nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2013‒01‒12
eight papers chosen by
Angelo Zago
University of Verona

  1. Corporate Taxation and Productivity Catch-Up: Evidence from 11 European Countries By Norman Gemmell; Richard Kneller; Danny McGowan; Ismael Sanz
  2. Firm productivity and institutional quality. Evidence from Italian industry By A. Lasagni; A. Nifo; G. Vecchione
  3. Estimating Urban Agglomeration Economies for India: A New Economic Geography Perspective By Tripathi, Sabyasachi
  4. Regional human capital in Republican and New China: Its spread, quality and effects on economic growth By Van Leeuwen, Bas; van Leeuwen-Li, Jieli; Foldvari, Peter
  5. Sectoral Contributions to Labour Productivity Growth: Does the Choice of Decomposition Formula Matter? By Ricardo de Avillez
  6. On the estimation of marginal cost By Delis, Manthos D; Iosifidi, Maria; Tsionas, Efthymios
  7. Energy Intensity and Firm Performance: Do Energy Clusters Matter? By Santosh Kumar, Sahu; K., Narayanan
  8. Short Communication: DEA based auctions By Papakonstantinou, A.; Bogetoft, P.

  1. By: Norman Gemmell; Richard Kneller; Danny McGowan; Ismael Sanz
    Abstract: Firms that lay far behind the technological frontier have the most to gain from imitating the technology or management practices of others. That some firms converge relatively slowly to the productivity frontier suggests the existence of factors that cause them to under-invest in their productivity. In this paper we explore whether higher rates of corporate taxation affect firm productivity convergence because they reduce the after tax returns to productivity enhancing investments for small firms. Using data for 11 European countries we find evidence for such an effect; productivity growth in small firms is slower the higher are high corporate tax rates. Our results are robust to the use of instrumental variable and panel data techniques with quantitatively similar effects found from a natural experiment following the German tax reforms in 2001.
    Keywords: Productivity, taxation, convergence JEL classification: D24, H25, L11, O31
  2. By: A. Lasagni; A. Nifo; G. Vecchione
    Abstract: This paper aims at contributing to the debate on the determinants of differentials in firms’ productivity. The case of Italy looks particularly interesting, since it is characterized by a substantial and long-lasting productivity gap of industrial firms located in the Southern regions with respect to the rest of the country. We test the hypothesis that the macro factors, particularly the quality of institutions, play a central role in explaining Italian firms’ productivity. Consistent with previous studies, our results show that institutional quality is one of the basic determinants of the observed TFP differentials across firms located in different Italian regions.
    Keywords: productivity, macroeconomic factors, institutional quality, differentials
    JEL: C33 D24 L60 O43 R11
    Date: 2012
  3. By: Tripathi, Sabyasachi
    Abstract: The main objective of this paper is to provide answer to an important question: Are Indian firms or industries in urban areas operating under decreasing returns to scale or increasing returns to scale? Scale economies are one of the main assumptions of new economic geography models that posit the formation of agglomeration economies. For this purpose, we use Kanemoto et al. (1996) model for estimation of aggregate production function and to derive the magnitude of scale economies. Using firm level data in 2004-05 from the Annual Survey of Industry, we find that urban firms in Indian industry operate under decreasing returns to scale.
    Keywords: Economic geography; Urban agglomeration; Firm level analysis; Manufacturing industry; India
    JEL: L60
    Date: 2012–12
  4. By: Van Leeuwen, Bas; van Leeuwen-Li, Jieli; Foldvari, Peter
    Abstract: In recent decades there has been increasing attention for Chinese economic development. There has been a big debate though if its growth is caused by capital accumulation (perspiration factors) or driven by Total Factor Productivity (TFP) growth (inspiration factors). The difference between both stances is quite substantial since, if the perspiration theory is correct, one expects the growth of the Chinese economy to slow down over time as the capital accumulation grows increasingly less efficient. However, so far this question is difficult to analyse for China since we lack information on one of the factors of production, human capital. To analyse this question, in this paper we develop a new dataset on human capital for the provinces of China between 1922 and 2010. Using our new dataset, together with physical capital and per capita GDP, allows us to do a TFP analysis for sub periods. We find a continuously negative TFP growth suggesting that reduction in productivity was a structural feature of the Chinese economy. If true, this was to lend support to the perspiration theory and would suggest a slowdown of the Chinese economy in the future. However, standard growth accounting allocates both technical efficiency of the factors of production and the general technical development to TFP. Subtracting technical efficiency from TFP growth, we find that general technological development turns increasingly positive in the 1990s and 2000s. This suggests that, whereas until the reform period China was largely driven by capital accumulation, afterwards general technical development got an increasingly prominent place giving hope for continued economic development in the future.
    Keywords: education; human capital; China; history; growth; inequality; regional development
    JEL: H7 P3 N15 H52 O4
    Date: 2011–04–11
  5. By: Ricardo de Avillez
    Abstract: Using three decomposition formulas (TRAD, CSLS, and GEAD), this article estimates sectoral contributions to business sector labour productivity growth in Canada during the 2000-2010 period. Although at the aggregate economy level there was substantial agreement among the three formulas - with most of business sector labour productivity growth being explained by within-sector productivity improvements -, contribution estimates varied widely at the sectoral level. In particular, there were signicant differences in the estimated contributions of construction, manufacturing, and mining and oil and gas extraction. Ultimately, these differences refl ect the fact that traditional decomposition formulas (TRAD and CSLS) and the GEAD formula measure distinct economic phenomena. Instead of seeing estimates constructed by the GEAD and traditional formulas as "competing" narratives, the article concludes it is more useful to see them as providing complementing stories about the role of dierent sectors in driving aggregate labour productivity growth.
    Date: 2013–01
  6. By: Delis, Manthos D; Iosifidi, Maria; Tsionas, Efthymios
    Abstract: This article proposes a general empirical method for the estimation of marginal cost of individual firms. The new method employs the smooth coefficient model, which has a number of appealing features when applied to cost functions. The empirical analysis uses data from a unique sample from which we observe marginal cost. We compare the estimates from the proposed method with the true values of marginal cost, and the estimates of marginal cost that we obtain through conventional parametric methods. We show that the proposed method produces estimated values of marginal cost that very closely approximate the true values of marginal cost. In contrast, the results from conventional parametric methods are significantly biased and provide invalid inference.
    Keywords: Estimation of marginal cost; Parametric models; Smooth coefficient model; Actual and simulated data
    JEL: C14 C81 Q40 D24 G21
    Date: 2012–12–01
  7. By: Santosh Kumar, Sahu; K., Narayanan
    Abstract: According to the basic law of supply and demand, as the cost of energy input rises, ceteris paribus, producer prefers to employ smaller quantity of energy input and substitute cheaper inputs for more expensive energy during the production process (Schurr, 1982; Jorgenson, 1984). Hence, the question arises whether determinants of profitability of firms differ based on different types of energy consumption. In analyzing this phenomenon for Indian manufacturing industries, this study tries to find out the determinants of profitability of firms based on three energy clusters (natural gas, petroleum and coal) of Indian manufacturing industries. This study uses data from the PROWESS database provided by the Center for Monitoring Indian Economy from 2000-2008. The finding of the study suggests that capital intensity, age of the firm and MNE affiliation of firms are the common determinants of profitability for different energy clusters in Indian manufacturing industries. However, the determinants of profitability differ for variables such as energy intensity, size of firm and R&D intensity and based on the choice of primary source of energy consumption. In the debate of CDM, climate change; shifting from traditional fuel sources to recent fuel source might help in reducing CO2 emissions, specifically for developing country such as India. Fiscal policies support to industries such as value-added tax exemption for new energy conservation products, import duty reduction and exemption for energy conservation technology might help Indian manufacturing industries to increase the profitability as well as energy efficiency.
    Keywords: Energy; Profitability; Cluster; Indian Manufacturing Industries
    JEL: B23 Q4
    Date: 2011–11–10
  8. By: Papakonstantinou, A.; Bogetoft, P.
    Abstract: In this paper we introduce a simulation framework which we use to numerically evaluate the Hybrid DEA - Second Score Auction. In a procurement setting, the winner of the Hybrid auction by design receives payment at the most equal to the second score auction. It is therefore superior to the traditional second score scheme from the point of view of a principal interested in acquiring an item at the minimum price without losing in quality. For a set of parameters we quantify the size of the improvements. We show in particular that the improvement depends intimately on the regularity imposed on the underlying cost function. In the least structured case of a variable returns to scale technology, the hybrid auction only improved the outcome for a small percentage of cases. However, for those few cases the improvement introduced by the hybrid auction is signicant. For other technologies with constant returns to scale, the gains are considerably higher and payments are lowered in a large percentage of cases. In the simulations, we furthermore calculate the eect of the number of the participating agents, the concavity of the principal value functions, and the number of quality dimensions.
    Keywords: Multi-dimensional auctions; Data envelopment analysis; Second score auction; Yardstick competition; Hybrid auction;
    JEL: D86 C44 D82
    Date: 2012

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