New Economics Papers
on Efficiency and Productivity
Issue of 2009‒11‒27
thirteen papers chosen by

  1. Competition Policy and Productivity Growth: An Empirical Assessment By Buccirossi, Paolo; Ciari, Lorenzo; Duso, Tomaso; Spagnolo, Giancarlo; Vitale, Cristiana
  2. Productivity and economic growth in Switzerland 1991-2005 By Rudolf, Barbara; Zurlinden, Mathias
  3. Product policy and the East-West productivity gap By Bernd Görzig; Martin Gornig; Ramona Voshage; Axel Werwatz
  4. Spillovers through backward linkages from multinationals: Measurement matters! By Barrios, Salvador; Görg, Holger; Strobl, Eric
  5. The Impact of Training on Productivity and Wages: Firm Level Evidence By Konings, Jozef; Vanormelingen, Stijn
  6. The Impact of Regional and Demographic Factors on the Efficiency of German Savings Banks By Alexander Conrad; Doris Neuberger; Lucinda Trigo Gamarra
  7. Financial Structure, Informality and Development By Hernan J Moscoso Boedo; Pablo N D’Erasmo
  8. Measuring Public Agricultural Research Capital and Its Contribution to State Agricultural Productivity By Huffman, Wallace
  9. Human Capital Spillovers Productivity and Regional Convergence in Spain By Raul Ramos; Manuel Artís; Jordi Suriñach
  10. Offshoring, Firm Performance and Establishment-Level Employment: Identifying Productivity and Downsizing Effects By Moser, Christoph; Urban, Dieter M; Weder di Mauro, Beatrice
  11. International Trade, Foreign Direct Investment, and Technology Spillovers By Keller, Wolfgang
  12. Knowledge Spillovers and TFP Growth Rates By Nuria Quella
  13. Treating Intangible Inputs as Investment Goods: the Impact on Canadian GDP By Nazim Belhocine

  1. By: Buccirossi, Paolo; Ciari, Lorenzo; Duso, Tomaso; Spagnolo, Giancarlo; Vitale, Cristiana
    Abstract: This paper empirically investigates the effectiveness of competition policy by estimating its impact on Total Factor Productivity (TFP) growth for 22 industries in 12 OECD countries over the period 1995-2005. We find a robust positive and significant effect of competition policy as measured by newly created indexes. We provide several arguments and results based on instrumental variables estimators as well as non-linearities to support the claim that the established link can be interpreted in a causal way. At a disaggregated level, the effect on TFP growth is particularly strong for specific aspects of competition policy related to its institutional set up and antitrust activities (rather than merger control). The effect is strengthened by good legal systems, suggesting complementarities between competition policy and the efficiency of law enforcement institutions.
    Keywords: Antitrust; Competition Policy; Deterrence; Institutions; Productivity Growth
    JEL: C23 K21 L4 O4
    Date: 2009–09
  2. By: Rudolf, Barbara (Swiss National Bank); Zurlinden, Mathias (Swiss National Bank)
    Abstract: In this paper, we analyse the sources of economic growth in Switzerland during the period 1991–2005. The results suggest that labour input and capital input contribute 0.57 pp and 0.45 pp, respectively, to the average annual GDP growth of 1.28%. The remaining 0.25 pp represent growth in multi-factor productivity, which is calculated as a residual. The estimate of growth in multi-factor productivity is lower than in previous studies because our measure of labour input takes changes in labour quality into account. Changes in labour quality explain 0.39 pp of the 0.45 pp contribution from labour input.
    Keywords: growth accounting; multi-factor productivity; capital services; constantquality labour
    JEL: E31 E37
    Date: 2009–09–01
  3. By: Bernd Görzig; Martin Gornig; Ramona Voshage; Axel Werwatz
    Abstract: After 20 years of transition from an economy integrated in an exchange scheme of planned economies towards an open market economy based on the ideas of competition, we ask whether East German firms succeeded in finding their place in the international division of labour. We concentrate on the question, to what extent they have caught up with the productivity level of their Western counterparts of similar size and sector and how this productivity difference is related to changes in their product policy. We analyse these questions with a unique data set provided by Statistics Germany that contains both product policy and productivity information for individual manufacturers from both parts of the country. Using a decomposition approach suggested by Nopo (2008) as a nonparametric extension of the widely-used Oaxaca-Blinder methodology (Blinder 1973; Oaxaca 1973) we find that the time span from 1995-2004 has two component periods: a period of adaptation from 1995 to 2001and a period of branding from 2002 to 2004. The initial period is characterized by a smaller share of Eastern firms that modify their product range and by a large productivity gap of Eastern non-modifiers if compared to Western non-modifiers of comparable size and sector. The evidence for the second period, however, points to a more active and established role of East German manufacturers: more of them alter their product range and step up their productivity performance.
    Keywords: Productivity, Product Policy, Decomposition, Transition Economies
    JEL: L25 D24 P23 C14
    Date: 2009–11
  4. By: Barrios, Salvador; Görg, Holger; Strobl, Eric
    Abstract: We argue that the measures of backward linkages used in recent papers on spillovers from multinational companies are potentially problematic, as they depend on a number of restrictive assumptions, namely that (i) multinationals use domestically produced inputs in the same proportion as imported inputs, (ii) multinationals have the same input sourcing behaviour as domestic firms, irrespective of their country of origin, and (iii) the demand for locally produced inputs by multinationals is proportional to their share of locally produced output. We discuss why these assumptions are likely to be violated in practice, and provide alternative measures that overcome these drawbacks. Our results, using plant level data for Ireland, show clearly that the choice of backward linkage measure and thus, the assumptions behind them, matters greatly in order to draw possible conclusions regarding the existence of FDI-related spillovers. Using the standard measure employed in the literature we fail to find robust evidence for spillovers through backward linkages. However, when we use alternative measures of backward linkages that relax assumptions (i)-(iii), we find robust evidence for positive FDI backward spillover effects.
    Keywords: backward spillovers; multinationals; productivity spillovers
    JEL: F23 L22
    Date: 2009–10
  5. By: Konings, Jozef; Vanormelingen, Stijn
    Abstract: This paper uses firm level panel data of firm provided training to estimate its impact on productivity and wages. To this end the strategy proposed by Ackerberg, Caves and Frazer (2006) for estimating production functions to control for the endogeneity of input factors and training is applied. The productivity premium for a trained worker is estimated at 23%, while the wage premium of training is estimated at 12%. Our results give support to recent theories that explain work related training by imperfect competition in the labor market.
    Keywords: Human Capital; Production Functions; Training
    JEL: J24 J31 L22
    Date: 2009–09
  6. By: Alexander Conrad (University of Rostock); Doris Neuberger (University of Rostock); Lucinda Trigo Gamarra (University of Rostock)
    Abstract: This paper examines the influence of environmental factors on technical, cost, scale and revenue efficiency of German savings banks in 2001‐2005. Taking into account growing regional disparities in economic wealth and population size, it differentiates between declining and growing regions. Regional and demographic factors explain part of the variation in efficiency levels. Population density and branch penetration positively affect efficiency in growing regions. A negative impact of economic power and a positive impact of competitive pressure on efficiency support the quiet life hypothesis. In declining regions, a larger share of elder people reduces bank efficiency. Savings banks seem to be well adapted to unfavorable environmental conditions.
    Keywords: savings banks, efficiency, Data Envelopment Analysis, demographic change, regional disparities
    JEL: G21 D21 D24 R1
    Date: 2009
  7. By: Hernan J Moscoso Boedo; Pablo N D’Erasmo
    Abstract: This is a theory of total factor productivity based on measured capital market im- perfections and costs of creating and operating formal sector firms. We develop a firm dynamics model with endogenous formal and informal sectors where firms face a technol- ogy adoption opportunity. The model predicts that countries with a low degree of debt enforcement and high costs of formality are characterized by low allocative efficiency and a large share output produced by low productivity firms in the informal sector. We find that this mechanism is quantitatively important. When frictions are parameterized using the World Bank Doing Business database, the model explains up to 60% of total factor productivity differences between the US and developing economies.
    Keywords: Financial Structure, Informal Sector, Productivity, Policy Distortions
    JEL: D24 E26 L11 O16 O17
    Date: 2009–11
  8. By: Huffman, Wallace
    Abstract: A methodology for measuring public agricultural research capital is developed and described for the first time, new public agricultural research capital measures for each of the 48 contiguous US states, 1970-1999, are presented, and a new econometric analysis of the contribution of public agricultural research capital to state agricultural productivity is reported. Public agricultural research capital across the states is shown to have five different growth patterns, only one of which is at a constant rate. New TFP results show that public agricultural research capital contributes significantly to agricultural productivity and is larger than previous estimates. Intrastate and spillin public agricultural research capital are shown to be complementary, but private agricultural research capital and public extension are substitutes. The marginal social rate of return to public agricultural, including significant interstate spillovers, is large which has science policy implications.
    Keywords: Research capital, agriculutre, states, measurement, produtivity decomposition, TFP
    JEL: O3 O4
    Date: 2009–11–12
  9. By: Raul Ramos (Faculty of Economics, University of Barcelona); Manuel Artís (Faculty of Economics, University of Barcelona); Jordi Suriñach (Faculty of Economics, University of Barcelona)
    Abstract: This paper analyses the differential impact of human capital, in terms of different levels of schooling, on regional productivity and convergence. The potential existence of geographical spillovers of human capital is also considered by applying spatial panel data techniques. The empirical analysis of Spanish provinces between 1980 and 2007 confirms the positive impact of human capital on regional productivity and convergence, but reveals no evidence of any positive geographical spillovers of human capital. In fact, in some specifications the spatial lag presented by tertiary studies has a negative effect on the variables under consideration.
    Keywords: Regional convergence, productivity, human capital composition, geographical spillovers.
    Date: 2009–11
  10. By: Moser, Christoph; Urban, Dieter M; Weder di Mauro, Beatrice
    Abstract: This paper examines the channels through which offshoring affects employment in a representative sample of German establishments, using a difference-in-differences matching approach. Offshoring establishments are identified by an increase in the share of foreign to total inputs. We find that an average offshoring establishment has higher employment, higher productivity, and higher domestic and foreign market share than if it did not engage in offshoring. Furthermore, its production depth remains unchanged indicating that offshoring predominantly operates through a substitution of domestic for foreign suppliers, rather than through a reduction of home production. This result enables us to isolate a positive productivity effect from offshoring on employment. However, employment in an establishment decreases - relative to its counterfactual - when it simultaneously engages in offshoring and restructuring of the home plant. Therefore, we are also able to isolate a negative downsizing effect of offshoring on employment.
    Keywords: difference-in-differences matching estimator; export performance; offshoring; stable unit treatment value assumption
    JEL: C21 F16 F23
    Date: 2009–09
  11. By: Keller, Wolfgang
    Abstract: This paper examines how international flows of technological knowledge affect economic performance across industries and firms in different countries. Motivated by the large share of the world's technology investments made by firms that are active across borders, we focus on international trade and multinational enterprise activity as conduits for technological externalities, or spillovers. In addition to reviewing the recent empirical research on technology spillovers, the discussion is guided by a new model of foreign direct investment, trade, and endogenous technology transfer. We find evidence for technology spillovers through international trade and the activity of multinational enterprises. The analysis also highlights challenges for future empirical research, as well as the need for additional data on technology and innovation.
    Keywords: Intra-firm trade; Learning-by-exporting; Multinational firms; Tacit knowledge; Technological externalities; Technology diffusion; Total factor productivity
    JEL: F1 F2 O3 O4
    Date: 2009–10
  12. By: Nuria Quella (Dept. of Economics, Stony Brook University)
    Abstract: In this paper I calibrate unobserved labor-generated knowledge spillovers within and between six large macroeconomic sectors covering the U.S. civilian economy from 1948 to 1991. Using quality-adjusted data I show that manufacturing and trade & transportation are the main source of knowledge flows to the overall economy for the entire period. However, the productivity slowdown of the early seventies coincides with trade & transportation taking over manufacturing as the main source and destination of post-73 knowledge flows. Furthermore, I compute the gap between the market and the optimal allocation of labor across sectors, and the wedge between market and optimal wages by sector. I find that, for the whole period, optimal employment in manufacturing and trade & transportation is, respectively, 20% and 27% above market. As a result optimal output in these sectors is 12% and 16% higher than the market’s, and optimal wages in manufacturing are 54% above market wages.
    Keywords: Knowledge spillovers; productivity; human capital; learning; wages.
    JEL: D24 J24 O30 O40
    Date: 2009–10
  13. By: Nazim Belhocine
    Abstract: This paper constructs a data set to document firms' expenditures on an identifiable list of intangible items and examines the implications of treating intangible spending as an acquisition of final (investment) goods on GDP growth for Canada. It finds that investment in intangible capital by 2002 is almost as large as the investment in physical capital. This result is in line with similar findings for the U.S. and the U.K. Furthermore, the growth in GDP and labor productivity may be underestimated by as much as 0.1 percentage point per year during this same period.
    Keywords: Canada , Capital goods , Capital transactions , Cross country analysis , Data collection , Economic growth , Gross domestic product , Investment , Labor productivity , National income accounts ,
    Date: 2009–09–10

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