New Economics Papers
on Efficiency and Productivity
Issue of 2014‒01‒24
seventeen papers chosen by

  1. How to properly decompose economic efficiency using technical and allocative criteria with non-homothetic DEA technologies By Aparicio, Juan; Pastor, Jesús; Zofío, José Luis
  2. Technical Efficiency of Takaful Industry- A Comparative Study of Malaysia and GCC Countries By Hela Miniaoui; Anissa Chaibi
  3. Canada-United States Labour Productivity Gap Across Firm Size Classes By Baldwin, John R. Leung, Danny Rispoli, Luke
  4. Profit Sharing and Workplace Productivity: Does Teamwork Play a Role? By Long, Richard J.; Fang, Tony
  5. Parenthood and Productivity of Highly Skilled Labor: Evidence from the Groves of Academe By Krapf, Matthias; Ursprung, Heinrich W.; Zimmermann, Christian
  6. Unionization and Productivity: Evidence from Charter Schools By Hart, Cassandra M. D.; Sojourner, Aaron J.
  7. Multinationals, Competition and Productivity Spillovers through Worker Mobility By Katariina Nilsson Hakkala; Alessandro Sembenelli
  8. More Is Better! What Can Firm-Specific Estimates of the Impact of Institutional Quality on Performance Tell Us? By Bhaumik, Sumon K.; Dimova, Ralitza; Kumbhakar, Subal C.; Sun, Kai
  9. Productivity of the English National Health Service from 2004/5: updated to 2011/12 By Chris Bojke; Adriana Castelli; Katja Grasic; Andrew Street
  10. Chinese Unions and Enterprises Performance By Fang, Tony; Ge, Ying
  11. Impact of export destinations on firm performance By Cebeci, Tolga
  12. Stages of Diversification and Industry Productivity Differences By Roberto Samaniego
  13. The Distribution of Gross Domestic Product and Hours Worked in Canada and the United States Across Firm Size Classes By Leung, Danny Rispoli, Luke
  14. CAPRI long-term climate change scenario analysis: The AgMIP approach By Heinz-Peter Witzke; Pavel Ciaian; Jacques Delince
  15. Measuring the performance of hedge funds using two-stage peer group benchmarks By Wilkens, Marco; Yao, Juan; Jeyasreedharan, Nagaratnam; Oehler, Patrick
  16. Does Culture Affect Local Productivity and Urban Amenities? By Brahim Boualam
  17. Incentives, Selection and Productivity in Labor Markets: Evidence from Rural Malawi By Raymond P. Guiteras; B. Kelsey Jack

  1. By: Aparicio, Juan (Center of Operations Research, Universidad Miguel Hernández, Elche, Spain); Pastor, Jesús (Center of Operations Research, Universidad Miguel Hernández, Elche, Spain); Zofío, José Luis (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: We discuss how to properly decompose economic efficiency when the underlying technology is non-homothetic using alternative allocative and technical efficiency criteria. We first show that only under the production of one output and assuming the particular case of constant returns to scale homotheticity, we may claim that the standard radial models correctly measure pure technical efficiency. Otherwise, when non-homotheticity is assumed, we then show that these traditional estimations would measure an undetermined mix of technical and allocative efficiency. To restore a consistent measure of technical efficiency in the non-homothetic case we introduce a new methodology that takes as reference for the economic efficiency decomposition the preservation of the allocative efficiency of firms producing in the interior of the technology. This builds upon the so-called reversed approach recently introduced by Bogetoft et al. (2006) that allows estimating allocative efficiency without presuming that technical efficiency has been already accomplished. We illustrate our methodology within the Data Envelopment Analysis framework adopting the most simple nonhomothetic BCC model and a numerical example. We show that there are significant differences in the allocative and technical efficiency scores depending on the approach.
    Keywords: Data Envelopment Analysis; Overall efficiency; Technical efficiency; Allocative efficiency; Homotheticity.
    JEL: C61 D21 D24
    Date: 2013–12
  2. By: Hela Miniaoui; Anissa Chaibi
    Abstract: The present study empirically investigates the technical efficiency of takaful industry operations in Malaysia and the Gulf Cooperation Council (GCC) countries. Data Envelopment Analysis (DEA) was employed to estimate the technical efficiency of using Constant Returns to Scale (CRS) and Variable Return to Scale (VRS) during the period 2006- 2009. The study reveals that takaful companies operating in GCC countries are more efficient than Malaysian operators that are encouraged to have aggressive marketing and wider distribution channels to capture more demand.
    Keywords: Takaful Industry, DEA, Efficiency, Malaysia, GCC
    JEL: C7 D8
    Date: 2014–01–06
  3. By: Baldwin, John R. Leung, Danny Rispoli, Luke
    Abstract: This paper examines and compares labour productivity in Canada and the United States for small and large firms over the period from 2002 to 2008. It quantifies the relative importance of small and large firms in Canada and the United States and measures the relative productivity levels of small versus large firms. Small firms are relatively more important in the Canadian economy. Small firms are less productive than large firms in both countries. But the productivity disadvantage of small relative to large firms was higher in Canada. The paper provides an estimate of the impact that these differences have on the gap in productivity levels between Canada and the United States. It first estimates the changes that would occur in Canadian aggregate labour productivity if the share of hours worked of large firms in Canada was increased to the U.S. level. It then quantifies the impact of increasing the relative productivity of small to large firms in Canada up to the relative productivity ratio of small firms to large firms that existed in the United States. Together, decreasing the relative importance of small firms in the economy and increasing their relative productivity compared to large firms accounts for most of the gap in productivity levels between Canada and the United States in 2002. However, changes in the economy that occurred between 2002 and 2008 reduced the contribution of the small-firm sector to the gap in productivity levels.
    Keywords: Business performance and ownership, Economic accounts, Productivity accounts, Small and medium-sized businesses
    Date: 2014–01–08
  4. By: Long, Richard J. (University of Saskatchewan); Fang, Tony (Monash University)
    Abstract: The conditions under which profit sharing affects workplace productivity have never been fully understood. Using panel data, this paper examines whether there is any link between adoption of an employee profit sharing plan and subsequent productivity growth in Canadian establishments, and whether this relationship is affected by various contextual factors, particularly use of work teams. In so doing, we use both three and five-year panels. Overall, we find a significant link between adoption of a profit sharing program and subsequent productivity growth in both panels, but only among establishments that utilize employee work teams.
    Keywords: profit sharing plans, workplace productivity, teamwork, firm-worker linked survey, Canada
    JEL: J33 J24 J54
    Date: 2013–12
  5. By: Krapf, Matthias (University of Zurich); Ursprung, Heinrich W. (University of Konstanz); Zimmermann, Christian (Federal Reserve Bank of St. Louis)
    Abstract: We examine the effect of pregnancy and parenthood on the research productivity of academic economists. Combining the survey responses of nearly 10,000 economists with their publication records as documented in their RePEc accounts, we do not find that motherhood is associated with low research productivity. Nor do we find a statistically significant unconditional effect of a first child on research productivity. Conditional difference-in-differences estimates, however, suggest that the effect of parenthood on research productivity is negative for unmarried women and positive for untenured men. Moreover, becoming a mother before 30 years of age appears to have a detrimental effect on research productivity.
    Keywords: Fertility; research productivity; gender gap; research productivity; life cycle.
    JEL: I23 J13 J24
    Date: 2014–01–11
  6. By: Hart, Cassandra M. D. (University of California, Davis); Sojourner, Aaron J. (University of Minnesota)
    Abstract: This paper studies the relationship between teacher unionization and student achievement. Generally stable patterns of teacher unionization since the 1970s have historically presented challenges in measuring the effects of unionization on educational production. However, the blossoming of the charter school sector in recent decades provides fertile ground for study because while most charters are non-union, teachers at some charters have unionized. Using a generalized difference-in-difference approach combining California union certification data with student achievement data from 2003-2012, we find that, aside from a one-year dip in achievement associated with the unionization process itself, unionization does not affect student achievement.
    Keywords: teacher, labor union, student achievement, charter school, education, labor productivity
    JEL: I21 J5 J45 J24 H75 D24
    Date: 2014–01
  7. By: Katariina Nilsson Hakkala; Alessandro Sembenelli
    Abstract: Spillovers can arise when multinational firms (MNEs) train local employees who later join domestic firms, bringing with them part of the technological, marketing and managerial knowledge they have acquired. Fosfuri et al. (2001) suggest that the direction and the intensity of the worker mobility, and its associated spillovers, are affected by the degree of product market competition. In this paper, we assess empirically the importance of this hypothesis for the first time by using the Finnish longitudinal employeer-employee data. We first quantify the importance of spillovers via worker mobility by estimating augmented production functions. Second, we analyse the impact of product market competition and absorptive capacity on worker mobility by estimating several competing risks models. We find that productivity spillovers arise only when workers move from MNEs to purely domestic firms in high-tech industries. Further, in line with predictions of Fosfuri et al, our results show that competition reduces worker mobility. This details a channel through which competition may affect total factor productivity of purely domestic plants adversely.
    Keywords: spillovers, labour mobility, product-market competition, linked employer-employee data
    JEL: D24 F23 D22 J62
    Date: 2014–01–13
  8. By: Bhaumik, Sumon K. (Aston University); Dimova, Ralitza (University of Manchester); Kumbhakar, Subal C. (Binghamton University, New York); Sun, Kai (Aston University)
    Abstract: We introduce a novel approach to modeling the impact of institutional quality on firm performance. Our methodology enables us to estimate the marginal effect of institutional quality on TFP, factor inputs and output of each firm, which gives us within-country distributions of these effects and hence a better picture of the winners and losers associated with a particular level of institutional quality. We are also able to model marginal impact of institutional quality on both TFP and the efficiency of use of factor inputs, and hence on output. This is a departure from stylized approaches that focus on the impact on TFP alone, and our approach therefore informs policy discussions about the impact of institutional quality (and their change) on shares of factor inputs in the output. We use cross-country firm-level data for the textiles and garments sector to demonstrate the advantages of this modeling approach in analyzing the impact of institutional quality.
    Keywords: institutional quality, firm performance, marginal effect, textiles industry
    JEL: C14 D24 K31 O43
    Date: 2014–01
  9. By: Chris Bojke (Centre for Health Economics, University of York, UK); Adriana Castelli (Centre for Health Economics, University of York, UK); Katja Grasic (Centre for Health Economics, University of York, UK); Andrew Street (Centre for Health Economics and Department of Economics and Related Studies, University of York, UK)
    Abstract: We measure the productivity of the health care sector over time by comparing the total amount of health care ‘output’ produced to the total amount of ‘input’ used to produce this output in accordance with Eurostat conventions (Eurostat, 2001). To construct a time series, we need to account for changes in routine data collection procedures, such as data coverage and changing activity definitions. To do this we construct a series of chained indices for both output and input growth in consecutive years. This allows us to calculate a like-with-like productivity growth series for the English National Health Service for the time period from 2004/5 to 2011/12.
    Date: 2014–01
  10. By: Fang, Tony (Monash University); Ge, Ying (School of International Trade and Economics, Beijing)
    Abstract: This paper uses the national firm level survey data to investigate the effects of Chinese unions on firm performance. We show that Chinese unions have a strong "State-Party voice" face and a "collective voice" face but lack of "monopoly" face. The government influence plays an important role in unionization. The empirical findings on the effectiveness of unions are remarkable: unions in the workplace significantly improve productivity but reduce enterprise profitability. Moreover, the presence of unions in same region and industry generates negative spillovers on enterprise performance.
    Keywords: unions, laws, productivity, profitability, China
    JEL: J51 J52 J53
    Date: 2013–12
  11. By: Cebeci, Tolga
    Abstract: This paper evaluates the role of export destinations on productivity, employment, and wages of Turkish firms by comparing the performance of firms that export to low-income destinations and high-income destinations with firms that do not export. A combination of propensity score matching and difference-in-differences methods are employed on a rich set of firm observables, including sector, region, employment, total factor productivity (TFP), capital intensity, wages, support from government, ownership, and the research and development intensity of firms. Four sets of findings emerge from the analysis: i) Export entry has a positive causal effect on firm TFP and employment and this effect is strengthened as a firm continues to export. ii) In contrast, export entry has a moderate wage effect that emerges only with a lag. iii) Unlike exporting to high-income destinations, exporting to low-income destinations does not result in significantly higher firm TFP and wages. iv) The employment effect of exporting to low-income destinations is comparable to that of exporting to high-income destinations.
    Keywords: Economic Theory&Research,Microfinance,Labor Policies,E-Business,Tax Law
    Date: 2014–01–01
  12. By: Roberto Samaniego (George Washington University)
    Abstract: Economies tend to diversify and then re-specialize as they develop. In an economy with many industries that experience different rates of productivity growth, these "stages of diversification" may obtain if initial conditions are skewed away from the industries that dominate economic structure in the long run as a matter of productivitydriven structural change. A calibrated multi-industry growth model with many countries replicates the main features of the "stages of diversification". We also present evidence that countries shift resources towards high-TFP growth manufacturing industries, and towards low-TFP growth sectors, consistent with the model.
    Date: 2013
  13. By: Leung, Danny Rispoli, Luke
    Abstract: This paper compares the relative importance of small and large firms in the business sectors of Canada and the United States from 2002 to 2008 using estimates of the contribution of small and large firms to the gross domestic product (GDP) of each country. It then makes use of estimates of labour input for comparison purposes. In this paper, small firms are defined as those with fewer than 500 employees and large firms as those with 500 or more employees.
    Keywords: Business performance and ownership, Economic accounts, Gross domestic product, Productivity accounts
    Date: 2014–01–08
  14. By: Heinz-Peter Witzke (Bonn University); Pavel Ciaian (European Commission (DG Joint Research Center)); Jacques Delince (European Commission (DG Joint Research Center))
    Abstract: The current paper investigates the long-term global effects of crops productivity changes under different climate scenarios and the impact of biofuels expansion using the Common Agricultural Policy Regionalised Impact (CAPRI) model. These analyses are conducted in the framework of the AgMIP project (Agricultural Model Intercomparison and Improvement Project). The results indicate that globally there will be both winners and losers, with some regions benefitting from agricultural production adjustment as a result of climate change whilst most regions suffering losses in production and consumption. Biofuel expansion leads to land relocation away from crop agricultural commodity production to new energy crops which is reflected in lower production levels of agricultural commodities and higher agricultural prices.
    Keywords: Climate Change, Lung-run modelling, Agriculture, Productivity, Biofuels
    JEL: Q02 Q11 Q54
    Date: 2014–01
  15. By: Wilkens, Marco (Chair of Finance and Banking, University of Augsburg); Yao, Juan (Finance Discipline, Business School, University of Sydney); Jeyasreedharan, Nagaratnam (School of Economics and Finance, University of Tasmania); Oehler, Patrick (University of Augsburg)
    Abstract: This paper is the first to present a two-stage peer group benchmarking approach to evaluate the performance of hedge funds. We present different ways of orthogonalizing the peer group benchark and discuss their propperties in general. We propose to orthogonalize the benchmark against all other exogenous factors. For a broad dataset we show that this approach captures much more commonalities in hedge funds returns compared to the standard methodology if only classical exogenous factors are used. As a result the empirical rankings of hedge funds on the basis of alphas received by this new approach change heavily. Therefore, the proposed two-stage peer group benchmark allows us to better determine which hedge fund managers outperformed the others in the past.
    Keywords: Hedge Funds, Performance Measurement, Factor Model, Peer Group Benchmark.
    JEL: G11 G12 G15
    Date: 2013–06–01
  16. By: Brahim Boualam
    Abstract: Does a better cultural milieu make a city more livable for residents and improve its business environment for firms? I address this question by computing a measure of cultural specialization based on detailed occupational data for 346 U.S. metropolitan areas. I then estimate hedonic wage and rent equations and ask if differences in the cultural environment across cities capitalize into housing price and wage differentials. Simple correlations replicate standard results from the literature: cities that are more specialized in cultural and artistic occupations enjoy higher factor prices. Using time-series data, controlling for observable and unobservable city characteristics, and implementing alternative specifications weaken the magnitude of this effect. Estimations correcting for reverse causality and endogeneity ultimately show that the impact of culture on city attractiveness is negligible at best. Even though the arts and culture might be appealing to some people and firms, such determinants are not strong enough to affect factor prices at the metropolitan level.
    Keywords: Urban economics, location choice, local amenities, culture.
    Date: 2013–12
  17. By: Raymond P. Guiteras; B. Kelsey Jack
    Abstract: An observed positive relationship between compensation and productivity cannot distinguish between two channels: (1) an incentive effect and (2) worker selection. We use a simplified Becker-DeGroot-Marschak mechanism, which provides random variation in piece rates conditional on revealed reservation rates, to separately identify the two channels in the context of casual labor markets in rural Malawi. A higher piece rate increases output in our setting, but does not attract more productive workers. Among men, the average worker recruited at higher piece rates is actually less productive. Local labor market imperfections appear to undermine the worker sorting observed in well-functioning labor markets.
    JEL: C93 J22 J24 J33 O12
    Date: 2014–01

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