New Economics Papers
on Efficiency and Productivity
Issue of 2011‒07‒02
twenty papers chosen by

  1. Returns to scale, productivity and efficiency in US banking (1989-2000): the neural distance function revisited By Panayotis G. Michaelides; Angelos T. Vouldis; Efthymios G. Tsionas
  2. Big ideas: How competition improves management and productivity By John Van Reenen
  3. Land use planning: the impact on retail productivity By Paul Cheshire; Christian Hilber; Ioannis Kaplanis
  4. Raising the Barcode Scanner: Technology and Productivity in the Retail Sector By Emek Basker
  5. On Marginal Returns and Inferior Inputs By Paolo Bertoletti; Giorgio Rampa
  6. Industry funding of university research and scientific productivity By Hottenrott, Hanna; Thorwarth, Susanne
  7. On the Efficiency Effects of Subsidies in Microfinance: An Empirical Inquiry By Daniel Traca
  8. Does Wage Dispersion Make All Firms Productive? By Mahy, Benoît; Rycx, Francois; Volral, Mélanie
  9. Labor Market Institutions and Labor Productivity Growth By Macit, Fatih
  10. Food Crises and Gender Inequality By Bina Agarwal
  11. Is infrastructure capital productive ? a dynamic heterogeneous approach By Calderon, Cesar; Moral-Benito, Enrique; Serven, Luis
  12. Measurement Invariance and Response Bias: A Stochastic Frontier Approach By Robert Rosenman; Vidhura Tennekoon; Laura G. Hill
  13. Increasing Returns to Scale in U.S. manufacturing industries: evidence from direct and reverse regression. By Xi Chen
  14. Human Capital and Regional Development By Nicola Gennaioli; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
  15. The use of supply chain DEA models in operations management: A survey By Halkos, George; Tzeremes, Nickolaos; Kourtzidis, Stavros
  16. Modeling Directions of Technical Change in Agricultural Sector. By Orachos Napasintuwong Artachinda;
  17. Augmented Solow Model with Mincerian Schooling and Infrastructure Externalities By Tomasz Brodzicki
  18. Proximity, Networks and Knowledge Production in Europe By Emanuela Marrocu; Raffaele Paci; Stefano Usai
  19. Endogenous R&D and Intellectual Property Laws in Developed and Emerging Economies By Bagchi, Aniruddha; Roy, Abhra
  20. Econometric Estimation of the “Constant Elasticity of Substitution" Function in R: Package micEconCES By Arne Henningsen; Géraldine Henningsen

  1. By: Panayotis G. Michaelides (National Technical University of Athens); Angelos T. Vouldis (Bank of Greece); Efthymios G. Tsionas (Athens University of Economics and Business)
    Abstract: Productivity and efficiency analyses have been indispensable tools for evaluating firms’ performance in the banking sector. In this context, the use of Artificial Neural Networks (ANNs) has been recently proposed in order to obtain a globally flexible functional form which is capable of approximating any existing output distance function while enabling the a priori imposition of the theoretical properties dictated by production theory, globally. Previous work has proposed and estimated the so-called Neural Distance Function (NDF) which has numerous advantages when compared to widely adopted specifications. In this paper, we carefully refine some of the most critical characteristics of the NDF. First, we relax the simplistic assumption that each equation has the same number of nodes because it is not expected to approximate reality with any reasonable accuracy and different numbers of nodes are allowed for each equation of the system. Second, we use an activation function which is known to achieve faster convergence compared to the conventional NDF model. Third, we use a relevant approach for technical efficiency estimation based on the widely adopted literature. Fitting the model to a large panel data we illustrate our proposed approach and estimate the Returns to Scale, the Total Factor Productivity and the Technical Efficiency in US commercial banking (1989-2000). Our approach provides very satisfactory results compared to the conventional model, a fact which implies that the refined NDF model successfully expands and improves the conventional NDF approach.
    Keywords: Output distance function; Neural networks; Technical efficiency; US banks
    JEL: C50 C45 C30
    Date: 2011–03
  2. By: John Van Reenen
    Abstract: John Van Reenen sketches the evolution of CEP research on the drivers of productivity growth - and its impact on policies to foster competition.
    Keywords: management, productivity, organization
    JEL: L2 M2 O32 O33
    Date: 2011–06
  3. By: Paul Cheshire; Christian Hilber; Ioannis Kaplanis
    Abstract: The restrictions that planning policies impose on retail development have significantly reduced the productivity of supermarkets, according to Paul Cheshire and colleagues.
    Keywords: Land use regulation, regulatory costs, firm productivity, retail
    JEL: D2 L51 L81 R32
    Date: 2011–06
  4. By: Emek Basker
    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 first few years, with a larger effect in stores carrying more packaged products likely to bear barcodes. Setup costs significantly offset the short-run productivity effect.
    Keywords: Barcode scanners, Retail, Supermarkets, Technology, Productivity
    JEL: L81 O33
    Date: 2011–05
  5. By: Paolo Bertoletti (Department of Economics and Quantitative Methods, University of Pavia); Giorgio Rampa (Department of Economics and Quantitative Methods, University of Pavia)
    Abstract: A necessary and sufficient condition for an input to be inferior is that, taking into account the input adjustment, an increase of its price raises the marginal productivity of all inputs. Contrary to a widespread opinion, it is not necessary that (some) inputs are “rivals” (i.e., that some marginal productivity cross derivative is negative). We discuss these facts and illustrate them by introducing a few simple functional forms for the production function. Our results suggest that the existence of inferior inputs is naturally associate to the presence of increasing returns, and possibly make the case for inferiority considerably stronger.
    Keywords: inferior and normal inputs, marginal productivity, homotheticity.
    JEL: D11 D21 D24
    Date: 2011–05
  6. By: Hottenrott, Hanna; Thorwarth, Susanne
    Abstract: University research provides valuable inputs to industrial innovation. It is therefore not surprising that private sector firms increasingly seek direct access through funding public R&D. This development, however, spurred concerns about possible negative long-run effects on scientific performance. While previous research mainly focused on a potential crowding-out of scientific publications through commercialization activities such as patenting or the formation of spin-off companies, we study the effects of direct funding from industry on professors' publication and patenting efforts. Our analysis on a sample of 678 professors at 46 higher education institutions in Germany shows that a higher share of industry funding of a professor's research budget results in a lower publication outcome both in terms of quantity and quality in subsequent years. For patents, we find that industry funding increases their quality measured by patent citations. --
    Keywords: Scientific Productivity,Research Funding,Academic Patents,Technology Transfer
    JEL: O31 O32 O33
    Date: 2011
  7. By: Daniel Traca
    Abstract: The impact of subsidies on the efficiency of microfinance institutions (MFIs) is a key question in the field, given the large volume of subsidies received over the last twenty years. Using an original database of rating agencies, this paper gives empirical evidence on the impact of subsidy intensity on the efficiency of MFIs. After correcting for endogeneity bias, our results suggest that subsidies have contributed to raise efficiency, for the majority of MFIs in our sample. However, the evidence suggests also that there is a level beyond which increased subsidization taxes efficiency, at the margin. In our sample, 50% of MFIs receive levels of subsidization higher than that threshold.
    Keywords: microfinance
    Date: 2011–06–01
  8. By: Mahy, Benoît (University of Mons-Hainaut); Rycx, Francois (Free University of Brussels); Volral, Mélanie (University of Mons-Hainaut)
    Abstract: This article puts the relationship between wage dispersion and firm productivity to an updated test, taking advantage of access to detailed Belgian linked employer-employee panel data. Controlling for simultaneity issues, time-invariant workplace characteristics and dynamics in the adjustment process of productivity, empirical results reveal the existence of a positive impact from conditional intra-firm wage dispersion to firm productivity (measured by the average value added per hour worked), which however decreases for higher dispersion levels. Findings thus suggest that the incentive effect of wage dispersion, predicted for instance by the 'tournament' model, dominates 'fairness' and/or 'sabotage' considerations. Further results reveal that the influence of wage dispersion on firm productivity is stronger among firms with a larger proportion of highly skilled workers but does not depend on whether wages are collectively renegotiated at the firm level.
    Keywords: labour productivity, matched employer-employee panel data, personnel economics, wage dispersion
    JEL: J31 J24 M5
    Date: 2011–06
  9. By: Macit, Fatih
    Abstract: In this paper I investigate how the labor productivity growth is affected from various institutions of the labor market using the empirical evidence from a panel data of OECD countries. I find that benefit replacement rate, benefit duration index, and the tax wedge appear to be significant labor market institutions affecting the labor productivity growth. A higher benefit replacement rate, a longer duration of unemployment benefits, and a higher tax wedge are expected to generate a lower labor productivity growth.
    Keywords: Labor Market Institutions; Labor Productivity Growth
    JEL: J01 J24
    Date: 2011–06
  10. By: Bina Agarwal
    Abstract: This paper examines the current food crises, the projected effect of climate change, the vulnerabilities created by regional concentrations of food production, imports and exports, and the significant role of women as food producers, consumers and family food managers. Bridging productivity differentials between male and female farmers, by helping women overcome production constraints, would significantly increase agricultural output. This becomes an imperative, given the feminization of agriculture. Institutionally, a group approach to farming would help women and other small holders enhance their access to land and inputs, benefit from economies of scale, and increase their bargaining power economically and socially.
    Keywords: food crises, food security, gender inequality, women farmers, agricultural productivity, gendered constraints, and group farming
    JEL: J16 J43 Q13 Q15 Q18
    Date: 2011–06
  11. By: Calderon, Cesar; Moral-Benito, Enrique; Serven, Luis
    Abstract: This paper offers an empirical evaluation of the output contribution of infrastructure. Drawing from a large data set on infrastructure stocks covering 88 countries and spanning the years 1960-2000, and using a panel time-series approach, the paper estimates a long-run aggregate production function relating GDP to human capital, physical capital, and a synthetic measure of infrastructure given by the first principal component of infrastructure endowments in transport, power, and telecommunications. Tests of the cointegration rank allowing it to vary across countries reveal a common rank with a single cointegrating vector, which is taken to represent the long-run production function. Estimation of its parameters is performed using the pooled mean group estimator, which allows for unrestricted short-run parameter heterogeneity across countries while imposing the (testable) restriction of long-run parameter homogeneity. The long-run elasticity of output with respect to the synthetic infrastructure index ranges between 0.07 and 0.10. The estimates are highly significant, both statistically and economically, and robust to alternative dynamic specifications and infrastructure measures. There is little evidence of long-run parameter heterogeneity across countries, whether heterogeneity is unconditional, or conditional on their level of development, population size, or infrastructure endowments.
    Keywords: Transport Economics Policy&Planning,Economic Theory&Research,Banks&Banking Reform,Public Sector Economics,Infrastructure Economics
    Date: 2011–06–01
  12. By: Robert Rosenman; Vidhura Tennekoon; Laura G. Hill (School of Economic Sciences, Washington State University)
    Abstract: The goals of the present paper were to assess measurement invariance using a common econometric method and to illustrate the approach with self-reported measures of parenting behaviors before and after a family intervention. Most recent literature on measurement invariance (MI) in psychological research 1) explores the use of structural equation modeling (SEM) and confirmatory factor analysis to identify measurement invariance, and 2) tests for measurement invariance across groups rather than across time. We use method, Stochastic Frontier Estimation, or SFE, to identify response bias and covariates of response bias both across individuals at a single point in time and across two measurement occasions (before and after participation in a family intervention). We examined the effects of participant demographics (N = 1437) on response bias; gender and race/ethnicity were related to magnitude of bias and to changes in bias across time, and bias was lower at posttest than at pretest. We discuss analytic advantages and disadvantages of SFE relative to SEM approaches and note that the technique may be particularly useful in addressing the problem of “response shift bias” or “recalibration” in program evaluation -- that is, a shift in metric from before to after an intervention which is caused by the intervention itself and may lead to underestimates of program effects.
    Keywords: Measurement invariance, measurement equivalence, response bias, response-shift bias, stochastic frontier analysis
    JEL: I1 C5
    Date: 2010–09
  13. By: Xi Chen
    Abstract: In this paper, I compare the OLS and IV estimators for the direct and reverse regression models in the context of estimating returns to scale and technical progress. It shows that the direct and reverse OLS estimators are inconsistent, that the direct OLS is always more precise than the reverse OLS under the normality assumption, and that the direct IV estimator and its reverse counterpart are consistent and asymptotically equivalent. Working with data from U.S. manufacturing industries over the last half-century, the estimation results show that in most industries increasing returns to scale are important and technical progress is small when it comes to explaining productivity growth.
    JEL: C13 D24
    Date: 2011
  14. By: Nicola Gennaioli; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
    Abstract: We investigate the determinants of regional development using a newly constructed database of 1569 sub-national regions from 110 countries covering 74 percent of the world’s surface and 96 percent of its GDP. We combine the cross-regional analysis of geographic, institutional, cultural, and human capital determinants of regional development with an examination of productivity in several thousand establishments located in these regions. To organize the discussion, we present a new model of regional development that introduces into a standard migration framework elements of both the Lucas (1978) model of the allocation of talent between entrepreneurship and work, and the Lucas (1988) model of human capital externalities. The evidence points to the paramount importance of human capital in accounting for regional differences in development, but also suggests from model estimation and calibration that entrepreneurial inputs and human capital externalities are essential for understanding the data.
    JEL: L26 O11 O43 O47 R11
    Date: 2011–06
  15. By: Halkos, George; Tzeremes, Nickolaos; Kourtzidis, Stavros
    Abstract: Standard Data Envelopment Analysis (DEA) approach is used to evaluate the efficiency of DMUs and treats its internal structures as a “black box”. The aim of this paper is twofold. The first task is to survey and classify supply chain DEA models which investigate these internal structures. The second aim is to point out the significance of these models for the decision maker of a supply chain. We analyze the simple case of these models which is the two-stage models and a few more general models such as network DEA models. Furthermore, we study some variations of these models such as models with only intermediate measures between first and second stage and models with exogenous inputs in the second stage. We define four categories: typical, relational, network and game theoretic DEA models. We present each category along with its mathematical formulations, main applications and possible connections with other categories. Finally, we present some concluding remarks and opportunities for future research.
    Keywords: Supply chain; Data envelopment analysis; Two-stage structures; Network structures
    JEL: C14 C61 C70
    Date: 2011–06
  16. By: Orachos Napasintuwong Artachinda (Department of Agricultural and Resource Economics,Faculty of Economics,Kasetsart University,Thailand);
    Keywords: directed technical change, induced innovation
    JEL: O31 O33
    Date: 2011–06
  17. By: Tomasz Brodzicki (Faculty of Economics, University of Gdansk)
    Abstract: According to Crescezni and Rodriguez-Pose (2008) backward European regions should follow balanced strategies in which infrastructure development is coordinated with policies aimed at developing human capital and the innovative potential of regions. In order to asses their postulates we extend the analysis of Carstensen et al. (2009) further augmenting the neoclassical Solow Model to incorporate both Mincerian schooling externalities and infrastructure externalities in a single theoretical framework. Infrastructure is introduced into the model in a manner similar to Hicks-neutral technological change – potentially rising overall efficiency of economy. We do not assume ax ante the existence of positive externality. Solving the model we obtain a structural equation which is then econometrically tested in order to obtain estimates of both education and infrastructure externalities for a group of European states. Estimates for panel data model bring interesting results. Infrastructure and education externalities are both postitive and statistically significant. The education externality is however significantly stronger for CEE countries while infrastructure externality is not statistically significant for the same group of countries.
    Keywords: economic growth, human capital, infrastructure development, augmented Solow model
    JEL: O41 H52 H54 C21 C23
    Date: 2011–06
  18. By: Emanuela Marrocu; Raffaele Paci; Stefano Usai
    Abstract: This paper aims at assessing the role of various dimension of proximity on the innovative capacity of a region within the context of a knowledge production function where we consider as main internal inputs R&D expenditures and human capital. We want to assess if, and how much, the creation of new ideas in a certain region is the result of flows of information and knowledge coming from proximate regions. In particular, we examine in details the concept of proximity combining the usual geographical dimension with the institutional, the technological, the social and the organizational proximity. The analysis is implemented for an ample dataset referring to 287 regions in 29 countries (EU27 plus Norway, Switzerland) for the last decade. Results show that human capital and R&D are clearly essential for innovative activity but with an impact which is much higher for the former factor. As for the proximity and network effects, we find that geography is important but less than technological and cognitive proximity. Social and organizational networks are also relevant but their role is more modest. Finally, most of these proximities prove to have a complementary role in shaping innovative activity across regions in Europe.
    Keywords: knowledge production; technological spillover; proximity; networks
    JEL: O31 C31 O18 R12 O52
    Date: 2011
  19. By: Bagchi, Aniruddha; Roy, Abhra
    Abstract: The incentive of providing protection of intellectual property has been analyzed, both for an emerging economy as well as for a developed economy. The optimal patent length and the optimal patent breadth within a country are found to be positively related to each other for a fixed structure of laws abroad. Moreover, a country can respond to stronger patent protection abroad by weakening its patent protection under certain circumstances and by strengthening its patent protection under other circumstances. These results depend upon the curvature of the R&D production function. Finally, we investigate the impact of an increase in the willingness-to-pay in the emerging economy and find conditions under which there is an improvement in both patent length as well as patent breadth in the emerging economy.
    Keywords: Patent Length; Patent Breadth; Productivity
    JEL: F20 O34 O31
    Date: 2011–06
  20. By: Arne Henningsen (Institute of Food and Resource Economics, University of Copenhagen); Géraldine Henningsen (Risø National Laboratory for Sustainable Energy, Technical University of Denmark)
    Abstract: The Constant Elasticity of Substitution (CES) function is popular in several areas of economics, but it is rarely used in econometric analysis because it cannot be estimated by standard linear regression techniques. We discuss several existing approaches and propose a new grid-search approach for estimating the traditional CES function with two inputs as well as nested CES functions with three and four inputs. Furthermore, we demonstrate how these approaches can be applied in R using the add-on package micEconCES and we describe how the various estimation approaches are implemented in the micEconCES package. Finally, we illustrate the usage of this package by replicating some estimations of CES functions that are reported in the literature.
    Keywords: constant elasticity of substitution, CES, nested CES, R
    JEL: C01 C13 D24 E23 O47
    Date: 2011–06

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