New Economics Papers
on Efficiency and Productivity
Issue of 2011‒09‒22
sixteen papers chosen by

  1. Are Occupations Paid What They Are Worth? An Econometric Study of Occupational Wage Inequality and Productivity By Kampelmann, Stephan; Rycx, Francois
  2. Shocks, Financial Dependence, and Efficiency: Evidence from U.S. and Canadian Industries By Marcello M. Estevão; Tiago Severo
  3. Russian Growth Path and TFP Changes in Light of the Estimation of Production Function using Quarterly Data By Kuboniwa, Masaaki
  4. European Cooperative R&D And Firm Performance By Luis Aguiar; Philippe Gagnepain
  5. The Impact of Cultural Diversity on Innovation: Evidence from Dutch Firm-Level Data By Ceren Ozgen
  6. On the informativeness of persistence for mutual funds' performance evaluation using partial frontiers By Amparo Soler Domínguez; Juan Carlos Matallín Sáez; Emili Tortosa Ausina
  7. Distortions, Endogenous Managerial Skills and Productivity Differences By Bhattacharya, Dhritiman; Guner, Nezih; Ventura, Gustavo
  8. The convergence theories and the manufactured industry in Portugal By Martinho, Vítor João Pereira Domingues
  9. Are health factors important for regional growth and convergence? An empirical analysis for the Portuguese districts By Ana Poças; Elias Soukiazis
  10. Energy efficiency in transition: do market-oriented economic reforms matter? By Nepal, Rabindra
  11. From Macro Growth to Disaggregated Production Studies By R. Førsund, Finn; Vislie, Jon
  12. The convergence theories and the geographic concentration in the Portuguese manufactured industry By Martinho, Vítor João Pereira Domingues
  13. Service Export sophistication and Europe's new growth model By Gable, Susanna Lundstrom; Mishra, Saurabh
  14. Growth and Productivity: the role of Government Debt By António Afonso; João Tovar Jalles
  15. Electoral Accountability and Local Government Efficiency: Quasi-Experimental Avidence From the Italian Health Care Sector Reforms By Francesco Porcelli
  16. Does the regulation of manure land application work against agglomeration economies? Theory and evidence from the French hog sector By Carl Gaigné; Julie Le Gallo; Solène Larue; Bertrand Schmitt

  1. By: Kampelmann, Stephan (University of Lille 1); Rycx, Francois (Free University of Brussels)
    Abstract: Labour economists typically assume that pay differences between occupations can be explained with variations in productivity. The empirical evidence on the validity of this assumption is surprisingly thin and subject to various potential biases. The authors use matched employer-employee panel data from Belgium for the years 1999-2006 to examine occupational productivity-wage gaps. They find that occupations play distinct roles for remuneration and productivity: while the estimations indicate a significant upward-sloping occupational wage-profile, the hypothesis of a flat productivity-profile cannot be rejected. The corresponding pattern of over- and underpayment stands up to a series of robustness tests.
    Keywords: labour productivity, wages, occupations, production function, matched employer-employee data
    JEL: J24 J31 J44
    Date: 2011–09
  2. By: Marcello M. Estevão; Tiago Severo
    Abstract: The paper investigates how changes in industries’ funding costs affect total factor productivity (TFP) growth. Based on panel regressions using 31 U.S. and Canadian industries between 1991 and 2007, and using industries’ dependence on external funding as an identification mechanism, we show that increases in the cost of funds have a statistically significant and economically meaningful negative impact on TFP growth. This effect is, however, non-monotonic across sectors with different degrees of dependence on external finance. Our findings cannot be explained by either increasing returns to scale or factor hoarding, as results are not sensitive to controlling for industry size and our calculations account for changes in factor utilization. The paper presents a theoretical model that produces the observed non-monotonic effect of financial shocks on TFP growth and suggests that financial shocks distort the allocation of factors across firms even within an industry, thus reducing TFP growth.
    Keywords: Business cycles , Canada , Economic models , External shocks , Industrial sector , Productivity , United States ,
    Date: 2011–08–17
  3. By: Kuboniwa, Masaaki
    Abstract: We present estimations of a Cobb-Douglas production function with a steady change in TFP (total factor productivity) for the Russian economy, using quarterly data for the favorable period 1998Q3–2008Q2 and the period 1995Q1–2010Q2 as well. Compiling our baseline data on capital and labor adjusted for utilization, we explicitly present estimations of the coefficients (the capital distribution ratio and TFP) of production function, which show that TFP is the major growth source, followed by the capital contribution. We also show results of measurement of Russia‟s GDP gaps as the differences between potential and actual GDPs based on the production function and the Hodrick-Prescott filter.
    Keywords: Growth, TFP, Cobb-Douglas, Russia
    JEL: E01 P24
    Date: 2011–02
  4. By: Luis Aguiar (Departamento de Economía - Universidad Carlos III de Madrid); Philippe Gagnepain (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The goal of this paper is to assess the impact on the performance of firms that participate in Research Joint Ventures (RJVs) funded by the Fifth European Framework Programme for Research and Technological Development (EU-FP5). A special emphasis is made on the User-friendly Information Society (IST) programme, one of the most important thematic programmes of the EU-FP5. We use the funding available to the firms as an instrumental variable to account for self-selection and estimate the Local Average Treatment Effect (LATE) of participation by considering labor productivity and profit margin as performance measures. Our results show a large and positive impact of participation on the labor productivity of the firms, whereas the effect on profit margin is weaker. When taking into account the size of the RJV, we find that the positive impact on labor productivity comes mainly from participation in large projects and that participation in smaller RJVs has a negative effect on the profit margin.
    Date: 2011
  5. By: Ceren Ozgen (Department of Spatial Economics, VU University Amsterdam)
    Abstract: Due to the growth in international migration in recent decades, the workforce of firms in host countries has become considerably more diverse, both demographically and culturally. It is an important question for firms and for governments to ask whether there are some productivity-enhancing externalities gained from this growing diversity within firms. In recent years migration research has demonstrated positive economic impacts of cultural diversity on productivity and innovation at the regional level. However, there is a dearth of research on the links between innovation and migrant diversity at the firm level. In this paper we construct and analyse a unique linked employer-employee micro-dataset of 4582 firms, based on survey and administrative data obtained from Statistics Netherlands. Excluding firms in the hospitality industry and other industries that employ low-skilled migrants, we use the local number of restaurants with foreign cuisines and the historical presence of migrant communities as valid instruments of endogenous migrant settlement. We find that firms in which foreigners account for a relatively large share of employment are somewhat less innovative. However, there is strong evidence that firms that employ a more diverse foreign workforce are more innovative, particularly in terms of product innovations.
    Keywords: immigration, innovation, cultural diversity, knowledge spillovers, linked employer-employee data, Netherlands
    JEL: F22 O31
    Date: 2011–09
  6. By: Amparo Soler Domínguez (Dpt. Finances i Comptabilitat); Juan Carlos Matallín Sáez (Dpt. Finances i Comptabilitat); Emili Tortosa Ausina (Universitat Jaume I)
    Abstract: The last few years have witnessed a rapid evolution in the literature evaluating mutual fund performance using frontier techniques. The instruments applied, mostly DEA (Data Envelopment Analysis) and, to a lesser extent, FDH (Free Disposal Hull), are able to encompass several dimensions of performance, but they also have some disadvantages that might be preventing a wider acceptance. The recently developed order-m and order-a partial frontiers overcome some of the disadvantages (they are robust with respect to extreme values and noise, and do not suffer from the well-known curse of dimensionality) while keeping the main virtues of DEA and FDH (they are fully-nonparametric). In this article we apply not only the non-convex counterpart of DEA, namely, FDH but also order-m and order-a partial frontiers to a sample of Spanish mutual funds. The results obtained for both order-m and order-a are useful, since a full ranking of mutual funds’ performance is obtained. We combine these methods with the literature on mutual fund performance persistence. By combining the two literatures we derive an algorithm for guiding the choice of m and a parameters intrinsic to order-m and order-a (respectively) based on mutual fund performance persistence. Los últimos años han sido testigos de una rápida evolución de la literatura que evalúa el rendimiento de fondos de inversión utilizando la metodología del enfoque frontera. Los instrumentos aplicados, principalmente DEA (Data Envelopment Analysis) y, en menor medida, FDH (Free Disposable Hull), son capaces de abarcar varios aspectos del rendimiento, pero también poseen algunas desventajas que podrían impedir una mayor aceptación. El recientemente desarrollado enfoque de las fronteras parciales de orden-m y de orden-alfa supera algunos de los inconvenientes (estos procedimientos son robustos con respecto a los valores extremos y perturbaciones aleatorias o ruido, y no sufren la conocida “maldición de la dimensionalidad” o curse of dimensionality), manteniendo las principales virtudes de DEA y FDH (ambas técnicas son absolutamente no paramétricas). En este artículo se aplica no sólo la versión no convexa de DEA, es decir, FDH, sino también para fronteras de orden-m y de orden-alfa cuya utilidad es notable, ya que se obtiene una clasificación completa del rendimiento de los fondos de inversión. En este trabajo se combinan estos métodos con la literatura existente relativa a la persistencia en el rendimiento de los fondos de inversión. Mediante la combinación de ambas literaturas deducimos un algoritmo capaz de guiar (o que sirva de referencia) en la elección de los parámetros intrínsecos m y alfa correspondientes a orden-m y a orden-alfa (respectivamente) en base a la persistencia en el rendimiento de los fondos de inversión.
    Keywords: eficiencia, fondos de inversión, enfoque de fronteras parciales, persistencia. efficiency, mutual funds, partial frontiers, persistence.
    Date: 2011–01
  7. By: Bhattacharya, Dhritiman (EQUIFAX); Guner, Nezih (MOVE, Barcelona); Ventura, Gustavo (Arizona State University)
    Abstract: We develop a span-of-control model where managerial skills are endogenous and the outcome of investments over the life cycle of managers. We calibrate this model to U.S plant-size data to quantify the effects of distortions that are correlated with the size of production units. These distortions lead to sharp reductions in plant productivity and the fraction of employment in large plants, with a quantitatively important role for managerial investments. We find that the model can account quite well for properties of Japanese size-distribution data, with a model-implied TFP of about 83% of the U.S. Distortions are critical in accounting for the differences in size distribution between the U.S. and Japan.
    Keywords: distortions, size, skill investments, productivity differences
    JEL: O40 E23
    Date: 2011–09
  8. By: Martinho, Vítor João Pereira Domingues
    Abstract: The aim of this paper is to present a further contribution to the analysis of absolute convergence, associated with the neoclassical theory, of the manufactured industry productivity at regional level and for the periods from 1986 to 1994 and from 1995 to 1999. The main conclusions that should be noted is which the signs of convergence different between the several manufactured industries.
    Keywords: convergence theories; panel data; manufactured industry; Portuguese regions
    JEL: O18 C23 R11 L60
    Date: 2011
  9. By: Ana Poças (Polytechnic Institute of Guarda and UDI); Elias Soukiazis (Faculdade de Economia/GEMF, Universidade de Coimbra)
    Abstract: The aim of this study is to analyze the impact of health factors on economic growth and convergence across the Portuguese regions at the district level. Like education, health factors could be important for explaining the growth performance of regions through the increase in labour productivity. Therefore, human capital can be seen in a broader perspective encompassing not only educational qualifications but also health conditions. Although this is not a new idea, empirical evidence at a regional level is not robust supporting this issue, with few exceptions. With this study we try to fill this gap and bring additional evidence of the relevance of health on regional growth considering the Portuguese districts. We employ a panel data approach for the period 1996-2006 taking into account specific regional differences. We also analyze whether there are differences between the littoral (coastal) and the interior (in-land) districts in what concerns health conditions and how they affect their convergence process.
    Keywords: : Regional growth, health and human capital, panel data.
    JEL: R11 O18
    Date: 2011–08
  10. By: Nepal, Rabindra
    Abstract: Global climate change and security of supply concerns pose significant challenges for sustainable development as well as the need to improve energy efficiency in transition and developing economies. Meanwhile, economic theory suggests that market-based economic policies and reforms are crucial for accelerating energy efficiency in developing and transition countries. Hence, this paper analyses the impacts of several market-oriented economic reforms on energy efficiency in the transition countries. The transition countries experienced a rapid marketization process that saw their economies transformed from central planning towards more market based economies since the early 1990s. The econometric results from the bias corrected fixed-effect analysis (LSDVC) suggest that both large and small scale privatisation process has been the sole driver of energy efficiency in transition countries. However, the lack of suitable institutions to support overall-market reforms implies that other market based economic reforms remain ineffective in improving energy efficiency in transition countries.
    Keywords: market reforms; energy efficiency; transition countries; institutions
    JEL: Q54 P28 C33
    Date: 2011–09–13
  11. By: R. Førsund, Finn (Dept. of Economics, University of Oslo); Vislie, Jon (Dept. of Economics, University of Oslo)
    Abstract: Professor Leif Johansen (1930 – 1982) made significant contributions to a large number of fields in economics. A short survey of his contributions is presented. The main focus in the paper is on his growth – production program constituting an important part of his research. The key concepts are embodied technical change, irreversibility, sunk cost, rigidities and heterogeneity. The impact of these factors on the nature of economic growth at the macro level is the point of departure of gradually disaggragating the level of analysis right down to the individual firm. An important tool for the analysis for dynamic structural change at the industry level is the short-run function capturing the underlying heterogeneity of the technologies of the firms within an industry. Technical rigidities represent constraints on how an economy develops from the level of a single industry up to the aggregated macro level of an economy.
    Keywords: Dynamic structural change; Heterogeneity; Macroeconomic growth; Short-run industry production function; Technical rigidities; Vintage
    JEL: C61 D24 D92 E22 E23
    Date: 2011–09–14
  12. By: Martinho, Vítor João Pereira Domingues
    Abstract: The aim of this paper is to present a further contribution to the analysis of absolute convergence, associated with the neoclassical theory, of the manufactured industry productivity at regional level and for the period from 1986 to 1994 (1)(Martinho, 2011a). This paper pretends, also, to analyze the importance which the natural advantages and local resources are in the manufacturing industry location, in relation with the "spillovers" effects and industrial policies. To this, we estimate the Rybczynski equation matrix for the various manufacturing industries in Portugal, at regional level (NUTS II) and for the period 1986 to 1994 (2)(Martinho, 2011b).
    Keywords: convergence; geographic concentration; panel data; manufactured industries; Portuguese regions
    JEL: O18 C23 R11 L60
    Date: 2011
  13. By: Gable, Susanna Lundstrom; Mishra, Saurabh
    Abstract: Technology has changed the nature of service activities and made them more productive, tradable and fragmented in the global supply chain. Has Europe's growth been benefiting from the ongoing globalization of services? Services dominate growth in EU-15 countries and, to a lesser extent, in New Member States (NMS) and Accession (ACC) countries. Except in the ACC region, Europe has maintained specialization in service exports. Service productivity, tradability, and exports of modern services are high in EU-15, growing fast in NMS while at a lower pace in ACC. Service export sophistication is important for growth across the region, but especially in NMS.
    Keywords: Commodities,Public Sector Corruption&Anticorruption Measures,Housing&Human Habitats,Economic Theory&Research,Banks&Banking Reform
    Date: 2011–09–01
  14. By: António Afonso; João Tovar Jalles
    Abstract: We use a panel of 155 countries to assess the links between growth, productivity and government debt. Via growth equations we assess simultaneity, endogeneity, cross-section dependence, nonlinearities, and threshold effects. We find a negative effect of the debt ratio. For the OECD, the higher the debt maturity the higher economic growth; financial crisis are detrimental for growth; fiscal consolidation promotes growth; and higher debt ratios are beneficial to TFP growth. The growth impact of a 10% increase in the debt ratio is -0.2% (0.1%) respectively for countries with debt ratios above (below) 90% (30%), and an endogenous debt ratio threshold of 59% can be derived.
    Keywords: government debt, crises, panel analysis. Classification-C23, E62, H50.
    Date: 2011–07
  15. By: Francesco Porcelli (University of Bari)
    Abstract: This paper evaluates the effect of two policy changes on the efficiency of Italian regional governments in the provision of health care services: first a change in the electoral system; second a process of fiscal decentralisation. The electoral system was changed in 1995 and replaced a pure proportional system by a majoritarian system, fostering the transition of regional governments towards a presidential regime. The process of fiscal decentralisation took effect in 1998, when intergovernmental grants earmarked for the health care sector were replaced by regional taxes. The Italian context offers a unique source of data to test the predictions of recent theoretical models that support a positive relationship between government efficiency and the electoral accountability enhanced by institutions such as electoral rules and fiscal decentralisation. The paper provides two main contributions: 1) a comprehensive analysis of the two main reforms that involved Italian regional governments and the health care sector during the 1990s; 2) the evaluation of the impact of the electoral reform in a quasi-experimental setting. The final results provide empirical evidence in line with the findings of the theoretical models.
    Keywords: electoral accountability, DEA, decentralisation, efficiency, health
    JEL: D71 D91 I32
    Date: 2011–09
  16. By: Carl Gaigné; Julie Le Gallo; Solène Larue; Bertrand Schmitt
    Abstract: The well-known increase in the geographical concentration of hog production suggests the presence of agglomeration economies related to spatial spillovers and inter-dependencies among industries. In this paper, we examine whether the restrictions on land application of manure may weaken productivity gains arising from the agglomeration process. We develop a model of production showing the ambiguous spatial effect of land availability and the restriction on the manure application rate. Indeed, while the regulation of manure application triggers dispersion when manure is applied to land as a crop nutrient, it also prompts farmer to adopt manure treatment that favors agglomeration of hog production. Estimations of a reduced form of the spatial model with a spatial HAC procedure applied to data for French hog production for 1988 and 2000 confirm the ambiguous effect of land limitations induced by the restrictions on manure application. It does not prevent spatial concentration of hog production, and even boosts the role played by spatial spillovers in the agglomeration process.
    Keywords: hog production, land availability, manure application regulation, agglomeration economies, spatial econometrics
    JEL: Q10 Q53 R12
    Date: 2011

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