New Economics Papers
on Efficiency and Productivity
Issue of 2010‒01‒10
thirteen papers chosen by

  1. Incorporating water purification in efficiency evaluation: Evidence from Japanese water utilities By Theara Horn
  2. Real wages, inflation and labour productivity in Australia By Saten Kumar; Don J. Webber; Geoff Perry
  3. Exploration drilling productivity at the Norwegian Shelf By Osmundsen, Petter; Roll, Kristin Helen; Tveterås , Ragnar
  4. Industry Dynamics and Productivity Research By Jeong-Dong Lee
  5. An epsilon-based measure of efficiency in DEA By Miki Tsutsui; Kaoru Tone
  6. Are Services Different Exporters? By Lööf, Hans
  7. Patent Productivity of German Professors over the Life Cycle By Sidonia von Ledebur
  8. The Effect of Direct Foreign Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies By Jozef Konings
  9. Private Equity and Industry Performance By Shai Bernstein; Josh Lerner; Morten Sørensen; Per Strömberg
  10. The economic performance of cartels: evidence from the New Deal U.S. sugar manufacturing cartel, 1934-74 By Benjamin Bridgman; Shi Qi; James A. Schmitz, Jr.
  11. Spatial Structure and Productivity in U.S. Metropolitan Areas By Meijers, E.J.; Burger, M.J.
  12. The links between internationalization, skills and wages: evidence from Italian firms trading with different countries By Andrea Petrella; Sandro Sapio
  13. Scale Economies and Heterogeneity in Business Money Demand: The Italian Experience By Ganugi, P; Grossi, L; Ianulardo, Giancarlo

  1. By: Theara Horn (Graduate School of Economics, Osaka University)
    Abstract: Water production and service quality have been used as dimensions of efficiency evaluation in previous studies of water utilitiesf performance. This study attempts to show that the inclusion of water purification efforts should be another crucial dimension in the efficiency measurement. We use a stochastic cost frontier to estimate the technical efficiency of 392 Japanese water utilities in 2005. The results show that a water purification effort may increase cost, and that its inclusion in efficiency evaluation leads to some specific changes in efficiency score and the ranking of water utilities. Furthermore, this incorporation enables the impact of different qualities of source water on efficiency to be controlled. The result suggests that in order to encourage water purification efforts, it is crucial to incorporate purification in benchmarking.
    Keywords: Water utilities, Water purification, Stochastic Cost Frontier
    JEL: D24 H49 L51
    Date: 2009–12
  2. By: Saten Kumar (Department of Business Economics, Auckland University of Technology); Don J. Webber (Department of Business Economics, Auckland University of Technology and Department of Economics, UWE, Bristol); Geoff Perry (Department of Business Economics, Auckland University of Technology)
    Abstract: This paper presents an analysis of real wages, inflation and labour productivity interrelationships using cointegration, Granger-causality and, most importantly, structural change tests. Applications of tests to Australian data over the 1965-2007 period corroborate the presence of a structural break in 1985 and show that a 1 percent increase in manufacturing sector real wages led to an increase in manufacturing sector productivity of between 0.5 and 0.8 percent. Comparable estimates for the effect of inflation on manufacturing sector productivity have limited statistical significance. Granger causality test results suggest that real wages and inflation both Granger-cause productivity in the long run.
    Keywords: Labour productivity; Real wages; Inflation; Cointegration; Granger causality
    JEL: C50 E23
    Date: 2009–12
  3. By: Osmundsen, Petter (University of Stavanger); Roll, Kristin Helen (University of Stavanger); Tveterås , Ragnar (University of Stavanger)
    Abstract: .
    Keywords: exploration; drilling; productivity; econometrics
    JEL: L70
    Date: 2009–12–07
  4. By: Jeong-Dong Lee (Technology Management, Economics and Policy Program(TEMEP), Seoul National University)
    Abstract: Firms experience birth (entry), growth and death (exit) as all living things do in any biological system. However, not all firms will show the same rate of growth and the same hazard rate of exit. Industry dynamics is a field of research that analyzes the dynamic patterns of entry, growth and exit of firms, and investigates the sources of those changes.On the other hand, productivity research has focused on the performance measurement of individual economic entities?such as firm, industry and country?and also on the examination of the sources. This paper reviews the past contribution of productivity research on industry dynamics and tries to specify the important future research areas that connect the two fields of research. For the past contribution, the paper emphasizes the following three issues: productivity as a measure of heterogeneity of firm population; productivity as an important source of the event in industry dynamics; source decomposition of industry-level productivity change. For the future work, the paper suggests the three areas of research: theoretical modeling that associates productivity with industry dynamics; accommodation of recent methodological developments of productivity analysis; rigorous study on the causal relationships among factors that affect the productivity change and industry dynamics. It is expected to better understand the logic behind pervasive yet complex behaviors of firms and industries, if the two research areas?productivity analysis and industry dynamics?interact more intensively
    Keywords: Industry Dynamics, Entry and Exit, Productivity, Survival Analysis, Firm Population
    JEL: D21 D24 L60 O30 C61
    Date: 2009–11
  5. By: Miki Tsutsui (Central Research Institute of Electric Power Industry); Kaoru Tone (National Graduate Institute for Policy Studies)
    Abstract: Firstly, we discuss differences between Farrell and Pareto-Koopmans efficiency measures in DEA, and propose a composite method for discriminating them. Then, we extend the method to so-called “epsilon based-measure (EBM).” The EBM can examine the robustness and stability of efficiency measure of DMUs regarding parametric change of input multiplier variables. Lastly, we propose a scheme for selecting an appropriate value of epsilon with recourse to actual cost shares of input resources.
    Keywords: Farrell efficiency, Pareto-Koopmans efficiency, stability analysis, EBM
    Date: 2009–09
  6. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Using an unbalanced panel of about 260,000 Swedish firm-level observations over the period 1997-2006, this paper shows that half of the firms exporting goods are service firms that account for a substantial and increasing share of the total value from exports of goods. Between 1997 and 2006 this fraction increased from 25% to 34%. Previous research provides little systematic evidence of this extension of goods exports among service firms or the benefits of exporting. This paper shows that service firms do become exporters for the same reasons as manufacturing firms. Besides, they are a self-selection of larger, more productive and high-equity firms, with more skilled labour, higher capital intensity and stronger links to multinational groups. However, the export productivity premium is larger for service firms than for manufacturers. No evidence is found to indicate that exporting increases the growth rate of productivity. In contrast, the annual employment growth premium from exporting is substantial for business services, 2% per year, compared to 0.5% for the retail and wholesale business.
    Keywords: export productivity premium; manufacturing; services; micro data; panel data
    JEL: C16 F14 L25 O33
    Date: 2009–12–07
  7. By: Sidonia von Ledebur (Department of Geography, Philipps University Marburg)
    Abstract: The paper studies the patent productivity of scientists over their life cycle. The incentives for patenting and for publishing are compared and how they shape life cycle productivity. In most empirical studies, publication productivity decreases at the end of the scientific career. In contrast, the analytical model given here suggests an increase of patent productivity over the life time. In the empirical part the patents of nearly 1000 German patent active professors are analyzed. The empirical findings support the theoretical prediction that patent productivity does not decline for older scientists.
    Keywords: : university patenting, patent productivity, scientific productivity, age and productivity, Germany
    JEL: O33 O34 J24
    Date: 2009
  8. By: Jozef Konings
    Abstract: This paper uses firm level panel data to investigate empirically the effects of direct foreign investment (DFI) on the productivity performance of domestic firms in three emerging economies of Central and Eastern Europe, Bulgaria, Romania and Poland. To this end a unique firm level panel data set is used with detailed information on foreign ownership at the firm level.
    Keywords: foreign investment, Bulgaria, Romania, poland, state sector, policy, invest, production, Foreign firms, technological, domestic firms, foreign investors, productivity, domestic firms, panel data, Econometric, employees, emerging economies, central europe, eastern europe, bulgaria, romania, poland, data set, foreign ownership, firm level, Spillovers, Absorptive Capacity, Emerging countries,
    Date: 2009
  9. By: Shai Bernstein (Harvard Business School); Josh Lerner (Harvard Business School, Finance Unit, EM Unit); Morten Sørensen (Columbia Business School); Per Strömberg (Stockholm School of Economics - Department of Finance)
    Abstract: The growth of the private equity industry has spurred concerns about its potential impact on the economy more generally. This analysis looks across nations and industries to assess the impact of private equity on industry performance. Industries where PE funds have invested in the past five years have grown more quickly in terms of productivity and employment. There are few significant differences between industries with limited and high private equity activity. It is hard to find support for claims that economic activity in industries with private equity backing is more exposed to aggregate shocks. The results using lagged private equity investments suggest that the results are not driven by reverse causality. These patterns are not driven solely by common law nations such as the United Kingdom and United States, but also hold in Continental Europe.
    Date: 2010–12
  10. By: Benjamin Bridgman; Shi Qi; James A. Schmitz, Jr.
    Abstract: We study the U.S. sugar manufacturing cartel that was created during the New Deal. This was a legal-cartel that lasted 40 years (1934-74). As a legal-cartel, the industry was assured widespread adherence to domestic and import sales quotas (given it had access to government enforcement powers). But it also meant accepting government-sponsored cartel-provisions. These provisions significantly distorted production at each factory and also where the industry was located. These distortions were reflected in, for example, a declining industry recovery rate, that is, the pounds of white sugar produced per ton of beets. It declined from about 310 pounds in 1934 to 240 pounds in 1974. The cartel provisions also distorted the location of industry. For example, it kept production in California and the Far West. Since the cartel ended in 1974, California's share of sugar production has dropped dramatically.
    Keywords: Cartels ; Productivity ; Competition
    Date: 2009
  11. By: Meijers, E.J.; Burger, M.J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Recent concepts as megaregions and polycentric urban regions emphasize that external economies are not confined to a single urban core, but shared among a collection of close-by and linked cities. However, empirical analyses of agglomeration and agglomeration externalities so-far neglects the multicentric spatial organization of agglomeration and the possibility of ‘sharing’ or ‘borrowing’ of size between cities. This paper takes up this empirical challenge by analyzing how different spatial structures, in particular the monocentricity – polycentricity dimension, affect the economic performance of U.S. metropolitan areas. OLS and 2SLS models explaining labor productivity show that spatial structure matters. Polycentricity is associated with higher labor productivity. This appears to justify suggestions that, compared to relatively monocentric metropolitan areas, agglomeration diseconomies remain relatively limited in the more polycentric metropolitan areas, while agglomeration externalities are indeed to some extent shared among the cities in such an area. However, it was also found that a network of geographically proximate smaller cities cannot provide a substitute for the urbanization externalities of a single large city.
    Keywords: polycentricity;dispersion;labor productivity;urbanization externalities
    Date: 2009–12–08
  12. By: Andrea Petrella; Sandro Sapio
    Abstract: Using firm level data on Italian manufacturing industry, we examine how trade activities are related to workforce composition and wages. We add to the existing literature in two ways. First, we consider the engagement of firms in international transaction, either by means of exports, imports or a combination of the two. We show that failing to control for the importing activities may bias upward the exporters premia. Second, we look at how the wage and the employment structure of trading firms change with the country of destination and origin of trade flows. Our evidence suggests that quality heterogeneity is a relevant determinant of trade behavior. Indeed, to rationalize our results one needs to refer to multi-attribute trade models in which both quality and efficiency requirements play a role and in which firms are active both in the import and export market
    Keywords: heterogeneous firms; exports; imports; productivity; market of destination and origin
    JEL: C51 G12
    Date: 2009–12–18
  13. By: Ganugi, P; Grossi, L; Ianulardo, Giancarlo
    Abstract: This paper investigates the demand for money by firms and the existence of economies of scales in order to evaluate the efficiency in the cash management of the Italian manufacturing industry. We estimate a money demand for cash elaborated by Fujiki and Mulligan (1996). Estimates differ from the previous literature firstly, because we use a choice dynamic model to overcome endogeneity problems in cash holdings; secondly, because we use an iterative procedure based on backward exclusion of firms from model estimation with which we point out the high heterogeneity of Italian companies in money demand. Our estimates show that the Italian Manufacturing industry, considered as whole, does not enjoy scale economies in money demand. Our iterative procedure points out that the cause of this result is to be ascribed to small firms which are characterized by thin cash money holdings and a consequently very modest opportunity cost. Once small size firms are removed from our data set our estimates reveal that money demand of medium and large size firms is different for high scale economies. This result, together with the fact that small firms’ cash balances are thin, implies the efficiency of Italian manufacturing industry.
    Date: 2009

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