. In addition to "productivity", firms are also heterogeneous in their "caliber" {the ability to produce quality using fewer fixed inputs. Compared to singleattribute models of firm heterogeneity emphasizing either productivity or the ability to produce quality, our model provides a more nuanced characterization of firms' exporting behavior. In particular, it explains the empirical fact that firm size is not monotonically related with export status: there are small firms that export and large firms that only operate in the domestic market. The model also delivers novel testable predictions. Conditional on size, exporters are predicted to sell products of higher quality and at higher prices, pay higher wages and use capital more intensively. These predictions, although apparently intuitive, cannot be derived from singleattribute models of firm heterogeneity as they imply no variation in export status after size is controlled for. We find strong support for the predictions of our model in manufacturing establishment datasets for India, the U.S., Chile, and Colombia.
    Keywords: Productivity, quality, exports, firm heterogeneity
    JEL: F10 F12 F14
    Date: 2009–05
  14. By: Izhar , Ahmad; Tariq , Masood
    Abstract: Abstract The study attempts to assess the impact of institutional credit on agriculture production by estimating Cobb Douglas agricultural production function for the pre reform (1972-91) and post reform (1992-2005) period in India using time series data. Study also analyses the trends and pattern of institutional credit during pre reform and post reform period. Annual average growth rate of institutional credit was lowest during the decade 1990-2000 and was highest during 1971-80. Institutional credit as percentage of agricultural gross domestic product increases more rapidly during the post reform period. Institutional credit per cultivated area also increases tremendously over the period since the total cultivated area remains more or less same over the period. Study also analyses sectoral share of total non food bank credit for the period 1980-2005. The share of agriculture sector in total non food bank credit deteriorated during the post reform period. In last cob Douglas production function has been estimated to assess the impact of institutional credit on aggregate agricultural production. Model estimated for the over all period 1972-2005 suggest that institutional credit has significant impact on aggregate agricultural production in India. Cob Douglas production function for the pre reform period (1971-91) gives coefficient which has significant impact on agricultural production. But the model estimated for the post reform period shows that institutional credit does not affect agricultural production. Study concludes that during post reform period the sectoral share agriculture sector declined and also the growth rate of agricultural credit deteriorated. During post reform period institutional credit is not a significant determinant of agricultural production in India.
    Keywords: Institutioan Credit; Agicultural Production Fuction; India
    JEL: Q14 C01
    Date: 2009–08–13
  15. By: Growitsch, C.; Jamasb, T.; Mueller, C.; Wissner, M.
    Abstract: In order to overcome the incentive of excessive maintenance reductions and insufficient network investments in incentive regulation of electricity distribution companies, regulators throughout Europe have started regulating quality of service in the energy sector. In this paper, we discuss the issue of assessing and implementing quality-related incentives based on customers’ WTP for network reliability and analyse the impact of such regulatory measures by means of a concrete casestudy. Surveying the most prominent methodological approaches to quantify customers’ WTP for quality we find that survey techniques such as contingent valuation and conjoint analysis cover regulatory purposes well. As Norway has put the measurement and assessment of quality of supply into practice, we empirically examine how network operators have adapted to quality-incorporated regulation. We find that the external cost for quality has not played a major role in Norwegian electricity distribution.
    Keywords: electricity, quality of service, willingness-to-pay, data envelopment analysis
    JEL: L15 L51 L94
    Date: 2009–08–30

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