New Economics Papers
on Efficiency and Productivity
Issue of 2013‒09‒13
seven papers chosen by

  1. The contribution of intangible assets to sectoral productivity growth in the EU By Niebel, Thomas; O'Mahony, Mary; Saam, Marianne
  2. Industry structure dynamics and productivity growth By Lech Kalina
  3. Efficiency and stock returns: Evidence from the insurance industry By Gaganis , Chrysovalantis; Hasan, Iftekhar; Pasiouras , Fotios
  4. On Biased Technical Change: Was technological change in Japan electricity-saving? By SATO Hitoshi
  5. REALLOCATION IN THE GREAT RECESSION: CLEANSING OR NOT? By Lucia Foster; Cheryl Grim; John Haltiwanger
  6. A taxonomy of manufacturing and service firms in Luxembourg according to technological skills By El Joueidi, Sarah
  7. Outsourcing, Offshoring and Innovation: Evidence from Firm-level Data for Emerging Economies By Ursula Fritsch; Holger Görg

  1. By: Niebel, Thomas; O'Mahony, Mary; Saam, Marianne
    Abstract: In this paper we report on new data on intangible investment at the level of 1-digit NACE industries of 10 EU countries. The data are constructed as a sectoral breakdown of the INTANInvest database, which contains measures of intangible investment at the level of the aggregate business sector. With the sectoral data we assess the contribution of intangibles to productivity growth based on growth accounting and econometric estimation of production functions. The growth accounting contribution of intangibles to labor productivity growth is generally highest in manufacturing and finance. The estimated output elasticity of intangibles lies between 0.1 and 0.2, considerably below values found in previous research using aggregate data. --
    Keywords: Intangible Assets,Labor Productivity,Growth Accounting,Panel Regressions
    JEL: E22 J24 O47
    Date: 2013
  2. By: Lech Kalina (Warsaw School of Economics)
    Abstract: Economic theory typically predicts that productivity should increase when a firm’s market is expanding since the benefits of reducing costs are higher when spread across a larger market. On the other hand there is a strong line of research stressing the positive impact of increasing competition and claiming that productivity should jump when a firm’s market is being squeezed by new compe titors. This paper investigates the effects of industry structure dynamics on productivity growth on panel data from industries of ten European countries. The econometric results provide empirical support for p ositive impact of less fragmented market stru ctures on productivity, however results also point out the important role which dynamics of firms turnover play in industry performance.
    JEL: D4 L1
    Date: 2013–09–04
  3. By: Gaganis , Chrysovalantis (Department of Economics, University of Crete, Greece); Hasan, Iftekhar (Schools of Business, Fordham University and Bank of Finland); Pasiouras , Fotios (Surrey Business School, University of Surrey, UK, and Financial Engineering Laboratory, Technical University of Crete, Greece)
    Abstract: This study investigates whether the capital market values the efficiency of firms. After tracing stock returns and efficiency changes of 399 listed insurance firms in 52 countries during the 2002-2008 period, the paper reports a positive and statistically significant relationship between profit efficiency change and market adjusted stock returns. However, there is no robust evidence that cost efficiency change is associated with stock returns.
    Keywords: efficiency; insurance; stock returns
    JEL: C22 C34 G22
    Date: 2013–08–16
  4. By: SATO Hitoshi
    Abstract: Since the Great East Japan Earthquake, electricity generation has declined in Japan, and electricity prices have allegedly increased. The literature on biased technical change suggests that such electricity supply constraints may induce a biased technical change. This paper explores the extent to which the technical change in Japanese industries is biased, using a system of translog cost share equations where electricity and non-electric energy are separately treated as inputs. Using Japanese industry data over the 1973-2008 period, our findings confirm that technical change has been energy-saving but not electricity-saving in many industries, and that it tends to be labor-saving and capital-using. As a result, factor prices are much more important than technical change as a determinant of electricity's cost share.
    Date: 2013–09
  5. By: Lucia Foster; Cheryl Grim; John Haltiwanger
    Abstract: The high pace of output and input reallocation across producers is pervasive in the U.S. economy. Evidence shows this high pace of reallocation is closely linked to productivity. Resources are shifted away from low productivity producers towards high productivity producers. While these patterns hold on average, the extent to which the reallocation dynamics in recessions are “cleansing” is an open question. That is, are recessions periods of increased reallocation that move resources away from lower productivity activities towards higher productivity uses? It could be recessions are times when the opportunity cost of time and resources are low implying recessions will be times of accelerated productivity enhancing reallocation. Prior research suggests the recession in the early 1980s is consistent with an accelerated pace of productivity enhancing reallocation. Alternative hypotheses highlight the potential distortions to reallocation dynamics in recessions. Such distortions might arise from many factors including, for example, distortions to credit markets. We find that in post-1980 recessions prior to the Great Recession, downturns are periods of accelerated reallocation that is even more productivity enhancing than in normal times. In the Great Recession, we find the intensity of reallocation fell rather than rose (due to the especially sharp decline in job creation) and the reallocation that did occur was less productivity enhancing than in prior recessions.
    Date: 2013–08
  6. By: El Joueidi, Sarah
    Abstract: This study uses data on Luxembourg manufacturing and service firms, sourced from CIS, to illustrate empirical methods of firms’ classification according to pattern and intensity of innovation and the use of technology. This topic is of relevance to Luxembourg, as to date no such specific classification exists for this country. Existing classifications are industry-based rather than firm-based which appears inappropriate given the heterogeneity within Luxembourgish industries. Moreover, they neglect the financial services, of primary importance to Luxembourg. Results show that cluster methods are well suited to classify firms for the case at hand. The analysis identifies four clusters exploiting information on the firms' innovation competencies, the technology used, and the human skills. Firms in the sample are classified into 4 groups, named respectively as i) high-technology, ii) medium-high-technology, iii) medium-lowtechnology, iv) low-technology. Characteristics of each group are discussed.
    Keywords: Innovation, classification, taxonomy, innovation surveys, cluster analysis.
    JEL: C1 C10 C8 O3 O30 O31 O38
    Date: 2013–09–01
  7. By: Ursula Fritsch; Holger Görg
    Abstract: It is striking that by far the lion’s share of empirical studies on the impact of outsourcing on firms considers industrialized countries. However, outsourcing by firms from emerging economies is far from negligible and growing. This paper investigates the link between outsourcing and innovation empirically using firm-level data for over 20 emerging market economies. We find robust evidence that outsourcing is associated with a greater probability to spend on research and development and to introduce new products and upgrade existing products. The effect of offshoring on R&D spending is significantly higher than the effect of domestic outsourcing. However, only domestic outsourcing increases the probability to introduce new products. We also show that the results crucially depend on the level of protection of intellectual property in the economy. Firms increase their own R&D effort in the wake of outsourcing only if they operate in an environment that intensively protects intellectual property
    Keywords: outsourcing, offshoring, innovation, emerging economies
    JEL: F14 O31 O34
    Date: 2013–08

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