|
on Efficiency and Productivity |
|
Issue of 2010‒10‒09
ten papers chosen by |
| By: | Henk Kox; George van Leeuwen; Henry van der Wiel |
| Abstract: | The paper empirically investigates whether a lack of competition determines the poor productivity performance of the European business services. It uses detailed panel data for 13 EU countries over the period 2000-2005. We apply parametric and nonparametric methods to estimate the productivity frontier and subsequently explain the distance to the productivity frontier by market characteristics, entry- and exit dynamics and national regulation. We find that the most efficient scale in business services is close to 20 employees. Scale inefficiencies show a hump-shape pattern with strong potential scale economies for the smallest firms. Nonetheless, some 95% of the firms operate at a scale below the minimal optimal scale. While they are competitive in the sense that their productivities are very similar, they have strong scale diseconomies compared to the larger firms. Their scale inefficiency is persistent over time, which points to growth obstacles that hamper the achievement of scale economies. Regulation characteristics explain this inefficiency, particularly regulation-caused exit and labour reallocation costs are found to have a large negative impact on productivity performance. |
| Keywords: | productivity; frontier models; scale efficiency; market selection; regulation |
| JEL: | L1 L5 D2 L8 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:discus:158&r=eff |
| By: | MARGARET MCKENZIE |
| Abstract: | Increased aggregate productivity growth in the 1990s has been taken to indicate support for the success of microeconomic reform policy in Australia. The Productivity Commission / Australian Bureau of Statistics key estimates of peak to peak market sector multifactor productivity growth since the mid 1960s are examined in this paper. The peak to peak market sector measures are compared with five year averages. Series are reconstructed for the whole economy, and simple regression estimates obtained. The findings lend support to a spike in the measure in the 1990s rather than sustained increase and highlight the sensitivity of the estimates to cyclical and unknown factors. |
| JEL: | C22 E61 L50 O47 |
| Date: | 2010–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:dkn:econwp:eco_2010_15&r=eff |
| By: | Färnstrand Damsgaard, Erika (Research Institute of Industrial Economics (IFN)); Krusell, Per (IIES) |
| Abstract: | This paper builds a theory of the shape of the distribution of total-factor productivity (TFP) across countries. The data on productivity suggests vast differences across countries, and arguably even has “twin peaks”. The theory proposed here is consistent with vast differences in long-run productivity, and potentially also with a twin-peaks outcome, even under the assumption that all countries are ex-ante identical. It is based on the hypothesis that TFP improvements in a given country follow a Nelson-Phelps specification. Thus, they derive from past investments in the country itself and, through a spillover (or catch-up) term, from past investments in other countries. We then construct a stochastic dynamic general equilibrium model of the world which has externalities: each country invests in TFP and internalizes the dynamic effects of its own investment, while treating other countries' investments as given. Average world growth is endogenous, as is the distribution of TFP across countries. We find that small idiosyncratic TFP shocks can lead to large long-run differences in TFP levels and that, in the long run, the world distribution of TFP across countries may be asymmetric, i.e., twin-peaked, or bimodal. More specifically, twin-peaked world distributions of TFP arise if the catch-up term in the Nelson-Phelps equation has a sufficiently low weight. If, on the other hand, technological catch-up is important, the world distribution of TFP is unimodal, though it may still have large dispersion. |
| Keywords: | Growth; Inequality |
| JEL: | F43 O10 |
| Date: | 2010–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0850&r=eff |
| By: | Galina Hale (Federal Reserve Bank of San Francisco and Hong Kong Institute for Monetary Research); Cheryl Long (Colgate University); Hirotaka Miura (Federal Reserve Bank of San Francisco) |
| Abstract: | Using panel data from Chinese Industrial Surveys of Medium-sized and Large Firms for 2000-06, we show that while there is evidence of positive technological spillovers from FDI, such spillovers are very unevenly distributed. For some industries, there are positive spillovers from FDI presence in the same industry and province, but for others spillovers are negative. There are positive spillovers from FDI presence in upstream and downstream industries, but such spillovers mostly occur in private firms. There are more spillovers from foreign capital that comes from outside the greater China area. |
| Keywords: | FDI, Spillovers, Forward-Backward Linkages, China |
| JEL: | L33 F23 O17 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:142010&r=eff |
| By: | Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Borje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This paper asks three explicit questions, where the first one concerns the impact of a firm’s choice of innovation strategy and knowledge resources. The study aims at confirming that firms with a strategy with R&D persistency have a markedly higher productivity, profitability and wage level than other firms. The second question is focused on the location of firms, with a distinction between firms dwelling in a metropolitan region and other firms. The hypothesis is that a metropolitan knowledge milieu may augment the performance of firms. The third question concerns knowledge exchange in regional and global networks that pertain to multinational affiliates. Applying Swedish data on individual firms and their location, the paper shows that firm performance is significantly higher when the three factors R&D persistency, metropolitan location and affiliation to a multinational group are combined. |
| Keywords: | R&D; knowledge; productivity; profitability; regional milieu |
| JEL: | F23 L25 O31 O33 R11 |
| Date: | 2010–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0241&r=eff |
| By: | Lippi, Francesco; Schivardi, Fabiano |
| Abstract: | We present a model in which the owner of the firm enjoys a private benefit from developing a personal relationship with the executives. This may lead the owner to retain a senior executive in office even though a more productive replacement is available. The model shows that the private returns of the employment relationship distort executive selection, reducing the executives' average ability and the firm productivity. We estimate the structural parameters of the model using a panel of Italian firms with information on the nature of the controlling shareholder, matched with individual records of their executives. These estimates are used to quantify the relevance of private returns and the related productivity gap across firms characterized by four different types of ownership: government, family, conglomerate and foreign. We find that private returns are large in family and government controlled firms, while smaller with other ownership types. The resulting distortion in executive selection can account for TFP differentials between control types of about 10%. The structural estimates are fully consistent with a set of model-based OLS regressions, even though the sample moments used by the two approaches are different. |
| Keywords: | corporate governance; private returns; TFP |
| JEL: | D2 G32 L2 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:8031&r=eff |
| By: | Jesus Felipe; Utsav Kumar |
| Abstract: | We reinterpret unit labor costs (ULC) as the product of the labor share in value added, times a price adjustment factor. This allows us to discuss the functional distribution of income. We use data from India’s organized manufacturing sector and show that while India’s ULC displays a clear upward trend since 1980 (with a decline since the early 2000s), this is exclusively the result of the increase in the price deflator used to calculate the ULC. The labor share of India’s organized manufacturing sector has been on a downward trend, from 60 percent in 1980 to 26 percent in 2007. This means that the sector’s capital share increased from 40 to 74 percent over the same period. We also find that real wages have increased minimally during the period analyzed—well below labor productivity—while the real profit rate and unit capital costs have increased substantially. We conclude that if India’s organized manufacturing sector has lost any competitiveness, it is the result of the increase in unit capital costs. Our analysis questions policy recommendations that advocate wage moderation, which result from simply looking at the evolution of the ULC, and that blame the loss of competitiveness on high or increasing wages. |
| Keywords: | Capital Productivity; Capital Share; Competitiveness; Functional Distribution of Income; India; Labor Productivity; Labor Share; Real Rate of Profit; Real Wage Rate; Unit Capital Cost; Unit Labor Cost |
| JEL: | D31 D33 E25 J30 O47 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_624&r=eff |
| By: | Heli Koski |
| Abstract: | This study uses a unique survey data from 398 Finnish manufacturing firms to explore how the order of magnitude of mobility and connectivity of a firm’s ICT stock in conjunction with various organizational innovation and HRM practices affect the firm’s performance. The data suggest that mobile connectivity as such does not significantly contribute to the firm’s growth and profitability. However, the empirical results find support for the agency theory based argument : a greater mobility associated with the use of a pertinent economic incentive scheme and a systematic performance monitoring seems to promote the firm’s growth. In addition, re-organization of tasks within an organization is implemented most successfully, boosting profitability, when the firm’s re-organization strategy incorporates the adoption of mobile, Internet-connected IT stock. |
| Keywords: | ICT use, mobility, connectivity, organizational practices, firm performance |
| JEL: | L25 M52 M54 O33 |
| Date: | 2010–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1222&r=eff |
| By: | Abdelkader Boudriga (University of Tunis); Neila Boulila Taktak; Sana Jellouli |
| Abstract: | The paper empirically analyzes the determinants of nonperforming loans (NPL) and the potential impact of both business and institutional environment on credit risk exposure of banks in the MENA region. Looking at a sample of 46 banks in 12 countries over the period 2002–2006, we find that, among bank specific factors, foreign participation coming from developed countries, high credit growth and loan loss provisions reduce the NPL level. However, highly capitalized banks experience high level of credit exposure. Credit quality of banks is also positively affected by the relevance of the information published by public and private bureaus. Finally, our findings highlight the importance of institutional environment in enhancing banks credit quality. Specifically, a better control of corruption, a sound regulatory quality, a better enforcement of rule of law, and a free voice and accountability play an important role in reducing NPL in the MENA countries. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:547&r=eff |
| By: | Poschke, Markus (McGill University) |
| Abstract: | In contrast to the very large literature on skill-biased technical change among workers, there is hardly any work on the importance of skills for the entrepreneurs who employ those workers, and in particular on their evolution over time. This paper proposes a simple theory of skill-biased change in entrepreneurial technology that fits with cross-country, historical and micro evidence. For this, it introduces two additional features into an otherwise standard occupational choice, heterogeneous firm model à la Lucas (1978): technological change does not benefit all potential entrepreneurs equally, and there is a positive relationship between an individual's potential payoffs in working and in entrepreneurship. If some firms consistently benefit more from technological progress than others, they stay closer to the frontier, and the others fall behind. Because wages rise for all workers, low-productivity entrepreneurs will then at some point exit and become workers. As a consequence, the entrepreneurship rate falls with income per capita, average firm size and firm size dispersion increase with income per capita, and "entrepreneurship out of necessity" falls with income per capita. The paper also documents, for two of the facts for the first time, that these are exactly the relationships prevailing in cross-country data. Quantitatively, the model fits the U.S. experience well. Using the parameters from a calibration to the U.S., the model also explains cross-country patterns quite well. |
| Keywords: | occupational choice, entrepreneurship, firm size, firm entry, growth, skill-biased technical change |
| JEL: | E24 J24 L11 L26 O30 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp5202&r=eff |