New Economics Papers
on Efficiency and Productivity
Issue of 2010‒08‒28
eleven papers chosen by

  1. Innovation, productivity and export. Evidence from Italy By R. Antonietti; G. Cainelli
  2. Exports and Productivity: An Empirical Analysis of German and Austrian Firm-Level Performance By Thorsten Hansen
  3. The Exporter Productivity Premium along the Productivity Distribution: First Evidence from a Quantile Regression Approach for Fixed Effects Panel Data Models By Powell, David; Wagner, Joachim
  4. Innovation and Productivity in the Argentine Manufacturing Sector By Valeria Arza; Andres Lopez
  5. Energy Consumption and Carbon Emission-Based Productivity Change and Industrialization in Post-Reform By Chen, Shiyi; Santos-Paulino, Amelia U.
  6. Productivity under Large Pay Increases: Evidence from Professional Baseball By Papps, Kerry L.
  7. The Productivity Effects of Profit Sharing, Employee Ownership, Stock Option and Team Incentive Plans: Evidence from Korean Panel Data By Kato, Takao; Lee, Ju Ho; Ryu, Jang-Soo
  8. Are Older Workers Worthy of Their Pay? An Empirical Investigation of Age-Productivity and Age-Wage Nexuses By Cardoso, Ana Rute; Guimaraes, Paulo; Varejão, José
  9. Does diversification increase or decrease bank risk and performance? Evidence on diversification and the risk-return tradeoff in banking By Berger, Allen N.; Hasan, Iftekhar; Korhonen, Iikka; Zhou, Mingming
  10. Firm Training and Labour Demand in Belgium: Do Productivity Dominate Cost Effects? By Benoît Mahy; Mélanie Volral
  11. The production function methodology for calculating potential growth rates and output gaps By Francesca D'Auria; Cécile Denis; Karel Havik; Kieran Mc Morrow; Christophe Planas; Rafal Raciborski; Werner Roger; Alessandro Rossi

  1. By: R. Antonietti; G. Cainelli
    Date: 2010–08
  2. By: Thorsten Hansen (University of Munich)
    Abstract: This paper studies the relationship between export activities and firm-level productivity. Unique matching of German and Austrian micro data from 1994 to 2003 suggests that exporters are more productive by around 40 percent compared with non-exporters. Moreover, beside other analysis techniques, instrumental variable estimations suggest that exporting causes a rise in firm-level productivity. That is, the annual average growth rate of an exporting firm's productivity is between about 1 and 1.5 percent higher than that of non-exporters. It allows the conclusion that, against other findings of existing studies, both directions hold: more productive firms self-select themselves into export markets and being active in foreign markets boosts firm-level productivity.
    JEL: D24 F13 F23 L22 L23 O47
    Date: 2010–04
  3. By: Powell, David (RAND); Wagner, Joachim (Leuphana University Lüneburg)
    Abstract: An emerging literature on international activities of heterogeneous firms documents that exporting firms are more productive than firms that only sell on the national market. This positive exporter productivity premium shows up in a large number of empirical studies after controlling for observed and unobserved firm characteristics in regression models including firm fixed effects. These studies test for a difference in productivity between exporters and non-exporters at the conditional mean of the productivity distribution. However, if firms are heterogeneous, it is possible that the size of the premium varies over the productivity distribution. In this paper we apply a newly developed estimator for fixed-effects quantile regression models to estimate the exporter productivity premium at quantiles of the productivity distribution for manufacturing enterprises in Germany, one of the leading actors in the world market for goods. We show that the premium decreases over the quantiles – a dimension of firm heterogeneity that cannot be detected through mean regression.
    Keywords: exporter productivity premium, quantile regression, fixed effects
    JEL: F14 C21 C23
    Date: 2010–08
  4. By: Valeria Arza; Andres Lopez
    Abstract: This paper adapts the Crepon, Duguet, and Mairesse (1998) approach to estimate the relationship between innovation and productivity and the realities of innovative activities in developing countries. Panel data for Argentina during the period 1998-2004 to estimate a structural model in which different types of firms’ innovative behavior—including in-house activities and the incorporation of external technologies—feeds into the probability of achieving successful results in product and process innovation, which in turn explains labor productivity. The endogeneity of this three-stage process is controlled for. The results suggest that all types of innovative activities are relevant to explain success in product and process innovation, and both are important factors to explain labor productivity. Moreover, investing systematically in R&D implies an extra payoff in labor productivity. These results suggest that investing in different types of innovative activities—and not only in R&D—and doing in-house activities systematically contribute to firms’ innovative and economic performance.
    Keywords: Innovation, Productivity, Argentina
    JEL: O33 O14 O12
    Date: 2010–08
  5. By: Chen, Shiyi; Santos-Paulino, Amelia U.
    Abstract: The paper investigates the determinants of productivity growth in China. It also analyses the sustainability of the country’s industrial growth by estimating sectoral productivity, accounting for energy usage and emission since the start of the marketoriented reforms in the late 1970s. The growth accounting analysis indicates that productivity is the most significant driver of growth. Energy and capital are also important factors promoting China’s industrial growth. The substantial productivity improvement of China’s industry is attributable more to high-tech light industrial sectors. Heavy industry, characterized by high energy emission levels, lags behind in terms of productivity and overall technical change.
    Keywords: productivity growth, industrial sustainability, energy consumption, carbon emission
    Date: 2010
  6. By: Papps, Kerry L. (University of Oxford)
    Abstract: The establishment of the free agency system in the 1970s resulted in large salary increases among professional baseball players. Historical data show that players have tended to perform better at early stages of their careers since free agency was introduced. Under the current salary bargaining system, players only become eligible for salary arbitration and free agency at predetermined points in their careers, resulting in sudden changes in salary growth rates at these points. Using data on official days of major league service, it is found that players with high expected salary growth perform better, consistent with efficiency wage theory.
    Keywords: efficiency wages, productivity, baseball
    JEL: J24 J31
    Date: 2010–08
  7. By: Kato, Takao (Colgate University); Lee, Ju Ho (KDI School of Public Policy and Management); Ryu, Jang-Soo (Pukyong National University)
    Abstract: We report the first results for Korean firms on the incidence, diffusion, scope and effects of diverse employee financial participation schemes, such as Profit Sharing Plans (PSPs), Employee Stock Ownership Plans (ESOPs), Stock Option Plans (SOPs) and Team Incentive Plans (TIPs). In do doing, we assemble important new panel data by merging data from a survey of all Korean firms listed on Korean Stock Exchange which enjoys an unusually high response rate of 60 percent with accounting data from their corporate proxy statements. Our estimated fixed effect models of production functions reveal consistently that the introduction of a PSP or a TIP will lead to a significant increase in productivity (about 10 percent) whereas no such evidence found for ESOPs or SOPs. We also find that the productivity payoff appears to be more long-lasting for PSPs than for TIPs. Finally, our fixed-effect estimates suggest that PSPs and TIPs tend to be substitutes rather than complements in their productivity effects.
    Keywords: profit sharing, employee stock ownership, team incentive, stock option, productivity, Korea
    JEL: M52 J33 J24 J53 O53
    Date: 2010–08
  8. By: Cardoso, Ana Rute (IAE Barcelona (CSIC)); Guimaraes, Paulo (University of South Carolina); Varejão, José (University of Porto)
    Abstract: Using longitudinal employer-employee data spanning over a 22-year period, we compare age-wage and age-productivity profiles and find that productivity increases until the age range of 50-54, whereas wages peak around the age 40-44. At younger ages, wages increase in line with productivity gains but as prime-age approaches, wage increases lag behind productivity gains. As a result, older workers are, in fact, worthy of their pay, in the sense that their contribution to firm-level productivity exceeds their contribution to the wage bill. On the methodological side, we note that failure to account for the endogenous nature of the regressors in the estimation of the wage and productivity equations biases the results towards a pattern consistent with underpayment followed by overpayment type of policies.
    Keywords: aging, productivity, wages
    JEL: J14 J24 J31
    Date: 2010–08
  9. By: Berger, Allen N. (BOFIT); Hasan, Iftekhar (BOFIT); Korhonen, Iikka (BOFIT); Zhou, Mingming (BOFIT)
    Abstract: Conventional wisdom in banking argues that diversification tends to reduce bank risk and improve performance, but the recent financial crisis suggests that aggressive diversification strategies may have resulted in increased risk taking and poor performance. This paper addresses this important question by evaluating the empirical relationship between diversification strategies and the risk-return tradeoff in banking. Our data set covers Russian banks during the 1999-2006 period and finds somewhat mixed results. Specifically, we find that banks’ performance tends to be non-monotonically related to their diversification strategy. The marginal effects of focus indices (inverse measures of diversification) on performance are nonlinearly associated with the level of risk and foreign ownership. A focused strategy is found to be associated with increased profit and decreased risk only up to a certain threshold. Additionally, when foreign ownership is either very high or very low, banks tend to benefit more from being diversified. This analysis provides important strategic and policy implications for bank managers and regulators in Russia as well as in other emerging economies.
    Keywords: banks; diversification; focus; Russia; foreign ownership; scope economies
    JEL: G21 G28 G34
    Date: 2010–06–21
  10. By: Benoît Mahy; Mélanie Volral
    Abstract: This paper models and estimates the impact of quantitative and qualitative training financed by the firm on labour demand in Belgium. It assumes profit maximising firms producing under a short run monopolistic competition regime, where training can increase labour demand through its positive net effect on labour productivity or decrease it through higher direct labour costs and wages. The estimation of our model on a panel of 17,812 firms over the period 1999-2007 allowing to control for the potential simultaneity between training and labour demand and for unobserved workplace characteristics reveals a small positive impact of training variables on labour demand. This suggests that productivity effects dominate cost effects.
    Keywords: Training; Labour Demand; Labour Productivity; Wage Determination
    JEL: M53 J23 J24 J30 C23
    Date: 2010–06–22
  11. By: Francesca D'Auria; Cécile Denis; Karel Havik; Kieran Mc Morrow; Christophe Planas; Rafal Raciborski; Werner Roger; Alessandro Rossi
    Abstract: Summary for non-specialistsAs a result of the financial crisis, cyclically corrected indicators have taken on a greater degree of significance and are firmly back at the forefront of economic policy making. This heightened level of policy interest not only reflects the anxiousness of policy makers to avoid the well-documented mistakes made in assessing the supply side impact of historical crises but is also linked with the primary role of such indicators in calculating cyclically adjusted budget balances & in designing successful "exit strategies" from the current crisis (and especially the requirement to unwind the large increases in EU public debt).
    Keywords: Macro-economic coordination fiscal policy and public finances structural policies growth and jobs stability and convergence programmes excessive deficit procedure Production function methodology potential growth output gaps
    JEL: C10 E60 O10
    Date: 2010–07

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