New Economics Papers
on Efficiency and Productivity
Issue of 2009‒12‒05
twelve papers chosen by

  1. Market Structure Conduct Performance Hypothesis Revisited Using Stochastic Frontier Efficiency Analysis By Shaik, Saleem; Allen, Albert J.; Edwards, Seanicaa; Harris, James
  2. Micro and macro indicators of competition: comparison and relation with productivity change By Polder, Michael; Veldhuizen, Erik; Bergen, Dirk van den; Pijll, Eugène van der
  3. Heterogeneous firms or heterogeneous workers? Implications for the exporter premium and the impact of labor reallocation on productivity By Irarrazabal, Alfonso; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene
  4. Productivity, Welfare and Reallocation: Theory and Firm Level Evidence By Susanto Basu; Luigi Pascali; Fabio Schiantarelli; Luis Serven
  5. Data Envelopment Analysis for Performance Evaluation: A Child's Guide By Subhash C. Ray; Lei Chen
  6. Textile manufacturing in eight developing countries:How far does the business environment explain firms' productive inefficiency? By Tidiane KINDA; Patrick PLANE; Mohamed CHAFFAI
  7. Changes in the productivity of labour and vertically integrated sectors — an empirical study for Italy By Garbellini, Nadia; Wirkierman, Ariel
  8. Productivity effects of innovation modes By Polder, Michael; Leeuwen, George van; Mohnen, Pierre; Raymond, Wladimir
  9. Energy efficiency developments in the manufacturing industries of Germany and Colombia, 1998–2005 By Clara Inés Pardo Martínez
  10. Innovation, Productivity and Export: the case of Hungary By László Halpern; Balázs Muraközy
  11. Disentangling the Link Between Stock and Accounting Performance in Acquisitions By Betzer, André; Goergen, Marc; Metzger, Daniel
  12. Human capital spillovers, productivity and regional convergence in Spain By Raul Ramos; Jordi Suriñach; Manuel Artís

  1. By: Shaik, Saleem; Allen, Albert J.; Edwards, Seanicaa; Harris, James
    Abstract: Stochastic frontier analysis, which is used to estimate the technical efficiency, is extended to examine the market structure, conduct and performance hypothesis for the U.S. trucking industry. The technical efficiency measure takes into account not only the relationship between inputs used in the production of output but also simultaneously examine the importance of market structure conduct factors on the performance of the firm. An empirical application to U.S. trucking carriers over the period 1994-2003 is examined. Results reveal that the variables average haul, average load, debt-to-equity and market concentration significantly affected technical efficiency. Capital, fixed and variable input variables were significant in the production function equation.
    Keywords: Demand and Price Analysis, Marketing,
    Date: 2009–09
  2. By: Polder, Michael; Veldhuizen, Erik; Bergen, Dirk van den; Pijll, Eugène van der
    Abstract: This paper investigates competition in the Dutch manufacturing sector. We look at various indicators that have been used throughout the literature and relate these to productivity growth. Moreover, where possible, the indicators and productivity growth are calculated at both the firm and industry level. This enables us to investigate differences in competition and in its relation with productivity for both aggregation levels. Our results indicate that contemporaneous competition is associated with lower productivity, while lagged competition is positively associated with productivity. This finding is consistent between micro and macro, and robust over the various indicators and industries. The results are consistent with the idea that firms first experience negative effects of changes in competition and need time to adjust, while in the period after adjustment productivity rises again.
    Keywords: competition; productivity change; growth accounts; Production Statistics; micro-macro
    JEL: O47 D24 D4
    Date: 2009
  3. By: Irarrazabal, Alfonso; Moxnes, Andreas; Ulltveit-Moe, Karen-Helene
    Abstract: We expect trade liberalization to give rise to aggregate productivity gains, as the least efficient firms are forced out, and labor is reallocated towards the best performing firms. But the positive intra-industry reallocation effects rely on the stark assumption that exporters’ superior performance is due to intrinsic firm efficiency. We investigate the importance of intrinsic firm efficiency relative to input quality as sources of exporters’ productivity premium, employing a matched employer-employee data set for Norwegian manufacturing. Augmented measures of total factor productivity which take worker characteristics into account, indicate that up to 67 percent of the exporter premium reflects differences in workforce rather than true efficiency. Simulating the labor dynamics proceeding firm exits, we illustrate that the benign impact on aggregate productivity from firm exits may be reduced because of worker reallocation.
    Keywords: exporters; firm heterogeneity; labor reallocation; productivity measurement; worker heterogeneity
    JEL: D24 F12 F14 F16
    Date: 2009–11
  4. By: Susanto Basu (Boston College; NBER); Luigi Pascali (Boston College); Fabio Schiantarelli (Boston College; IZA); Luis Serven (World Bank)
    Abstract: We prove that the change in welfare of a representative consumer is summarized by the current and expected future values of the standard Solow productivity residual. The equivalence holds if the representative household maximizes utility while taking prices parametrically. This result justifies TFP as the right summary measure of welfare (even in situations where it does not properly measure technology) and makes it possible to calculate the contributions of disaggregated units (industries or firms) to aggregate welfare using readily available TFP data. Based on this finding, we compute firm and industry contributions to welfare for a set of European OECD countries (Belgium, France, Great Britain, Italy, Spain), using industry-level (EU-KLEMS) and firm-level (Amadeus) data. After adding further assumptions about technology and market structure (firms minimize costs and face common factor prices), we show that welfare change can be decomposed into three components that reject respectively technical change, aggregate distortions and allocative efficiency. Then, using theoretically appropriate firm-level data, we assess the importance of each of these components as sources of welfare improvement in the same set of European countries.
    Keywords: Productivity, Welfare, Reallocation, Technology, TFP
    JEL: D24 D90 E20 O47
    Date: 2009–11–23
  5. By: Subhash C. Ray (University of Connecticut); Lei Chen (University of Connecticut)
    Abstract: In this paper we offer a simple exposition of the neoclassical production theoretic foundations of Data Envelopment Analysis. The concepts of technical efficiency (both input- and output-oriented), scale efficiency, and cost efficiency are explained and the corresponding DEA models are described in details. We offer step-by-step instruction on how to write the codes for solving the various DEA models using the Solver option in the widely accessible MS Excel software. An important feature of this paper is a detailed exposition of how to write various Visual Basic Macro programs for solving DEA problems. We also describe the non-convex Free Disposal Hull (FDH) procedure and the second-stage regression analysis that seeks to account for variation in measured efficiency scores due to external factors.
    Keywords: Efficiency; Linear Programming; Benchmarking; Excel Solver
    JEL: C6 D2
    Date: 2009–11
  6. By: Tidiane KINDA (Fonds Monétaire International); Patrick PLANE (Centre d'Etudes et de Recherches sur le Développement International); Mohamed CHAFFAI (Université Sfax)
    Abstract: Production frontiers and inefficiency determinants are estimated by using stochastic models. Textile manufacturing is considered for a sample of eight developing countries encompassing about one thousand firms. We find that the most influential individual inefficiency determinants relate to in-house organization. Both access to financing and infrastructural services (e.g. power supply, modern information technologies…) also matter. Information about determinants is then regrouped into three broad categories (e.g. managerial organization, economic environment, institutions) by using principal component analyses. Results do not reject the hypothesis that managerial know-how and the quality of institutions are the most important determinants. The impact of the external economic environment is of less importance although statistically significant. Sector-based simulations are then proposed in order to assess productivity gains which would occur if firms had the opportunity to evolve in most favorable environments within the sample. Domestic and international production contexts are considered, respectively. When referring to domestic benchmarks, the contribution of in-house organization prevails as the main source of gains for the eight countries. The role of institutions proves dominant for Egypt and India when focusing on international simulations.
    Keywords: Technical efficiency, external economic environment, firms, institutions, one step stochastic frontier method, organizational know-how, productivity, textile
    Date: 2009
  7. By: Garbellini, Nadia; Wirkierman, Ariel
    Abstract: The object of this paper is to derive measures for the changes in physical labour productivity and to apply them to the case of Italy during the 1995-2000 period. Firstly, section 1, introduces the historical development of selected literature on labour productivity measurement using the notion of vertically integrated sectors and derives measures computable from actual data. In the second place,section 2 describes the series utilised and presents the computation of the previously derived measures. Thirdly, section 3 presents the main results, introducing a typology according to which characterize the determinants behind changes in physical labour productivity, and draws implications for the particular case under study. Some final comments are given in section 4.
    Keywords: Labour productivity measurement; Vertically integrated sectors; Input-Output analysis.
    JEL: B51 O41 C67
    Date: 2009–11–26
  8. By: Polder, Michael; Leeuwen, George van; Mohnen, Pierre; Raymond, Wladimir
    Abstract: Many empirical studies have confirmed the positive impact of innovation on productivity at the firm level. The focus tends to be either on R&D driven techno-logical innovation on the one hand, or on organisational changes complemented by ICT on the other. To investigate the effect of different types of innovations on produc-tivity, we propose a model with two innovation input equations (R&D and ICT) that feed into a knowledge production function consisting of a system of three innovation output equations (product innovation, process innovation and organisational innova-tion), which ultimately feeds into a productivity equation. We find that ICT is an im-portant driver of innovation in both manufacturing and services. Doing more R&D has a positive effect on product innovation in manufacturing. Organisational innova-tion has the strongest productivity effects. We only find positive effects of product and process innovation when combined with an organisational innovation.
    Keywords: technological innovation; non-technological innovation; ICT; R&D; productivity; trivariate probit; CDM model;
    JEL: O30 D24
    Date: 2009
  9. By: Clara Inés Pardo Martínez
    Abstract: This paper describes the energy efficiency development in the German and Colombian industrial sectors between 1998 and 2005. Using data at the two- and three-digit levels for the German and Colombian manufacturing industry, the performance of the industrial sector is analysed in terms of energy intensity, value of production, value added, fuel sources and energy costs. It was found that energy consumption in the industrial sector has increased by 2.3% in Germany and 5.5% in Colombia, whereas energy intensity decreased by 12% and 6% respectively during the sample period. A decomposition analysis was performed in order to separate structural, production and intensity effects. It was found that in both countries, the aggregate energy intensity in the industrial sector was highly dependent on the changes in the energy intensive sectors (EISs). The trend is to produce more while consuming less energy. In Germany, structural and intensity effects contributed to energy efficiency improvement, whereas in Colombia, intensity effects dominated over structural effects. Moreover, in both countries the capital intensity and energy prices influenced the changes in the aggregate energy intensity, whereas the changes in labour intensity did not show a clear relationship with the energy intensity results. These results showed the importance of the formulation and adoption of energy policies in the industrial sector, taking into account that several differences in energy efficiency performance exist at the different levels of aggregation and that energy policy instruments ought to encourage cost-effective energy efficiency
    Date: 2009–11–22
  10. By: László Halpern; Balázs Muraközy
    Abstract: This paper estimates the relationship between innovation and firm performance by using Community Innovation Survey data for Hungary. It exploits the possibility of linking the innovation data to ownership and disaggregated trade data. Innovative firms are more productive, more likely to trade and export into more countries. Foreign firms are more likely to innovate compared to similar domestic firms, but the amount of R&D is a weaker predictor of the innovative output of foreign firms.
    Date: 2009–12–02
  11. By: Betzer, André; Goergen, Marc (Cardiff Business School); Metzger, Daniel
    Abstract: While empirical studies that use event-study methodology find on average that the gains from mergers and acquisitions are positive, those focusing on accounting figures tend to find a significant drop in performance. We argue that each of the four possible combinations between positive or negative abnormal stock returns and accounting performance is due to a distinct acquisition motive. We find strong empirical evidence in support of this claim.
    Keywords: Mergers and acquisitions; performance measurement; synergies; preemption; overvaluation; corporate governance; agency problems
    JEL: G34 G3 G14
    Date: 2009–11
  12. By: Raul Ramos (AQR-IREA, Universitat de Barcelona); Jordi Suriñach (AQR-IREA, Universitat de Barcelona); Manuel Artís (AQR-IREA, Universitat de 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.
    JEL: O18 O47 R23
    Date: 2009–11

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