New Economics Papers
on Efficiency and Productivity
Issue of 2011‒04‒23
fourteen papers chosen by

  1. The Performance of German Water Utilities: A (Semi)-Parametric Analysis By Michael Zschille; Matthias Walter
  2. Eficiencia Bancaria en Chile: un Enfoque de Frontera de Beneficios By José Luis Carreño; Gino Loyola; Yolanda Portilla
  3. Persistent Productivity Differences Between Firms By Katsuya Takii
  4. Learning by Exporting, Importing or Both? Estimating productivity with multi-product firms, pricing heterogeneity and the role of international trade By Smeets, Valérie; Warzynski, Frédéric
  5. Trade Adjustment and Productivity in Large Crises By Gita Gopinath; Brent Neiman
  6. Assessing eco-efficiency with directional distance functions By Andrés J. Picazo-Tadeo; Mercedes Beltrán-Esteve; José A. Gómez-Limón
  7. Population density and regional welfare efficiency By Halkos, George; Tzeremes, Nickolaos
  8. Post-Merger Restructuring and the Boundaries of the Firm By Vojislav Maksimovic; Gordon Phillips; Nagpurnanand Prabhala
  9. Do Labour Societies Perform Differently to Cooperatives? Evidence from the Spanish Building Industry By Francisco J. Sáez-Fernández; Andrés J. Picazo-Tadeo; Carmen Llorca-Rodríguez
  10. Examining the influence of access to improved water and sanitation sources on countries’ economic efficiency By Halkos, George; Tzeremes, Nickolaos
  11. Delayering and Firm Performance: Evidence from Swiss firm-level Data By Dieter Kuhn
  12. Foreign Acquisition, Wages and Productivity By Bandick, Roger
  13. Efficiency or Competition? A Structural Analysis of Canada's AWS Auction and the Set-Aside Provision By Kyle Hyndman; Christopher F. Parmeter
  14. Performance Appraisal: Dimensions and Determinants By Bayo-Moriones, Alberto; Galdón-Sánchez, José Enrique; Martinez-de-Morentin, Sara

  1. By: Michael Zschille; Matthias Walter
    Abstract: Germany's water supply industry is characterized by a multitude of utilities and widely diverging prices, possibly resulting from structural differences beyond the control of firms' management, but also from inefficiencies. In this article we use Data Envelopment Analysis and Stochastic Frontier Analysis to determine the utilities' technical efficiency scores based on cross-sectional data from 373 public and private water utilities in 2006. We find large differences in technical efficiency scores even after accounting for significant structural variables like network density, share of groundwater usage and water losses.
    Keywords: Water supply, technical efficiency, data envelopment analysis, stochastic frontier analysis, structural variables, bootstrapped truncated regression
    JEL: L95 C14 Q25
    Date: 2011
  2. By: José Luis Carreño; Gino Loyola; Yolanda Portilla
    Abstract: This paper characterizes the evolution of the efficiency X in the Chilean banking industry over 1987 to 2007, based on a profit frontier approach. Our results suggest that over this period the Chilean banking sector has attained just a 15% over its maximum profits. This inefficiency basically arises from a technical source rather than an assignative one, and mainly affects domestic and small banks. Nevertheless, the level of efficiency X of the industry as a whole has dramatically improved since the late 1990’s, which is consistent with important economic, technological and regulatory transformations.
    Date: 2010–12
  3. By: Katsuya Takii (Osaka School of International Public Policy, Osaka University)
    Abstract: We construct a dynamic assignment model that explains persistent productivity differences between firms. Large expected organization capital (firm-specific knowledge) attracts skilled workers, who help to accumulate organization capital. Accumulated large organization capital leads to good performances, which, in turn, confirm high expectations. It is shown that the sluggish movement of expected productivity that occurs through this positive feedback can play a role similar to an unobserved fixed effect in the productivity dynamics. Our calibration exercises suggest that the proposed feedback accompanied by amplification mechanisms inherent in the assignment model can explain a major part of the observed persistence and disparity in productivity.
    Keywords: Organization Capital, Assignment, Productivity, Disparity, Persistence
    JEL: J24 L25
    Date: 2011–04
  4. By: Smeets, Valérie (Department of Economics, Aarhus School of Business); Warzynski, Frédéric (Department of Economics, Aarhus School of Business)
    Abstract: In this paper, we analyze the relationship between exporting/importing status and firm productivity. We use a rich product-firm-level dataset providing both revenue and quantities of all products for a large panel of Danish manufacturing firms over the period 1998-2005 and link it to another dataset describing firms’ international trade transactions by product. We use our detailed product level information to compute a firm level deflator and avoid the criticism of biased estimates due to the use of industry level deflator. We find that both importing and exporting behaviours are strongly associated with productivity, but firms involved in both importing and exporting are the most productive. We also find evidence of a self-selection into importing and exporting but no learning effect. Finally, we try to distinguish between cost effect and product quality effect by analyzing the importance of the origin of imports and the destination of exports. We find that both imports from countries with abundant and cheap labor like China and from countries with similar level of development matter, although the mechanism through which productivity is affected is likely to be different. In addition, exporting to more distant OECD economies is more strongly associated to productivity than exporting to neighboring or other EU countries, especially when controlling for the price specific effect
    Keywords: no; keywords
    JEL: F10
    Date: 2010–10–01
  5. By: Gita Gopinath; Brent Neiman
    Abstract: We empirically characterize the mechanics of trade adjustment during the Argentine crisis using detailed firm-level customs data covering the universe of import transactions during 1996-2008. Our main findings are as follows: First, the extensive margin defined as the entry and exit of firms or of products (at the country level) plays a small role during the crisis. Second, the sub-extensive margin defined as the churning of inputs within firms plays a sizeable role in aggregate adjustment. This implies that the true increase in input costs exceeds that imputed from conventional price indices. Third, the relative importance of these margins and of overall trade adjustment varies with firm size. Motivated by these facts, we build a model of trade in intermediate inputs with heterogenous firms, fixed import costs, and round-about production to evaluate the channels through which a collapse in imports effects TFP in manufacturing. Measured aggregate productivity in the sector depends on within-firm adjustments to the varieties imported as well as the joint distribution of each firm's technology and the share of imports in its total spending on inputs. We simulate an imported input cost shock and show that these mechanisms can deliver quantitatively significant declines in manufacturing TFP.
    JEL: E32 F4 O47
    Date: 2011–04
  6. By: Andrés J. Picazo-Tadeo (Departamento de Economía Aplicada II. Universidad de Valencia); Mercedes Beltrán-Esteve (Departamento de Economía Aplicada II. Universidad de Valencia); José A. Gómez-Limón (Departamento de Economía Agraria. Instituto Andaluz de Investigación y Formación Agraria y Pesquera. Córdoba.)
    Abstract: Eco-efficiency is a matter of concern at present that is receiving increasing attention in political, academic and business circles. Broadly speaking, this concept refers to the ability to create more goods and services with less impact on the environment and less consumption of natural resources, thus involving both economic and ecological issues. In this paper we propose the use of directional distance functions and Data Envelopment Analysis techniques to assess eco-efficiency. More specifically, we show how these functions can be used to compute a range of indicators representing different objectives of policymakers and/or firm managers regarding economic and ecological performance. Our methodological approach is illustrated by an empirical application to a sample of olive-growing farmers located in Southern Spain. Our foremost finding is that eco-inefficiency is a widespread managerial practice. We also suggest further avenues to explore in this burgeoning line of research.
    Keywords: Data Envelopment Analysis; eco-efficiency assessment; directional distance functions
    Date: 2011–04
  7. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper demonstrates an evaluation of welfare policies and regional allocation of public investment using Data Envelopment Analysis (DEA). Specifically, the efficiency of the welfare policies of the Greek prefectures for the census years of 1980, 1990 and 2000 are compared and analyzed. The paper using bootstrap techniques on unconditional and conditional full frontier applications determines whether the government investments have been used efficiently by the local authorities in order to stimulate regional welfare among the Greek prefectures. Our empirical results indicate that there are major welfare inefficiencies among the prefectures over the three census years. The analysis reveals that the population density among the Greek prefectures hasn’t been taken into account in regional welfare planning over the years. In addition, the paper demonstrates empirically how the new advances in DEA analysis can be incorporated into different stages of regional planning investment and evaluation. In addition, the impact of external factors can be directly measured and evaluated accordingly.
    Keywords: Regional development; Welfare policies; Conditional DEA; Bootstrap techniques; Kernel density estimation
    JEL: O18 C02 P25
    Date: 2011–04
  8. By: Vojislav Maksimovic; Gordon Phillips; Nagpurnanand Prabhala
    Abstract: We examine how firms redraw their boundaries after acquisitions using plant-level data. We find that there is extensive restructuring in a short period following mergers and full-firm acquisitions. Acquirers of full firms sell 27% and close 19% of the plants of target firms within three years of the acquisition. Acquirers with skill in running their peripheral divisions tend to retain more acquired plants. Retained plants increase in productivity whereas sold plants do not. These results suggest that acquirers restructure targets in ways that exploit their comparative advantage.
    Date: 2011–04
  9. By: Francisco J. Sáez-Fernández (Universidad de Granada, Spain); Andrés J. Picazo-Tadeo (Universidad de Valencia, Spain); Carmen Llorca-Rodríguez (Universidad de Granada, Spain)
    Abstract: Cooperatives and Labour Societies are both Social Economy enterprises, but with noticeable differences, some of which are imposed by legislation in Spain. The aim of this paper is to study whether such differences affect their management capacity and, in particular, efficiency. In order to do so, we apply Data Envelopment Analysis (DEA) techniques to a sample of Spanish enterprises in the building industry and calculate indices of program efficiency. Results show that there is little difference between the performance of the two types of enterprises, although Cooperatives appear to have advantages over Labour Societies in regard to the management of working capital and, albeit to a lesser extent, labour.
    Date: 2011–04
  10. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper evaluates the effect of access to improved water sources and sanitation on 41 sub-Saharan African (SSA) countries’ economic efficiency and growth. For this reason Data Envelopment Analysis (DEA), bootstrap techniques and probabilistic approaches are used. The empirical results indicate that SSA countries’ economic efficiency is positively influenced by the access of population both on improved water sources and sanitation. Finally, when the provision of access to improved water sources is provided to more than 50% of the population, the positive effect on countries’ economic efficiency is much greater compared to the effect of providing sustainable access to improved sanitation to the same proportion of population.
    Keywords: Water and sanitation; Sub-Saharan African countries; economic efficiency; DEA; nonparametric techniques
    JEL: O55 O10 C14 C61
    Date: 2011–04
  11. By: Dieter Kuhn (University of Basel)
    Date: 2011
  12. By: Bandick, Roger (Department of Economics, Aarhus School of Business)
    Abstract: This paper studies the effect of foreign acquisition on wages and total factor productivity (TFP) in the years following a takeover by using unique detailed firm-level data for Sweden for the period 1993-2002. The paper takes particular account of the potential endogeneity of the acquisition decision (for example due to “cherry picking”) by implementing an instrumental variable approach and propensity score matching with difference-in-difference estimation technique. Moreover, in line with recent literature on firm heterogeneity in international trade, this paper allows for the acquisition effect to differ depending on whether the targeted firms were domestic multinational or non-multinationals before the foreign takeover. This paper also allows for the acquisition effect to differ depending on whether the acquisition is horizontal or vertical. The result shows that foreign acquisition has no effects on overall, skilled or less-skilled wage growth neither in targeted Swedish MNEs nor in targeted Swedish non-MNEs and neither if the acquisition was motivated by vertical or horizontal motives. However, the results indicate that both targeted Swedish MNEs and non- MNEs have better growth in TFP after vertical foreign acquisition only but no such impact from horizontal foreign acquisition
    Keywords: heterogeneity; multinational enterprises; acquisitions; wage differentials; productivity; matching; difference-in-difference
    JEL: F23 J31 L23
    Date: 2010–01–01
  13. By: Kyle Hyndman (Southern Methodist University); Christopher F. Parmeter (University of Miami)
    Abstract: In 2008 Industry Canada auctioned 105MHz of spectrum to a group of bidders that included incumbents and potential new entrants into the Canadian mobile phone market, raising $4.25 billion. In an effort to promote new entry, 40MHz of spectrum was set-aside for new entrants. We adapt the methodology of Bajari and Fox (2009) to the Canadian auction setting in an effort to estimate the implicit cost (in terms of lower auction efficiency) of this policy. Our results indicate that revenue would have been approximately 10% higher without the set-aside.
    Keywords: Spectrum Auction, Set-Aside, Efficiency
    JEL: C10 D44
    Date: 2011–02
  14. By: Bayo-Moriones, Alberto (University of Navarra); Galdón-Sánchez, José Enrique (Universidad Pública de Navarra); Martinez-de-Morentin, Sara (Universidad Pública de Navarra)
    Abstract: The determinants of the dimensions that shape a formal system of performance appraisal are studied in relation to a sample of Spanish manufacturing establishments. In particular, the factors that influence the measures used to evaluate performance, the person who carries out such appraisal and its frequency are analysed. Our results show that the characteristics of the establishment exert a significant influence on the configuration of performance appraisal. Specifically, we find that the use of practices complementary to performance evaluation and the structural factors of the establishment are found to correlate closely with the dimensions of formal performance appraisal.
    Keywords: performance appraisal, monitoring, establishment characteristics, dimensions of appraisal
    JEL: M12 M5
    Date: 2011–04

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