New Economics Papers
on Efficiency and Productivity
Issue of 2012‒05‒08
thirteen papers chosen by

  1. The Productivity Advantages of Large Cities: Distinguishing Agglomeration from Firm Selection By Combes, Pierre-Philippe; Duranton, Gilles; Gobillon, Laurent; Puga, Diego; Roux, Sébastien
  2. A New Approach to Measuring the Gap between Marginal Productivity and Wages of Workers By KODAMA Naomi; ODAKI Kazuhiko
  3. Accounting for economies of scope in performance evaluations of university professors By De Witte, Kristof; Rogge, Nicky; Cherchye, Laurens; Van Puyenbroeck, Tom
  4. Economies of scope in research and teaching: a non-parametric investigation By De Witte, Kristof; Rogge, Nicky; Cherchye, Laurens; Van Puyenbroeck, Tom
  5. The Impact of Health Information Technology on Hospital Productivity By Jinhyung Lee; Jeffery S. McCullough; Robert J. Town
  6. The Impact of Capital Measurement Error Correction on Firm-Level Production Function Estimation By Lubomir Lizal; Kamil Galuščák
  7. An environment-adjusted evaluation of local police eectiveness: evidence from a conditional Data Envelopment Analysis approach By Verschelde, Marijn; Rogge, Nicky
  8. Inner and Outer Approximations of Technology: A Shadow Profit Approach By Hervé Leleu
  9. Undesirable specialization in the construction of composite policy indicators: The Environmental Performance Index By Rogge, Nicky
  10. Empirical Determinants of Government Efficiency: A study Based on Objective Indicators By Francisca Guedes de Oliveira
  11. Performance measurement in environmental management at the local level : an experiment and proposal with reference to Switzerland By Dafflon, Bernard; Daguet, Sandra
  12. Women in the Boardroom: Symbols or Substance? By O'Reilly, Charles A., III; Main, Brian G. M.
  13. La Performance des Fusions-Acquisitions : une Revue de la Littérature By Ludivine Chalençon

  1. By: Combes, Pierre-Philippe (GREQAM, University of Aix-Marseille); Duranton, Gilles (University of Toronto); Gobillon, Laurent (INED, France); Puga, Diego (IMDEA); Roux, Sébastien (DARES French Ministry of Labour)
    Abstract: Firms are more productive on average in larger cities. Two main explanations have been offered: firm selection (larger cities toughen competition, allowing only the most productive to survive) and agglomeration economies (larger cities promote interactions that increase productivity), possibly reinforced by localised natural advantage. To distinguish between them, we nest a generalised version of a tractable firm selection model and a standard model of agglomeration. Stronger selection in larger cities left-truncates the productivity distribution whereas stronger agglomeration right-shifts and dilates the distribution. Using this prediction, French establishment level data, and a new quantile approach, we show that firm selection cannot explain spatial productivity differences. This result holds across sectors, city size thresholds, establishment samples, and area definitions.
    Keywords: productivity, firm selection, agglomeration, cities
    JEL: C52 R12 D24
    Date: 2012–04
  2. By: KODAMA Naomi; ODAKI Kazuhiko
    Abstract: The idea that the productivity and wages of workers are not necessarily equal has long attracted the attention of many economists. Indeed, the lack of a method to measure the productivity-wage gap has hindered the development of research on labor economics, productivity analysis, and human capital study. This paper proposes a new empirical method to measure the gap between the value of a worker's marginal product (VMP) and wage. We first define this gap. The method then aggregates the Mincer-type function of each worker's human capital service to obtain the total labor input of a firm. The semi-log form of total labor input can be inserted into Cobb-Douglas and trans-log type production functions and enable expressing of the production function as a linear form of gap parameters. This linear functional form of production function, if applied to employer-employee matched panel data, can control for firm-level productivity differences that would otherwise cause biases in estimating the gap coefficients. We apply the new method to Japanese employee-employer matched panel data and find that the gap between the VMP and wage is not so large. The traditional way of measurement, in which wage acts as a proxy of worker productivity, could be a rough approximation.
    Date: 2012–05
  3. By: De Witte, Kristof (KULeuven, Maastricht Universiteit); Rogge, Nicky (Hogeschool-Universiteit Brussel (HUB)); Cherchye, Laurens (KULeuven, Tilburg University); Van Puyenbroeck, Tom (Hogeschool-Universiteit Brussel (HUB))
    Abstract: Teaching and research are widely regarded as the two key activities of academics. We propose a tailored version of the popular Data Envelopment Analysis methodology to evaluate the overall performance of university faculty. The methodology enables accounting for the potential presence of economies of scope between the teaching and research activities. It is illustrated with a dataset of professors working at a Business & Administration department of a university college. The estimation results reveal that overall the performance scores of faculty decrease if we allow for spillovers from research to teaching and vice-versa.
    Keywords: Teaching-research nexus, Data envelopment analysis, Conditional efficiency, Economies of scope, Higher education
    Date: 2012–02
  4. By: De Witte, Kristof (KULeuven, Maastricht Universiteit); Rogge, Nicky (Hogeschool-Universiteit Brussel (HUB)); Cherchye, Laurens (KULeuven, Tilburg University); Van Puyenbroeck, Tom (Hogeschool-Universiteit Brussel (HUB), KULeuven)
    Abstract: We propose a non-parametric methodology to study the presence of economies of scope between teaching and research (i.e., the teaching-research nexus). In particular, the paper advocated a conditional version of the ‘benefit-of-the-doubt’ approach to estimate the relationship between the professors’ overall academic output, measured by a composite measure of multi-dimensional and importance-adjusted scores of teaching effectiveness and research productivity, and the time devoted to teaching and to research. The methodology is illustrated with a dataset of professors working at a Business & Administration department of a university college where the time allocation of teaching and research was assigned exogenously. The outcome of the analysis indicates the presence of limited scope economies for professors with an extensive research time.
    Keywords: Teaching-research nexus, Data envelopment analysis, Conditional efficiency, Economies of scope, Higher education
    Date: 2012–02
  5. By: Jinhyung Lee; Jeffery S. McCullough; Robert J. Town
    Abstract: The US health care sector is, by most accounts, extraordinarily inefficient. Health information technology (IT) has been championed as a tool that can transform health care delivery. Recently, the federal government has taken an active role in promoting health IT diffusion. There is little systematic analysis of the causal impact of health IT on productivity or whether private and public returns to health IT diverge thereby justifying government intervention. We estimate the parameters of a value-added hospital production function correcting for endogenous input choices in order to assess the private returns hospitals earn from health IT. Despite high marginal products, the potential benefits from expanded IT adoption are modest. Over the span of our data, health IT inputs increased by more than 210% and contributed about 6% to the increase in value-added. Virtually all the increase in value-added is attributable to the increased use of inputs{there was little change in hospital multi-factor productivity. Not-for-profits invested more heavily and differently in IT than for-profit hospitals. Finally, we find no evidence of labor complementarities or network externalities from health IT.
    JEL: D24 L31
    Date: 2012–04
  6. By: Lubomir Lizal; Kamil Galuščák
    Abstract: Based on a large panel of Czech manufacturing firms, we estimate firm-level production functions in 2003–2007 using the Levinsohn and Petrin (2003) and Wooldridge (2009) approaches, correcting for the measurement error in capital. We show that measurement error plays a significant role in the size of the estimated capital coefficient. The capital coefficient estimate approximately doubles (depending on the particular industry) when we control for capital measurement error. Consequently, while the majority of industries exhibit constant or (in)significantly decreasing returns to scale when the standard methods are used, increasing returns cannot be rejected in some industries when the estimation is corrected for capital measurement error.
    Keywords: Measurement error, capital, firm-level data, Czech Republic.
    JEL: C23 C33 D24 O47
    Date: 2012–01–01
  7. By: Verschelde, Marijn (Universiteit Gent); Rogge, Nicky (Hogeschool-Universiteit Brussel (HUB))
    Abstract: Hard data alone are not sufficient to evaluate local police effectiveness in the new age of community policing. Citizens can provide useful feedback regarding strengths and weaknesses of police operations. However, citizen satisfaction indicators typically fail to accurately convey the multidimensional nature of local policing and account for characteristics that are non-controllable for the local police departments. To construct a measure of perceived effectiveness of community oriented police corpses that accounts for both multidimensional aspects of local policing and exogenous in uences, this paper proposes the use of a multivariate conditional, robust order-m version of a non-parametric Data Envelopment Analysis approach with no inputs. We show the potentiality of the method by constructing and analyzing effectiveness indicators of local police corpses in Belgium. The findings suggest that perceived police effectiveness is significantly conditioned by the demographic and socioeconomic environment.
    Keywords: Local police effectiveness, Citizen survey, Data envelopment analysis, Conditional efficiency
    Date: 2012–02
  8. By: Hervé Leleu (CNRS-LEM (UMR 8179) and IESEG School of Management)
    Abstract: In this paper we extend the taxonomy on inner and outer approximations to a technology by assuming that price data are not available. Mimicking Varian [Econometrica, 52(3) (1984) 579] we introduce a Weak Axiom of Shadow Profit Maximization (WASPM) to test if observed production plans are compatible with technically efficient behavior. If the test fails for an observed sample, we then characterize the maximal subset of observed production plans that meets WASPM and we derive lower and upper bounds on technical efficiency for production plans that are observed but not in this subset. We also derive linear programs to implement these bounds.
    Keywords: Technical efficiency, Shadow prices, Bounds on inefficiency
    Date: 2012–04
  9. By: Rogge, Nicky (Hogeschool-Universiteit Brussel (HUB))
    Abstract: The non-parametric Data Envelopment Analysis approach is increasingly used to construct composite indicators for country performance monitoring, benchmarking, and policy evaluation in a large variety of fields. The flexibility in the definition of aggregation weights is praised as the method's most important advantage: DEA allows each evaluated country to look for its own optimal weights that maximize the composite indicator relative to the other countries. However, this flexibility also carries a potential disadvantage as it may allow countries to appear as a brilliant performer in a manner that is hard to justify: by ignoring or overemphasizing one or multiple of the judiciously selected performance indicators. To illustrate this issue of undesirable specialization in DEA-based evaluations, this paper compares the Environmental Performance Index (EPI) as computed by the optimistic and pessimistic version of the DEA-model as proposed by Zhou et al. (2007). Based on both computed composites, undesirable specialization in performance is identified.
    Keywords: Data envelopment analysis, benefit of the doubt, Composite indicators, Expert opinion, Undesirable specialization, Environmental Performance Index
    Date: 2012–02
  10. By: Francisca Guedes de Oliveira (Faculdade de Economia e Gestão - Universidade Católica Portuguesa, Porto)
    Abstract: This paper is concerned with two things: finding an objective and easily quantifiable measure of government efficiency and testing possible determinants of such quality. As measures of government efficiency we use the ratios of infant mortality rate to health expenditures as a percentage of GDP and the ratios of drop out and illiteracy rates to education expenditures as a percentage of GDP. We assume that government efficiency in providing health and education services depends on economic, political and cultural factors.
    Keywords: Government quality; Public good provision; Efficiency; political determinants, cultural determinants, economic determinants.
    JEL: H11 I0
    Date: 2012–04
  11. By: Dafflon, Bernard (Department of Economics); Daguet, Sandra (Department of Economics)
    Abstract: This paper deals with the management of three environmental policies at the local level: clean water distribution, sewage and wastewater treatment and household solid waste collection and treatment. The argument is that applying the benefit principle for financing these services will enhance allocative efficiency, budget and environmental accountability, and contribute to induce environmental friendly attitude. The paper is organised in two parts. Because there is no fundamental seminal theory in environmental management, Part One summarizes the analytical foundations in combining three disciplines: political economy, law and environmental accounting. The original contribution of the paper is to mix them in a coherent process which also corresponds to the Directives 2000/60 and 2008/98 of the European Parliament in the fields of water policy and solid waste. Part Two develops a possible technique for defining and measuring the performance in order to assess the feasibility of our proposal. The data cover the 168 communes of the Canton Fribourg for the 1996-2009 period. The tested hypothesis is that the cost coverage ratio is an accurate measure of performance in the management of the selected environmental functions. But for accuracy - thus for improvement in policy implementation and practices - the test requires an in-depth command of the real situations because available data need to be treated before measurement. With the proposed procedure, the results verify efficiency in production, full information and no strategic behaviour from economic agents and politicians, and managerial accountability.
    Keywords: benefit principle of taxation ; environmental accounting ; environmental legislation ; environmental policy ; environmental taxation ; polluter-pays principle ; user charges ; user-pays principle ; performance analysis in environmental management
    JEL: H23 Q53 Q58
    Date: 2012–04–26
  12. By: O'Reilly, Charles A., III (Stanford University); Main, Brian G. M. (University Edinburgh)
    Abstract: The central argument for increasing the number of women on corporate boards of directors has been the so-called "business case for diversity" which proposes that women and minorities add valuable new perspectives that result in enhanced corporate performance. Unfortunately, the empirical evidence for this claim is mixed, leading some researchers to suggest that women outsiders are appointed for symbolic rather than substantive reasons. Using a sample of more than 2,000 firms over the period 2001-2005, we examine the effects of women outside directors on firm performance and CEO compensation. We find no evidence that adding women outsiders to the board enhances corporate performance. We do find some evidence that male CEOs with higher levels of compensation are more likely to appoint women outsiders and that boards with more women outside members are more generous in paying the CEO. We interpret these results as consistent with the appointment of women outsiders for normative rather than profit-enhancing reasons.
    Date: 2012–03
  13. By: Ludivine Chalençon (EA3713 - Centre de Recherche Magellan - Université de Lyon - Université Jean Moulin - Lyon III)
    Abstract: Les fusions-acquisitions suscitent l'intérêt des chercheurs en finance qui tentent de déterminer la performance de ces opérations à haut risque. Bien que les résultats constatés soient plutôt mitigés, cette stratégie de développement est de nouveau en forte croissance. La littérature fait ainsi état d'études mobilisant des méthodologies et des échantillons très différents et qui rencontrent de nombreuses difficultés à trouver des consensus. Cet article a pour objectif de présenter une revue de la littérature de la performance des fusions-acquisitions afin d'améliorer notre compréhension des résultats des précédentes études. Pour ce faire, nous mobilisons quatorze articles parus dans des revues françaises et internationales.
    Keywords: Fusions-Acquisitions ; Performance
    Date: 2011

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