New Economics Papers
on Efficiency and Productivity
Issue of 2012‒02‒27
twelve papers chosen by

  1. Export, Productivity Pattern, and Firm Size Distribution By Sun, Churen; Zhang, Tao
  2. Does Institutional Quality Affect Firm Performance? Insights from a Semiparametric Approach By Bhaumik, Sumon K.; Dimova, Ralitza; Kumbhakar, Subal C.; Sun, Kai
  3. Environmental Performance and Profits By Lundgren, Tommy; Marklund, Per-Olov
  4. Age and gender composition of the workforce, productivity and profits: Evidence from a new type of data for German enterprises By Christian Pfeifer; Joachim Wagner
  5. Wage-Productivity Gap in Turkish Manufacturing Sector By Ceyhun Elgin; Tolga Umut Kuzubas
  6. Productivity Volatility and the Misallocation of Resources in Developing Economies By Allan Collard-Wexler; John Asker; Jan De Loecker
  7. Does Competition Improve Public Hospitals' Efficiency? Evidence from a Quasi-Experiment in the English National Health Service By Zack Cooper; Stephen Gibbons; Simon Jones; Alistair McGuire
  8. Why Has China Grown So Fast? The Role of International Technology Transfer By John Van Reenen; Linda Yueh
  9. Boosting Innovation and Productivity in Enterprises: What Works? By Ruane, Frances; Siedschlag, Iulia
  10. Peer Heterogeneity, School Tracking and Students’ Performances: Evidence from PISA 2006 By Michele Raitano; Francesco Vona
  11. The impact of ICT on the Italian productivity dynamics By E. et al. Saltari
  12. The Potential Role of Pay-for-Performance in Irish Health Care By Nolan, Anne; O'Reilly, Jacqueline; Smith, Samantha; Brick, Aoife

  1. By: Sun, Churen; Zhang, Tao
    Abstract: We show in the Chinese Annual Survey of Industrial Firms that size distributions of non-exporters and exporters have different shapes, which can only be explained by assuming that their productivity distributions have different shapes. Empirical estimations verify this assumption. This paper also analyzes the relationship between firms' size and productivity distributions and shows that: 1) productivity and size distributions change accordingly, and 2) productivity is deterministic for size distribution.
    Keywords: Heterogeneous firm; Pareto distribution; Production size; Productivity heterogeneity
    JEL: D21 F12 D24
    Date: 2012–01–03
  2. By: Bhaumik, Sumon K. (Aston University); Dimova, Ralitza (University of Manchester); Kumbhakar, Subal C. (Binghamton University, New York); Sun, Kai (Aston University)
    Abstract: Using a novel modeling approach, and cross-country firm level data for the textiles industry, we examine the impact of institutional quality on firm performance. Our methodology allows us to estimate the marginal impact of institutional quality on productivity of each firm. Our results bring into question conventional wisdom about the desirable characteristics of market institutions, which is based on empirical evidence about the impact of institutional quality on the average firm. We demonstrate, for example, that once both the direct impact of a change in institutional quality on total factor productivity and the indirect impact through changes in efficiency of use of factor inputs are taken into account, an increase in labor market rigidity may have a positive impact on firm output, at least for some firms. We also demonstrate that there are significant intra-country variations in the marginal impact of institutional quality, such that the characteristics of "winners" and "losers" will have to be taken into account before policy is introduced to change institutional quality in any direction.
    Keywords: institutional quality, firm performance, marginal effect, textiles industry
    JEL: C14 D24 K31 O43
    Date: 2012–02
  3. By: Lundgren, Tommy (CERE, Centre for Environmental and Resource Economics); Marklund, Per-Olov (CERE, Centre for Environmental and Resource Economics)
    Abstract: In this study we investigate how firm level environmental performance (EP) affect firm level economic performance measured as profit efficiency (PE) in a stochastic profit frontier setting. Analyzing firms in Swedish manufacturing 1990-2004, results show that EP induced by environmental policy is not a determinant of PE, while voluntary or non-policy induced EP seem to have a significant (+) effect on firm PE in most sectors. The evidence generally supports the idea that good EP is also good for business, as long as EP is not brought on by policy measures, in this case a CO2 tax.
    Keywords: CO2 tax; environmental performance index; profit efficiency; stochastic frontier analysis
    JEL: D20 H23
    Date: 2012–02–17
  4. By: Christian Pfeifer (Leuphana University Lueneburg, Germany); Joachim Wagner (Leuphana University Lüneburg, Germany)
    Abstract: This empirical paper documents the relationship between composition of a firm's workforce (with a special focus on age and gender) and its performance (productivity and profitability) for a large representative sample of enterprises from manufacturing industries in Germany. We use unique newly available data that for the first time combine information from the statistics of employees covered by social security that is aggregated at the enterprise level and information from enterprise level surveys performed by the Statistical Offices. Our microeconometric analysis confirms previous findings of concave age-productivity profiles, which are consistent with human capital theory, and adds a new finding of a rather negative effect of age on firms' profitability, which is consistent with deferred compensation considerations. Moreover, our analysis reveals for the first time that the ceteris paribus lower level of productivity in firms with a higher share of female employees does not go hand in hand with a lower level of profitability in these firms. If anything, profitability is (slightly) higher in firms with a larger share of female employees. This finding might indicate that lower productivity of women is (over)compensated by lower wage costs for women, which might be driven by general labor market discrimination against women.
    Keywords: Ageing, firm performance, gender, productivity, profitability, Germany
    JEL: D22 D24 J21 J24 L25
    Date: 2012–02
  5. By: Ceyhun Elgin; Tolga Umut Kuzubas
    Date: 2012–03
  6. By: Allan Collard-Wexler; John Asker; Jan De Loecker
    Date: 2011
  7. By: Zack Cooper; Stephen Gibbons; Simon Jones; Alistair McGuire
    Abstract: This paper uses a difference-in-difference style estimation strategy to test separately the impact of competition from public sector and private sector hospitals on the efficiency of public hospitals. Our identification strategy takes advantage of the phased introduction of a recent set of substantive reforms introduced in the English NHS from 2006 onwards. These reforms forced public sector health care providers to compete with other public hospitals and eventually to face competition from existing private sector providers for care delivered to publicly funded patients. In this study, we measure efficiency using hospitals' average length of stay (LOS) for patients undergoing elective surgery. For a more nuanced assessment of efficiency, we break LOS down into its two key components: the time from patients' admission to the hospital until their surgery and the time from their surgery until their discharge. Here, pre-surgery LOS serves as a proxy for hospitals' lean efficiency. Our results suggest that competition between public providers prompted public hospitals to improve their productivity by decreasing their pre-surgery, overall and post-surgery length of stay. In contrast, competition from private hospitals did not spur public providers to improve their performance and instead left incumbent public providers with a more costly case mix of patients and led to increases in post-surgical LOS.
    Keywords: Hospital competition, market structure, prospective payment, incentivestructure
    JEL: C21 I18 L1 R0
    Date: 2012–02
  8. By: John Van Reenen; Linda Yueh
    Abstract: Chinese economic growth has been spectacular in the last 30 years. We investigate the role of International Joint Ventures with Technology Transfer agreements, an understudied area. Technology transfer is the traditional mechanism for developing countries to "catch up" and has been a key component of Chinese economic policy. We collect original survey data on Chinese firms and their joint ventures and match this to administrative data on firm performance. To identify the causal effect of joint ventures we use time-varying and province-specific policies at the time when a firm was born. International joint ventures have large effects on productivity especially when combined with a technology transfer component. We estimate that without International joint ventures China's growth would have been about one percentage point lower per annum over the last three decades.
    Keywords: China, technology transfer, joint ventures, productivity
    JEL: O32 O33
    Date: 2012–02
  9. By: Ruane, Frances; Siedschlag, Iulia
    Abstract: A return to economic growth and higher employment requires growth in the number and sustainability of Irish enterprises. Innovation at enterprise level is essential for sustainability and competitiveness and plays a major role in increasing overall productivity. Understanding the determinants of enterprise innovation and how it affects productivity is important for designing effective innovation policies. The tight fiscal constraints and the urgency of achieving successful outcomes require that government policies aimed at enhancing enterprise innovation and raising productivity need to be very effective. This paper draws on recent international theoretical and empirical literature based on enterprise level data to explore four questions: Does innovation contribute to higher productivity? Which types of enterprises invest in innovation? Which enterprises have higher innovation expenditure per employee? Which types of enterprises are more likely to innovate successfully? We then look at what these findings imply for policy in relation to indigenous enterprises, whether the current policy mix is appropriate and how it might become more effective.
    Keywords: Productivity
    Date: 2011
  10. By: Michele Raitano; Francesco Vona
    Abstract: The empirical literature using large international students’ assessments tends to neglect the role of school composition variables in order not to incur in a misidentification of peer effects. However, this could lead to an error of higher logical type since the learning environment crucially depends on peer variables. In this paper, using PISA 2006, we show how peer heterogeneity is a key determinant of students’ attainments. Interestingly, the effect of peer variables differs depending on the country tracking policy: peer heterogeneity reduces efficiency in comprehensive systems whereas it has a non-linear impact in early-tracking ones. In turn, linear peer effects are larger in early-tracking systems. Results remain robust in both student- and school-level regressions and when we add school-level dummies and several controls correlated with the school choice to alleviate the selectivity bias.
    Keywords: peer heterogeneity, peer effects, schooling tracking, educational production function.
    JEL: I21 I28 J24
    Date: 2011–05
  11. By: E. et al. Saltari
    Abstract: The last twenty years have seen a marked slowdown of the Italian productivity growth rate. The literature has underlined the role of international factors, such as globalization and adoption of the euro. In this paper we emphasize the role and dynamics of capital accumulation investigating the impact of the introduction of information technology on capital and production in the Italian economy and the extent to which that is being affected by skills in the labour force. The model is specified and estimated as continuous-time general disequilibrium framework. It presents original features: it analyzes the effects of the introduction of the ICT technology on the Italian economy not in a partial equilibrium context of a single market but from a macro point of view where input markets interact; it does not assume that these markets instantaneously clear but rather that there are imperfections and frictions; it does not impose the condition that the economy necessarily converges to a steady state. The model behaves quite well in replicating the dynamics of the Italian economy. It also shows however that there remains some structural inefficiency that worsened in recent years. In fact, our main finding shows that there exists a permanent gap between “optimal†and actual output which increased in the latter part of the sample period. While a fraction of this gap can be attributed to unavoidable (market and non market) adjustment costs some is associated to efficiency losses.
    Keywords: Technological adoption, Disequilibrium models, Continuous-time econometrics.
    JEL: E22 O33 C51
    Date: 2011–11
  12. By: Nolan, Anne; O'Reilly, Jacqueline; Smith, Samantha; Brick, Aoife
    Abstract: The current recession dictates that large decreases in public expenditure are required. As the second largest component of public expenditure, health is particularly vulnerable to the effects of the further cuts in expenditure that are required over the period 2012-2014. In the context of diminishing financial resources, there is increasing emphasis on maximising the value of expenditure by achieving efficient delivery of high-quality health-care services. In addition, the Irish health system is characterised by a complex set of financial incentives which have important implications for efficiency and equity. This paper examines international evidence on pay for performance (P4P) schemes to inform policymakers on the potential for implementing P4P in the Irish health-care system. In P4P, payments are tied to performance. P4P is becoming increasingly common in international health-care systems despite the lack of evidence on its effectiveness and a lack of consensus on how to design and implement such programmes. It is therefore important to understand the implications of existing P4P programmes before recommending their introduction in the Irish context. We provide an overview of the literature relating to large-scale P4P schemes, focusing on programmes that have been instituted by national public sector organisations. The literature highlights the poor quality of evidence on P4P schemes, stemming partly from technical challenges inherent in evaluating P4P schemes. Notwithstanding these technical difficulties, the available evidence does not provide a clear answer to the question of whether P4P should be implemented. Limitations include difficulties in obtaining valid performance indicators, unintended consequences, and the absence of evidence on cost effectiveness of P4P schemes. We assess how a P4P scheme would interact with the payment structures already in place in the Irish health-care system. We conclude that while there is an obvious need for greater efficiency and quality in the system, there are reasons why P4P initiatives are not recommended at this stage at least until the many complexities in provider reimbursement, public/private interaction, and patient access to the system are resolved.
    Keywords: recession/Services/Health System/equity/cost
    Date: 2011

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