New Economics Papers
on Efficiency and Productivity
Issue of 2010‒12‒23
ten papers chosen by

  1. Determinants of Labor Productivity in Iran’s Manufacturing Firms: With Emphasis on Labor Education and Training By Fallahi, Firouz; Sakineh, Sojoodi; Mehin Aslaninia, Nasim
  2. Does Exporting Raise Productivity? Evidence from Korean Microdata By Sanghoon Ahn
  3. Sensitivity analysis of network DEA illustrated in branch banking By N. Avkiran
  4. The determinants of R&D Investment: the role of Cash flow and Capabilities By Francesco Bogliacino; Sebastian Gómez Cardona
  5. Methodologies for Assessment of Building's Energy Efficiency and Conservation: A Policy-Maker View By Aleksandra Novikova
  6. A tool for scrutinizing bank bailouts based on multi-period peer benchmarking By N. Avkiran
  7. Bad loans in the meltdown: micro analysis of credit union performance versus banks, an initial investigation By Klinedinst, Mark
  8. Simple econometric models for short term production choices in cropping systems By Alain Carpentier; Elodie Letort
  10. Eliciting the Regulation of an Economic System: The Case of the French Rail Industry By Ivaldi, Marc; Pouyet, Jérôme

  1. By: Fallahi, Firouz; Sakineh, Sojoodi; Mehin Aslaninia, Nasim
    Abstract: In an era of globalized competition, productivity has become a crucial factor determining profitability, competitiveness and the growth of a firm. High productivity means lower per unit cost and, therefore, ability of the firm to match prices on the global markets. Because of that, there has been an increasing interest recently in the literature on factors affecting productivity. This paper investigates the determinants of labor productivity at the firm level in the Iran’s manufacturing sector. The analysis is based on descriptive statistics and cross sectional regression models on a sample of 12299 Industrial firms. The results show that labor productivity is positively related to wage, fixed capital per employee, export orientation, R&D activity and Education of labor force.
    Keywords: Labor productivity; Industrial firms; Education; Training; Export; R&D
    JEL: J24 J2
    Date: 2010–12–13
  2. By: Sanghoon Ahn
    Abstract: This paper explores a plausible channel through which exporting could have made both a substantial and a persistent contribution to export-oriented economic growth in Korea and by extension other East Asian NIEs: namely, the spillovers (or externalities) of learning-by-exporting. Plant-level data for Korean manufacturing show that more export-intensive industries tend to have a higher productivity level. In addition, a substantial part of the variance in plant-level productivity is explained by the variance in industry-level export intensity. [ADB Institute Research Paper Series No. 67]
    Keywords: plausible, channel, substantial, economic growth, Korea, East Asian
    Date: 2010
  3. By: N. Avkiran (CEPA - School of Economics, The University of Queensland)
    Abstract: Users of data envelopment analysis (DEA) often presume efficiency estimates to be robust. While traditional DEA has been exposed to various sensitivity studies, network DEA (NDEA) has so far escaped similar scrutiny. Thus, there is a need to investigate the sensitivity of NDEA, further compounded by the recent attention it has been receiving in literature. NDEA captures the underlying performance information found in a firm?s interacting divisions or sub-processes that would otherwise remain unknown. Furthermore, network efficiency estimates that account for divisional interactions are more representative of a dynamic business. Following various data perturbations overall findings indicate positive and significant rank correlations when new results are compared against baseline results - suggesting resilience. Key findings show that, (a) as in traditional DEA, greater sample size brings greater discrimination, (b) removing a relevant input improves discrimination, (c) introducing an extraneous input leads to a moderate loss of discrimination, (d) simultaneously adjusting data in opposite directions for inefficient versus efficient branches shows a mostly stable NDEA, (e) swapping divisional weights produces a substantial drop in discrimination, (f) stacking perturbations has the greatest impact on efficiency estimates with substantial loss of discrimination, and (g) layering suggests that the core inefficient cohort is resilient against omission of benchmark branches. Various managerial implications that follow from empirical findings are discussed in conclusions.
    Date: 2010–12
  4. By: Francesco Bogliacino (JRC-IPTS); Sebastian Gómez Cardona (Departamento de Economía, Universidad EAFIT)
    Abstract: In this paper we have estimated a behavioural equation for R&D investment. We assess the impact of liquidity constraints and capabilities, measured respectively as internal cash flow and distance from the technological frontier. Our estimation is performed on an industry level panel covering fifteen European countries from 1996 to 2005 and on a sample of European R&D performers extracted from COMPUSTAT covering 2000-2008. Both at industry level and firm level we found that financing constraints exist and that the distance from the frontier negatively affects the decision to engage in R&D. We claim that the implied divergence pattern opens a gap for policy intervention, but that these policies should be correctly tailored and should also promote enablers of technological change.
    Keywords: R&D, liquidity constraints, technological frontier, panel data
    JEL: D24 L50 O33
    Date: 2010–12
  5. By: Aleksandra Novikova
    Keywords: Buildings, energy efficiency potential, greenhouse gas mitigation, policy assessment, energy policy impact evaluation, sectoral efficiency targets
    Date: 2010
  6. By: N. Avkiran (CEPA - School of Economics, The University of Queensland)
    Abstract: In the wake of the recent global financial crisis central banks and regulators are concerned about redirection of bailout funds into dividends. Yet, we do not know much about the extent banks follow dividend policies and funding decisions optimal to generating shareholders? wealth because banks have been mostly absent from an otherwise expansive literature on dividend policy. A relative, multi-period analysis of the troubled Japanese regional banks for the period 1998-2007 identifies inefficiencies in the levels of dividends, retained earnings, external funding and share performance. The study unfolds further by investigating associations between inefficiencies and non-performing loans, followed by a comparison of efficient versus inefficient banks across good and bad economic times. The methodology captures linkages among yearly financial decisions over multiple periods, thus summarizing long-term performance. The new approach can guide continuous benchmarking of bank financial performance, as well as help policy-makers monitoring potential misappropriation of bailout funds during financial crises. The findings indicate a potential to adjust levels of debt and equity funding, and substantial room for improvement in share performance. Associations between non-performing loans and technical inefficiencies are generally statistically significant.
    JEL: G21 L25
    Date: 2010–12
  7. By: Klinedinst, Mark
    Abstract: The current economic crisis has had a devastating impact in the credit markets as evidenced by bank failures, large bailouts and foreclosures. Trillions of dollars have been spent to prop up the financial sector in the U.S. alone. Credit unions, commercial banks and thrifts are where Americans go for home loans, but credit unions have a very different track record when it has come to bailouts from the government. Credit unions instead of taking trillions may ultimately not take a dime from the taxpayer. This paper will try to discern this advantage that credit unions have by focusing on the direct impact felt by financial institutions in the United States through net charge-offs from 1994 through 2009 using an exceptional data set that combines information on credit unions and banks in the U.S. from 1994 through 2009.
    Keywords: credit unions; banks; cooperative; defaults; net charge-offs
    JEL: G14 P0 P13 L21 G21
    Date: 2010–12–11
  8. By: Alain Carpentier; Elodie Letort
    Abstract: The aim of this article is to present new models of acreage choices to describe short term production choices. Its construction combines concepts developed in the Positive Mathematical Programming and Multicrop Econometric literatures. They consider land as an allocable fixed input and motivate crop diversification by decreasing returns to crop area and/or implicit costs generated by constraints on acreage choices and by limiting quantities of quasi-fixed factors. Attractive re-parametrization of the standard quadratic production function and different functional forms for cost function are proposed to have parameters easily interpretable and to define econometric models in a very simple way.
    Keywords: Acreage share; Production function; Multicrop econometric model; Positive Mathematical Programming
    JEL: C51 Q12
    Date: 2010
  9. By: Andersson, Mats (Swedish National Road & Transport Research Institute (VTI)); Smith, Andrew (Institute for Transport Studies, University of Leeds); Wheat, Phillip (Institute for Transport Studies, University of Leeds); Wikberg, Åsa (Swedish National Road & Transport Research Institute (VTI))
    Abstract: Economic theory advocates marginal cost pricing for efficient utilisation of transport infrastructure. A growing body of literature has emerged on the issue of marginal infrastructure wear and tear costs, but the majority of the work is focused on costs for infrastructure maintenance. Railway track renewals are a substantial part of an infrastructure manager’s budget, but in disaggregated statistical analyses, they cause problems for traditional regression models since there is a piling up of values of the dependent variable at zero. Previous econometric work has sought to circumvent the problem by aggregation in some way. In this paper we work with disaggregate (track-section) data, including the zero observations, but apply censored and sample selection regression models to overcome the bias that would result from estimation using OLS. We derive track renewal cost elasticities with respect to traffic volumes and in turn marginal renewal costs using Swedish railway renewal data over the period 1999 to 2009. Our paper is the first paper in the literature that we are aware of to report usage elasticities specifically for renewal costs and therefore adds important new evidence to the previous literature where there is a paucity of studies on renewals and considerable uncertainty over the effects of rail traffic on renewal costs. In the Swedish context, we find that the inclusion of marginal track renewal costs in the track access pricing regime, which currently only reflects marginal maintenance costs, would add substantially to the existing track access charge.
    Keywords: Marginal cost; railway; renewal; selection models.
    JEL: C34 D24 L92
    Date: 2010–11–17
  10. By: Ivaldi, Marc (Toulouse School of Economics); Pouyet, Jérôme (Paris School of Economics)
    Abstract: Based on the modern theory of regulation, the analysis aims to characterize the effective economic regulation of the French railway industry. The methodology consists in econometrically testing various scenarios of regulation and determining which of these best fits the data. Using aggregate data on the overall passenger traffic for the incumbent French rail operator (RO), SNCF, the two behavioral hypotheses of reference which we consider –absence of regulation of the rail operator which acts as a pure monopoly, and price regulation of services supplied by the RO– are both statistically significant and do not subtract from each other. This result is certainly related to the fact that passenger services include both high speed train services, for which the RO has some entrepreneurial freedom, and regional transport services, which are regulated by local authorities. In any case however, as the presence of unobservable efforts exerted by the RO to improve its productivity is statistically relevant, one concludes that the RO is not fully and properly regulated. This emphasizes that the design of policy reforms must account for the incentives they create on the RO. The analysis also shows that the most statistically significant scenarios are the ones in which the access tariff imposed by the infrastructure manager is such that the revenue generated by the access tariff is equal to the infrastructure spending. The pricing of the access to the infrastructure network therefore does not seem to be governed by economic principles, but more by budget considerations. While data limitations does neither allow to understand all the facets of a complex reality, nor to claim a high level of precision in the measure of all the parameters of interest, we believe however that we provide an objective methodology to characterize the optimal economic policies for the railway sector, in particular because it yields realistic estimates of the main structural parameters. Indeed the empirical results suggest that the railway industry as a whole exhibits increasing returns to scale, which incidentally is not compatible with the presence of multiple firms. In addition, the elasticity of demand for railway transport is relatively high, an indication of the competitive constraints this mode of transport faces from other transport modes or induced traffic.
    Keywords: Regulation, Asymmetric information, Railroad industry
    JEL: L51 L92
    Date: 2010–12–06

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.