New Economics Papers
on Efficiency and Productivity
Issue of 2013‒09‒28
sixteen papers chosen by

  1. Undesirable Outputs and a Primal Divisia Productivity Index Based on the Directional Output Distance Function By Guohua Feng; Apostolos Serletis
  2. Agri-Environmental Policy Effects at Producer Level - Identification and Measurement By Sauer, Johannes; Walsh, John; Zilberman, David
  3. Identifying Factor Productivity by Dynamic Panel Data and Control Function Approaches: A Comparative Evaluation for EU Agriculture By Petrick, Martin; Kloss, Mathias
  4. The Heterogeneous Effects of Workforce Diversity on Productivity, Wages and Profits By Garnero, Andrea; Kampelmann, Stephan; Rycx, François
  5. Productivity or Employment: Is It a Choice? By Andrea De Michelis; Marcello M. Estevão; Beth Anne Wilson
  6. Agglomeration Economies in Classical Music By Karol J. Borowiecki
  7. Analysis of International R&D Spillover from International Trade and Foreign Direct Investment Channel: Evidence from Asian Newly Industrialized Countries By Samuel Nursamsu; Fithra Faisal Hastiadi
  8. Job Mobility, Peer Effects, and Research Productivity in Economics By Thomas Bolli; Jörg Schläpfer
  9. Railway Efficiency By Arne Beck; Heiner Bente; Martin Schilling
  10. Dividend Policy in Regulated Firms By Francisca Bremberger; Carlo Cambini; Klaus Gugler and Laura Rondi
  11. Efficiency, Distortions and Factor Utilization during the Interwar Period By Alex Klein; Keisuke Otsu
  12. Sources, Reserves, and Convergence of the Serbian Economic Growth - Jobless Growth of the Serbian Economy By Popovic, Milenko
  13. Estimation of a physician practice cost function By Heimeshoff, Mareike; Schreyögg, Jonas
  14. Where is the Backward Peasant? Regional Crop Yields on Common and Private Land in Russia 1883-1913 By Michael Kopsidis; Katja Bruisch; Daniel W. Bromley
  15. Efficiencies Brewed: Pricing and Consolidation in the U.S. Beer Industry By Orley C. Ashenfelter; Daniel Hosken; Matthew C. Weinberg
  16. Heterogeneous Firms and Imperfect Substitution: The Productivity Effect of Migrants By Anette Haas; Michael Lucht

  1. By: Guohua Feng; Apostolos Serletis (University of Calgary)
    Abstract: Despite their great popularity, the conventional Divisia productivity indexes all ignore undesirable outputs. The purpose of this study is to …fill in this gap by proposing a primal Divisia-type productivity index that is valid in the presence of undesirable outputs. The new productivity index is derived by total differentiation of the directional output distance function with respect to a time trend and referred to as the Divisia–-Luenberger productivity index. We also empirically compare the Divisia-Luenberger productivity index and a representative of the conventional Divisia productivity indexes - —the radial-output-distance-function-based Feng and Serletis (2010) productivity index - using aggregate data on 15 OECD countries over the period 1981–-2000. Our empirical results show that failure to take into account undesirable outputs not only leads to misleading rankings of countries both in terms of productivity growth and in terms of technological change, but also results in wrong conclusions concerning efficiency change.
    Date: 2013–09–19
  2. By: Sauer, Johannes; Walsh, John; Zilberman, David
    Abstract: This empirical study investigates the effects of different agri-environmental schemes on individual producer behaviour. We consider the effects on production intensity, performance and structure for a sample of UK cereal farms for the period 2000 to 2009 and use the policy examples of the Environmental Stewardship Scheme (ESS) and the Nitrate Vulnerable Zones (NVZ). The econometric methodology is based on a directional distance function framework as well as the application of matching estimators. We find that both schemes are effectively influencing production behaviour at individual farm level. However, agri-environmental schemes show only very minor effects on the technical and allocative efficiency of farms, hence, we can conclude that farms enrolled in agri-environmental schemes are efficiently adjusting their production decisions given the constraints by the respective scheme. Farms affected by these schemes indeed tend to become less specialised and more diversified with respect to their production structure. A voluntary type agri-environmental scheme seems to signficantly influence producer behaviour at a far higher scale than a non-voluntary agri-environmental scheme. The methodological novelty of this research lies in the use of a sound production theory based multi-output multi-input approach to disentangle measures for production performance and structure which are then used as indicators for the robust treatment effects’ analyses.
    Keywords: Agri-Environmental Policy, PES, Directional Distance Function, Matching Estimators, Environmental Economics and Policy, Production Economics, Productivity Analysis,
    Date: 2013
  3. By: Petrick, Martin; Kloss, Mathias
    Abstract: The classical problem of agricultural productivity measurement has regained interest due to recent price hikes in world food markets. At the same time, there is a new methodological debate on the appropriate identification strategies for addressing endogeneity and collinearity problems in production function estimation. We examine the plausibility of alternative identification strategies for the case of agriculture and test two related, innovative estimators using farm-level panel datasets from seven EU countries. The control function and dynamic panel approaches provide attractive conceptual improvements over the received ‘within’ and duality models. Even so, empirical implementation of the conceptual sophistications built in these estimators does not always live up to expectations. This is particularly true for the dynamic panel estimator, which mostly failed to identify reasonable elasticities for the (quasi-) fixed factors. Less demanding proxy approaches represent an interesting alternative for agricultural applications. In our EU sample, we find very low shadow prices for labour, land and fixed capital across countries.The production elasticity of materials is high, so that improving the availability of working capital is the most promising way to increase agricultural productivity.
    Keywords: Agricultural factor productivity, production function estimation, EU, Farm Accountancy Data Network, Production Economics, Productivity Analysis,
    Date: 2013
  4. By: Garnero, Andrea; Kampelmann, Stephan; Rycx, François
    Abstract: We estimate the impact of workforce diversity on productivity, wages and productivity-wage gaps (i.e. profits) using detailed Belgian linked employer-employee panel data. Findings show that educational (age) diversity is beneficial (harmful) for firm productivity and wages. While gender diversity is found to generate significant gains in high-tech/knowledge intensive sectors, the opposite result is obtained in more traditional industries. Estimates neither vary substantially with firm size nor point to sizeable productivity-wage gaps except for age diversity.
    Keywords: labour diversity; productivity; wages; linked panel data; GMM
    JEL: D24 J24 J31 M12
    Date: 2013–09
  5. By: Andrea De Michelis; Marcello M. Estevão; Beth Anne Wilson
    Abstract: Traditionally, shocks to total factor productivity (TFP) are considered exogenous and the employment response depends on their effect on aggregate demand. We raise the possibility that in response to labor supply shocks firms adjust efficiency, rendering TFP endogenous to firms’ production decisions. We present robust cross-country evidence of a strong negative correlation between growth in TFP and labor inputs over the medium to long run. In addition, when using instruments to capture changes in hours worked that are independent of TFP shocks, we find that cross-country increases in labor input cause reductions in TFP growth. These results have important policy implications, including that low productivity growth in some countries may partly be a side effect of strong labor market performance. By the same token, countries facing a declining workforce, say, because of aging, may see accelerating TFP as firms find better ways of employing workers.
    Keywords: Productivity;Employment;Labor supply;External shocks;Labor productivity;total factor productivity, employment performance, technology choices
    Date: 2013–05–03
  6. By: Karol J. Borowiecki (Department of Business and Economics, University of Southern Denmark, Odense, Denmark)
    Abstract: This study investigates agglomeration effects for classical music production in a wide range of cities for a global sample of composers born between 1750 and 1899. Theory suggests a trade-off between agglomeration economies (peer effects) and diseconomies (peer crowding). I test this hypothesis using historical data on composers and employ a unique instrumental variable - a measure of birth centrality, calculated as the average distance between a composer´s birthplace and the birthplace of his peers. I find a strong causal impact of peer group size on the number of important compositions written in a given year. Consistent with theory, the productivity gain eventually decreases and is characterized by an inverted U-shaped relationship. These results are robust to a large series of tests, including checks for quality of peers, city characteristics, various measures of composers´ productivity, and across different estimations in which also time-varying birth centrality measures are used as instrumental variables.
    Keywords: agglomeration economies, density effects, peer effects, productivity, urban history, cities, composer
    JEL: D24 J24 N90 R12 Z11
    Date: 2013–09
  7. By: Samuel Nursamsu (Department of Economics, Faculty of Economics Universitas Indonesia); Fithra Faisal Hastiadi (Department of Economics, Faculty of Economics Universitas Indonesia)
    Abstract: This research tries to explain the relation between international R&D spillover from international trade and FDI channel with productivity (TFP) based on endogenous growth theory in Asian Newly Industrialized Countries (ANIC) in period 1990--2010. In this research, it is found that R&D spillover is a significant factor in increasing TFP, especially from trade channel. It is also found that the availability of educated workers is another important factor in increasing productivity. From the comparison of the two country groups in ANIC, it is found that in ANIC Tier 2, international R&D spillover from export is not increasing productivity, yet its spillover effect is still significant. Another finding of this research is FDI is not an important channel for technology spillover. However, there is a need to further discuss the FDI spillover measurement.
    Keywords: R&D Spillover, Endogenous Growth, Productivity, Asia Developing Countries
    JEL: F00 O33 O47
    Date: 2013–09
  8. By: Thomas Bolli (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Jörg Schläpfer (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Analysing a comprehensive panel dataset of economists working at Austrian, German, and Swiss universities, we investigate how the local environment influences a scientist’s research productivity. The research environment varies if a scientist joins another department or if the characteristics of his colleagues change. We find no influence of the research environment on the average researcher’s productivity, if we control for individual characteristics. This result indicates that with today’s communication technologies spillovers are not bounded locally.
    Keywords: University, economics, productivity, mobility, peer effects, bibliometrics
    JEL: I23 J62
    Date: 2013–09
  9. By: Arne Beck; Heiner Bente; Martin Schilling
    Abstract: Railway efficiency is a topic of interest worldwide for railway managers operating in competitive markets and for fiscally strained governments. Several recent studies indicate that European railways differ in terms of their efficiency. Based on a comparison with some major non-European railway systems, our analysis provides further evidence that significant efficiency gaps exist.
    Date: 2013–05–07
  10. By: Francisca Bremberger; Carlo Cambini; Klaus Gugler and Laura Rondi
    Abstract: We study the impact of different regulatory and ownership regimes on the dividend policy of regulated firms. Using a panel of 106 publicly traded European electric utilities in the period 1986-2010, we link payout and smoothing decisions to the implementation of different regulatory mechanisms (cost plus vs. incentive regulation) and to firm ownership (state vs. private). After controlling for the potential endogeneity of the regulatory mechanism, our results show that utilities subject to incentive regulation smooth their dividends less than firms subject to cost-based regulation and present higher impact effects and target payout ratios. This suggests that when managers are more sensitive to competition-like efficiency pressures following the adoption of incentive regulation, they adopt a dividend policy more responsive to earnings variability and more consistent with optimal cash management. These results, however, apply only to private utilities. If the state still has ultimate control, smoothing of dividends remains irrespective of the regulatory mechanism. It seems that corporate governance (i.e. state control) trumps regulation when it comes to dividend payout policy.
    Keywords: Dividends, Lintner model, incentive regulation, electricity
    JEL: G35 G38 L51 L94
    Date: 2013–07
  11. By: Alex Klein; Keisuke Otsu
    Abstract: In this paper, we analyze the International Great Depression in the US and Western Europe using the business cycle accounting method a la Chari, Kehoe and McGrattan (CKM 2007). We extend the business cycle accounting model by incorporating endogenous factor utilization which turns out to be an important transmission mechanism of the disturbances in the economy. Our main findings are that in the US labor wedges account for roughly half of the drop in output while efficiency and investment wedges each account for a quarter of it during the 1929-1933 period while in Western Europe labor wedges account for more than one-third of the output drop and efficiency, government and investment wedges are responsible for the remaining during the 1929-1932 period. Our findings are consistent with several strands of existing descriptive and empirical literature on the International Great Depression.
    Keywords: International Great Depression; Business Cycle Accounting; Efficiency; Market Distortions
    JEL: E13 E32 N10
    Date: 2013–09
  12. By: Popovic, Milenko
    Abstract: The topic of this paper is an analysis of the growth of the Serbian economy. The paper is primarily devoted to the analysis of the sources of growth of the Serbian economy. In this regard, apart from conventional decomposition of growth (into contributions of capital, labor, and total factor productivity), the demand side and the industry composition sides of the sources-of-growth analysis are also considered. Furthermore, on the basis of these results, the reserves for further growth of the gross domestic product per capita are identified and estimated. Special attention is given to a possible increase in the total factor productivity, induced by the advance in “broader knowledge”, and to an increase in the labor participation rate. Institutional and policy prerequisites for realization of these reserves of growth are also briefly analyzed. Finally, on the basis of different assumptions regarding magnitudes of realization of these reserves, future convergence of the Serbian economy toward E15 and E27 countries is given.
    Keywords: sources of growth, growth reserves, convergence
    JEL: O40 O43 O47
    Date: 2013–03–05
  13. By: Heimeshoff, Mareike; Schreyögg, Jonas
    Abstract: This is the first study to specify a physician practice cost function with practice costs as the unit of analysis. Our study is based on the data of 3,706 physician practices for the years 2006 to 2008. We propose a model using physician practices as the unit of observation and considering the endogenous character of physician input. In doing so, we apply a translog functional form and include a comprehensive set of variables that have not been previously used in this context. A system of four equations using three-stage least squares is estimated. We find that a higher degree of specialisation and participation in disease management programs and gatekeeper models leads to a decrease in costs, whereas quality certification increases costs. Costs increase with the number of physicians, most likely because of the existence of indivisibilities of expensive technical equipment. Smaller practices might not reach the critical mass to invest in certain technologies, which leads to differences in the type of health care services provided by different practice types. --
    Keywords: physician practice cost function,three-stage least squares,specialization,economies of scale
    Date: 2013
  14. By: Michael Kopsidis (Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO)); Katja Bruisch (German Historical Institute Moscow (DHI Moskau)); Daniel W. Bromley (University of Wisconsin-Madison)
    Abstract: This paper deals with agricultural dynamics in late-Imperial Russia. Based upon a comprehensive micro-level data set on annual yields between 1883 and 1913, we provide insight into regional differences of agricultural growth and the development prospects of Russian agriculture before WWI. Making use of the fact that— unique in Europe— contemporary Russian statistics distinguished between “privately owned” and mostly communally governed “peasant” land, we are able to test the implications of different landtenure systems for agricultural growth. In a broader sense we will challenge the stereotype of the “backward” peasant and the common narrative of Russia as an exception to the pan-European picture of economic development during the era of industrialization.
    Keywords: Russia, land productivity, peasant communal agriculture, land tenure
    JEL: N53 O13 Q15
    Date: 2013–09
  15. By: Orley C. Ashenfelter; Daniel Hosken; Matthew C. Weinberg
    Abstract: Merger efficiencies provide the primary justification for why mergers of competitors may benefit consumers. Surprisingly, there is little evidence that efficiencies can offset incentives to raise prices following mergers. We estimate the effects of increased concentration and efficiencies on pricing by using panel scanner data and geographic variation in how the merger of Miller and Coors breweries was expected to increase concentration and reduce costs. All else equal, the average predicted increase in concentration lead to price increases of two percent, but at the mean this was offset by a nearly equal and opposite efficiency effect.
    JEL: K21 L1 L4
    Date: 2013–08
  16. By: Anette Haas; Michael Lucht (Institut für Arbeitsmarkt- und Berufsforschung (IAB))
    Abstract: To examine the impact of migrants on the average firm productivity, wages and welfare we construct a general equilibrium model with monopolistic competition a la Melitz (2003) considering heterogeneous firms with different productivity levels and imperfect substitutability between migrants and natives. This gives rise to wage differences between natives and migrants. As a consequence firms with a higher share of migrants realize wage cost advantages. The heterogeneous distribution of migrants in our model might foster regional disparities. In the long run equilibrium it depends on the migrant share, which kind of firms survive in the market. Above a certain migrant share only those firms stay in the market which are highly productive or are able to compensate a lower productivity level by wage cost advantages. By modeling this process, we show that a higher migrant share may explain a higher average productivity in a region. Though the relative wages of natives to migrants increase in the migrant share, in contrast the welfare effects for natives are ambiguous: it might be the case that in a region with a higher migrant share the welfare of a native can be lower compared to a worker in a region of the same size with lower migrant share.
    Keywords: immigration, firm heterogeneity, skills, tasks, regional labor markets
    JEL: R23 J15 J24 J61
    Date: 2013–09

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