New Economics Papers
on Efficiency and Productivity
Issue of 2014‒04‒18
fifteen papers chosen by

  1. Don't Stop Me Now: Barriers to innovation and firm productivity By Alex Coad; Maria Savona; Gabriele Pellegrino
  2. Does the Unemployment Benefit Institution affect the Productivity of Workers? Evidence from a Field Experiment By Blanco, Mariana; Dalton, Patricio S.; Vargas, Juan F.
  3. Productivity and the Welfare of Nations By Basu, Susanto; Pascali, Luigi; Schiantarelli, Fabio; Serven, Luis
  4. Do electricity supply constraints matter for comparative advantage? : a neoclassical approach By Sato, Hitoshi
  5. Crossing the hurdle: the determinants of individual scientific performance By Alberto Baccini; Lucio Barabesi; Martina Cioni; Caterina Pisani
  6. Efficiency, Distortions and Factor Utilization during the Interwar Period By Klein, Alexander; Otsuy, Keisuke
  7. Product market regulation, innovation and productivity By Bruno Amable; Ivan Ledezma; Stéphane Robin
  8. FDI Impact on Firm Performance in Enlarged Europe: Evidence from a Meta-Regression Analysis By Bruno, Randolph Luca; Cipollina, Maria
  9. Beyond the R&D effects on innovation: the contribution of non-R&D activities to TFP growth in the EU By Jesus Lopez-Rodriguez; Diego Martinez
  10. Workers' Mental Health and Firm Performance: Evidence from firms' longitudinal data in Japan (Japanese) By KURODA Sachiko; YAMAMOTO Isamu
  11. The (Changing) Knowledge Production Function: Evidence from the MIT Department of Biology for 1970-2000 By Annamaria Conti; Christopher C. Liu
  12. Unfavorable Land Endowment, Cooperation, and Reversal of Fortune By Litina, Anastasia
  13. Internationalization and Innovation of Firms: Evidence and Policy By Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano
  14. Which Factors Explain the Rising Ethnic Heterogeneity in Italy? An Empirical Analysis at Province Level By Cristina Cattaneo
  15. Revealed Comparative Advantage and Half-A-Century Competitiveness of Canadian Agriculture: A Case Study of Wheat, Beef and Pork Sectors By Sarker, Rakhal; Ratnesena, Shashini

  1. By: Alex Coad (SPRU, University of Sussex, UK); Maria Savona (SPRU, University of Sussex, UK); Gabriele Pellegrino (Barcelona Institute of Economics, University of Barcelona)
    Keywords: Barriers to innovation, labour productivity, quantile regressions, propensity score matching JEL Classification: C23, O31, O32, O33
    Date: 2014–04
  2. By: Blanco, Mariana (University of Rosario); Dalton, Patricio S. (Tilburg University); Vargas, Juan F. (University of Rosario)
    Abstract: We investigate whether and how the type of unemployment benefit institution affects productivity. We designed a field experiment to compare workers' productivity under a welfare system, where the unemployed receive an unconditional monetary transfer, with their productivity under a workfare system, where the transfer is received conditional on the unemployed spending some time on ancillary activities. First, we find that having an unemployment benefit institution, regardless of whether it makes transfers conditional or unconditional, increases workers' productivity. Second, we find that productivity is higher under Welfare than under Workfare. Becoming unemployed under Welfare comes at the psychological cost of a drop in self-esteem, presumably due to the shame or stigma associated with receiving an unconditional unemployment benet. We document the empirical relevance of precisely this channel. The differences we observe in productivity suggest that this psychological cost acts as an extra non- monetary incentive for workers under Welfare to put a higher effort in their work.
    Keywords: Unemployment Benefits, Workfare, Productivity, Self-esteem, Shame.
    Date: 2013
  3. By: Basu, Susanto (Boston College and NBER); Pascali, Luigi (University of Warwick); Schiantarelli, Fabio (Boston College and IZA); Serven, Luis (World Bank)
    Abstract: We show that the welfare of a countrys in…nitely-lived representative consumer is summarized, to a …rst order, by total factor productivity (TFP) and by the capital stock per capita. These variables su¢ ce to calculate welfare changes within a country, as well as welfare di¤erences across countries. The result holds regardless of the type of production technology and the degree of product market competition. It applies to open economies as well, if TFP is constructed using domestic absorption, instead of gross domestic product, as the measure of output. Welfare relevant TFP needs to be constructed with prices and quantities as perceived by consumers, not …rms. Thus, factor shares need to be calculated using after-tax wages and rental rates, and will typically sum to less than one. These results are used to calculate welfare gaps and growth rates in a sample of advanced countries with high-quality data on output, hours worked, and capital. We also present evidence for a broader sample that includes both advanced and developing countries.
    Keywords: Productivity, Welfare, TFP, Solow Residual.
    Date: 2013
  4. By: Sato, Hitoshi
    Abstract: This paper examines the extent to which electricity supply constraints could affect sectoral specialization. For this purpose, an empirical trade model is estimated from 1990-2008 panel data on 15 OECD countries and 12 manufacturing sectors. We find that along with Ricardian technological differences and Heckscher-Ohlin factor-endowment differences, productivity-adjusted electricity capacity drives sectoral specialization in several sectors. Among them, electrical equipment, transport equipment, machinery, chemicals, and paper products will see lower output shares as a result of decreases in productivity-adjusted electricity capacity. Furthermore, our dynamic panel estimation reveals that the effects of Ricardian technological differences dominate in the short-run, and factor endowment differences and productivity-adjusted electricity capacity tend to have a significant effect in only the long-run.
    Keywords: Developed countries, Electric power, Manufacturing industries, Technology, Productivity, International trade, Factor endowments, GDP function, Comparative advantage, Electricity
    JEL: F1 F11 Q40
    Date: 2014–03
  5. By: Alberto Baccini; Lucio Barabesi; Martina Cioni; Caterina Pisani
    Abstract: An original dataset referring to a medium-sized Italian university is implemented for analyzing the determinants of scientific research production at individual level. Three different indicators, based on the number of publications and/or citations, are considered. Their distributions are highly skewed, displaying an excess of zero-valued observations, thus zero-inflated and hurdle regression models are introduced. Among them, the Hurdle Negative Binomial model exhibits a good fitting and appears to be reasonably coherent with the underlying generating data process. Indeed, the performance of active researchers is described by the count component of the model, while the odds to be in a non-active status is modelled by the zero component. Individual characteristics, teaching and administrative activities, as well as the features of the department the researcher belongs to, are considered as explanatory variables. The analysis of the results highlights that scientific productivity is lower for oldest active researchers, and that there is a significant effect of academic position on research production. Evidence of clear-cut and significant substitution or complementarity effect between teaching and research activities is not found. Indeed, a major teaching load does not apparently affect the odds to be a non-active researcher, while it has mixed and very weak effects on publication performance of active researchers. A negative relationship among productivity and administrative tasks is highlighted. Finally, the analysis points out the effects of department composition on both the odds to be non-active and the value of the production indicators of active researchers.
    Keywords: Academic research productivity, Scientist productivity, Hurdle models, Zero-Inflated models, Negative Binomial distribution, Poisson distribution
    Date: 2013–12
  6. By: Klein, Alexander (University of Kent); Otsuy, Keisuke (University of Kent)
    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 …ndings are that in the U.S. 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 …ndings 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
    Date: 2013
  7. By: Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne, CEPREMAP - Centre pour la recherche économique et ses applications, IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique); Ivan Ledezma (LEDa - Université Paris-Dauphine, IRD - DIAL - UMR 225); Stéphane Robin (PRISM - Sorbonne - Pôle de Recherche Interdisciplinaire en Sciences du Management)
    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
    Date: 2014–03
  8. By: Bruno, Randolph Luca (University College London); Cipollina, Maria (University of Molise)
    Abstract: This paper combines, explains and summarizes recent findings from the empirical literature focusing on the FDI's effect on firms' performances by collecting all the relevant firm level quantitative studies to run a regression of regressions focused on Enlarged Europe. The results show that there exists a positive indirect impact of FDI on productivity and ultimately on economic growth in EU, but it is limited in magnitude. Moreover, the effect of FDI on growth is stronger for New EU Members after 2001.
    Keywords: firm performance, Enlarged Europe, meta-regression analysis
    JEL: C81 F23 O52
    Date: 2014–03
  9. By: Jesus Lopez-Rodriguez (European Commission, Joint Research Centre, Institute for Prospective); Diego Martinez (University Pablo Olavide)
    Abstract: A significant part of the innovation efforts carried out across very heterogeneous economies in Europe is under the form of Non-R&D innovation activities. But the traditional macro approach to the determinants of TFP does not handle this issue appropiately. This paper has proposed and estimated an augmented macro-theoretical model to the determinants of total factor productivity (TFP) by jointly considering the effects of R&D endowments and the impact of Non-R&D innovation activities on …firms´ levels of productivity. The estimation of the model for a sample of EU26 countries covering the period 2004-2008 shows that the distinction between R&D and Non-R&D endowments really matters for a number of different issues. First, the results show a sizable differential impact of these endowments on TFP growth, being the impact of R&D twice as big as the impact of Non-R&D. Second, absorptive capacity is only linked to R&D endowments. And third, the two types of endowments cannot strictly been seen as complements at least for the case of countries with high R&D intensities or high Non-R&D intensities.
    Keywords: TFP, R&D, Non-R&D expenditures, EU countries
    JEL: O0 O3 O4
    Date: 2014
  10. By: KURODA Sachiko; YAMAMOTO Isamu
    Abstract: Using firms' longitudinal data, this paper investigates the relationship among workers' mental health, firms' profit and productivity, and preventive measures at the workplace. In Japan, the number of workers suffering from mental disorders has grown significantly in this decade. From the advice given by the Japanese government, firms have introduced various preventive measures to cope with this problem. To our knowledge, however, there is almost no cost-and-benefit quantitative analysis when implementing such measures. Furthermore, there is also no evidence, besides numerous literature focusing on presenteeism and absenteeism, to assess to what extent firms' profit and productivity are affected when there are workers with mental disorders at the workplace. By using data from 451 Japanese firms with rich information related to mental health and firm performance, we found the following. First, we found that medium-sized firms (300-999 employees), the information technology industry, and firms with relatively longer average work hours tend to have a higher ratio of workers taking long-term sick leave due to mental disorders. Second, many firms seem to be reluctant to introduce costly measures, such as hiring occupational doctors or nurses and screening surveys. Third, we found that, in general, introducing firm-level measures does not decrease the ratio significantly. Fourth, firms with a higher ratio of such workers may decrease their profit-to-sales ratio compared to those with a lower ratio with more than a two-year lag. This implies that the ratio of workers taking long-term sick leave due to mental disorders may become a proxy of bad workplace management and also a leading indicator of a firm's future profit/loss situation.
    Date: 2014–04
  11. By: Annamaria Conti; Christopher C. Liu
    Abstract: Considerable attention has been focused, in recent years, on the role that graduate and postdoc students play in the production of academic knowledge. Using data from the MIT Department of Biology for the period 1970-2000, we analyze the evolution over time of four fundamental aspects of their productivity: i) training duration; ii) time to a first publication; iii) productivity over the training period; and iv) collaboration with other scientists. We identified four main trends that are common to graduate students and postdocs. First, training periods have increased for later cohorts of graduate and postdoc students. Second, later cohorts tend to publish their initial first-author article later than the earlier cohorts. Third, they produce fewer first-author publications. Finally, collaborations with other scientists, as measured by the number of coauthors on a paper, have increased. This increase is driven by collaborations with scientists external to a trainee’s laboratory. We interpret these results in light of the following two paradigms: the increased burden of knowledge that later generations of scientists face and the limited availability of permanent academic positions.
    JEL: D2 H41 I2 I20 I28
    Date: 2014–04
  12. By: Litina, Anastasia (University of Luxembourg)
    Abstract: This research advances the hypothesis that reversal of fortunes in the process of economic development can be traced to the effect of natural land productivity on the desirable level of cooperation in the agricultural sector. In early stages of development, unfavorable land endowment enhanced the economic incentive for cooperation in the creation of agricultural infrastructure that could mitigate the adverse effect of the natural environment. Nevertheless, despite the benefcial effects of cooperation on the intensive margin of agriculture, low land productivity countries lagged behind during the agricultural stage of development. However, as cooperation, and its persistent effect on social capital, have become increasingly important in the process of industrialization, the transition from agriculture to industry among unfavorable land endowment economies was expedited, permitting those economies that lagged behind in the agricultural stage of development, to overtake the high land productivity economies in the industrial stage of development. Exploiting exogenous sources of variations in land productivity across countries the research further explores the testable predictions of the theory. It establishes that: (i) reversal of fortunes in the process of development can be traced to variation in natural land productivity across countries. Economies characterized by favorable land endowment dominated the world economy in the agricultural stage of development but were overtaken in the process of industrialization; (ii) lower level of land productivity in the past is associated with higher levels of contemporary social capital; (iii) cooperation, as reflected by agricultural infrastructure, emerged primarily in places were land was not highly productive and collective action could have diminished the adverse effects of the environment and enhance agricultural output.
    Keywords: Land productivity, Cooperation, Social Capital, Trust, Economic development, Agriculture, Industrialization
    Date: 2013
  13. By: Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano
    Abstract: We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European countries (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom). We find strong evidence of positive association among the three firm-level characteristics across countries and sectors. We also find that the positive correlation between internationalization and innovation survives after controlling for productivity, with some evidence of causality running from the latter to the former. Our analysis suggests that export promotion per se is unlikely to lead to sustainable internationalization because internationalization goes beyond export and because, in the medium-to-long term, internationalization is driven by innovation. We recommend coordination and integration of internationalization and innovation policies 'under one roof' at both the national and EU levels, and propose a bigger coordinating role for EU institutions.
    Keywords: Internationalization, innovation, firm-level data, exports, foreign direct investment, outsourcing
    JEL: F13 F23 O31 O38
    Date: 2014–04
  14. By: Cristina Cattaneo (Fondazione Eni Enrico Mattei (FEEM))
    Abstract: The paper investigates the determinants of ethnic heterogeneity of the Italian provinces. Among other factors, the paper tests empirically whether gradual improvements in distant communication boost the generation of ethnically heterogeneous provinces. Consequently to easier communication, movers increasingly rely on an enlarged community for identity transmission, rather than on localized peer effects of the ethnic enclaves. The empirical estimation provides support to this hypothesis. Improvements in internet communications are found to increase the ethnic diversity of the Italian provinces.
    Keywords: Immigration, Ethnic Diversity, Productivity
    JEL: F22 J61 R11
    Date: 2014–03
  15. By: Sarker, Rakhal; Ratnesena, Shashini
    Abstract: While the competitiveness of the Canadian agri-food sector attracted significant research attention since the mid 1980s, no study has measured competitiveness using longitudinal data and determined empirically the drivers of competitiveness. This article contributes to the competitiveness literature by measuring the international competitiveness of wheat, beef and pork sectors in Canada using data from 1961 to 2011 and by determining the drivers of competitiveness. Our results demonstrate that Canada enjoys competitiveness in the wheat sector but not in the beef or pork sectors. Empirical results also suggest that the competitiveness of the Canadian wheat sector can be enhanced if the cost seed in Canada relative to that in the United States is lower. Similarly, if the relative labour cost of meat processing is lower, the competitiveness of both beef and pork sectors in Canada will be enhanced. Exchange rates are important drivers of international competitiveness of beef and pork sectors in Canada. The decoupled farm policies in Canada do not have a significant impact on the competitiveness of wheat and pork sectors in Canada. Our empirical results also highlight cases of significant policy failures in Canada.
    Keywords: Competitiveness, Measurement, Normalized Revealed Comparative Advantage, Wheat, beef and pork sectors, Drivers of Competitiveness, Agribusiness, Agricultural and Food Policy, International Relations/Trade,
    Date: 2014–03

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.