nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2010‒12‒11
thirteen papers chosen by
Angelo Zago
University of Verona

  1. Efficiency and Technological Change in Health Care Services in Ontario By H. Chowdhury; V. Zelenyuk; W. Wodchis; A. Laporte
  2. Where is the primal Total Factor Productivity Index? By Antonio Peyrache
  3. Processing Trade, Firm's Productivity, and Tariff Reductions: Evidence from Chinese Products By Miaojie Yu
  4. Who leads Research Productivity Change? Guidelines for R&D policy makers By Jiménez-Sáez, Fernando; Zabala, Jon Mikel; Zofío, José L.
  5. Productivity growth in the Old and New Europe: the role of agglomeration externalities By Emanuela Marrocu; Raffaele Paci; Stefano Usai
  6. Does Labor Diversity Affect Firm Productivity? By Parrotta, Pierpaolo; Pozzoli, Dario; Pytlikova, Mariola
  7. Decompositions of Profitability Change using Cost Functions By W. Erwin Diewert
  8. Citizens control and the efficiency of local public services By Nuria Bosch; Marta Espasa; Toni Mora
  9. Globalization and productivity : a survey of firm-level analysis By Hayakawa, Kazunobu; Kimura, Fukunari; Machikita, Tomohiro
  10. Lessons From the Latest Data on U.S. Productivity By Jan P.A.M. Jacobs; Simon van Norden
  11. Structural development accounting By Gino Gancia; Andreas Müller; Fabrizio Zilibotti
  12. Multilateral productivity comparisons and homotheticity By A. Peyrache
  13. What factors determine student performance in East Asia? New evidence from TIMSS 2007 By Hojo, Masakazu; Oshio, Takashi

  1. By: H. Chowdhury (CEPA - School of Economics, The University of Queensland); V. Zelenyuk (CEPA - School of Economics, The University of Queensland); W. Wodchis (CEPA - School of Economics, The University of Queensland); A. Laporte (CEPA - School of Economics, The University of Queensland)
    Abstract: This paper presents productivity measurement results for hospital services using panel data for Ontario hospitals between 2003 and 2006. The study uses the Malmquist Productivity index (MPI) obtained through the application of Data Envelopment Analysis (DEA) which is decomposed into efficiency change (ECH), i.e., movement towards the best practice frontier and technological change (TCH), i.e., movement of the frontier itself (Färe et al. [12]). The study also uses kernel density estimation techniques for analysis of efficiency distributions of the productivity scores and their components across different types of hospitals (e.g. small /large and rural /urban) and over time. Our results suggest that in addition to average productivity it is important to examine distributions of productivity and of its components which we find differs by hospital type and over time. We find that productivity growth occurred mostly through improvement in technology and in spite of declining efficiency. The results provide useful insight into the underlying mechanisms of observed changes in overall productivity, in technological change and in technical efficiency change in this vital sector of the health care market.
    Date: 2010–11
  2. By: Antonio Peyrache (CEPA - School of Economics, The University of Queensland)
    Abstract: A primal index of productivity change is introduced which decomposes exactly in three components: technical change, technical efficiency change and average scale economies (radial scale change). The proposed index is invariant to movement along indifference surfaces and it collapses to the Malmquist index if the technology is locally constant returns to scale. It is the best linear approximation of the Orea (2002) translog productivity index (primal growth accounting). The existing proposals for the primal productivity index are discussed in detail. An empirical illustration on real data is provided to show the magnitude of the residuals associated to the lack of indifference surface invariance for these indexes.
    Date: 2010–11
  3. By: Miaojie Yu (China Center for Economic Research)
    Abstract: This paper explores how processing trade, jointly with tariff reduction, can improve a firm's productivity. Tariff reductions generate productivity gain via competition, whereas processing export does so via spillovers. Using mostly disaggregated Chinese product-level trade data and firm-level production data from 2000--2006, after constructing firm-level tariffs based on product information and controlling for possible endogeneity, I found that a 10% tariff decrease generates a 12% increase in a firm's productivity gain. In addition, processing firms enjoy significant productivity gains via spillovers, with heterogeneity across firms divided according to ownership. These findings are robust to various econometric methods, disaggregated specifications, and measures.
    Keywords: Processing Trade, Productivity, Firm's Heterogeneity, Chinese Plants
    JEL: F1 L1 O1 O2
    Date: 2010
  4. By: Jiménez-Sáez, Fernando (INGENIO (CSIC-UPV), Institute of Innovation and Knowledge Management, Univ. Polytechnic of Valencia); Zabala, Jon Mikel (CIRCLE, Lund University); Zofío, José L. (Department of Economic Analysis, Autonomous University of Madrid, Spain)
    Abstract: Relying on efficiency analysis we evaluate to what extent policy makers have been able to promote the establishment of consolidated and comprehensive research groups to contribute to the implementation of a successful innovation system for the Spanish food technology sector, oriented to the production of knowledge based on an application model. Using data envelopment analysis techniques and Malmquist productivity indices we find pervasive levels of inefficiency and a typology of different research strategies. Among these, in contrast to what has been assumed, established groups do not play the pre-eminent benchmarking role; rather, partially oriented, specialized and "shooting star" groups are the most common patterns. These results correspond with an infant innovation system, where the fostering of higher levels of efficiency and promotion of the desired research patterns are ongoing.
    Keywords: Innovation Policy; Management; Productivity Change; Malmquist Index; Distance Function
    JEL: C43 D24 O47
    Date: 2010–10–30
  5. By: Emanuela Marrocu; Raffaele Paci; Stefano Usai
    Abstract: The recent history of the European Union is characterized by a dual picture showing the Old and the New countries in sharp contrast with respect to several economic dimensions. In particular, regions and industries in Eastern countries have shown an excellent performance whilst Western countries have kept moving on a rather slow track. Our aim is to assess the intertwined performance of regions and industries in New and Old economies within Europe by investigating the dynamics of total factor productivity over the period 1996-2007 and the role played by local externalities in the agglomeration process of economic activities. Among the determinants of local industry growth we analyse the agglomeration externalities and, in particular, we focus on the different impact of the specialisation and diversity externalities. Moreover, we analyse the potential influence of regional intangible assets such as human and technological capital while controlling for other territorial features which may affect the efficiency of the local industry. The empirical analysis makes use of spatial econometric techniques to take into account the possibility of cross-border externalities.
    Keywords: Agglomeration externalities; Local industry growth; Total Factor Productivity; Spatial models; European regional cohesion
    JEL: C31 O47 R31
    Date: 2010
  6. By: Parrotta, Pierpaolo (Department of Economics, Aarhus School of Business); Pozzoli, Dario (Department of Economics, Aarhus School of Business); Pytlikova, Mariola (Department of Economics, Aarhus School of Business)
    Abstract: Using an employer-employee dataset, we analyze how diversity in cultural background, skills and demographic characteristics affects total factor productivity (TFP) of firms in Denmark. Implementing structural estimation of firms’ production function, we find evidence that labor diversity in skills/education significantly enhances firm performance as measured by firm TFP. Conversely, diversity in demographics and ethnicity brings mixed results – both dimensions of workforce diversity have either no or negative effects on firm TFP. Hence, it seems as if the negative effects, coming from communication and integration costs connected to a more demographically and culturally diverse workforce, counteract the positive effects of diversity on firm TFP, coming from creativity and knowledge spillovers. However, we find that ethnic diversity is valuable for firms operating in industries characterized by above-average trade openness, giving support to the hypothesis that an ethnically diverse workforce provides information and access to global markets.
    Keywords: Labor diversity; skill complementarities; communication barriers; total factor productivity
    JEL: C23 J24 L20
    Date: 2010–12–01
  7. By: W. Erwin Diewert (CEPA - School of Economics, The University of Queensland)
    Abstract: Profitability at a period of time is defined as the value of outputs produced by a production unit divided by the corresponding cost. Using some earlier work by O?Donnell, the paper provides a decomposition of profitability growth over two periods into various explanatory factors. The explanatory factors are: the change in the production unit?s cost efficiency, an index of output price growth, returns to scale, technical progress and an index of input price growth. If output prices for the production unit are not available, the paper suggests that marginal costs could be used as prices to weight outputs in each period. Using marginal or average costs to weight outputs leads to a methodology for evaluating the productivity performance of nonmarket production units that is similar to the methodology suggested in the Atkinson report.
    Date: 2010–11
  8. By: Nuria Bosch; Marta Espasa; Toni Mora (Universitat de Barcelona)
    Abstract: It is generally accepted that fiscal decentralization increases citizens control over politicians, fostering accountability and increasing efficiency. This article identifies the socioeconomic characteristics of citizens (potential voters) that increase their control over local policy-makers and thus generate greater efficiency in a decentralized context. We also highlight the fiscal characteristics of local governments that influence this control and efficiency. The study examines a sample of Spanish municipalities, applying a methodology based on the conventional procedure of two-stage estimation. In the first stage we estimate the efficiency of local public services by calculating a new version of a global output indicator using the DEA technique. In the second stage, using a Tobit type estimation (censored models) and bootstrap methods, we show how the factors mentioned may influence efficiency. The results suggest that strong presence of retailers, retired people, and people entitled to vote favour citizens control, which fosters accountability and efficiency. A factor that facilitates this control, and therefore greater efficiency, is the presence of low opportunity costs for obtaining information regarding local public service management.
    Keywords: technical efficiency, local governments, socioeconomic and fiscal variables, citizens control
    JEL: H11 H72 H71
    Date: 2010
  9. By: Hayakawa, Kazunobu; Kimura, Fukunari; Machikita, Tomohiro
    Abstract: Recent empirical studies which utilize plant- or establishment-level data to examine globalization's impact on productivity have discovered many causal mechanisms involved in globalization's impact on firms' productivity. Since these pathways have been broad, there have been few attempts to summarize the several and detailed mechanisms of self-selection and learning at the same time. This paper examines seven pathways so that the clear-cut consequences of the broad picture of globalization become visible. This strategy is useful for detecting missing links within and across the existing studies as well as for finding possible synergy effects among different mechanisms. Insightful policy implications may be derived from the comprehensive comparisons between the seven different pathways of globalization.
    Keywords: Firm-level data, Globalization, Productivity, International trade, Foreign investments, Developing countries, Developed countries
    JEL: F15 F23
    Date: 2010–08
  10. By: Jan P.A.M. Jacobs; Simon van Norden
    Abstract: Productivity growth is carefully scrutinized by macroeconomists because it plays key roles in understanding private savings behaviour, the sources of macroeconomic shocks, the evolution of international competitiveness and the solvency of public pension systems, among other things. However, estimates of recent and expected productivity growth rates suffer from two potential problems: (i) recent estimates of growth trends are imprecise, and (ii) recently published data often undergo important revisions. This paper documents the statistical (un)reliability of several measures of aggregate productivity growth in the US by examining the extent to which they are revised over time. We also examine the extent to which such revisions contribute to errors in forecasts of US productivity growth. We find that data revisions typically cause appreciable changes in published estimates of productivity growth rates across a range of different productivity measures. Substantial revisions often occur years after the initial data release, which we argue contributes significantly to the overall uncertainty policymakers face. This emphasizes the need for means of reducing the uncertainty facing policymakers and policies robust to uncertainty about current economic conditions.
    JEL: C22 J24 O47
    Date: 2010–12
  11. By: Gino Gancia; Andreas Müller; Fabrizio Zilibotti
    Abstract: In this paper, we construct and estimate a unified model combining three of the main sources of cross-country income disparities: differences in factor endowments, barriers to technology adoption and the inappropriateness of frontier technologies to local conditions. The key components of our framework are different types of workers (skilled and unskilled labor), distortions to capital accumulation, directed technical change, costly adoption and spillovers from the world technology frontier. Despite its parsimonious parametrization, our empirical model provides a good fit of GDP data for up to 90 countries in 1970 and 2000. We use the model to assess the relative importance of alternative factors affecting the world income distribution and to perform counterfactual experiments. Our results suggests that removing barriers to technology adoption would increase output of the average OECD economy relative to the US frontier from 68.3% to 92.5%. The average non-OECD country would instead increase from 17.4% to 53.8%. Slashing barriers would also lead to higher skill premia in all countries. We also study how globalization can shape income disparities. In the absence of global IPR protection, we find that trade in goods amplifies income disparities, induces skill-biased technology adoption and increases skill premia in the majority of countries. These results are reverted if trade liberalization is coupled with international protection of IPR.
    Keywords: Directed Technology Adoption, Development Accounting, Distance to Frontier, Inappropriate Technologies, Skill-biased Technical Change, Productivity, TFP differences.
    JEL: F43 O11 O31 O33 O38 O41 O43 O47
    Date: 2010–07
  12. By: A. Peyrache (CEPA - School of Economics, The University of Queensland)
    Abstract: In this paper it is shown that a well known procedure (GEKS) of transitivizing a bilateral system of productivity comparisons is implicitly a way of imposing a homothetic structure onto the data. The main implication of this result is that deviations between the bilateral and the multilateral (GEKS) indexes can be interpreted as a measure of local deviation from the homothetic assumption. This establishes an additional link between homotheticity and transitivity
    Date: 2010–11
  13. By: Hojo, Masakazu; Oshio, Takashi
    Abstract: This study investigates what factors determine students’ academic performance in five major economies in East Asia, using the dataset from the 2007 survey of Trends in International Mathematics and Science Study (TIMSS). We explicitly consider initial maturity differences, endogeneity of class size, and peer effects in regression analysis. We find that a student’s individual and family background is a key determinant of educational performance, while institutional and resource variables have a more limited effect. Peer effects are significant in general, but ability sorting at the school and/or class levels makes it difficult to interpret them in Hong Kong and Singapore.
    Keywords: Educational production function, Initial maturity differences, Peer effects, Class size, Asia
    JEL: I21 I22
    Date: 2010–12

This nep-eff issue is ©2010 by Angelo Zago. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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