nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2011‒05‒14
fifteen papers chosen by
Angelo Zago
University of Verona

  1. Efficiency, Productivity and Environmental Policy: A Case Study of Power Generation in the EU By Jurate Jaraite; Corrado Di Maria
  2. Technical Efficiency, Environment Efficiency, Productivity and Beneficial Management Practices By Lota D., Tamini; Bruno, Larue; West, Gale E.
  3. New Estimates and a Decomposition of Provincial Productivity Change in China By J. Laurenceson; C.J. O’Donnell
  4. Link between Exporting and Productivity: Firm Level analysis for Indian Chemical Industry By Vinish Kathuria
  5. Developing a short-term comparative optimization forecasting model for operational units’ strategic planning By Filippou, Miltiades; Zervopoulos, Panagiotis
  6. Productivity Growth and Ownership Change in China: 1998-2007 By Liu, Jing; Cao, Shutao
  7. Opening the 'black box' of efficiency measurement: input allocation in multi-output settings By Laurens CHERCHYE; Bram DE ROCK; Bart DIERYNCK; Filip ROODHOOFT; Jeroen SABBE
  8. Does the Kyoto Protocol Agreement matters? An environmental efficiency analysis By Halkos, George; Tzeremes, Nickolaos
  9. Sustainable Agricultural Practices and Agricultural Productivity in Ethiopia: Does Agroecology Matter? By Kassie, Menale; Zikhali, Precious; Pender, John; Köhlin, Gunnar
  10. Public goods production and private sector productivity. By Norman, Eva Benedicte Danielsen
  11. Evidence on Productivity, Comparative Advantage, and Networks in the Export Performance of Firms By Federico Trionfetti; Luca Antonio Ricci
  12. Developing a step-by-step effectiveness assessment model for customer-oriented service organizations By Brissimis, Sophocles; Zervopoulos, Panagiotis
  13. Spillover and Competition Effects: Evidence from the sub-Saharan African Banking Sector By Birte Pohl
  14. Firm-Heterogeneity, Persistent and Transient Technical Inefficiency By Mike, Tsionas; Subal, Kumbhakar
  15. Flexible Wage Contracts, Temporary Jobs and Worker Performance: Evidence from Italian Firms By Michele Battisti; Giovanna Vallanti

  1. By: Jurate Jaraite (CERE, Umeå University); Corrado Di Maria (Queen’s University Belfast)
    Abstract: This study uses the EU public power generating sector as a case study to investigate the environmental efficiency and productivity enhancing performance of the European Union’s CO2 Emissions Trading Scheme (EU ETS) in its pilot phase. Using Data Envelopment Analysis methods, we measure the environmental efficiency and the productivity growth registered in public power generation across the EU over the 1996-2007 period. In the second stage of our analysis we attempt to explain changes in productivity and efficiency over time using state-of-the-art econometric techniques. Our analysis suggests two conclusions: on the one hand carbon pricing led to an increase in environmental efficiency and to a shift outwards of the technological frontier; on the other hand, the overly generous allocation of emission permits had a negative impact on both measures. These results are shown to be robust to changes in controls and specifications.
    Keywords: Emissions Trading, EU ETS, Environmental Efficiency, Productivity Growth, Data Envelopment Analysis
    JEL: O38 Q48 Q58
    Date: 2011–02
  2. By: Lota D., Tamini; Bruno, Larue; West, Gale E.
    Abstract: An input distance function (IDF) is estimated to empirically evaluate and analyze the technical and environmental efficiencies of 210 farms located in the Chaudière watershed (Quebec), where water quality problems are particularly acute because of the production of undesirable outputs that are jointly produced with agricultural products. The true IDF is approximated by a flexible translog functional form estimated using a full information maximum likelihood method. Technical and environmental efficiencies are disaggregated across farms and account for spatial variations. Our results show that there is a significant correlation between technical and environmental efficiencies. Farms that are technically efficient tend to be environmentally efficient. We used the cumulative Malmquist productivity index and the Fisher index to measure changes in technology, profitability, efficiency, and productivity in response to the adoption of 2 selected best management practices (BMPs) whose objective is to reduce water pollution. We found significant differences across BMPs regarding the direction and the magnitude of their effect on profitability, efficiency and productivity.
    Keywords: Environment efficiency, distance function, phosphorus rumoff, productivity, profitability, technical efficiency, Agribusiness,
    Date: 2011–04
  3. By: J. Laurenceson (CEPA - School of Economics, The University of Queensland); C.J. O’Donnell (CEPA - School of Economics, The University of Queensland)
    Abstract: Productivity and efficiency change lies at the heart of some of the key challenges facing China’s economy. This paper contributes to an understanding of TFP change by computing and decomposing provincial-level Hicks-Moorsteen (H-M) total factor productivity (TFP) indexes for the period 1978 to 2008. The H-M index is appealing because, unlike the more commonly-used Malmquist TFP index, it can be decomposed into unambiguous measures of technical change and efficiency change. The efficiency change component can be further decomposed into measures of pure technical, scale and mix efficiency change. We also make use of new capital stock estimates that have been computed using province-specific investment price deflators and capital stock depreciation rates. On average across provinces, we find evidence of moderate TFP growth, as well as large changes in the components of TFP growth over the sample period. Considerable heterogeneity from province to province is also documented both with respect to the rate of TFP growth and its components.
    Date: 2011–04
  4. By: Vinish Kathuria
    Abstract: The first objective of the study tests the empirical regularity that exporters are more productive than non-exporters in India. TFP is calculated from the Cobb-Douglas Production function using a fixed effects model. The productivity differential comparison between exporters and non-exporters show that Non-exporters have a higher Total Factor Productivity than Exporters. URL: [ /129.pdf].
    Keywords: chemical industry, productivity, exporters, India, cobb-douglas, firm level, self-selection hypothesis, international contracts, commodities, domestic economy, foreign technology
    Date: 2011
  5. By: Filippou, Miltiades; Zervopoulos, Panagiotis
    Abstract: Data drain for peer active units operating in the same sector is a major factor that prevents policy makers from developing flawless strategic plans for their organisation. This study introduces a hybrid model that incorporates a purely deterministic method, Data Envelopment Analysis (DEA), and a semi-parametric technique, Artificial Neural Networks (ANNs), to provide a strategic planning tool for efficiency optimization applicable to short-term lag of data availability. For consecutive time instances, t and t+1, the developed DEANN model returns optimum “regression-type” input and output levels for every sample operational unit, even for the fully efficient ones, that may decide to alter the levels of the efficiency determinants, respecting the t-time efficiency frontier.
    Keywords: Forecasting; Optimization; Efficiency; Data Envelopment Analysis (DEA); Artificial Neural Networks (ANN); Adaptive Techniques
    JEL: C53 C14 C45
    Date: 2011–04–20
  6. By: Liu, Jing; Cao, Shutao
    Abstract: This paper studies the industry productivity dynamics in China’s manufacturing sector from 1998 to 2007, and in particular, explores to what extent the privatization of state-owned enter- prises (SOEs) contributes to the aggregate productivity growth. Our results show that, though non-SOEs on average are more productive than SOEs, the average productivity growth among SOEs is greater than their counterparts. Industry concentration, taxation, and credit market all account for this difference in growth between SOEs and non-SOEs. We find that industry productivity growth is mainly attributed to the growth of non-SOEs, entry of non-SOE firms, and the exit of SOEs. However, non-SOE firms that are transformed directly from SOEs make a small and negative contribution to industry productivity growth.
    Keywords: Productivity Growth; Industry Dynamics; Ownership Change; Reallocation
    JEL: E6 D24 O4
    Date: 2011–04–28
  7. By: Laurens CHERCHYE; Bram DE ROCK; Bart DIERYNCK; Filip ROODHOOFT; Jeroen SABBE
    Abstract: We develop a new Data Envelopment Analysis (DEA)-based methodology for measuring the efficiency of Decision Making Units (DMUs) characterized by multiple inputs and multiple outputs. The distinguishing feature of our method is that it explicitly includes information about output-specific inputs and joint inputs in the efficiency evaluation. This contributes to opening the „black box? of efficiency measurement in two different ways. First, including information on the input allocation substantially increases the discriminatory power of the efficiency measurement. Second, it allows to decompose the efficiency value of a DMU into output-specific efficiency values which facilitates the identification of the outputs the manager should focus on to remedy the observed inefficiency. We demonstrate the usefulness and managerial implications of our methodology by means of a unique dataset collected from the Activity Based Costing (ABC) system of a large service company with 290 DMUs.
    Date: 2011–05
  8. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper uses both conditional and unconditional Data Envelopment Analysis (DEA) models in order to determine different environmental efficiency levels for a sample of 110 countries in 2007. In order to capture the effect of countries compliance with the Kyoto Protocol Agreement (KPA), we condition the years since a country has signed the agreement until 2007. Particularly, various DEA models have been applied alongside with bootstrap techniques in order to determine the effect of Kyoto protocol agreement on countries’ environmental efficiencies. The study illustrates how the recent developments in efficiency analysis and statistical inference can be applied when evaluating environmental performance issues. The results indicate that the first six years after countries signed the Kyoto protocol agreement have a positive effect on their environmental efficiencies. However after that period it appears that countries avoid complying with the actions imposed by the agreement which in turn has an immediate negative effect on their environmental efficiencies.
    Keywords: Environmental efficiency; Kyoto protocol agreement; Conditional full frontiers; Statistical inference; DEA
    JEL: Q50 C00 C60 Q58
    Date: 2011–05
  9. By: Kassie, Menale; Zikhali, Precious; Pender, John; Köhlin, Gunnar
    Abstract: This paper uses data from household- and plot-level surveys conducted in the highlands of the Tigray and Amhara regions of Ethiopia to examine the contribution of sustainable land-management practices to net values of agricultural production in areas with low- and high-agricultural potential. A combination of parametric and nonparametric estimation techniques is used to check result robustness. Both techniques consistently predict that minimum tillage is superior to commercial fertilizers—as are farmers’ traditional practices without use of commercial fertilizers—in enhancing crop productivity in the low-agricultural potential areas. In the high-agricultural potential areas, by contrast, use of commercial fertilizers is superior to both minimum tillage and farmers’ traditional practices without commercial fertilizers. The results are found to be insensitive to hidden bias. Our findings imply a need for careful agroecological targeting when developing, promoting, and scaling up sustainable land-management practices.
    Keywords: agricultural productivity, commercial fertilizer, Ethiopia, low and high agricultural potential, minimum tillage, propensity score matching, switching regression
    JEL: C21 Q12 Q15 Q16 Q24
    Date: 2011–05–05
  10. By: Norman, Eva Benedicte Danielsen (Samfunns- og Næringslivsforskning)
    Abstract: In this paper we study how the use of resources in the public sector affects industrial structure, the size and the productivity in knowledge-intensive clusters in local communities. We also discuss how these considerations should be implemented in costbenefit assessments of local public goods supply. The topics are studied in a setting where there are gains from agglomeration in knowledge-intensive industries, creating clusters of firms in such industries. We find that the primary effect is a Rybczynski effect: If production in the public sector is knowledge-intensive, the size of the knowledge-intensive private industry declines when the public sector increases its production. If, on the other hand, public sector production uses relatively much unskilled labour, increased public goods production leads to higher production in the knowledge-intensive private industries. Private sector productivity is affected in the same way as production: If production in the knowledgeintensive industry increases, so does its productivity due to agglomeration effects; leading to higher wages for highly skilled labour.
    Keywords: Agglomeration; external economies of scale; firm location; production cost; regional government policies.
    JEL: D24 H00 R00
    Date: 2010–08–17
  11. By: Federico Trionfetti; Luca Antonio Ricci
    Abstract: This paper tests the effect of comparative advantage, size, and networking on the firm probability of exporting. The closest theoretical framework is the one of Bernard, Redding, and Schott (2007), with firm heterogeneity across countries and industries. We use a recently assembled multi-country multi-industry firm level dataset, and construct original measures of comparative advantage. The results show that firms are more likely to export if they belong to the comparative advantage industry, if they enjoy a higher productivity, or if they benefit from foreign, domestic, or communication networks.
    Keywords: Economic models , Export performance , Exports , Industrial sector , International trade , Productivity ,
    Date: 2011–04–05
  12. By: Brissimis, Sophocles; Zervopoulos, Panagiotis
    Abstract: Effectiveness involves more than simple efficiency, which is limited to the production process assessment of peer operational units. Effectiveness incorporates both endogenous and exogenous variables. It is a fundamental driver for the success of an operational unit within a competitive environment in which either the liquidity of money in the market and the customers are considered to be scarce sources, or the New Public Management (NPM) is citizen/customer and goal-oriented. Additionally, with respect to short-run production constraints, the resources available and controllable by the operational units, as well as the legal status, we go beyond the traditional effectiveness assessment techniques by developing a modified or “rational” Quality-driven – Efficiency-adjusted DEA (MQE-DEA) model. This particular model provides a feasible effectiveness attainment path for every disqualified unit in order to meet high-perceived quality and high-efficiency standards. The input-output mix restructuring targets estimated by the original QE-DEA model are provided on a step-by-step basis in order to have realistic managerial implications.
    Keywords: Effectiveness; Efficiency; Perceived Quality; Data Envelopment Analysis (DEA); context-dependent DEA
    JEL: C14 C02 C61
    Date: 2011–04–13
  13. By: Birte Pohl
    Abstract: This paper examines the efficiency effects of foreign bank entry on domestic banks in sub- Saharan Africa during the period 1999–2006. Using a recently compiled dataset on foreign bank presence, the competition and spillover effects of North–South, regional and nonregional South–South banks are distinguished. The results show that the competitive pressure on domestic banks' net interest margins emanates only from regional South–South banks. There is evidence of spillover effects from North-South and regional South-South banks on domestic banks. As domestic banks invest in foreign technologies, their overhead costs increase in the short-run. Non-regional South-South banks seem to have little effect on the efficiency of domestic banks.
    Keywords: sub-Saharan Africa, efficiency, South–South banks, spillover
    Date: 2011–04
  14. By: Mike, Tsionas; Subal, Kumbhakar
    Abstract: This paper provides a new model that disentangles firm effects from persistent (time-invariant/long-term) and transient (time-varying/short-term) technical inefficiency.
    Keywords: Bayesian analysis; Markov Chain Monte Carlo; Technical efficiency.
    JEL: C13 C23 C11
    Date: 2011–01–05
  15. By: Michele Battisti (University of Palermo); Giovanna Vallanti (LUISS "Guido Carli" University)
    Abstract: This paper focuses on the effects of decentralized wage schemes and temporary forms of employment on worker/firm performance. The effect of monetary incentives on worker effort and firm performance is a central topic in economics. According to the principal-agent paradigm, firms (the principal) have to link employees’ remuneration scheme to any verifiable indicator of performance in order to avoid opportunistic behaviours. The effectiveness of incentives on workers’ behaviour may vary significantly accordingly to the institutional/economic context in which the firms operate but in general the empirical evidence shows that financial incentives have the potential to exert strong effects on indicators of firm performance, such as productivity and worker absenteeism. Both from a theoretical and empirical point of view, the prediction on the effects of temporary forms of employment on effort and productivity is less neat. In light of these considerations, the aim of this paper is to provide further empirical evidence on whether and to what extent the performance related pay and the contract flexibility affect workers effort and in turn firm productivity for different type of workers (white collar vs. blue collar), working in workplaces characterized by different degree of uncertainty and risk and in firms operating in different economic and institutional settings using a sample of Italian firms. According to our results, wage flexibility appears to have a significant effect on effort and then on firm’s productivity and white collars are more responsive to monetary incentives than blue collars. Moreover, the presence of a large share of temporary contracts implies a lower dismissal probability for permanent workers and a deterioration in the working environment and then it reduces workers’ motivation and effort.
    Keywords: Productivity, Effort, Performance-related-pay, Temporary contracts.
    JEL: J22 J33 J38
    Date: 2011

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