|
on Efficiency and Productivity |
|
Issue of 2014‒04‒11
twenty papers chosen by |
| By: | Tasso Adamopoulos; Diego Restuccia |
| Abstract: | We assess the effects of a major land-policy change on farm size and agricultural productivity using a quantitative model and micro-level data. We study the 1988 land reform in the Philippines that imposed a ceiling on land holdings and severely restricted the transferability of the redistributed farm lands. We study this reform in the context of an industry model of agriculture with a non-degenerate distribution of farm sizes featuring an occupation decision and a technology choice of farm operators. In this model, a land reform reduces agricultural productivity not only by reallocating resources from large/high productivity farms to existing small/low productivity farms (misallocation effect), but also by distorting farmers' occupation and technology adoption decisions (selection effect). The model, calibrated to pre-reform farm-level data in the Philippines, implies that on impact the land reform reduces average farm size by 34 percent and agricultural productivity by 17 percent. The government assignment of land and the ban on its transfer are key for the magnitude of the results since a market allocation of the above-ceiling land produces only 1/3 of the size and productivity effects. These results emphasize the potential role of land market efficiency for misallocation and productivity in the agricultural sector. |
| Keywords: | agriculture, misallocation, within-farm productivity, land reform. |
| JEL: | O11 O14 O4 |
| Date: | 2014–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-509&r=eff |
| By: | Mitaritonna, Cristina (CEPII, Paris); Orefice, Gianluca (CEPII, Paris); Peri, Giovanni (University of California, Davis) |
| Abstract: | Immigrants may complement native workers, increase productivity, allow specialization by skill in the firm and lower costs. These effects could be beneficial for the firm and increase its productivity and profits. However not all firms use immigrants. Allowing firms to have differential fixed cost in hiring immigrants we analyze the impact of an increase in local supply of immigrants on firms' immigrant employment and firm's productivity. Using micro-level data on French firms, we show that a supply-driven increase in foreign born workers in a department (location) increases the productivity of firms in that department. We also find that this effect is significantly stronger for firms with initially zero level of foreign employment. Those are also the firms whose share of immigrants increases the most. We also find that the positive productivity effect of immigrants is associated with faster growth of capital and improved export performances of the firms. Finally we find a positive effect of immigration on wages of natives and on specialization of natives in complex occupations, that is common to all firms in the department. |
| Keywords: | immigrants, firms, productivity, heterogeneity, fixed costs of hiring |
| JEL: | F22 E25 J61 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8063&r=eff |
| By: | Chen, Kaihua |
| Abstract: | The combination way of component efficiencies into the overall efficiency is a central topic in the efficiency modeling of network systems based on data envelopment analysis (DEA). In terms of the feature and advantage of DEA modeling as the multiplier generation on inputs/outputs, it is desirable that the combination weights are derived from the data and self-generated in calculation process. The prior weights choice makes DEA modeling lose the objectivity and generalization in efficiency measures. This study proposes a new formulating approach of dynamic network DEA (DN-DEA) models to measure and decompose the overall efficiency of multi-period and -division systems without the pre-specified weights to combine component efficiencies into the overall efficiency. In our formulating approach, the double identities of carry-overs connecting consecutive periods and linkers connecting consecutive divisions are fully accounted for. This approach is applicable for the formulations of both radial measures (DN-CCR and DN-BCC) and non-radial measures (DN-SBM). This study extends Kao’s (in press) relational approach of dynamic DEA to dynamic network systems for empirical comparison. In contrast to Kao’s (in press) approach, our approach can present a weighted average decomposition of the overall (in)efficiency score into components ones by a set of endogenous weight sets which are the most favorable for the tested multi-period and -division system. This makes sense of the comparison between overall and component (in)efficiency scores. In this context, the overall efficiency score is less or more than all component ones. We applied our models to evaluate the innovation efficiency of OECD (Organization for Economic Co-operation and Development) countries. |
| Keywords: | Dynamic network DEA; Multi-period and -division systems; Efficiency measurement and decomposition; Innovation efficiency; OECD countries |
| JEL: | C51 O31 P51 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55073&r=eff |
| By: | Khayyat, Nabaz T. (Seoul National University); Lee, Jongsu (Seoul National University); Heshmati, Almas (Sogang University) |
| Abstract: | This empirical study examines changes in industrial productivity in Korea between 1980 and 2009, focusing on how investment in information and communication technology (ICT) and energy use, influence productivity levels. A dynamic factor demand model is applied in order to link inter-temporal production decisions by explicitly recognizing that the level of certain factors of production cannot be changed without incurring so-called adjustment costs, defined in terms of forgone output from current production. In particular, we investigate how the ICT–energy relationship affects total factor productivity growth in 30 industrial sectors. Describing industry-specific productivity levels is important for policymakers when the allocation of public investment and support is limited. The results presented herein show that ICT/non-ICT capital investment are substitutes for labor and energy use. We also find a high output growth rate in the sampled sectors, and increasing returns to scale, whose effects on the TFP component are higher than those of technological progress. |
| Keywords: | dynamic factor demand, panel data, ICT investment, energy use, productivity |
| JEL: | C32 C33 Q41 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8080&r=eff |
| By: | Daniel Montolio (Universitat de Barcelona & IEB); Francesc Trillas (Autonomous University of Barcelona, PPSRC-Iese & IEB); Elisa Trujillo-Baute (Universitat de Barcelona & IEB) |
| Abstract: | We empirically estimate the effects of regulated access prices and firms’ multinational status on firm performance by using firm, corporate group, and country level information for the European broadband market between 2002 and 2010. Three measures of firm performance are used, namely: market share, turnover and productivity. Special attention is paid to differences in the impact on the performance measures depending on a firm’s position as either a market incumbent or entrant. We find that while access prices have a negative effect on entrants’ market share and turnover, the effect on incumbents’ market share, turnover and productivity is positive. Further, we find that multinational entrants perform better than national entrants in terms of their market share but worse in terms of their turnover and productivity. The opposite is true of incumbent multinationals which perform better than nationals in terms of their turnover and productivity but worse in terms of their market share. This confirms that a firm’s multinational status has a significant impact on its performance, and that this impact differs for incumbents and entrants. Finally, when evaluating the impact of access prices on firm performance at the mean performance of national and multinational firms, we find that the impact of access prices is lower for multinational than for national firms. |
| Keywords: | Regulation, firm performance, telecommunications, multinational firms |
| JEL: | L51 L25 L96 F23 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:2013/6/doc2014-15&r=eff |
| By: | Andersson, Martin (CITR, Blekinge Inst of Technology); Gråsjö, Urban (University West); Karlsson, Charlie (CITR, Blekinge Inst of Technology) |
| Abstract: | Multinational firms (MNFs) have been shown to have a set of defining characteristics. Compared to domestic firms, they have a larger fraction of skilled workers, higher R&D to sales ratios and established networks to knowledge sources in several different countries. As illustrated by the so-called ‘anchor-tenant’ hypothesis, they can be described as “knowledge spillover agents”. MNF affiliates, as defined in this paper, are firms that are part of large domestic and foreign MNFs. In this paper we test whether the local presence of MNF affiliates generate spillover effects on the local industry. The empirical analysis focuses on assessing whether the productivity of the regional manufacturing industry of non-affiliated firms is higher in regions with a large fraction of MNF affiliates. The analysis uses data on Swedish firms and is conducted on regional level as well as on firm level. The regressions show that local presence of MNFs in a region has a positive effect on Gross Regional Product (GRP) from non-MNFs. The paper also shows that regions where the low-productive non-MNFs are located appear to benefit the most from local presence of MNFs. The MNFs have, on the other hand, no effect on non-MNF productivity in regions where the high-productive non-MNFs are located. |
| Keywords: | Multinational firms; affiliates; productivity; R&D; knowledge; spillovers; skilled workers; region |
| JEL: | F23 J24 O33 R11 |
| Date: | 2014–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bthcsi:2014-004&r=eff |
| By: | Khayyat, Nabaz T. (College of Engineering, Seoul National University); Heshmati, Almas (Centre of Excellence for Science and Innovation Studies (CESIS) and Sogang University) |
| Abstract: | Korea imports all of its primary energy, which leads to high dependency and vulnerability related to its energy supply. Efficiency in the use of energy is a way to reduce dependency and emissions. This study provides empirical results of the stochastic production process in energy use. Special attention is given to the factors that increase the risk or variation of using more of the energy input in production. A dynamic panel model is specified and applied to 25 Korean industrial sectors over the period 1970-2007. The determinants of energy use are identified and their effects in the form of elasticities of energy use are estimated. Stochastic production technology is applied to estimate an energy demand model based on an inverted factor demand. The findings reveal that: first, there are large variations in the degree of overuse or inefficiency in energy use among the individual industries as well as over time; second, information and communication technology (ICT) capital and labor are substituting for energy; and third, ICT capital input decreases the variability of energy demand while non-ICT capital, material and labor increase the variability of energy demand. The results suggest that technical progress contributes more to the increase in the mean energy demand than to the reduction in the level of risk. It is recommended that industries increase their level of ICT capital as well as digitalize and invest more in R&D activities and value added services to reduce the uncertainty related to their demand for energy. |
| Keywords: | Production risk; Energy use efficiency; Technical change; Stochastic production; Panel data; Industrial Sector; Korea |
| JEL: | C23 D24 L60 O13 O33 |
| Date: | 2014–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0359&r=eff |
| By: | Bruno Amable (Centre d'Economie de la Sorbonne & Institut Universitaire de France); Ivan Ledezma (Université Paris-Dauphine, LEDa & IRD); Stéphane Robin (PRISM Sorbonne - Université Paris 1) |
| Abstract: | Several recent policy and academic contributions consider that liberalising product markets would foster innovation and growth. This paper analyses the innovation-productivity relationship at the industry-level for a sample of OECD manufacturing industries. We pay particular attention to the vertically-induced influence of product market regulation (PMR) of key input sectors of the economy on the innovative process of manufacturing and its consequences on productivity. We test for a differentiated effect of this type of PMR depending on whether countries are technological leaders or laggards in a given industry and for a given time period. Contrary to the most widespread policy claims, the innovation-boosting effects of liberalisation policies at the leading edge are systematically not supported by the data. These findings question the relevance of a research and innovation policy based on liberalisation. |
| Keywords: | Product market regulation, innovation, productivity, growth. |
| JEL: | D24 O43 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:14025&r=eff |
| By: | Feder, Christof (University of Turin) |
| Abstract: | Antonelli and Quatraro (2010) apply a speciÖc methodology to identify the e§ects of biased technological change on productivity growth. However, this method has been criticized by Ji and Wang (2014). This research note is a reply to their critique. |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201404&r=eff |
| By: | Rosina Moreno (Faculty of Economics, University of Barcelona); Jordi Suriñach (Faculty of Economics, University of Barcelona) |
| Abstract: | The idea in this paper is to provide an empirical verification of the relationship between innovation adoption and productivity growth. After a brief revision of the literature about the concept and main determinants of innovation adoption/diffusion, the paper provides empirical evidence of the above-mentioned relationship through means of descriptive statistics and subsequently, we study the impact that innovation adoption may have on productivity growth through a regression analysis. The analysis is made with the statistical information provided by the Community Innovation Survey in its third and fourth waves, which concern innovative activities carried out between 1998 and 2000 and between 2002 and 2004 respectively. The countries covered are the 25 EU Member States plus Iceland and Norway as well as Turkey. |
| Keywords: | Innovation, Innovation adoption, Productivity, Europe, Community Innovation Survey. JEL classification: C8, J61, O31, O33, R0 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201413&r=eff |
| By: | Yi-Ting Chen (Institute of Economics, Academia Sinica, Taipei, Taiwan); Yu-Chin Hsu (Institute of Economics, Academia Sinica, Taipei, Taiwan); Hung-Jen Wang (Department of Economics, National Taiwan University; Institute of Economics, Academia Sinica, Taipei, Taiwan) |
| Abstract: | Government policies are frequently used throughout the world to promote productivity. While some of the policies are designed to work through technology enhancement, others are meant to exert the influence through effciency improvement. It is therefore important to have a program evaluation method that can distinguish the channels of effects. We propose a treatment eect stochastic frontier model for this purpose. One of the important feature of the model is that the participation in the treatment is endogenous. We illustrate the empirical application of the model using the data of large dams in India to study the eects on the agricultural production. |
| Keywords: | stochastic frontier models, treatment effect |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:14-a006&r=eff |
| By: | Maliranta, Mika; Määttänen, Niku |
| Abstract: | Radical innovations require risk-taking. However, it is hard to find an objective measure for innovation investments that would take riskiness into account. In this paper, we investigate how a simple measure of firms’ innovation investments, namely the employee share of managers and professionals, is associated with profit risk at the firm level. Using data that cover essentially all firms in the Finnish business sector, we first document that labor productivity dispersion is very high among firms with a high employment share of managers and professionals. We also find that the dispersion in the return to firms’ total capital is particularly high among young firms with a high employment share of managers and professionals. We then build a simple model where firms’ innovation activities and firm risk are interrelated. We use the model to analyze how the asymmetric tax treatment of profits and losses in corporate taxation influences firms’ innovation decision in market equilibrium and whether innovation subsidies can improve industry productivity by mitigating such a tax distortion. |
| Keywords: | productivity, R&D, innovation, corporate taxation |
| JEL: | E23 L16 O47 |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:rif:report:22&r=eff |
| By: | Stefan Lutz (Royal Docks Business School, University of East London) |
| Abstract: | Economic theory implies that research and development (R&D) efforts increase firm productivity and ultimately profits. In particular, R&D expenses lead to the development of intangible assets in the form of intellectual property (IP) and these assets command a return that increases overall profits of the firm. This hypothesis is investigated for the North American and European automotive supplier industries. Results indicate that R&D expenses in fact increase both intangible asset levels and their profit contributions. In particular, increases in the R&D expense to sales ratio lead to increases in the profit contribution of intangible assets relative to sales. This indicates that more R&D intensive IP should command higher royalty rates per sales when licensed to third parties and within multinational enterprises alike. |
| Keywords: | Productivity; Intellectual property; Royalties; MNE; Transfer pricing. |
| JEL: | D24 L20 L62 M21 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:doicae:1406&r=eff |
| By: | Sang-Wook (Stanley) Cho (School of Economics, Australian School of Business, the University of New South Wales); Juliàn P. Dìaz (Department of Economics, Quinlan School of Business, Loyola University) |
| Abstract: | In this article, we disentangle the relationship between the skill premium, trade liberalization and productivity changes in accounting for the skill premium patterns of transition economies that joined the European Union (EU) in 2004. To conduct our analysis, we construct an applied general equilibrium model with skilled and unskilled labor, and combining Social Accounting Matrices, Household Budget Surveys and the EU KLEMS Growth and Productivity Accounts database, we calibrate it to match Hungarian data, a transition economy wherethe skill premium consistently increased between 1995 and 2005. We then assess the role of the multiple factors that affected the patterns of the skill premium: trade liberalization reforms, factor and sector bias of technical change and capital deepening, and find that all the factors can jointly account for approximately 87% of the actual change in skill premium between 1995 and 2005. Individually, capital deepening accounts for the largest share of the rise in the skill premium, whereas trade liberalization accounts for a small portion of that increase. While productivity changes account for only a small fraction of the skill premium increases during 1995 and 2000, they significantly offset the impact of the capital deepening on the skill premium in the period between 2000 and 2005. |
| Keywords: | Transition Economies, Skill Premium, Trade Liberalization, Skill-biased Technical Change, Capital-skill complementarity |
| JEL: | D58 F16 O33 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2014-14&r=eff |
| By: | Laura Di Giorgio (Institute of Economics (IdEP), University of Lugano, Switzerland; Institute for Health Metrics and Evaluation (IHME), University of Washington, Seattle, USA); Massimo Filippini (Institute of Economics (IdEP), University of Lugano; ETH, Zurich, Switzerland); Giuliano Masiero (Department of Engineering, University of Bergamo, Italy; Institute of Economics (IdEP), University of Lugano, Switzerland) |
| Abstract: | We investigate the relationship between costs and quality in nonprofit nursing homes, a key issue in the present context of cost containment measures. In accordance with the economic theory of production, we estimate a three-inputs total cost function for nursing home services using data from 45 nursing homes in Switzerland between 2006 and 2010. Quality is measured by means of clinical indicators regarding process and outcome derived from the Minimum Data Set. We consider both composite and single quality indicators. Contrary to previous studies, we use panel data and control for unobserved heterogeneity. This allows to capture nursing homes specific features that may explain differences in structural quality or costs levels. We find evidence that poor levels of quality regarding outcome, as measured by the prevalence of severe pain and weight loss, lead to higher costs. Our results are robust to quality endogeneity concerns. |
| Keywords: | nursing home costs, nonprofit, quality indicators, cost-quality tradeoff |
| JEL: | I10 L3 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:1402&r=eff |
| By: | Giorgio Fagiolo; Gianluca Santoni |
| Abstract: | This paper asks whether the level of integration of world countries in the international network of temporary human mobility can explain differences in their per-capita income and labor productivity. We disentangle the role played by global country centrality in the network from traditional openness measures, which only account for local, nearest- neighbor linkages through which ideas and knowledge can flow. Using 1995-2010 data, we show that global country centrality in the temporary human-mobility network enhances both per-capita income and labor productivity. Our results hold cross-sectionally, as well as in a dynamic-panel estimation, and take into account potential endogeneity issues. Our findings imply that how close a country is to the theoretical technological frontier, depends not only on how much she is open to temporary human mobility, but mostly on whether she is embedded in a web of relationships connecting her with other influential partners in the network. Our exercises also suggest that most of the gain in income and productivity can be attained if country centrality in the network comes mostly from influential partners that lie not too far away from, but neither too close to them in the network. |
| Keywords: | temporary human-mobility network; International technological diffusion; Per-capita income; Productivity; Openness to mobility and trade; Centrality. |
| Date: | 2014–03–30 |
| URL: | http://d.repec.org/n?u=RePEc:ssa:lemwps:2014/08&r=eff |
| By: | Chen, Kaihua |
| Abstract: | This paper uncovers the“mysterious veil”above the formulations and concerned properties of existing weighted additive data envelopment analysis (WADD) models associated with dataset standardization techniques. Based on the truth that the formulation of objective functions in WADD models seems random and confused for users, the study investigates the correspondence relationship between the formulation of objective functions by statistical data-based weights aggregating slacks in WADD models and the pre-standardization of original datasets before using the traditional ADD model in terms of satisfying unit and translation invariance. Our work presents a statistical background for WADD models’ formulations, and makes them become more interpretive and more convenient to be computed and practically applied. Based on the pre-standardization techniques, two new WADD models satisfying unit invariance are formulated to enrich the family of WADD models. We compare all WADD models in some concerned properties, and give special attention to the (in)efficiency discrimination power of them. Moreover, some suggestions guiding theoretical and practical applications of WADD models are discussed. |
| Keywords: | Data envelopment analysis; Weighted additive models; Formulations and applications; Dataset standardization techniques |
| JEL: | C51 C61 O31 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55072&r=eff |
| By: | Raul V. Fabella (School of Economics, University of the Philippines Diliman) |
| Abstract: | This paper revisits the record of CARP over the quarter century of its existence. By 2014, 5.05 million of the 5.37m hectares of the targeted agricultural land shall have been distributed. As a program for land asset equity, it shall have accomplished 99% of its target, whopper of a success for a government program. As a program to advance the economic welfare of farmers, it has accomplished the opposite of its stated goals. Productivity has fallen drastically in coconut and sugar and poverty incidence among agrarian reform beneficiaries in agrarian reform communities stood at 54% in 2011 higher than for farmers in general. CARP and CARPER has created a new class of people: the landed poor. The paper then explores the many design and implementation flaws that has brought this sad result among which are: CARP’s illegalization of the market for land assets (Section 27) sending Coasean bargains underground and the 5-hectare land ownership ceiling leading to the demise of the legal rural financial market and the flight of private capital. It is time to shift from land equity to farm efficiency. The paper argues for the return of the market in rural production: let productive farmers legally cultivate 10 or more hectares as the market dictates; let PSE-registered firms legally operate agro-industrial farms without land ceiling. Poverty reduction requires the shift of resources and manpower from informal to formal sectors. CARP has done the opposite. To echo the architect of the great Chinese Economic Miracle, Deng Xiaoping: It is time to stop redistributing poverty! |
| Keywords: | CARP, agrarian reform, agriculture, Coase Theorem, Philippines |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:phs:dpaper:201402&r=eff |
| By: | Gary Gorton (Department of Economics, Yale University); Guillermo Ordonez (Department of Economics, University of Pennsylvania) |
| Abstract: | Credit booms usually precede financial crises. However, some credit booms end in a crisis (bad booms) and other booms do not (good booms). We document that, while all booms start with an increase in the growth of Total Factor Productivity (TFP), such growth falls much faster subsequently for bad booms. We then develop a simple framework to explain this. Firms finance investment opportunities with short-term collateralized debt. If agents do not produce information about the collateral quality, a credit boom develops, accommodating firms with lower quality projects and increasing the incentives of lenders to acquire information about the collateral, eventually triggering a crisis. When the quality of investment opportunities also grow, the credit boom may not end in a crisis because there is a gradual adoption of low quality projects, but those projects are also of better quality, not inducing information about collateral. |
| Keywords: | Financial Crises, Credit booms, Productivity |
| JEL: | E3 E5 |
| Date: | 2014–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:14-008&r=eff |
| By: | Diego Restuccia; Guillaume Vandenbroucke |
| Abstract: | Consider the following facts. In 1950, the richest countries attained an average of 8 years of schooling whereas the poorest countries 1.3 years, a large 6-fold difference. By 2005, the difference in schooling declined to 2-fold because schooling increased faster in poor than in rich countries. What explains educational attainment differences across countries and their evolution over time? We consider an otherwise standard model of schooling featuring non-homothetic preferences and a labor supply margin to assess the quantitative contribution of productivity and life expectancy in explaining educational attainment. A calibrated version of the model accounts for 90 percent of the difference in schooling levels in 1950 between rich and poor countries and 71 percent of the faster increase in schooling over time in poor relative to rich countries. These results suggest an alternative view of the determinants of low education in developing countries that is based on low productivity. |
| Keywords: | schooling, productivity, life expectancy, labor supply. |
| JEL: | O1 O4 E24 J22 J24 |
| Date: | 2014–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-507&r=eff |