New Economics Papers
on Efficiency and Productivity
Issue of 2011‒02‒12
eighteen papers chosen by

  1. Financial Development, Economic Efficiency and Productivity Growth: Evidence from China By Sylviane Guillaumont Jeanneney; Ping Hua; Zhicheng Liang
  2. Nonparametric frontier estimation from noisy data By SCHWARZ, Maik; VAN BELLEGEM, Sébastien; FLORENS, Jean - Pierre
  3. An Econometric Analysis of Firm Specific Productivities: Evidence from Japanese plant level data By ICHIMURA Hidehiko; KONISHI Yoko; NISHIYAMA Yoshihiko
  4. Productivity and International Firm Activities: What Do We Know? By Wagner, Joachim
  5. Raising the Barcode Scanner: Technology and Productivity in the Retail Sector By Emek Basker
  6. Human capital and productivity By Angel de la Fuente
  7. Good and Bad Institutions: Is the Debate Over? Cross-Country Firm-Level Evidence from the Textile Industry By Bhaumik, Sumon K.; Dimova, Ralitza
  8. Total Factor Productivity of Tunisia's manufacturing sectors: measurement, determinants and convergence towards OECD countries By Mohamed Chaffai; Patrick Plane
  9. Valuation of Linkages between Climate Change, Biodiversity and Productivity of European Agro-Ecosystems By Ruslana Rachel Palatnik; Paulo A.L.D. Nunes
  10. A distance function approach to school-leavers’ efficiency in the school-to-work transition By B. DEFLOOR; L. VAN OOTEGEM; E. VERHOFSTADT
  11. Measuring Cost Efficiency in an Integrated Model of Production and Distribution: A Nonparametric Approach By Subhash C. Ray
  12. Is part-time employment beneficial for firm productivity? By Nelen Annemarie; Grip Andries de; Fouarge Didier
  13. Driven by Social Comparisons: How Feedback about Coworkers’ Effort Influences Individual Productivity By Francesca Gino; Bradley R. Staats
  14. Accounting for China's Growth in 1952-2008: China's growth performance debate revisited with a newly constructed data set By Harry X. WU
  15. Efficiency Improving Fossil Fuel Technologies for Electricity Generation: Data Selection and Trends By Elisa Lanzi; Elena Verdolini; Ivan Hašcic
  16. Financial constraints and exports: evidence from Portuguese manufacturing firms By Armando Silva
  17. Productivity Spillovers from Foreign MNEs on Domestic Manufacturing Firms: Is Co-location Always a Plus? By Sergio Mariotti; Marco Mutinelli; Marcella Nicolini; Lucia Piscitello
  18. Regional value added in Italy over the long run (1891-2001): linking indirect estimates with official figures, and implications By Emanuele Felice

  1. By: Sylviane Guillaumont Jeanneney (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Ping Hua (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Zhicheng Liang (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Financial development may lead to productivity improvement in developing countries. In this paper, based on the Data Envelopment Analysis (DEA) approach, we use the Malmquist index to measure China's total factor productivity change and its two components (i.e., efficiency change and technical progress). We find that China has recorded an increase in total factor productivity from 1993 to 2001, and that productivity growth was mostly attributed to technical progress, rather than to improvement in efficiency. Moreover, using panel data set covering 29 Chinese provinces over the period of 1993-2001 and applying the Generalized-Method-of-Moment system estimation, we investigate the impact of financial development on productivity growth in China. Empirical results show that, during this period, financial development has significantly contributed to China's productivity growth, mainly through its favourable effect on efficiency.
    Keywords: Financial Development;total factor productivity;Chinese Economy
    Date: 2011–02–03
  2. By: SCHWARZ, Maik (Université catholique de Louvain, Institut de Statistique, de Biostatistique et de Sciences Actuarielles, B-1348 Louvain-la-Neuve, Belgium); VAN BELLEGEM, Sébastien (Toulouse School of Economics, France; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); FLORENS, Jean - Pierre (Toulouse School of Economics, France)
    Abstract: A new nonparametric estimator of production frontiers is defined and studied when the data set of production units is contaminated by measurement error. The measurement error is assumed to be an additive normal random variable on the input variable, but its variance is unknown. The estimator is a modification of the m-frontier, which necessitates the computation of a consistent estimator of the conditional survival function of the input variable given the output variable. In this paper, the identification and the consistency of a new estimator of the survival function is proved in the presence of additive noise with unknown variance. The performance of the estimator is also studied through simulated data.
    Keywords: production frontier, deconvolution, measurement error, efficiency analysis
    JEL: C14 C24 P42
    Date: 2010–08–01
  3. By: ICHIMURA Hidehiko; KONISHI Yoko; NISHIYAMA Yoshihiko
    Abstract: In estimating the production function of firms, problems of endogeneity and self selection exist as a result of firm-specific productivity shocks and entry/exit decisions. Several methods have been proposed to handle these problems, such as those by Olley and Pakes (1996) and Levinsohn and Petrin (1999, 2003). However, the endogeneity of labor input does not seem to be completely solved by these methods. We therefore propose an alternative semiparametric IV estimator. We suppose that firm-specific productivity influences labor input as well as capital input. We adopt the lagged variables of inputs as their instruments instead of investment inputs, unlike Olley and Pakes. Moreover, our econometric model should automatically adapt to the effect of the exit decision of each firm. We applied the model to Japanese plant-level panel data from 1982 to 2004 on the Census of Manufactures provided by the Ministry of Economy, Trade and Industry. We found that our estimator works well in an empirical study in terms of sign and magnitude of the technological parameters. Using the estimation residuals, we decomposed the TFP into firm-specific productivity and other exogenous shocks. We also aggregated the productivity shocks to industry-level productivities to determine the transition. We examined whether negative technological shocks were the main cause of poor economic performance in Japan during the glost decadeh, and found that productivity did not decline in most Japanese industries since the 1980s. This implies that the recession might have been caused by demand-side factors rather than supply-side issues.
    Date: 2011–01
  4. By: Wagner, Joachim (Leuphana University Lüneburg)
    Abstract: This paper summarizes in a non-technical way what we know from empirical studies based on firm-level data about the mutual links between international activities of firms and productivity. It is written with a view to inform policy makers in an evidence-based way. A special focus is on the empirical evidence we have from studies using firm-level data from the Nordic countries. It is argued that this empirical evidence does not provide a sound basis to search for similarities and differences (and their causes) between the Nordic countries, and the empirical results reported cannot qualify as stylized facts that can inform policy makers in an evidence-based way.
    Keywords: international firm activities, productivity, firm level data, Nordic countries
    JEL: F14 F23 L25
    Date: 2011–01
  5. By: Emek Basker (Department of Economics, University of Missouri-Columbia)
    Abstract: Barcode scanners were introduced in the 1970s as a way to reduce labor costs in stores, particularly at checkout. This paper is the first to estimate their effect on productivity. I use store-level data from the 1972, 1977, and 1982 Census of Retail Trade, matched to data on store scanner installations, to estimate scanners' effect on labor productivity. I find that early scanners increased a store's labor productivity, on average, by approximately 4.5 percent in the medium run, mostly due to a 15-17 percent increased in cashier productivity. Setup costs significantly reduced the short-run productivity effect.
    Keywords: Barcode scanners, Retail, Supermarkets, Technology, Productivity
    JEL: L81 O33
    Date: 2011–02–06
  6. By: Angel de la Fuente
    Abstract: This paper surveys the empirical literature on human capital and productivity and summarizes the results of my own work on the subject. On balance, the available evidence suggests that investment in education has a positive, significant and sizable effect on productivity growth. According to my estimates, moreover, the social returns to investment in human capital are higher than those on physical capital in most EU countries and in many regions of Spain.
    Keywords: human capital, productivity, growth, measurement error
    JEL: O40 I20 O30 C19
    Date: 2011–01–31
  7. By: Bhaumik, Sumon K. (Aston University); Dimova, Ralitza (University of Manchester)
    Abstract: Using firm-level data from nine developing countries we demonstrate that (a) certain institutions like restrictive labour market regulations that are considered to be bad for economic growth might be beneficial for production efficiency, whereas (b) good business environment which is considered to be beneficial for economic growth might have an adverse impact on production efficiency. We argue that our results suggest that the debate about the implications of institutional quality is far from being over, and classification of institutions into "good" and "bad" might be premature.
    Keywords: institutional quality, production efficiency, stochastic frontier model
    JEL: D02 D23 D24
    Date: 2011–01
  8. By: Mohamed Chaffai (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Patrick Plane (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: The purpose of this paper is twofold. First, sector-based Total Factor Productivity (TFP) is calculated for six Tunisian manufacturing sectors over the period 1983-2002. Economic determinants of the productive performance are also investigated. In doing so, we take care of the direction of the causality by using a panel data Granger type-test. The recent literature in international economics has placed a particular emphasis on the relation between TFP and variables reflecting the potential impact of both trade and financial openness. Sector-based TFPs proved to be sensitive to some of these variables, highlighting a causality that does not reject the stimulating impact of exports and foreign direct investments. Second, the paper implements some panel data unit root tests to investigate the statistical hypothesis of TFP catching up of Tunisia with OECD members. In benchmarking each of the six Tunisian sectors by those of the most developed countries, panel data unit root tests do not reject the hypothesis of an overall catching- up for five of them.
    Keywords: cerdi
    Date: 2011–02–03
  9. By: Ruslana Rachel Palatnik (FEEM, Department of Economics, the Max Stern Academic College of Emek Yezreel Israel, NRERC- Natural Resource and Environmental Research Center, University of Haifa); Paulo A.L.D. Nunes (FEEM and Center for Environmental Economics and Management, Department of Economics, Ca’ Foscari University of Venice)
    Abstract: It is clear that climate change involves changes in temperature and precipitation and therefore directly affects land productivity. However, this is not the only channel for climatic change to affect agro-systems. Biodiversity is subject to climatic fluctuations and in turn may alter land productivity too. Firstly, biodiversity is an input into agro-ecosystems. Secondly, biodiversity supports the functioning of these systems (e.g. the balancing of the nutrient cycle). Thirdly, agro-systems also host important wildlife species which, though not always, play a functional role in land productivity, nonetheless constitute important sources of landscape amenities. The present paper illustrates a unique attempt to economically assess this additional effect climate change may imply on agriculture. We first empirically evaluate changes in land productivity due to climatic change effect on temperature, precipitations and biodiversity. Then we estimate the economic cost of biodiversity impact on agro-systems. Our key finding is that climate-change-induced biodiversity impact on European agro-systems measured in terms of GDP change in year 2050 is sufficiently large to deepen the direct climate-change effect in some regions and to reverse it in others. Different economies show different resilience profiles to deal with this effect.
    Keywords: Climate Change, Biodiversity, Agro-Ecosystems
    JEL: D58 Q54 Q57
    Date: 2010–10
    Abstract: Two conventional approaches to study the school-to-work transition are the duration period to the first job and the satisfaction in (or for some specific characteristics of) the first job. This paper compares these two approaches with an analysis of the efficiency of school-leavers‟ first job achievement. The transformation of resources, when leaving school, into achieved first job characteristics is analysed using a multi-input multi-output stochastic distance function approach. This allows to assess the efficiency of this conversion process. Inter-individual differences in transformation efficiency are important, especially when policy makers want to focus on reasons for resource-inefficiency that are beyond the control of the individual.<br> The empirical analysis is based on the 1978 birth cohort of the Flemish SONAR data. The variation in efficiency is explained in terms of individual-specific conversion factors that influence job efficiency: the social (family) background, the motivation to work, the number of search channels used and the sector of employment. The most important positive factor is education (a higher number of successful school years). The results are compared with the average duration to the first job and average job satisfaction. The efficiency analysis provides additional information. Most attention is attracted to the role of the social background, more specifically having a non-Belgian background, for the school-to-work transition.
    Date: 2010–10
  11. By: Subhash C. Ray (University of Connecticut)
    Abstract: In production economics, little attention is paid to transportation costs in any discussion of cost minimization by the firm. When the output is produced at multiple locations, transportation costs can become quite important in light of the geographical dispersion of plants and markets. In network models within the operations research literature, on the other hand, the main interest lies in minimization of the total transportation and inventory costs and only casual attention is devoted to production costs. This paper formulates an optimization problem that minimizes the total delivered cost of the firm. A numerical example is included for illustration.
    Keywords: Data Envelopment Analysis; Multi-plant Production; Transportation Cost
    JEL: C61 D24
    Date: 2011–02
  12. By: Nelen Annemarie; Grip Andries de; Fouarge Didier (METEOR)
    Abstract: This paper analyzes whether part-time employment is beneficial for firm productivity in the service sector. Using a unique dataset on the Dutch pharmacy sector that includes the work hours of all employees and a “hard” physical measure of firm productivity, we estimate a production function including heterogeneous employment shares based on work hours. We find that a larger part-time employment share leads to greater firm productivity. Additional data on the timing of labor demand show that part-time employment enables firms to allocate labor more efficiently. First, firms with part-time workers can bridge the gap between opening hours and a full-time work week. Second, we find that during opening hours part-time workers are scheduled differently than full-timers. For example, we find that part-time workers enable their full-time colleagues to take lunch breaks so that the firm can remain open during these times.
    Keywords: labour economics ;
    Date: 2011
  13. By: Francesca Gino (Harvard Business School, Negotiation, Organizations & Markets Unit); Bradley R. Staats (University of North Carolina at Chapel Hill)
    Abstract: Drawing on theoretical insights from research on social comparison processes, this article explores how managers can use performance feedback to sustain employees' motivation and performance in organizations. Using a field experiment at a Japanese bank, we investigate the effects of valence (positive versus negative), type (direct versus indirect), and timing of feedback (one-shot versus persistent) on employee productivity. Our results show that direct negative feedback (e.g., an employee learns her performance falls in the bottom of her group) leads to improvements in employees' performance, while direct positive feedback does not significantly impact performance. Furthermore, indirect negative feedback (i.e., the employee learns she is not in the bottom of her group) worsens productivity while indirect positive feedback (i.e., the employee learns she is not in the top of her group) does not affect it. Finally, both persistently positive and persistently negative feedback lead to improvements in employees' performance. Together, our findings offer insight into the role of performance feedback in motivating productivity in repetitive tasks.
    Keywords: Feedback, Framing, Learning, Motivation, Persistence, Productivity, Social comparison
    Date: 2011–02
  14. By: Harry X. WU
    Abstract: Using a "data fundamentalist approach," this study revisits the long debate about China's growth performance by seriously tackling the existing data problems that have been the major obstacles to a proper assessment of China's growth performance. First, this study examines and adjusts the serious break in the official employment statistics in 1990. Second, it provides an adjustment for the numbers employed by a human capital effect. Third, it tests the sensitivity of Maddison's (1998a) "zero labor productivity growth" assumption in gauging the real growth of the so-called "non-material (including non-market) services." Fourth, it further improves the author's earlier physical output-based production index for the industrial sector (Wu, 2002a) by using multiple weights and time-variant value added ratios obtained from the Chinese input-output tables. The likely problem of "product quality" in such a physical measure is examined and rejected. Fifth, it provides a new set of estimates of capital stock for the aggregate economy using alternative deflators and depreciation rates, crosschecked by the author's industry-level capital stock estimates (Wu, 2008b). This completely new data set is used in a Solow-type growth accounting exercise with different factor income share assumptions. The new results-under the full adjustment scenario for the post-reform period using input-output table income weights-show that the estimated annual TFP growth rate is 0.3 percent, which is substantially lower than the estimate of 3.1 percent derived from the official data without any major adjustment. A range of TFP estimates is also provided for each sub-period under different assumptions.
    Date: 2011–01
  15. By: Elisa Lanzi (Fondazione Eni Enrico Mattei); Elena Verdolini (Fondazione Eni Enrico Mattei and Università Cattolica di Milano); Ivan Hašcic (OECD Environment Directorate)
    Abstract: This paper studies innovation dynamics in efficiency improving electricity generation technologies as an important means of mitigating climate change impacts. Relevant patents are identified and used as an indicator of innovation. We find that patenting in efficiency improving technologies has mostly been stable over time, with a recent decreasing trend. We also find that majority of patents are first filed in OECD countries and only then in non-OECD or BRIC countries. Conversely, non-OECD and BRIC countries apply for patents that are mostly marketed domestically. This result shows that there is significant technology transfer in the field of efficiency improving technologies for electricity production. This flow of know-how is likely to contribute to mitigation of greenhouse gases emissions in emerging economies in the long run.
    Keywords: Climate Change, Technological Innovation, Energy, Patents, Fossil Fuels
    JEL: Q32 Q4 Q55
    Date: 2011–01
  16. By: Armando Silva (Instituto Politécnico do Porto, Escola Superior de Estudos Industriais e de Gestão)
    Abstract: This paper analyzes the links between financial constraints and firm export behavior, at the firm level, by using data on Portuguese manufacturing enterprises. Theoretical models of Chaney (2005) and Manova (2010) suggest that credit constraints are detrimental for exports but no model explains consistently why exports could improve firms´ financial health. Previous empirical literature has not yet reached a consensus on these subjects and there is a great heterogeneity in measuring financial constraints and how to assess the causality relationships; results are also quite heterogeneous. Developing a very recent trend, we approximate credit constraints by using a financial score built on eight variables; to assess the effects of exports on the financial status of firms we apply, for the first time to these types of studies, a propensity score matching with difference in differences. This procedure is used to deal with the endogeneity problems, stemming from the fact that new exporters have most likely initial better financial health. We find that firms enjoying better financial health are more likely to become exporters and that new exporters show improvements in their financial situation. These findings have important policy implications as they suggest that public intervention to support exports is clearly justified.
    Keywords: exports, matching, financial constraints, corporate finances
    Date: 2011–02
  17. By: Sergio Mariotti (DIG - Politecnico di Milano); Marco Mutinelli (University of Brescia); Marcella Nicolini (Fondazione Eni Enrico Mattei); Lucia Piscitello (DIG - Politecnico di Milano)
    Abstract: The paper analyses productivity spillovers from foreign MNEs on domestic manufacturing firms. Using a database on foreign MNEs in Italy, our results reveal that local firms do benefit from the presence of foreign MNEs, and the effect is higher when local and foreign firms in manufacturing sectors are co-located. However, spillovers benefiting domestic firms are likely to be less influenced by co-location when foreign MNEs are in services sectors as the latter are different from manufacturing industries under a number of aspects that overcome the effect of distance. Indeed, in these sectors, proximity and interaction are often obtained through professional mobility and temporary inter-organizational routines.
    Keywords: Multinational Firms, Co-Location, Proximity, Spillover Effects, Customer-Supplier Interaction, Vertical Linkages
    JEL: D24 F23 O19 R30
    Date: 2011–01
  18. By: Emanuele Felice (Departament d’Economia i d’Història Econòmica, Universitat Autònoma de Barcelona, Spain)
    Abstract: This paper presents value added estimates for the Italian regions, in benchmark years from 1891 until 1951, which are linked to those from official figures available from 1971 in order to offer a long-term picture. Sources and methodology are documented and discussed, whilst regional activity rates and productivity are also presented and compared. Thus some questions are briefly reconsidered: the origins and extent of the north-south divide, the role of migration and regional policy in shaping the pattern of regional inequality, the importance of social capital, and the positioning of Italy in the international debate on regional convergence, where it stands out for the long run persistence of its disparities.
    Keywords: Italy, regional growth, convergence, productivity
    JEL: N93 N94 O47 R11 Y10
    Date: 2011–01

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