New Economics Papers
on Efficiency and Productivity
Issue of 2013‒09‒26
sixteen papers chosen by

  2. Assessing the Trade-Related Sources of Productivity Growth in Emerging Economies By Przemyslaw Kowalski; Max Büge
  3. Productivity Growth, Human Capital, and Technology Spillovers: Nonparametric Evidence for EU Regions By Badinger, Harald; Egger, Peter; von Ehrlich, Maximilian
  4. Quantifying Productivity Gains from Foreign Investment By Fons-Rosen, Christian; Kalemli-Ozcan, Sebnem; Sørensen, Bent E; Villegas-Sanchez, Carolina; Volosovych, Vadym
  5. Measuring Efficiency and Effectiveness in the Public Sector By Førsund, Finn R.
  6. Prizes and Productivity: How Winning the Fields Medal Affects Scientific Output By George J. Borjas; Kirk B. Doran
  7. Productivity Growth and Stock Returns: Firm- and Aggregate-Level Analyses By Hyunbae Chun; Jung-Wook Kim; Randall Morck
  8. Firm Size Distortions and the Productivity Distribution: Evidence from France By Garicano, Luis; Lelarge, Claire; Van Reenen, John
  9. Beyond inducement in climate change: Does environmental performance spur environmental technologies? By Claudia Ghisetti; Francesco Quatraro
  10. Waste Not, Want Not: The Efficiency of Health Expenditure in Emerging and Developing Economies By Francesco Grigoli; Javier Kapsoli
  11. Benchmarking Banking Sector Efficiency Across Regional Blocks in Sub-Saharan Africa: What Room for Policy? By Francois Boutin-Dufresne; Santiago Peña; Oral Williams; Tomasz A. Zawisza
  12. The origins of the German current account surplus: Unbalanced productivity growth and structural change By Coricelli, Fabrizio; Ravasan, Farshad R; Wörgötter, Andreas
  13. Technology Adoption and Energy Efficiency in Irrigation: First Results from a Coordination Game in Andhra Pradesh, India By Müller, Malte; Rommel, Jens
  14. Lending concentration, bank performance and systemic risk : exploring cross-country variation By Beck, Thorsten; De Jonghe, Olivier
  15. The Peer Performance of Hedge Funds By David Ardia; Kris Boudt
  16. Private Equity, Jobs, and Productivity By Steven J. Davis; John C. Haltiwanger; Kyle Handley; Ron S. Jarmin; Josh Lerner; Javier Miranda

  1. By: Maria Conceição Portela (Faculdade de Economia e Gestão, Universidade Católica Portuguesa - Porto)
    Abstract: This paper calls attention to the implications of using cost or revenue data in efficiency measurement through Data Envelopment Analysis (DEA). In many empirical settings this issue arises, since frequently input and/or output quantities or prices are not available, and only value measures are available. When value data are used in technical efficiency models it is clearly questionable what sort of efficiency measure is being computed, since it cannot be a productive efficiency measure (that takes into account only quantities of inputs and outputs), and it cannot be either a traditional cost or revenue efficiency measure (that considers prices of factors disagregated from quantities). In this paper we call the attention for this fact and address situations where only value data are available, and situations where for some inputs (outputs) there is quantity information and for others there is value information. The main contribution of this paper is a reconciliation of previous literature on analysing these issues and on providing some guidelines on what to do and not do, when these issues arise in a data set.
    Keywords: Data Envelopment Analysis, cost eciency, revenue eciency
    Date: 2013–09
  2. By: Przemyslaw Kowalski; Max Büge
    Abstract: This paper contributes new empirical evidence on the relationship between productivity and international trade. This is accomplished using an econometric approach that combines input-output and productivity data, which allows a more detailed tracking of the relationship between trade in intermediate and final products and productivity in countries at different stages of economic development. The results show that various forms of trade integration strongly support productivity in emerging economies. Exporting final products, importing intermediates for domestic production and re-exporting are all associated with higher productivity levels, pointing to the particular importance for this country grouping of being able to integrate into regional and global value chains. Our results emphasise also important linkages between different economic sectors and call for broad-based approaches to facilitating integration with foreign intermediate inputs and final products markets.
    Keywords: international trade, productivity, global value chains, emerging economies, intermediate imports, developing economies
    JEL: F13 F14 F43
    Date: 2013–07–30
  3. By: Badinger, Harald; Egger, Peter; von Ehrlich, Maximilian
    Abstract: This paper assesses the strength of productivity spillovers non-parametrically in a data-set of 12 industries and 231 NUTS2 regions in 17 European Union member countries between 1992 and 2006. It devotes particular attention to measuring catching up through spillovers depending on the technology gap of a unit to the industry leader and the local human capital endowment. We find evidence of a non-monotonic relationship between the technology gap to the leader as well as human capital and growth. Spillovers are strongest for units with a small technology gap to the leader and with abundant human capital.
    Keywords: Absorptive capacity; Nonparametric estimation; Technology spillovers; Total factor productivity
    JEL: C14 N10 N14 O33 O47 R11
    Date: 2013–04
  4. By: Fons-Rosen, Christian; Kalemli-Ozcan, Sebnem; Sørensen, Bent E; Villegas-Sanchez, Carolina; Volosovych, Vadym
    Abstract: We quantify the causal effect of foreign investment on total factor productivity (tfp) using a new global firm-level database. Our identification strategy relies on exploiting the difference in the amount of foreign investment by financial and industrial investors and simultaneously controlling for unobservable firm and country-sector-year factors. Using our well identified firm level estimates for the direct effect of foreign ownership on acquired firms and for the spillover effects on domestic firms, we calculate the aggregate impact of foreign investment on country-level productivity growth and find it to be very small.
    Keywords: FDI; Knowledge Spillovers; Multinationals; Selection
    JEL: E32 F15 F36 O16
    Date: 2013–04
  5. By: Førsund, Finn R. (Dept. of Economics, University of Oslo)
    Abstract: The distinction between the concepts outputs and outcomes can be made operational based on the consideration of the degree of control a public service producer has over its production activity. Resources are transformed into service outputs under the control of the organisation in question, while outcomes represent some higher social goals than outputs and are determined by the outputs and other exogenous variables, but the production of outcomes is outside the control of the organisation. The link to the calculation of savings potentials and efficiency measurement is provided based on introducing the concept of a benchmark frontier technology for the type of production in question. A new measure of overall preference efficiency is introduced and its decomposition into output-oriented technical efficiency and output mix efficiency is shown. The rather monumental task of providing the necessary information for calculating mix efficiency is highlighted.
    Keywords: outputs; outcomes; factorially dete rmined multioutput production; Farrell efficiency measures; savings potentials; overall preference effectiveness; output mix effectivenes
    JEL: D24 H40
    Date: 2013–07–12
  6. By: George J. Borjas; Kirk B. Doran
    Abstract: Knowledge generation is key to economic growth, and scientific prizes are designed to encourage it. But how does winning a prestigious prize affect future output? We compare the productivity of Fields medalists (winners of the top mathematics prize) to that of similarly brilliant contenders. The two groups have similar publication rates until the award year, after which the winners’ productivity declines. The medalists begin to “play the field,” studying unfamiliar topics at the expense of writing papers. It appears that tournaments can have large post-prize effects on the effort allocation of knowledge producers.
    JEL: J22 J24 J33 O31
    Date: 2013–09
  7. By: Hyunbae Chun; Jung-Wook Kim; Randall Morck
    Abstract: Technological innovation is not a blessing for all firms, or for investors holding the market. In the late 20th century US, individual firms’ stock returns correlate positively with their own productivity growth, yet the market return correlates negatively with aggregate productivity growth, yet. This seeming fallacy of composition reflects Schumpeterian creative destruction: a few technology winners’ stocks rise with their rising productivity while many technology losers’ stocks fall with their declining productivity. Thus, most individual firms’ stock returns correlate negatively with aggregate productivity growth. Analogous reasoning explains prior findings that the market return correlates negatively with aggregate earnings.
    JEL: G14 G31 O33
    Date: 2013–09
  8. By: Garicano, Luis; Lelarge, Claire; Van Reenen, John
    Abstract: We show how size-contingent laws can be used to identify the equilibrium and welfare effects of labor regulation. Our framework incorporates such regulations into the Lucas (1978) model and applies this to France where many labor laws start to bind on firms with exactly 50 or more employees. Using data on the population of firms between 2002 and 2007 period, we structurally estimate the key parameters of our model to construct counterfactual size, productivity and welfare distributions. With flexible wages, the deadweight loss of the regulation is below 1% of GDP, but when wages are downwardly rigid welfare losses exceed 5%. We also show, regardless of wage flexibility, that the main losers from the regulation are workers (and to a lesser extent large firms) and the main winners are small firms.
    Keywords: firm size; labor regulation; power law; productivity
    JEL: J8 L11 L25 L51
    Date: 2013–06
  9. By: Claudia Ghisetti (Département des sciences économiques - Università di Bologna); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS])
    Abstract: This paper contributes to the debate on the inducement of environmental innovations by analysing the extent to which endogenous inducement mechanisms spur the generation of greener technologies in contexts characterized by weak exogenous inducement pressures. In the presence of a fragile environmental regulatory framework, inducement can indeed be endogenous and environmental innovations may be spurred by firms' reactions to their direct or related environmental performance. Cross-sector analysis focuses on a panel of Italian regions, over the time span 2003-2007, and is conducted by implementing zero-inflated regression models for count data variables. The empirical results suggest that in a context characterized by a weak regulatory framework, such as the Italian one, environmental performance has significant and complementary within- and between-sector effects on the generation of green technologies.
    Keywords: Green technologies; Environmental Performance; Regional NAMEA; Technological innovation; Knowledge production function
    Date: 2013–09–09
  10. By: Francesco Grigoli; Javier Kapsoli
    Abstract: Public health spending is low in emerging and developing economies relative to advanced economies and health outputs and outcomes need to be substantially improved. Simply increasing public expenditure in the health sector, however, may not significantly affect health outcomes if the efficiency of this spending is low. This paper quantifies the inefficiency of public health expenditure and the associated potential gains for emerging and developing economies using a stochastic frontier model that controls for the socioeconomic determinants of health, and provides country-specific estimates. The results suggest that African economies have the lowest efficiency. At current spending levels, they could boost life expectancy up to about five years if they followed best practices.
    Keywords: Government expenditures;Health care;Emerging markets;Developing countries;Economic models;Health expenditure, efficiency, emerging economies, developing economies
    Date: 2013–08–28
  11. By: Francois Boutin-Dufresne; Santiago Peña; Oral Williams; Tomasz A. Zawisza
    Abstract: This paper examines the determinants of net interest margins in four regional blocks in Sub-Saharan Africa and one comparator block in the Eastern Caribbean. Using bank-level data, we find that countries with a high level of operating costs, a high ratio of equity to total assets and high treasury bill interest rates have higher net interest margins. Moreover, high operating costs are associated with low measures of institutional quality and a small size of bank operations. We find support for the view that market structure is also partly responsible for high net interest margins in Sub-Saharan Africa. If interpreted causally, high operating costs and a high ratio of equity to total assets and, indirectly, institutional factors such as the rule of law, are the most important factors in accounting for high interest margins in the East African Community, relative to other regions.
    Keywords: Banking sector;Sub-Saharan Africa;Interest rates;Cross country analysis;Financial intermediation efficiency, net interest margins, economies of scale, institutions.
    Date: 2013–02–26
  12. By: Coricelli, Fabrizio; Ravasan, Farshad R; Wörgötter, Andreas
    Abstract: The surge in the German current account surplus in the 2000s is often interpreted as the result of efficiency-enhancing structural reforms, especially in the labor market. However, this interpretation is puzzling because the growth rate of the German economy has been one of the lowest in the Euro area in the 2000s. Using empirical evidence and a simple theoretical two-sector model, the paper argues that the German surplus is closely linked to the increasing gap between productivity growth in manufacturing and services. Such gap is due not only to improvements in the manufacturing sector but also to a significant slowdown of productivity growth in services. Therefore, despite the success in export markets, the German surplus may signal long-run weaknesses associated with constraints on service growth and the inability of productivity growth in manufacturing to create positive spill-over effects on services. Persistence of barriers to liberalization in services may partly explain these phenomena. The paper concludes that higher and more balanced growth could lead to an equilibrium reduction of the current account surplus.
    Keywords: German current account surplus; structural change; unbalanced productivity change
    JEL: E21 E22 F31 F41 O40
    Date: 2013–06
  13. By: Müller, Malte; Rommel, Jens
    Abstract: Farmers’ technology adoption in electric irrigation has recently been analyzed as a coordination problem. To study how the Pareto-inferior equilibrium, farmers are trapped in, can be overcome we have developed a framed field experiment. Leadership and group size are varied in a full factorial experimental design. Initial results show only minor treatment effects. Further analysis is necessary to account for socio-demographic heterogeneity.
    Keywords: Coordination Game, Energy Efficiency, India, Irrigation, Technology Adoption, Community/Rural/Urban Development, Institutional and Behavioral Economics, Research Methods/ Statistical Methods,
    Date: 2013
  14. By: Beck, Thorsten; De Jonghe, Olivier
    Abstract: Using both market-based and annual report-based approaches to measure lending specialization for a broad cross-section of banks and countries over the period 2002 to 2011, this paper is the first to empirically gauge the relationship between bank lending specialization and bank performance and stability in an international sample. Theory suggests that banks might benefit from specialization in the form of higher screening and monitoring efficiency, while a diversified loan portfolio might also enhance stability. This paper finds that sectoral specialization increases volatility and systemic risk exposures, while not leading to higher returns. The paper also documents important time, cross-bank, and cross-county variation in this relationship, which is stronger post 2007, for richer countries, countries without regulatory requirements on diversification, banks with lower market power, and banks with more traditional intermediation models.
    Keywords: Banks&Banking Reform,Debt Markets,Access to Finance,Mutual Funds,Financial Intermediation
    Date: 2013–09–01
  15. By: David Ardia; Kris Boudt
    Abstract: An essential component in the analysis of (hedge) fund returns is to measure its performance with respect to the group of peer funds. Through the analysis of risk-adjusted return percentiles an answer is given to the question how many funds are out-performed by the focal fund. In case all funds perform equally well, this approach will lead a random number between zero and one, depending on how lucky the fund is. We use the false discovery rate approach to construct relative performance ratios that account for the uncertainty in estimating the performance differential of two funds. Our application is on hedge funds, which leads us to develop a test for equality of the modified Sharpe ratio of two funds. The effectiveness of the method is illustrated with a Monte Carlo study and an empirical study is performed on the Hedge Fund Research database.
    Keywords: equal-performance ratio, false discovery rate, hedge fund, modified Sharpe ratio, out-performance ratio, peer group, performance measurement
    JEL: C12 C21 C22
    Date: 2013
  16. By: Steven J. Davis; John C. Haltiwanger; Kyle Handley; Ron S. Jarmin; Josh Lerner; Javier Miranda
    Abstract: Private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance. To evaluate these claims, we construct and analyze a new dataset that covers U.S. buyouts from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing them to controls defined by industry, size, age, and prior growth. Relative to controls, employment at target establishments falls 3 percent over two years post buyout and 6 percent over five years. However, target firms also create more new jobs at new establishments, and they acquire and divest establishments more rapidly. Considering all adjustment margins, relative net job loss at target firms is a modest one percent of employment over two years post buyout. In contrast, the sum of gross job creation and destruction at target firms exceeds that of controls by 14 percent of employment over two years. Buyouts also bring TFP gains at target firms and reductions in earnings per worker. Productivity gains arise mainly from an accelerated exit of less productive establishments and greater entry of more productive ones – that is, from a directed reallocation of jobs within target firms.
    JEL: D22 D24 J3 J63
    Date: 2013–09

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