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on Efficiency and Productivity |
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Issue of 2013‒11‒09
fourteen papers chosen by |
| By: | Frank Jr. , Douglas H.; Obloj , Tomasz |
| Abstract: | This paper explores conflicting implications of firm-specific human capital (FSHC) for firm performance. Existing theory predicts a productivity effect that can be enhanced with strong incentives. We propose an offsetting agency effect: FSHC may facilitate more sophisticated “gaming” of incentives, to the detriment of firm performance. Using a unique dataset from a multiunit retail bank, we document both effects and estimate their net impact. Managers with superior FSHC are more productive in selling loans but are also more likely to manipulate loan terms to increase incentive payouts. We find that resulting profits are two percentage points lower for high-FSHC managers. Finally, profit losses increase more rapidly for high-FSHC managers, indicating adverse learning. Our results suggest that FSHC can create agency costs that outweigh its productive benefits. |
| Keywords: | FSHC; firm-specific human capital; firm performance; incentives; multiunit retail bank |
| JEL: | G00 |
| Date: | 2013–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:0999&r=eff |
| By: | Kuntchev, Veselin; Ramalho, Rita; Rodriguez-Meza, Jorge; Yang, Judy S. |
| Abstract: | Using a unique firm level data set -- the Enterprise Surveys -- this paper develops a new measure of credit-constrained status for firms using hard data instead of perceptions data. The paper classifies firms into four ordinal categories: Not Credit Constrained, Maybe Credit Constrained, Partially Credit Constrained, and Fully Credit Constrained to understand the characteristics of the firms that fall into each group. Comparable data from the Enterprise Surveys for 116 countries are used to look at the relationship between firm size and credit-constrained status. First, the analysis finds that small and medium enterprises are more likely to be credit constrained (either partially or fully) than large firms. Furthermore, small and medium enterprises finance their working capital and investments mainly through trade credit and informal sources of finance. These two results hold to a large extent in all the regions of the developing world. Second, although size is a significant predictor of the probability of being credit constrained, firm age is not. Third, high-performing firms, as measured by labor productivity, are less likely to be credit constrained. This result applies to all firms but is not as strong for small firms as it is for large and medium firms. Finally, in countries with high private credit-to-gross domestic product ratios, firms are less likely to be credit constrained. Given the importance of access to credit for firm growth and efficiency, this paper confirms that throughout the developing world access to credit is inversely related to firm size but positively related to productivity and financial deepening in the country. |
| Keywords: | Access to Finance,Banks&Banking Reform,Bankruptcy and Resolution of Financial Distress,Microfinance,Investment and Investment Climate |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6670&r=eff |
| By: | Pierre-Daniel G. Sarte; Esteban Rossi-Hansberg; Fernando Parro; Lorenzo Caliendo |
| Abstract: | We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input structure that matches the U.S. input-output matrix. Using data on trade flows by industry between states, as well as other regional and industry data, we calibrate the model and carry out a variety of counterfactual experiments that allow us to gauge the impact of regional and sectoral productivity changes. We find that such changes can have dramatically different effects depending on the sectors and regions affected. In extreme cases, increases in productivity can have negative effects on real GDP (although welfare effects remain positive). |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedrwp:13-14&r=eff |
| By: | Ghosh, Saibal |
| Abstract: | Employing data on Indian banks for 1992-2012, the article examines the impact of macroprudential measures on bank performance. First, it finds that state-owned banks tend to have lower profitability and soundness than their private counterparts. Next, it tests whether such differentials between state-owned and private banks are driven by macroprudential measures; it finds strong support for this hypothesis. |
| Keywords: | banking; macroprudential; capital adequacy; loan classification; provisioning; ownership; India |
| JEL: | G21 L51 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51226&r=eff |
| By: | Lucas Bretschger (ETH Zurich, Switzerland); Simone Valente (The Norwegian University of Science and Technology) |
| Abstract: | We study the incentives of selfish governments to tax tradable primary inputs un- der asymmetric trade. Using an empirically-consistent model of endogenous growth, we obtain explicit links between persistent gaps in productivity growth and the observed tendency of resource-exporting (importing) countries to subsidize (tax) domestic resource use. Assuming uncoordinated maximization of domestic welfare, national governments wish to deviate (i) from inefficient laissez-faire equilibria as well as (ii) from efficient equilibria in which domestic distortions are internalized. The incentive of resource-rich countries to subsidize hinges on slower productivity growth and is disconnected from the typical incentive of importers to tax resource inflows. i.e., rent extraction. The model predictions concerning the impact of resource taxes on relative income shares are supported by empirical evidence. |
| Keywords: | Productivity Growth; Exhaustible Resources; International Trade. |
| JEL: | F43 O40 |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:eth:wpswif:13-185&r=eff |
| By: | KIYOTA Kozo; OKAZAKI Tetsuji |
| Abstract: | This paper attempts to provide a systematic analysis on the effects of industrial policy in postwar Japan. Among the various types of Japanese industrial policy, this paper focuses on the removal of de facto import quotas through the foreign exchange allocation system. Analyzing a panel of 100 Japanese manufacturing industries in the 1960s, we find that the effects of the quota removal on productivity were limited—the effects were significantly positive, but time was required before they appeared. On the other hand, the effects of tariffs on labor productivity were negative although insignificant. One possible reason for this is that the Japanese government increased tariff rates before removing the import quotas and maintained high tariff rates afterward. As a result, the effects of the Japanese industrial policy in the 1960s might be smaller than widely believed in the Japanese economic history literature. |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13093&r=eff |
| By: | Dominika Langenmayr (University of Munich); Andreas Hau fler (University of Munich and CESifo); Christian J. Bauer (University of Munich and CESifo) |
| Abstract: | Heterogeneous firm productivity raises the question of whether governments should pursue `pick-the-winner' strategies by subsidizing highly productive firms more, or taxing them less, than their less productive counterparts. We study this issue in a setting where governments can set differentiated effective tax rates in an oligopolistic industry where firms with two productivity levels co-exist. We show that the optimal structure of tax differentiation depends critically on the feasible level of the corporate profit tax, which in turn depends on the degree of international tax competition. When tax competition is weak and optimal profit tax rates are high, favouring high-productivity firms is indeed the optimal policy. When tax competition is aggressive and profit taxes are low, however, the optimal tax policy reverses and favours low-productivity firms. |
| Keywords: | business taxation, firm heterogeneity, tax competition |
| JEL: | H25 H87 F15 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:btx:wpaper:1308&r=eff |
| By: | Festel, Gunter; Würmseher, Martin; Rammer, Christian; Boles, Eckhard; Bellof, Martin |
| Abstract: | This paper presents the results of a calculation model for biofuel production costs in 2015 and 2020 based on raw material price projections and considering scale and learning effects. Distinguishing six types of biofuels, the paper finds that scale economies and learning effects are critical for 2nd generation biofuels to become competitive. In case these effects can be utilized, cost saving potentials for 2nd generation biofuels are significant. -- |
| Keywords: | Biofuels,Production Cost Scenarios,Raw Material Price Projection,Conversion Costs |
| JEL: | L25 L26 J24 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:13075&r=eff |
| By: | Berliant, Marcus; Weiss, Adam |
| Abstract: | We examine econometric and elementary economic theory issues arising from the model specification in Henderson, Storeygard and Weil (2012), that uses night light data to proxy for missing or unreliable GDP growth data. An alternative approach based on the expenditure function is outlined. It can accommodate prices as well as quantity information from other commodity markets. |
| Keywords: | GDP, Night light data, Omitted variable, Expenditure function, Spatial autocorrelation |
| JEL: | D11 D61 O47 O57 |
| Date: | 2013–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51055&r=eff |
| By: | Tomas Havranek; Roman Horvath; Petra Valickova |
| Abstract: | We analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth. Taken together, the studies imply a positive and statistically significant effect, but the individual estimates vary widely. We find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results. Studies that do not address endogeneity tend to overstate the effect of finance on growth. While the effect seems to be weaker in less developed countries, the effect decreases worldwide after the 1980s. Our results also suggest that studies using stock-market-oriented measures as a proxy for financial development tend to report larger positive effects on growth. We find little evidence of publication bias in the literature. |
| Keywords: | Development, finance, growth, meta-analysis. |
| JEL: | C83 G10 O40 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2013/05&r=eff |
| By: | Jens Leth Hougaard (Department of Food and Resource Economics, University of Copenhagen); Jørgen Tind (Department of Mathematical Sciences, University of Copenhagen) |
| Abstract: | This article investigates progressive development of Aumann-Shapley cost allocation in a multilevel organizational or production structure. In particular, we study a linear parametric programming setup utilizing the Dantzig-Wolfe decomposition procedure. Typically cost allocation takes place after all activities have been performed, for example by finishing all outputs. Here the allocation is made progressively with suggestions for activities. I other words cost allocation is performed in parallel for example with a production planning process. This development does not require detailed information about some technical constraints in order to make the cost allocation. |
| Keywords: | cost allocation, Aumann-Shapley prices, decomposition, parametric programming |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:foi:msapwp:01_2013&r=eff |
| By: | Samantas, Ioannis |
| Abstract: | This paper constitutes a new endeavor of investigating competitive conditions in European banking. Since the vast literature of competition modeling has produced mixed results, the proposed methodology goes one step further in order to investigate the intensity of key effects on bank competition as decomposed into specific bank activities. The sample comprises nine of the most developed banking markets in the European region during the period 2002-2010. The concluding remarks over the explanatory power of traditional collusion, relative market power and efficiency alongside other key controls on bank pricing conduct, provide considerable policy implications. |
| Keywords: | Competition; Banking income, Collusion, Market power, Cost efficiency |
| JEL: | D4 D57 G21 L11 L21 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:51098&r=eff |
| By: | Gilles Duranton (University of Pennsylvania); Diego Puga (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | Why do cities grow in population, surface area, and income per person? Which cities grow faster and why? To these questions, the urban growth literature has offered a variety of answers. Within an integrated framework, this chapter reviews key theories with implications for urban growth. It then relates these theories to empirical evidence on the main drivers of city growth, drawn primarily from the United States and other developed countries. Consistent with the monocentric city model, fewer roads and restrictions on housing supply hinder urban growth. The fact that housing is durable also has important effects on the evolution of cities. In recent decades, cities with better amenities have grown faster. Agglomeration economies and human capital are also important drivers of city growth. Although more human capital, smaller firms, and a greater diversity in production foster urban growth, the exact channels through which those effects percolate are not clearly identified. Finally, shocks also determine the fate of cities. Structural changes affecting the broader economy have left a big footprint on the urban landscape. Small city-specific shocks also appear to matter, consistent with the recent wave of random growth models. |
| Keywords: | Urban growth, Agglomeration economies, Land use, Transportation, amenities. |
| JEL: | C52 R12 D24 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2013_1308&r=eff |
| By: | Karl Aiginger; Susanne Bärenthaler-Sieber; Johanna Vogel |
| Abstract: | This paper aims to redefine the term competitiveness to enhance its usefulness for the evaluation of country performance and for policy conclusions. We attempt to establish a definition that is adequate if economic policy strives for a new growth path that is more dynamic, socially inclusive and ecologically sustainable. We tentatively apply the proposed definition to evaluate the "competitiveness" of EU member states as well as to compare Europe's competitiveness with that of the US, Switzerland, Japan and China, where possible. In the first part of the paper, we examine the evolution of the concept from a focus on "inputs" at the firm level (price or cost competitiveness) to economic structure and capabilities at the country level and finally to "outcome" competitiveness, where outcomes are defined in a broad sense and in the context of the WWWforEurope project. We propose to define competitiveness as the "ability of a country (region, location) to deliver the beyond-GDP goals for its citizens". In the second part of the paper, the performance of the EU-27 countries is assessed along the dimensions described above. We begin with price competitiveness and then proceed to economic structure and countries’ capabilities regarding innovation, education, the social system, institutions and environmental ambition. We conclude with outcome competitiveness in terms of economic, social and ecological outcomes. Overall, we compile a database of 68 indicators that describe these different aspects of competitiveness. In the third part of the paper, we investigate empirically the relationship between "outcome" and "input" competitiveness for the EU-27 using panel data analysis for the period from 2000 to 2010. We construct a composite indicator for outcome competitiveness consisting of income, social and ecological pillars, following the beyond-GDP literature. This measure is then econometrically related to composite indicators of the three groups of input indicators: price competitiveness, economic structure, and capabilities. The results of panel regressions suggest that both economic structure and capabilities on aggregate are positively related to our measure of outcome competitiveness, while a negative relationship is found for the wage component of price competitiveness. Among the different dimensions of capabilities, ecological ambition and institutions are positively associated with outcome competitiveness. Overall, we conclude that a narrow focus on the price component of competitiveness neglects other aspects of the concept that are likely to be particularly important for high-income economies like the EU-27. |
| Keywords: | Competitiveness, economic growth path, industrial policy, social capital as growth driver, sustainable growth |
| JEL: | O25 L16 |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:feu:wfewop:y:2013:m:10:d:0:i:44&r=eff |