nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2012‒02‒01
thirteen papers chosen by
Angelo Zago
University of Verona

  1. Nontransferable Water Rights and Technical Inefficiency in the Japanese Water Supply Industry By Eiji Satoh
  2. Productivity and Credit Constraints: Firm-Level Evidence from Propensity Score Matching By Ciaian, Pavel; Fa?kowski, Jan; d’Artis, Kanc; Pokrivcak, Jan
  3. Second-tier Government Banks and Firm Performance: Micro-Evidence from Colombia By Marcela Eslava; Alessandro Maffioli; Marcela Meléndez Arjona
  4. The Inventive, the Educated, and the Creative: How Do They Affect Metropolitan Productivity? By Lobo, José; Mellander, Charlotta; Stolarick, Kevin; Strumsky, Deborah
  5. Technological Change, Fuel Efficiency and Carbon Intensity in Electricity Generation: A Cross-Country Empirical Study By Elena Verdolini; Nick Johnstone; Ivan Hašcic
  6. Incentives and the Effects of Publication Lags on Life Cycle Research Productivity in Economics By John P. Conley; Mario J. Crucini; Robert A. Driskill; Ali Sina Onder
  7. Development Accounting with Intermediate Goods By Jan Grobovšek
  8. Public Banks and the Productivity of Capital By Svetlana Andrianova
  9. Can governments do it better? Merger mania and hospital outcomes in the English NHS By Martin Gaynor; Mauro Laudicella; Carol Propper
  10. Nonparametric cost and revenue functions under constant economies of scale: A simplification for the single output or input case By Briec, Walter; Kerstens, Kristiaan; Van de Woestyne, Ignace
  11. Comparative advantage, multi-product firms and trade liberalisation : An empirical test By Catherine Fuss; Linke Zhu
  13. Do agricultural subsidies crowd out or stimulate rural credit institutions? The Case of CAP Payments By Ciaian, Pavel; Pokrivcak, Jan

  1. By: Eiji Satoh
    Abstract: This study examines whether the Japanese scheme of nontransferable water rights results in technical inefficiency. Using data on 1,263 Japanese retail water suppliers for 2008, their technical efficiency is measured employing data envelopment analysis. Next, a bootstrapped truncated regression model is specified to examine the determinants of technical efficiency. The estimation results reveal that the nontransferability of water rights leads to technical inefficiency of retail water suppliers. Furthermore, the costs of this efficiency amount to about 462 billion yen. This result suggests the government should reallocate water rights flexibly in order to ensure efficiency.
    Keywords: Bootstrapped Truncated Regression, Data Envelopment Analysis, Technical Efficiency, Water Rights
    JEL: Q25 L51 L95
    Date: 2011–12
  2. By: Ciaian, Pavel; Fa?kowski, Jan; d’Artis, Kanc; Pokrivcak, Jan
    Abstract: Drawing on a unique, farm-level panel dataset with 37,409 observations and employing a matching estimator, this paper analyses how farm access to credit affects farm input allocation and farm efficiency in the Central and Eastern European transition countries. We find that farms are asymmetrically credit constrained with respect to inputs. Farm use of variable inputs and capital investment increases up to 2.3% and 29%, respectively, per €1,000 of additional credit. Our estimates also suggest that farm access to credit increases total factor productivity up to 1.9% per €1,000 of additional credit, indicating that an improvement in access to credit results in an adjustment in the relative input intensities on farms. This finding is further supported by a negative effect of better access to credit on labour, suggesting that these two are substitutes. Interestingly, farms are found not to be credit constrained with respect to land.
    Date: 2011–09
  3. By: Marcela Eslava; Alessandro Maffioli; Marcela Meléndez Arjona
    Abstract: Despite the large potential gains from credit by second-tier development banks, little is known about the actual impact of these banks' lending activity. This study partially fills that gap by analyzing the impact of the lending activity of Bancoldex, the Colombian second-tier development bank, on firm performance. The evaluation uses data over a several-year period on loans granted to firms by Bancoldex and on performance for all manufacturing establishments with 10 or more employees. Using a combination of matching techniques and fixed effects panel regressions
    Keywords: Financial Sector :: Financial Services, Economics :: Productivity, Financial Sector :: Financial Markets, Second-tier development banks, access to credit, job creation, firm growth, productivity
    JEL: G28 H43 L25 O12 O54
    Date: 2012–01
  4. By: Lobo, José (Arizona State University); Mellander, Charlotta (Jönköping International Business School); Stolarick, Kevin (University of Toronto); Strumsky, Deborah (University of North Carolina-Charlotte)
    Abstract: A longstanding research tradition assumes that endogenous technological development increases regional productivity. It has been assumed that measures of regional patenting activity or human capital are an adequate way to capture the endogenous creation of new ideas that result in productivity improvements. This process has been conceived as occurring in two stages. First, an invention or innovation is generated, and then it is developed and commercialized to create benefits for the individual or firm owning the idea. Typically these steps are combined into a single model of the “invention in/productivity out” variety. Using data on Gross Metropolitan Product per worker and on inventors, educational attainment, and creative workers (together with other important socio-economic controls), we unpack the model back to the two-step process and use a SEM modeling framework to investigate the relationships among inventive activity and potential inventors, regional technology levels, and regional productivity outcomes. Our results show almost no significant direct relationship between invention and productivity, except through technology. Clearly, the simplification of the “invention in/productivity out” model does not hold, which supports other work that questions the use of patents and patenting related measures as meaningful innovation inputs to processes that generate regional productivity and productivity gains. We also find that the most effective measure of regional inventive capacity, in terms of its effect on technology, productivity, and productivity growth is the share of the workforce engaged in creative activities.
    Keywords: Innovation; Productivity; Regional Technology; Patents; Human Capital; Creative Class
    JEL: C31 O10 O31 O47 R11 Z10
    Date: 2012–01–20
  5. By: Elena Verdolini (Fondazione Eni Enrico Mattei); Nick Johnstone (OECD Environment Directorate); Ivan Hašcic (OECD Environment Directorate)
    Abstract: This paper provides an empirical analysis of the determinants of energy efficiency in fossil fuel electricity generation across 28 OECD countries over the period 1981-2006, with particular attention to the role played by technological development and the availability of energy efficient technologies in the market. This contribution is novel in three respects: first, empirically assess the effects of different determinants of energy efficiency, which include the input mix in electricity generation, the capacity ratio at which power plants are run, as well as the characteristics of the production technology. Second, we focus on the role of technological availability: using patent data for carefully selected innovations in fossil-fuel technologies, we build an indicator which proxies for technological developments in fuel-efficient electricity generation. Third, by formalizing the relationship between fuel efficiency and carbon intensity, we assess the impact of changes in the input mix and in technological availability on CO2 emissions in the electricity sector. Results show that input mix, capacity utilization and new investment in capacity play a significant role in increasing energy efficiency. Increasing the stock of available technologies (or stock of knowledge) is also associated with higher efficiency levels. Given the link between increased efficiency and lower CO2 emissions, we conclude that technological change has a negative and significant effect on carbon intensity, while the changing input mix affects CO2 intensity both through an increase in efficiency as well as by lowering the input-weighted emission factor.
    Keywords: Fossil Fuel Electricity Generation, Energy Efficiency, Carbon Intensity, Technological Change, Patents
    JEL: Q40 O33 O13
    Date: 2011–12
  6. By: John P. Conley (Department of Economics, Vanderbilt University); Mario J. Crucini (Department of Economics, Vanderbilt University); Robert A. Driskill (Department of Economics, Vanderbilt University); Ali Sina Onder (Department of Economics, Uppsala University)
    Abstract: We investigate how increases in publication delays have affected the life-cycle of publications of recent Ph.D. graduates in economics. We construct a panel dataset of 14,271 individuals who were awarded Ph.D.s between 1986 and 2000 in US and Canadian economics departments. For this population of scholars, we amass complete records of publications in peer reviewed journals listed in the JEL (a total of 368,672 observations). We find evidence of significantly diminished productivity in recent relative to earlier cohorts when productivity of an individual is measured by the number of AER equivalent publications. Diminished productivity is less evident when number of AER equivalent pages is used instead. Our findings are consistent with earlier empirical findings of increasing editorial delays, decreasing acceptance rates at journals, and a trend toward longer manuscripts. This decline in productivity is evident in both graduates of top thirty and non-top thirty ranked economics departments and may have important implications for what should constitute a tenurable record. We also find that the research rankings of the faculty do not line up with the research quality of their students in many cases.
    Keywords: Academia, Economists, Research Productivity, Performance Evaluation, Tenure Process, Graduate Programs, Department Rankings
    JEL: A11 A23 J24 J29 J44
    Date: 2011–11
  7. By: Jan Grobovšek (Universitat Autònoma de Barcelona)
    Abstract: Do intermediate goods help explain relative and aggregate productivity differences across countries? Three observations suggest they do: (i) intermediates are relatively expensive in poor countries; (ii) goods industries demand intermediates more intensively than service industries; (iii) goods industries are more prominent intermediate suppliers in poor countries. I build a standard multisector growth model accommodating these features to show that inefficient intermediate production strongly depresses aggregate productivity and increases the price ratio of final goods to services. Applying the model to data for middle and high income countries, I find that poorer countries are only modestly less efficient at producing goods than services, but substantially less efficient at producing intermediate relative to final goods and services. If all countries had the intermediate production efficiency of the US, the aggregate productivity gap between the lowest and highest income countries in the sample is predicted to shrink by roughly two thirds while cross-country differences in the final price ratio would virtually vanish.
    Keywords: Development Accounting, Productivity, Intermediate Goods
    JEL: O10 O41 O47
    Date: 2011–11
  8. By: Svetlana Andrianova
    Abstract: Weak institutions are shown to create scope for public banks to play a growth-promoting role, even if such banks are less efficient than private banks.
    Keywords: Economic growth; governance; regulation
    JEL: O16 G18 G28 K42
    Date: 2011–10
  9. By: Martin Gaynor; Mauro Laudicella; Carol Propper
    Abstract: The literature on mergers between private hospitals suggests that such mergers often produce little benefit. Despite this, the UK government has pursued an active policy of hospital mergers, arguing that such consolidations will bring improvements for patients. We examine whether this promise is met. We exploit the fact that between 1997 and 2006 in England around half the short term general hospitals were involved in a merger, but that politics means that selection for a merger may be random with respect to future performance. We examine the impact of mergers on a large set of outcomes including financial performance, productivity, waiting times and clinical quality and find little evidence that mergers achieved gains other than a reduction in activity. Given that mergers reduce the scope for competition between hospitals the findings suggest that further merger activity may not be the appropriate way of dealing with poorly performing hospitals.
    Keywords: Hospital mergers, event study, quality, political influence.
    JEL: I18 I11 L13 L32
    Date: 2012–01
  10. By: Briec, Walter (Universit´e de Perpignan, Perpignan, France); Kerstens, Kristiaan (IESEG School of Management, Lille, France); Van de Woestyne, Ignace (Hogeschool-Universiteit Brussel (HUB), Belgium)
    Abstract: This note shows how the linear programs needed to compute cost and revenue functions under constant returns to scale and a single output or input, respectively, can be replaced with a more efficient enumeration algorithm. An empirical illustration shows the gain in computer time one can obtain.
    Keywords: nonparametric cost and revenue functions
    JEL: D24
    Date: 2011–09
  11. By: Catherine Fuss (National Bank of Belgium, Research Department); Linke Zhu (Katholieke Universiteit Leuven, LICOS)
    Abstract: This paper investigates how economies of scope in multi-product firms interact with comparative advantage in determining the effect of trade liberalisation on resource reallocation, using Belgian manufacturing firm- and firm-product-level data over the period 1997-2007. We first provide evidence on industry integration induced by multi-product firms producing simultaneously in multiple industries and on the extent to which industry integration occurs between industries that have different degrees of comparative advantage. We then examine the impact of opening up trade with low-wage countries on both inter- and intra-industry resource reallocation, taking into account heterogeneity in the integration rate across sectors and industries. Our results indicate that, within more closely integrated sectors, trade liberalisation with low-wage countries leads to less reallocation from low-skill-intensity (comparative-disadvantage) industries to high-skill-intensity (comparative-advantage) industries, both in terms of employment and output. We also find that more integrated industries experience less skill upgrading after trade liberalisation with low-wage countries. Furthermore, we find that within sectors with a low integration rate, trade liberalisation with low-wage countries induces relatively more aggregate TFP and average firm output growth in comparative-advantage industries than in comparative-disadvantage industries, in line with the prediction of Bernard, Redding and Schott (2007), while the opposite is true in highly integrated sectors. Decomposition of the industry-level aggregate TFP changes reveals that the result is mainly driven by reallocation between incumbent firms within industries. Overall, the results are highly consistent with the predictions of the Song and Zhu (2010) model.
    Keywords: trade liberalisation, industry integration, comparative advantage, firm heterogeneity, microeconomic panel data, Total Factor Productivity
    JEL: F11 F12 F14 L23
    Date: 2012–01
  12. By: SMRUTI RANJAN BEHERA (Department of Economics,Shyamlal College,University of Delhi); PAMI DUA (Department of Economics, Delhi School of Economics, Delhi, India); BISHWANATH GOLDAR (V.K.R.V. Rao Centre for Studies in Globalization Institute of Economic Growth, University Enclave, Delhi)
    Abstract: The paper attempts to analyze the spillover effect of Foreign Direct Investment (FDI) across Indian manufacturing industries. Foreign presence by way of FDI brings new channels of technology spillover to the domestic industrial firms in the form of enhanced efficiency and diffusion of knowledge in the long-run. By carrying out Pedroni cointegration tests, the analysis tries to provide a long-run relationship between endogenous variables and explanatory variables, pertaining to technology spillovers across Indian manufacturing industries. We find that technology spillovers are relatively higher in industries like food products, textiles, chemicals, drugs and pharmaceuticals and non-metallic mineral products.
    Keywords: Foreign Direct Investment; Technology Spillover; Manufacturing; Panel Cointegration; Unit Root Tests.
    JEL: O41 F43 E23 C22 C23
    Date: 2012–01
  13. By: Ciaian, Pavel; Pokrivcak, Jan
    Abstract: In this paper we estimate the impact of subsidies from the EU’s common agricultural policy on farm bank loans. According to the theoretical results, if subsidies are paid at the beginning of the growing season they may reduce bank loans, whereas if they are paid at the end of the season they increase bank loans, but these results are conditional on whether farms are credit constrained and on the relative cost of internal and external financing. In the empirical analysis, we use farm-level panel data from the Farm Accountancy Data Network to test the theoretical predictions for the period 1995–2007. We employ fixed-effects and generalised method of moment models to estimate the impact of subsidies on farm loans. The results suggest that subsidies influence farm loans and the effects tend to be non-linear and indirect. The results also indicate that both coupled and decoupled subsidies stimulate long-term loans, but the long-term loans of large farms increase more than those of small farms, owing to decoupled subsidies. Furthermore, the results imply that short-term loans are affected only by decoupled subsidies, and they are altered by decoupled subsidies more for small farms than for large farms; however, when controlling for endogeneity, only the decoupled payments affect loans and the relationship is non-linear.
    Date: 2011–09

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