New Economics Papers
on Efficiency and Productivity
Issue of 2012‒09‒03
sixteen papers chosen by

  1. Analysis of efficiency in sugarcane production: the case of men and women headed households in SONY sugar out -grower zone, Rongo and Trans-Mara districts, Kenya By Nyanjong', Oyugi Johana; Lagat, Job
  2. Technical Efficiency of Thai Manufacturing SMEs: a Comparative Study of North-eastern Provinces By Teerawat Charoenrat; Charles Harvie
  3. Human capital externalities, departmental co-authorship and research productivity. By Frank Neri; Joan Rodgers
  4. Monte Carlo Experiments on Bootstrap DEA By Tziogkidis, Panagiotis
  5. Labour relations quality and productivity: An empirical analysis on French firms. By Cette, G.; Dromel, N.; Lecat, R.; Paret, A-C.
  6. Agricultural Production, Productivity and R&D over the Past Half Century: An Emerging New World Order By Pardey, Philip G.; Alston, Julian M.; Chan-Kang, Connie
  7. Costs of Low Productivity: Intensive and Extensive Margins By goksel, turkmen
  8. An 'extended" Knowledge Production Function approach to the genesis of innovation in the European regions By Charlot, S.; Crescenzi, R.; Musolesi, A.
  9. Growth of African Economies: Productivity, Policy Syndromes and the Importance of Institutions By Augustin Kwasi Fosu
  10. Credit Constraints, Quality, and Export Prices: Theory and Evidence from China By Fan, Haichao; Lai, Edwin L.-C.; Li, Yao Amber
  11. Evidence on the Impact of Education on Innovation and Productivity By Junge, Martin; Severgnini, Battista; Sørensen, Anders
  12. Bootstrap DEA and Hypothesis Testing By Tziogkidis, Panagiotis
  13. What Affects the Environmental Performance of Pipelines in the US? An Empirical Analysis By Sarah L. Stafford
  14. An equilibrium analysis of efficiency gains from mergers By Jovanovic, Dragan; Wey, Christian
  15. Are Founding Families Special Blockholders ? An Investigation of Controlling Shareholder Influence on Firm Performance By Isakov, Dusan; Weisskopf, Jean-Philippe
  16. On the Theory of By-Production of Emissions By Sushama Murty

  1. By: Nyanjong', Oyugi Johana; Lagat, Job
    Abstract: About one quarter of cane producers in SONY Outgrower Zone are women headed households. However, a number of studies have suggested that women in rural areas are more disadvantaged in terms of accessing education, land, credit, and extension services. If this is the case, women cane farmers would be expected to be less efficient compared to men farmers. Before this can be concluded, there was need to establish whether differences in economic efficiency between men and women headed households exist in cane growing. The objectives of the research were; to characterize men and women headed cane growing households, to evaluate the relationship between institutional factors and gender, and to determine the differences in economic efficiency between men and women managed sugarcane farms. A multi stage sampling procedure was employed to select 205 active sugarcane farmers. A dual parametric stochastic decomposition technique was employed to disaggregate the components of economic efficiency. FRONTIER 4.1 program was used to derive maximum likelihood estimates and farm level technical efficiencies. A two limit Tobit model was then used to determine the influence of selected socio-economic and institutional variables on farm level technical, allocative and economic efficiency. Results showed that men headed households had a mean technical efficiency of 67.6%, a mean allocative efficiency of 82.48% and a mean economic efficiency of 58.0%. Women headed households had a mean technical efficiency of 72.0%, a mean allocative efficiency of 83.15% and a mean economic efficiency of 62.5%. Land under sugarcane cultivation was the single most important contributor to farmers’ efficiency. Women managed farms were on average more technically, allocative and economically efficient than men managed farms. Membership to outgrower associations in addition to encouraging increase in human capital will be important in enhancing farmers’ efficiency.
    Keywords: efficiency; Kenya; sugarcane productivity; stochastic frontier functions
    JEL: O13 O12
    Date: 2012–06–13
  2. By: Teerawat Charoenrat (University of Wollongong); Charles Harvie (University of Wollongong)
    Abstract: A major motivation of this study is to examine factors that are most important in contributing to the relatively poor efficiency performance of Thai manufacturing SMEs. The results obtained will be significant in devising effective policies aimed at tackling this poor performance. This paper uses data on manufacturing SMEs in the North-eastern region of Thailand in 2007 as a case study, by applying a stochastic frontier analysis (SFA) and technical inefficiency effects model. The empirical results obtained indicate that the mean technical efficiency of all categories of manufacturing SMEs in the North-eastern region is 43 percent, implying that manufacturing SMEs have high levels of technical inefficiency in their production process. Manufacturing SMEs in the North-eastern region are particularly labour intensive. The empirical results of the technical inefficiency effects model suggest that skilled labour, municipal area and ownership characteristics are important firm-specific factors affecting technical efficiency. The paper argues that the government should play a more substantive role in developing manufacturing SMEs in the North-eastern provinces through: providing training programs for employees and employers, encouraging greater usage of capital and technology in the production process of SMEs, enhancing the efficiency of state owned enterprises, encouraging a wide range of ownership forms and improving information and communications infrastructure.
    Keywords: Technical Efficiency; Stochastic Frontier Analysis (SFA); Small and Medium sized Enterprises (SMEs); Manufacturing; North-eastern Region of Thailand
    JEL: C31 C87 D24 O12
    Date: 2012
  3. By: Frank Neri (University of Wollongong); Joan Rodgers (University of Wollongong)
    Abstract: Lucas (1988) hypothesised that human capital externalities explain persistent productivity growth and become manifest via interactions between workplace colleagues. Consistent with the first part of this hypothesis, Fox and Milbourne (2006) concluded that an increase in the average level of human capital in Australian economics departments raised the research productivity of departmental members. This paper tests the robustness of this finding by using a direct, rather than a proxy, measure of human capital and confirms the existence of human capital externalities within Australian economics departments. But we go further by investigating the second part of Lucas’ hypothesis. Whilst there are numerous ways in which departmental colleagues may interact, we investigate whether the externality becomes manifest via co-authorship. We find no evidence that this type of interaction significantly enhances research productivity, especially for higher quality outputs.
    Keywords: productivity; externalities; human capital
    JEL: J24 D62
    Date: 2012
  4. By: Tziogkidis, Panagiotis
    Abstract: Since the introduction of bootstrap DEA there is a growing literature on applications which use this method, mainly for hypothesis testing. It is therefore important to establish the consistency and evaluate the performance of bootstrap DEA. The few Monte Carlo experiments in the literature perform this exercise on the basis of coverage probabilities, using a certain population assumption and usually they analyze the simple case of 1 input and 1 output. However, it has been argued recently that coverage probabilities are not a good tool of assessment. In our study we evaluate the performance of bootstrap DEA using the standard approach of comparing moments. We use three different data generating processes over three different dimensions while for each case we compare results from both the smooth and “naïve” bootstrap. Our results are not in accordance with previous studies, as we find that the smooth bootstrap performs overall worse while we highlight the cases where the researcher should be cautious when using these techniques.
    Keywords: Data Envelopment Analysis; Efficiency; Bootstrap; Bootstrap DEA; Monte Carlo
    JEL: C14 C15 C61 C67
    Date: 2012–08
  5. By: Cette, G.; Dromel, N.; Lecat, R.; Paret, A-C.
    Abstract: This analysis characterizes empirically how good labour relations can alleviate the negative impact on productivity of regulatory constraints or workforce opposition. Our evidence of good labour relations lies in the existence of binding collective agreements, at the firm or at the industry level. The estimations are based on a unique dataset collected by the Banque de France about the obstacles French firms may face in increasing their utilisation of production factors. Data are an unbalanced sample of 7,441 observations, corresponding to 1,545 companies, over the period 1991-2008. Our main results may be summarised as follows: i) ‘workforce or union opposition’ interacted with ‘regulatory constraints’ has a negative significant impact on total factor productivity (TFP). Regulatory constraints would become really binding when workers or unions use them as a tool to oppose management’s decisions; ii) ‘regulatory constraints’ interacted with ‘branch or firm agreement’ has a positive significant impact on TFP. These agreements, which can only be obtained if labour relations are supportive, would be used by firms to offset the negative impact of regulatory constraints. These results confirm that labour relations quality, at the branch or the firm levels, is an important factor of productive performance.
    Keywords: Labour relation, collective bargaining, trade unions, productivity.
    JEL: J53 J52 J51
    Date: 2012
  6. By: Pardey, Philip G.; Alston, Julian M.; Chan-Kang, Connie
    Abstract: Recent trends in farm productivity and food prices raise concerns about whether the era of global agricultural abundance is over. Agricultural R&D is a crucial determinant of agricultural productivity and production, and therefore food prices and poverty. In this paper we review past and present agricultural production and productivity trends and present entirely new evidence on investments in public agricultural R&D worldwide as an indicator of the prospects for agricultural productivity growth over the coming decades. The agricultural R&D world is changing, and in ways that will definitely affect future global patterns of poverty, hunger and other outcomes. The global picture is mixed. In the world as a whole crop yield growth has slowed. In high-income countries productivity growth has slowed significantly, and real spending on agricultural R&D is being reduced. In China, and other middle-income countries, spending on agricultural R&D is being ramped up and productivity growth has not slowed. The overall picture is one in which the middle-income countries are growing in relative importance as producers of agricultural innovations through investments in R&D and have consequently better prospects as producers of agricultural products.
    Keywords: Agricultural and Food Policy, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,
    Date: 2012
  7. By: goksel, turkmen
    Abstract: This paper discusses welfare costs of a decrease in productivity and argues that there are two important channels which cause a reduction in welfare: a decrease in output per firm (intensive margin) and a decrease in number of operating firms (extensive margin). Traditional Dixit-Stiglitz monopolistic competition framework with constant elasticity of substitution utility and common productivity across firms fail to capture the extensive margin. To address this problem, this paper introduces “continuum-quadratic” utility (i.e. linear demand system) while keeping the other assumptions unchanged and finds that lowering productivity affects not only the intensive but extensive margin as well.
    Keywords: productivity; quadratic utility; monpolistic competition
    JEL: L00
    Date: 2012–01
  8. By: Charlot, S.; Crescenzi, R.; Musolesi, A.
    Abstract: The paper looks at the genesis of innovation in the EU regions in ordre to shed light on the link between innovative inputs (R&D and Human Capital) and the genesis of economically valuable knowledge. The 'traditional' regional Knowledge Production Function (KPF) is innovatively developed in three complementary directions. Firs, the KPF is 'augmented' in order to control for all possible 'unobsrevable' and 'immesurable' time varying factors that influence the genesis of innovation (i.e. localised institutional and relational factors, regional innovation policies). Second, a semi-parametric approach that relaxes any arbitrary assumption on the 'shape' of the KPF is adopted. Finally, the assumption of homogeneity in the impact of R&D and Human Capital is relaxed by explicity accounting for the differences between 'core' and 'peripherial' regions. The econometric results confirm the importance of accounting for time varying unobserved heterogeneity through the adoption of a 'random growth' specification: R&D efforts exert a significant influence on innovation only after controlling for regional specific time varying unobserved factors. In addition, the semi parametric approach uncovers significant threshold effects for both R&D expenditure and Human Capital and highlights a strong complementarity between these two factors. However, 'core' regions benefit from a persistent advantage in terms of the 'productivity' of their innovation inputs. This has important implications for the EU innovation policies at the regional level.
    JEL: R11 C14 C23
    Date: 2012
  9. By: Augustin Kwasi Fosu
    Abstract: Recent evidence from an exhaustive political-economy study of growth of African economies – the Growth Project of the African Economic Research Consortium (AERC) - suggests that ‘policy syndromes’ have substantially contributed to the generally poor growth in sub-Saharan Africa during post-independence. The current article employs the unique data and insights generated by the Growth Project to further explore the importance of a ‘syndrome-free’ (SF) regime for growth in the region by examining: (i) the channels via which SF affects growth: total factor productivity (TFP) versus factors of production; and (ii) the role of institutions in mediating this impact, with special attention accorded the efficacy of the restraint on the executive branch of government in mitigating the potentially adverse effect of ethnicity.
    Date: 2012
  10. By: Fan, Haichao; Lai, Edwin L.-C.; Li, Yao Amber
    Abstract: This paper examines (i) the relationship between the credit constraints faced by a firm and the unit value prices of its exports, as well as (ii) the relationship between the export prices of a firm and its productivity. The paper extends Melitz's (2003) model of trade with heterogeneous firms by introducing endogenous quality, credit constraints and marketing costs. There are three key findings. First, there exists a positive relationship between firm productivity and export prices because the choice of higher-quality inputs is associated with higher productivity. Second, tighter credit constraints faced by a firm reduces its optimal prices as its choice of lower-quality inputs dominates the price distortion effect resulting from credit constraints. Third, if one adopts the alternative assumption that quality is exogenous across firms, then completely opposite results would be expected: there would be a negative relationship between prices and productivity; prices increase as firms face tighter credit constraints. An empirical analysis using Chinese bank loans data, Chinese firm-level data from the National Bureau of Statistics of China (NBSC), and Chinese customs data strongly supports the predictions of the endogenous-quality model, and confirms the existence of the quality adjustment effect: firms optimally choose lower quality when facing tighter credit constraints. Our finding of a significant impact of credit constraints on export prices indicates the prevalence of heterogeneity of product quality across firms.
    Keywords: credit constraints; credit access; credit needs; endogenous quality; export prices; quality; heterogeneous firms; productivity
    JEL: G2 D2 F1 L1
    Date: 2012–08–01
  11. By: Junge, Martin; Severgnini, Battista (Department of Economics, Copenhagen Business School); Sørensen, Anders (Department of Economics, Copenhagen Business School)
    Abstract: This paper investigates the importance of the educational mix of employees at the rm level for the probability of rms being involved in innovation activities. We distinguish between four types of innovation: product, process, organisational, and marketing innovation. Moreover, we consider three di erent types of education for employees with at least 16 years of schooling: technical sciences, social sciences, and humanities. Furthermore, we examine the in uence of these di erent innovation activities on rm productivity. Using a rotating panel data sample of Danish rms, we nd that di erent types of innovations are related to distinct educational types. Moreover, we nd that rms that adopt product and marketing innovation are more productive than rms that adopt product innovation but not marketing innovation and rms that adopt marketing innovation but not product innovation. In addition, rms that adopt organisational and process innovation demonstrate greated productivity levels than forms that adopt organisational innovation but not process innovation that again demonstrate greater productivity than rms that do not adopt process innovation but not organisational innovation. Finally, we establish that product and marketing innovation as well as organisational and process innovation are complementary inputs using formal tests for supermodularity. Complementarity can be rejected for all other pairs of innovation types.
    Keywords: educational composition; human capital; innovation; productivity; complementarity
    JEL: D24 J24 O31 O32
    Date: 2012–07–16
  12. By: Tziogkidis, Panagiotis
    Abstract: Bootstrapping non-parametric models is a fairly complicated exercise which is associated with implicit assumptions or requirements that are not always obvious to the non-expert user. Bootstrap DEA is a significant development of the past decade; however, some of its assumptions and properties are still quite unclear, which may lead to mistakes in implementation and hypothesis testing. This paper clarifies these issues and proposes a hypothesis testing procedure, along with its limitations, which could be extended to test almost any hypothesis in bootstrap DEA. Moreover, it enhances the intuition behind bootstrap DEA and highlights logical and theoretical pitfalls that should be avoided.
    Keywords: Data Envelopment Analysis; Efficiency; Bootstrap; Bootstrap DEA; Hypothesis Testing
    JEL: C12 C14 C15 C61 C67
    Date: 2012–08
  13. By: Sarah L. Stafford (Department of Economics, College of William and Mary)
    Date: 2012–08–26
  14. By: Jovanovic, Dragan; Wey, Christian
    Abstract: We analyze the efficiency defense in merger control. First, we show that the relationship between exogenous efficiency gains and social welfare can be non-monotone. Second, we consider both endogenous mergers and endogenous efficiencies and find that merger proposals are largely aligned with a proper social welfare analysis which explicitly considers the without merger counterfactual. We demonstrate that the merger specificity requirement does not help much to select socially desirable mergers; to the contrary, it may frustrate desirable mergers inducing firms not to claim efficiencies at all. --
    Keywords: Horizontal Mergers,Efficiency Defense,Merger Specific Efficiencies
    JEL: K21 L13 L41
    Date: 2012
  15. By: Isakov, Dusan; Weisskopf, Jean-Philippe
    Abstract: This paper examines how family and non-family ownership affects the performance of Swiss listed firms from 2003 to 2010. We distinguish between these two types of controlling shareholders since they have different objectives. We hypothesise that only family shareholders have a real incentive to reduce agency costs whereas non-family blockholders are similar to widely held companies. Our results show that family firms are more profitable and sometimes display better market valuations as opposed to companies that are widely held or have a non-family blockholder. We investigate the impact of different features of family firms on performance, and document that the generation of the family, active involvement of the family and contestability of family control play an important role.
    Keywords: founding family firm; active management; founder; ownership structure; firm performance; contestability
    JEL: G3 G32
    Date: 2012–08–20
  16. By: Sushama Murty (Department of Economics, University of Exeter)
    Abstract: We identify the disposability properties of a production technology resulting from the simultaneous play of nature's emission-generating mechanism and the firm's intended production activities. Our axioms define a "by-production" technology (BPT), which has a novel functional representation and can be decomposed into a standard neo-classical intended-production technology and a nature's emission generation set.
    Keywords: theory of production, emission-generating production technologies, free input and output disposability, weak disposability, costly disposability, functional representations of multi-output production technologies.
    JEL: D20 D24 Q50
    Date: 2012

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