New Economics Papers
on Efficiency and Productivity
Issue of 2011‒04‒30
thirteen papers chosen by

  1. Bank Efficiency in Transitional Countries: Sensitivity to Stochastic Frontier Design By Zuzana Irsova
  3. Stochastic Origin of Scaling Laws in Productivity and Employment Dispersion By FUJIWARA Yoshi; AOYAMA Hideaki
  4. Risk Management and Managerial Efficiency in Chinese Banks: A Network DEA Framework By Kent Matthews
  5. On the effect of prospective payment system on hospital efficiency and competition for patients in Germany By Herwartz, Helmut; Strumann, Christoph
  6. Technology and the Great Divergence By Robert C. Allen
  7. Heterogeneity matters: labour productivity differentiated by age and skills By M. ROGER; M. WASMER
  8. Health Insurance Reform and Efficiency of Township Hospitals in rural China: an Analysis from Survey Data By Xiao Xian HUANG; Jacky MATHONNAT; Martine AUDIBERT; Aurore PELISSIER
  9. A nonparametric analysis of the Greek renewable energy sector By Halkos, George; Tzeremes, Nickolaos
  10. The impact of EPL on labour productivity in a general equilibrium matching model By Lisi, Domenico
  11. Which Foreigners are Worth Wooing? A Meta-Analysis of Vertical Spillovers from FDI By Tomas Havranek; Zuzana Irsova
  12. Assessing Mondragon: Stability & Managed Change in the Face of Globalization By Saioa Arando; Fred Freundlich; Monica Gago; Derek C. Jones; Takao Kato
  13. Securitization, bank lending and credit quality: the case of Spain By Santiago Carbó-Valverde; David Marqués-Ibáñez; Francisco Rodríguez Fernández

  1. By: Zuzana Irsova
    Abstract: This article provides an empirical insight on the heterogeneity in the estimates of banking efficiency produced by the stochastic frontier ap- proach. Using data from five countries of Central and Eastern Europe, we study the sensitivity of the efficiency score and the efficiency ranking to a change in the design of the frontier. We found that the average scores are significantly smaller when the transcendental logarithmic functional form is used in the profit efficiency measurement and when the scaling effect is neglected in the cost efficiency measurement. The implied bank ranking is robust to changes in the stochastic frontier definition for cost efficiency, but not for profit efficiency.
    Keywords: Banking, Eciency Analysis, Stochastic Frontier Approach, Transitional Countries
    JEL: C13 G21 L25
    Date: 2010–09–01
  2. By: Aleksander Aristovnik; Alka Obadic
    Abstract: The paper applies a non-parametric approach, i.e. data envelopment analysis (DEA), to assess the relative technical efficiency of higher education across countries, with a particular focus on Croatia and Slovenia. When estimating the efficiency frontier we focus on measures of quantities outputs/outcomes. The results show that the relatively high public expenditure per student in Croatia should have resulted in a better performance regarding the outputs/outcomes, i.e. a higher rate of higher education school enrolment, a greater rate of labor force with a higher education and a lower rate of the unemployed who have a tertiary education. On the other hand, regardless of the input-output/outcome mix, the higher education system in Slovenia is shown to have a much higher level of efficiency compared to both Croatia and many other comparable EU and OECD countries.
    Keywords: higher education, funding, efficiency, DEA, Croatia, Slovenia, EU, OECD
    JEL: I21 J24 H52
    Date: 2011–01–01
  3. By: FUJIWARA Yoshi; AOYAMA Hideaki
    Abstract: Labor and productivity play central roles in the aging population problem in all developed countries. The understanding of labor allocation among different productivity levels is required for policy issues, specifically, the dynamics of how workers are allocated and reallocated among sectors. We uncover an empirical fact that firm-level dispersions of output and employment satisfy certain scaling laws in their joint probability distributions, which closely relate to the dispersion of productivity. The empirical finding is widely observed in large databases including small and medium-sized firms in both Japan and European countries. We argue that a stochastic process generates a steady-state allocation of labor across firms of differing output and productivity, which results in the observed distributions of workers, productivity, and output.
    Date: 2011–04
  4. By: Kent Matthews (Cardiff University and Hong Kong Institute for Monetary Research)
    Abstract: Risk Management in Chinese banks has traditionally been the Cinderella of its internal functions. Political stricture and developmental imperative have often overridden standard practice of risk management resulting in large non-performing loan (NPL) ratios. One of the stated aims of opening up the Chinese banks to foreign strategic investment is the development of risk management functions. In recent years NPL ratios have declined through a mixture of recovery, asset management operation and expanded balance sheets. However, the training and practice of risk managers remain second class compared with foreign banks operating in China. This paper evaluates bank performance using a Network DEA approach where an index of risk management practice and an index of risk management organisation are used as intermediate inputs in the production process. The two indices are constructed from a survey of risk managers in domestic banks and foreign banks operating in China. The use of network DEA can aid the manager in identifying the stages of production that need attention.
    Keywords: Risk Management, Risk Organisation, Managerial Efficiency, Network DEA
    JEL: D23 G21 G28
    Date: 2011–03
  5. By: Herwartz, Helmut; Strumann, Christoph
    Abstract: The introduction of hospital reimbursement based on diagnosis related groups (DRG) in 2004 has been a conspicuous attempt to increase hospital efficiency in the German health sector. In this paper changes of hospital efficiency, quantified as a Malmquist index decomposition in pure technical efficiency change, are analyzed for periods before and after the reform. We implement a two-stage semi-parametric efficiency model that allows for spatial interdependence among hospitals. The results reveal an enhancement in overall efficiency after the DRG introduction. Moreover, an increase in the magnitude of negative spatial spillovers among German hospital performance can be diagnosed. This result is in line with a rise of competition for (low cost) patients. --
    Keywords: hospital effciency,data envelopment analysis,spatial analysis,diagnosis related groups
    JEL: C21 D61 I11 I18
    Date: 2011
  6. By: Robert C. Allen
    Abstract: The paper measures productivity growth in seventeen countries in the nineteenth and twentieth centuries. GDP per worker and capital per worker in 1985 US dollars were estimated for 1820, 1850, 1880, 1913, 1939 by using historical national accounts to back cast Penn World Table data for 1965 and 1990. Frontier and econometric production functions are used to measure neutral technical change and local technical. The latter includes concurrent increases in capital per worker and output per worker beyond the highest values achieved. These increases were pioneered by the rich countries of the day. An increase in the capital-labour ratio was usually followed by a half century in which rich countries raised output per worker at that higher ratio. Then the rich countries moved on to a higher capital-ratio, and technical progress ceased at the lower ratio they abandoned. Most of the benefits of technical progress accrued to the rich countries that pioneer it. It is remarkable that countries in 1990 with low capital labour ratios achieved an output per worker that was no higher than countries with the same capital labour ratio in 1820. In the course of the last two hundred years, the rich countries created the production function of the world that defines the growth possibilities of poor countries today.
    Keywords: Productivity, economic growth, global history
    JEL: N10 O11 O47
    Date: 2011
  7. By: M. ROGER (Insee); M. WASMER (University of Fribourg and Université Lumière Lyon 2)
    Abstract: This study aims at evaluating the actual profile of marginal productivity across age groups within the workforce. As age-productivity profiles might differ between occupations, we differentiate the workforce simultaneously by skills (low-skilled, high-skilled) and by age (young, middle-aged, old). Estimating a production function with a nested constant-elasticity-of-substitution (CES) specification in labour allows imperfect substitution between different categories of workers. We use French datasets for manufacturing, services and trade sectors. Labour productivity is found to be the lowest for the low-skilled older workers while high-skilled senior employees in manufacturing and trade are the most productive group. Throughout the sectors, wage rates vary considerably less than productivity and wage profiles are steeper for high-skilled workers. The relative productivity/wage ratio is found to be sector-specific. It is the highest for young workers in manufacturing while in services and trade it is the highest for the middle-age employees.
    Keywords: ageing, older workers, labour productivity, CES production function, endogeneity
    JEL: J24 J31 J41
    Date: 2011
  8. By: Xiao Xian HUANG (-); Jacky MATHONNAT (Centre d'Etudes et de Recherches sur le Développement International); Martine AUDIBERT (Centre d'Etudes et de Recherches sur le Développement International); Aurore PELISSIER (Centre d'Etudes et de Recherches sur le Développement International)
    Abstract: In the rural health-care organization of China, township hospitals ensure the delivery of basic medical services. Particularly damaged by the economic reforms implemented from 1975 to the end of the 1990s, township hospitals efficiency is questioned, mainly with the implementation since 2003 of the reform of health insurance in rural areas. From a database of 24 randomly selected township hospitals observed over the period 2000-2008 in Weifang prefecture (Shandong), the study examines the efficiency of township hospitals through a two-stage approach and the calculation of the Malmquist index. As curative and preventive medical services delivered at township hospital level use different production processes, two data envelopment analysis models are estimated with different orientation chosen to compute scores. Following Simar and Wilson (2007), as the traditional two-stage methodology is not relevant, we used a double bootstrap strategy. Results show that technical efficiency declines over time. Moreover, township hospitals are less efficient in the production of preventive services than in the production of curative ones. Several variables explained efficiency (township hospitals' and environment's characteristics) but our results suggest that in the context of China, the efficiency of township hospitals is also influenced by unobservable factors.
    Keywords: data envelopment analysis, Technical efficiency, Double bootstrapping, China, New Rural Cooperative Medical Scheme, Township Hospitals
    JEL: O12 I38 I1 G22
    Date: 2011
  9. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper applies a bootstrapped Data Envelopment Analysis (DEA) formulation aiming to evaluate the financial performance of the firms operating in the Greek renewable energy sector. With the use of financial ratios in a DEA setting, efficiency ratios are constructed in order to analyse firms’ financial performance. The results reveal that firms’ performances are positively influenced by the high levels of return on assets and equity and by lower levels of debt to equity. In addition it appears that there are not significant differences of firms’ efficiency levels indicating high competitiveness between firms. Finally, firms producing wind energy appear to perform better than firms producing hydropower energy. It emerges that the majority of firms are operating in the wind and hydropower energy production making the Greek market of solar energy production being an emerging segment of the Greek renewable energy sector.
    Keywords: Renewable energy market; Data Envelopment Analysis; Financial ratios; Greece
    JEL: L25 C14 C02 Q20
    Date: 2011–04
  10. By: Lisi, Domenico (University of Catania, Department of Economics and Quantitative Methods)
    Abstract: The standard analysis of the impact of EPL on labour market outcomes concentrates mainly on unemployment, disregarding the possible effect on productivity. In this paper we make (a component of) labour productivity endogenous and analyze how the presence of a stringent protection legislation affects labour market in an equilibrium matching model with endogenous job destruction. Indeed, considering labour productivity an endogenous could be important not only in the case of EPL, but also for all kind of personnel policy evaluation. In this framework high labour productivity on one hand is costly in terms of effort, on the other hand is beneficial in terms of lower job destruction. We find that high firing costs partially substitute high labour productivity in reducing job destruction and this, consequently, brings down the optimal level of productivity. Moreover, the impact of EPL on unemployment is ambiguous but numerical exercises show unambiguously how higher firing restrictions reduce different measures of aggregate welfare. To some extent, the clear emergence of these results is full of policy implication and, indeed, rationalizes the recent empirical evidence on the impact of EPL.
    Keywords: Employment protection; Endogenous labour productivity; Job destruction
    JEL: J24 J38 J63 J64
    Date: 2010–04–01
  11. By: Tomas Havranek; Zuzana Irsova
    Abstract: The principal argument for subsidizing foreign investment, especially in developing and transition economies, is the assumed spillover of technology to local firms. Yet researchers report mixed results on spillovers. To examine the phenomenon in a systematic way, we collected 3,626 estimates from 57 empirical studies on between-sector spillovers and reviewed the literature quantitatively. Our results indicate that model misspecifications reduce the reported estimates, but that journals select relatively large estimates for publication. The underlying spillover to suppliers is positive and economically significant, whereas the spillover to buyers is insignificant. Greater spillovers are generated by investors that come from distant countries and that have only slight technological advantages over local firms. In addition, greater spillovers are received by countries that have underdeveloped financial systems and that are open to international trade.
    Keywords: Foreign direct investment; Productivity; Spillovers; Meta-analysis; Publication selection bias
    JEL: C42 F23
    Date: 2010–06–01
  12. By: Saioa Arando; Fred Freundlich; Monica Gago; Derek C. Jones; Takao Kato
    Abstract: By drawing on new interview evidence gathered during several field trips and new financial and economic data from both external and internal sources, we document and assess the changing economic importance and performance of the Mondragon group of cooperatives as well as the two largest sectors within the group. Compared to conventional firms in the Basque Country and Spain, and producer co-ops (PCs) and employee owned firms elsewhere, in general we find evidence of growing group importance and strong performance and a similarly strong record for the industrial and retail divisions...
    Keywords: employee ownership, producer cooperatives, labor managed firm, productive efficiency, Mondragon
    JEL: J54 P50 L20
    Date: 2010–11–01
  13. By: Santiago Carbó-Valverde (University of Granada and Federal Reserve Bank of Chicago, USA.); David Marqués-Ibáñez (European Central Bank, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Francisco Rodríguez Fernández (University of Granada, Spain.)
    Abstract: While the 2007-2010 financial crisis has hit a variety of countries asymmetrically, the case of Spain is particularly illustrative: this country experienced a pronounced housing bubble partly funded via spectacular developments in its securitization markets leading to looser credit standards and subsequent financial stability problems. We analyze the sequential deterioration of credit in this country considering rating changes in individual securitized deals and on balance sheet bank conditions. Using a sample of 20,286 observations on securities and rating changes from 2000Q1 to 2010Q1 we build a model in which loan growth, on balancesheet credit quality and rating changes are estimated simultaneously. Our results suggest that loan growth significantly affects on balance-sheet loan performance with a lag of at least two years. Additionally, loan performance is found to lead rating changes with a lag of four quarters. Importantly, bank characteristics (in particular, observed solvency, cash flow generation and cost efficiency) also affect ratings considerably. Additionally, these other bank characteristics seem to have a higher weight in the rating changes of securities issued by savings banks as compared to those issued by commercial banks. JEL Classification: G21, G12.
    Keywords: securitization, lending, risk, financial instability.
    Date: 2011–04

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