New Economics Papers
on Efficiency and Productivity
Issue of 2011‒06‒04
ten papers chosen by

  1. The returns to scale effect in labour productivity growth By Mizobuchi, Hideyuki
  2. New indices of labour productivity growth: Baumol’s disease revisited By Mizobuchi, Hideyuki
  3. Some Determinants of Intermediate Local Governments' Spending Efficiency: The Case of French Départements By Maria Nieswand; Stefan Seifert
  4. Measuring the economic efficiency of Italian agricultural enterprises By Darina Zaimova
  5. A non-parametric analysis of the efficiency of the top European football clubs By Halkos, George; Tzeremes, Nickolaos
  6. Profit, Cost and Scale Efficiency for Latin American Banks: Concentration-Performance Relationship By Benjamin M. Tabak; Dimas M. Fazio; Daniel O. Cajueiro
  7. Cost Efficiency and Scale Economies of Japanese Water Utilities By Theara Horn; Hitoshi Saito
  8. British Relative Economic Decline Revisited By Crafts, Nicholas
  9. Delayering and Firm Performance: Evidence from Swiss firm-level Data By Dieter Kuhn
  10. Do domestic and cross-border M&As differ? Cross-country evidence from the banking sector By Caiazza, Stefano; Pozzolo, Alberto Franco; Trovato, Giovanni

  1. By: Mizobuchi, Hideyuki
    Abstract: Labour productivity is defined as output per unit of labour input. Economists acknowledge that technical progress as well as growth in capital inputs increases labour productivity. However, little attention has been paid to the fact that changes in labour input alone could also impact labour productivity. Since this effect disappears for the constant returns to scale short-run production frontier, we call it the returns to scale effect. We decompose the growth in labour productivity into two components: 1) the joint effect of technical progress and capital input growth, and 2) the returns to scale effect. We propose theoretical measures for these two components and show that they coincide with the index number formulae consisting of prices and quantities of inputs and outputs. We then apply the results of our decomposition to U.S. industry data for 1987–2007. It is acknowledged that labour productivity in the services industries grows much more slowly than in the goods industries. We conclude that the returns to scale effect can explain a large part of the gap in labour productivity growth between the two industry groups.
    Keywords: Labour productivity; index numbers; Malmquist index; Törnqvist index; output distance function; input distance function
    JEL: O47 C14 O51 D24
    Date: 2011–05–27
  2. By: Mizobuchi, Hideyuki
    Abstract: We introduce two new indexes of labour productivity growth. Both indexes are intended to capture the shift in the short-run production frontier, which can be attributed to technological progress or growth in capital inputs. The two indexes adopt distinct approaches to measuring the distance between the production frontiers. One is based on the distance function and the other is based on the profit function. In the end, we show that these two theoretical measures coincide with the index number formulae that are computable from the observable prices and quantities of output and input. By applying these formulae to the U.S. industry data of the years 1970–2005, we compare newly proposed index of labour productivity growth with the growth of average labour productivity over periods and across industries. We revisit the hypothesis of Baumol’s disease throughout our observations on the trend of industry labour productivities in the service sector.
    Keywords: Labour productivity; index numbers; Malmquist index; Törnqvist index; output distance function; input distance function; Baumol’s disease; service sector
    JEL: O47 O51 D24 A14
    Date: 2010–09–20
  3. By: Maria Nieswand; Stefan Seifert
    Abstract: Efforts undertaken by France to restructure the allocation of governmental competencies increased the importance of subnational governments by transferring additional tasks. This paper analyzes the efficiency of public spending on an intermediate government level for a sample of 96 départements in metropolitan France in 2008. Spending efficiency is measured using Data Envelopment Analysis (DEA). Results indicate significant room for improvements and detect spending inefficiencies averaging between 10 and 22 percent, depending on model specification. To explain efficiency, a bootstrapped truncated regression, following Simar and Wilson (2007), is applied. The second-stage regression shows that efficiency is also determined by exogenous factors and identifies the distance to the national capital, inhabitants' income and the share of inhabitants of an age over 65 as significant determinants of efficiency.
    Keywords: Intermediate government spending efficiency, nonparametric efficiency analysis, bootstrapped truncated regression
    JEL: C14 H11 H72
    Date: 2011
  4. By: Darina Zaimova
    Abstract: Early microeconomic theory established its framework under the assumption that producers’ behaviour is optimal towards input allocation and output level. Since Debreu and Farrell this basic neoclassical approach has been extended, allowing for producers’ decisions to diverge from the optimum production choice. The generally accepted reason for production units no to be efficient regards the presence of technical or allocative inefficiency components in their production function. Therefore one of the main objectives of studying production and cost frontiers is to estimate their efficiency towards input utilization and allocation. This paper aims to measure the technical efficiency of agricultural enterprises in Italy during the period 2003 – 2007 by applying a stochastic frontier analysis to panel data. The developed two-sectored model distinguishes between agricultural production function and non-agricultural production function. The variables included in the first production function are related directly to the final product and are utilized during the production process. The non-agricultural production function includes two categories of variables: the first accounts for the general characteristics of the agricultural enterprises, while the second attempts to describe the opportunities and restrictions of the institutional framework.
    Keywords: agricultural enterprises, SFA model, stochastic frontier production models, technical efficiency
    JEL: C12 C23 C87
    Date: 2011
  5. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper analyses how European football clubs’ current value and debt levels influence their performance. The Simar and Wilson (J Econometrics, 136: 31–64, 2007) procedure is used to bootstrap the data envelopment analysis DEA scores in order to establish the influence of football clubs’ current value and debt levels on their obtained efficiency performances. The results reveal that football clubs’ current value levels have a negative influence on their performances, indicating that football clubs’ high value doesn’t ensure higher performance. At the same time, the empirical evidence suggests that there is no influence associated of football clubs’ debt to their efficiency levels.
    Keywords: European football clubs; Data Envelopment Analysis; Truncated regression; Bootstrapping
    JEL: C69 C14 L83
    Date: 2011–05
  6. By: Benjamin M. Tabak; Dimas M. Fazio; Daniel O. Cajueiro
    Abstract: Using a sample of 495 Latin American banks over the period 2001-2008, this paper investigates how bank concentration influences cost and profit efficiency. We calculate scale efficiency to assess whether these banks are close to their optimal size. We find that banks are more inefficient in profits than in costs; concentration impairs cost efficiency; larger banks have higher performance, but this advantage decreases in concentrated markets; private and foreign banks are the most efficient; most banks are operating under increasing returns of scale, which contributes to the discussion on Basel III.
    Date: 2011–05
  7. By: Theara Horn (Graduate School of Economics, Osaka University); Hitoshi Saito (Graduate School of Economics, Osaka University)
    Abstract: With the data of 831 Japanese water utilities from 1999 to 2008, we used the stochastic cost frontier analysis with a true fixed-effect model in order to estimate the cost efficiency and scale economies. We found that cost inefficiency was approximately 37%. The economies of water delivery volume were observed and found to be remarkably higher for small water utilities than for large ones. Scale economies were also discovered in small water utilities; however, scale diseconomies are likely to be incurred in larger water utilities. The optimal supply population size of a water utility is estimated to be 85,658 consumers, with a water delivery volume of 15.7 million m3 and a network length of 522 km.
    Keywords: Cost Efficiency, Scale Economies, Optimal Size, Japanese Water Utilities
    JEL: H11 L38 L95
    Date: 2011–05
  8. By: Crafts, Nicholas
    Abstract: This paper examines the role of competition in productivity perfromance in Britain over the period from the late-nineteenth to the early twenty-first century. A detailed review of the evidence suggests that the weakness of competition from the 1930s to the 1970s undermined productivity growth but since the 1970s stronger competition has been a key ingredient in ending relative economic decline. The productivity implications of the retreat from competition resulted in large part from interactions with idiosyncratic British institutional structures in terms of corporate governance and industrial relations. This account extends familiar insights from cliometrics both analytically and chronologically.
    Keywords: competition; productivity; relative economic decline
    JEL: N13 N14 O52
    Date: 2011–05
  9. By: Dieter Kuhn (University of Basel)
    Date: 2011
  10. By: Caiazza, Stefano; Pozzolo, Alberto Franco; Trovato, Giovanni
    Abstract: Are the drivers of domestic and cross-border M&As in the banking sector different? Despite the intense research on bank M&As in the last decade, the attention paid to this issue is surprisingly limited. We fill this gap studying the ex-ante determinants of national and international acquisitions in the banking sector in an unbalanced panel of nearly 1,000 banks from 50 world countries, from 1992 to 2007. Our results show that size and profitability have a stronger impact on the probability that a bank is a bidder in a cross-border deal than in a domestic deal. Consistent with the findings of the literature on the determinants of the internationalization of manufacturing firms, international expansion in the banking sector is therefore easier for countries with a number of large “national championsâ€, that are more capable to overcome the fixed costs of internationalization and have a stronger incentive to diversify the idiosyncratic risks of their domestic activities.
    Keywords: M&As, bank internationalization
    JEL: G15 G34 G34
    Date: 2011–05–19

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