New Economics Papers
on Efficiency and Productivity
Issue of 2014‒08‒09
eighteen papers chosen by

  1. ICT and R&D as inputs or efficiency determinants? Analysing the manufacturing Italian firms over the 2007-2009 By Bonanno, Graziella
  2. Misallocation, Establishment Size, and Productivity By Pedro Bento; Diego Restuccia
  3. Revisions to the Multifactor Productivity Accounts By Wang, Weimin; Macdonald, Ryan; Gu, Wulong; Baldwin, John R.; Yan, Beiling
  4. Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU By Lopez-Rodriguez, Jesus; Martinez, Diego
  5. Robust Measurement of National Technological Progress By Stefano Zambelli; Thomas Fredholm; Ragupathy Venkatachalam
  6. Heterogeneous effects of risk-taking on bank efficiency : a stochastic frontier model with random coefficients By Miguel Sarmiento; Jorge E. Galán
  7. Education and Cross-Country Productivity Differences By Alok Kumar; Brianne Kober
  8. The effect of spatial mobility and other factors on academic productivity : some evidence from a set of highly productive economists By Pedro Albarrán; Raquel Carrasco; Javier Ruiz-Castillo
  9. A consistent set of multilateral productivity approach-based indicators of price competitiveness By Fischer, Christoph; Hossfeld, Oliver
  10. The Impact of Leased and Rented Assets on Industry Productivity Measurement By Wang, Weimin; Moussaly, Karim
  11. Scale effects in workplace innovations By Jan de Kok; Sophie Doove; Peter Oeij; Karolus Kraan
  12. Theoretical Perspectives on Localised Knowledge Spillovers and Agglomeration By Leppälä, Samuli
  13. The determinants and profitability of switching costs in Chinese banking By Yin, Wei; Matthews, Kent
  14. Research Funding and Academic Output: The Case of Agricultural University of Athens By Kyriakos Drivas; Athanasios T. Balafoutis; Stelios Rozakis
  15. Convergence to the Managerial Frontier By William F. Maloney; Mauricio Sarrias
  16. World Total Factor Productivity Growth and the Steady-State Rate in the 20th Century By Theodore R. Breton
  17. La revision des comptes de productivite multifactorielle By Wang, Weimin; Macdonald, Ryan; Gu, Wulong; Baldwin, John R.; Yan, Beiling
  18. Aggregate Production Functions and Neoclassical Properties: An Empirical Verification By Stefano Zambelli

  1. By: Bonanno, Graziella
    Abstract: Are Information and Communication Technology (ICT) and Research & Development (R&D) inputs or efficiency determinants? This is the topic of the paper which is developed by analysing a sample of 2691 Italian manufacturing firms over the period 2007-2009. The empirical setting is based on a production function estimated through the Stochastic Frontier (SF) approach. ICT and R&D are used once as inputs, once as efficiency determinants (Coelli et al., 1999). Results show that the rates of return of ICT and R&D investments are high (0.08 for ICT and 0.04 for R&D) when they enter into the model only as inputs. We also documented that ICT and R&D contribute positively to explain the efficiency scores.
    Keywords: ICT, R&D, Stochastic Frontier Approach, efficiency
    JEL: D22 D24 L69 O39
    Date: 2014–07–29
  2. By: Pedro Bento; Diego Restuccia
    Abstract: We construct a new dataset using census, survey, and registry data from hundreds of sources to document a clear positive relationship between aggregate productivity and average establishment size for manufacturing establishments across 124 countries. We rationalize this relationship using a standard model of reallocation among production units that features endogenous entry and productivity investment. The model connects small operational scales in poor countries to the prevalence in these countries of correlated distortions (the elasticity between wedges and establishment productivity). The model also rationalizes the low establishment-level productivity and aggregate investment found in poor countries. A calibrated version of the model implies that when correlated distortions change from 0.13 in the U.S. to 0.56 in India, establishment size and productivity fall by a factor of six. These substantial size and productivity losses are large compared to the existing literature and more in line with actual data for the differences in size and productivity between India and the United States.
    Keywords: misallocation, establishment size, productivity, investment, idiosyncratic distortions.
    JEL: O1 O4
    Date: 2014–07–25
  3. By: Wang, Weimin; Macdonald, Ryan; Gu, Wulong; Baldwin, John R.; Yan, Beiling
    Abstract: This paper highlights revisions to multifactor productivity (MFP) growth and related variables in the business sector and in individual industries, which resulted from the historical revision of the Canadian System of National Accounts (CSNA) released October 1, 2012, revisions to the labour productivity accounts released October 12, 2012, and changes in the estimation of capital input that were made in order to improve its consistency in industry MFP growth estimates. The multifactor productivity program produces indexes of MFP and related measures (output, capital input, labour input and intermediate inputs) for the business sector, broad economic sub-sectors, and their constituent industries. The MFP program divides growth in labour productivity into its key determinants: capital intensity (changes in capital per hour worked), investment in human capital, and MFP, which includes technological change, organizational innovation and economies of scale.
    Keywords: Economic accounts, Gross domestic product, Productivity accounts
    Date: 2014–07–08
  4. By: Lopez-Rodriguez, Jesus; Martinez, Diego
    Abstract: Although non-R&D innovation activities account for a significant portion of innovation efforts carried out across very heterogeneous economies in Europe, how to incorporate them in to economic models is not always straightforward. For instance, the traditional macro approach to estimating the determinants of total factor productivity (TFP) does not handle them well. To counter these problems, this paper proposes applying an augmented macro-theoretical model to estimate the determinants of TFP by jointly considering the effects of R&D and the impact of non-R&D innovation activities on the productivity levels of firms. Estimations from a model of a sample of EU-26 countries covering the period 2004-2008 show that the distinction between R&D and non-R&D effects is significant for a number of different issues. First, the results show a sizeable impact on TFP growth, as the impact of R&D is twice that 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 complementary, 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: 2014–06
  5. By: Stefano Zambelli; Thomas Fredholm; Ragupathy Venkatachalam
    Abstract: We propose a measure of technological progress based on the information embedded in standard input-output tables. A connection is established between the quantities necessary as inputs, the associated output and auxiliary prices. It is argued that the wage-profit frontiers and the associated production prices together provide a robust basis for measuring technological progress and productivities. The computation of the wage-profit frontiers is a non-trivial exercise because of high combinatorial complexity. An algorithm that renders this computation feasible is presented. We analyze technological progress and productivities among 30 countries between 1995-2009 using the latest multi-regional input-output data.
    Keywords: Technological Change, Input–Output analysis, Wage Profit Frontier, Production Prices, Computational Techniques
    JEL: C61 C63 C67 O47
    Date: 2014
  6. By: Miguel Sarmiento; Jorge E. Galán
    Abstract: We estimate a stochastic frontier model with random inefficiency parameters, which allows us not only to identify the role of bank risk-taking on driving cost and profit inefficiency, but also to recognize heterogeneous effects of risk exposure on banks with different characteristics. We account for an integral group of risk exposure covariates including credit, liquidity, capital and market risk, as well as bank-specific characteristics of size and affiliation. The model is estimated for the Colombian banking sector during the period 2002-2012. Results suggest that risk-taking drives inefficiency and its omission leads to over (under) estimate cost (profit) efficiency. Risk-taking is also found to have different effects on efficiency of banks with different size and affiliation, and those involved in mergers and acquisitions. In particular, greater exposures to credit and market risk are found to be key profit efficiency drivers.Likewise, lower liquidity risk and capital risk lead to higher efficiency in both costs and profits. Large, foreign and merged banks benefit more when assuming credit risk, while small, domestic and non-merged banks institutions take advantage of assuming higher market risk
    Keywords: Bank efficiency, Bayesian Inference, Heterogeneity, Random Parameters, Risk-Taking, Stochastic frontier models
    JEL: C11 C23 C51 D24 G21 G32
    Date: 2014–07
  7. By: Alok Kumar (Department of Economics, University of Victoria); Brianne Kober
    Abstract: In this paper, we study the effects of education on the total factor productivity (TFP) of a large number of countries. We estimate TFP using a variant of augmented Solow growth model in which health capital is one of the factors of production. We find that quantity of education significantly and positively affects TFP. This result is in contrast to the findings of the previous literature, that suggest that either the quantity of education does not matter for growth (e.g. Benhabib and Spiegel 1994, Caselli et al. 1996) or only the quality of education matters for growth (e.g. Hanushek and Kimko 2000). We also find that TFP differences explain about 1/3rd of per-capita real income differences across countries. This estimate is substantially lower than the existing estimates (e.g. Klenow and Rogriguez-Clare 1997, Hall and Jones 1999) which suggest that TFP differences are the dominant source of per-capita real income differences across countries.
    Keywords: Augmented Solow Growth Model, TFP, Quantity and Quality of Education, Health
    JEL: F43 E23 N10 N30 O47
    Date: 2014–07–25
  8. By: Pedro Albarrán; Raquel Carrasco; Javier Ruiz-Castillo
    Abstract: This paper analyzes a sample of economists from two sources: faculty members working in2007 in a selection of the 81 top Economics departments in the world, and Fellows of the Econometric Society active at that date but working elsewhere in other institutions. Productivity is measured in terms of a quality index that weights the publications of each individual in four journal equivalent classes. Consider the partition of any set into the following three groups: those who study and work in the same country (stayers), those who study the Ph.D. abroad but come back to the country where they obtained a first degree (brain circulation), and those who complete their education at home but move abroad after the Ph.D., plus those who leave their country to study the Ph.D. and remain abroad in 2007 (two different forms of brain drain). From the point of view of a country or a geographical area, there are three types of movers: brain circulation, brain drain,and migrants constituting a brain gain for the country or the geographical area in question. We investigate the following four issues. (1) and (2). Controlling for demographic and career variables,we study the productivity of movers versus stayers for the individuals working in 2007 in the U.S. or in the EU. (3) The potential deleterious effect of academic in breeding practices on researchers' productivity. (4) The existence of productivity differences among economists from different countries.
    Date: 2014–07
  9. By: Fischer, Christoph; Hossfeld, Oliver
    Abstract: We propose a novel, multilaterally consistent productivity approach-based indicator to assess the international price competitiveness of 57 industrialized and emerging economies. It is designed to be a useful assessment tool for monetary policy authorities and, thereby, differs from previously proposed indicators, which are hardly applicable on a day-to-day basis. Special attention has been paid to an appropriate selection of price and productivity data in levels as opposed to indices, and to the treatment of country fixed effects when interpreting currency misalignments. The discussion of the results focuses on the larger economies of the sample. At the current juncture, and in contrast to the prevailing view, we find US price competitiveness to be above and China's price competitiveness to be below its derived benchmark. --
    Keywords: equilibrium exchange rates,productivity approach,price competitiveness,panel cointegration
    JEL: F31 C23
    Date: 2014
  10. By: Wang, Weimin; Moussaly, Karim
    Abstract: Leasing is an important means of gaining access to assets, of obtaining finance, and of reducing a lessee?s exposure to the risks inherent to asset ownership. A lease can be either a financial lease (capital lease) or an operating lease (capital rental). A financial lease is one where the legal owner of an asset (lessor) passes the economic ownership to the user of the asset (lessee), who then accepts the operating risks and receives the economic benefits from using the asset in a productive activity. Under an operating lease, the lessor is both the legal owner and the economic owner of the asset leased (rented), bearing the operating risks and receiving the economic benefits from the asset. The lessor transfers only the right to use the asset to the lessee. Leasing offers firms the possibility to acquire the right to use capital assets under terms that differ from those prevailing through other financial instruments. The recording of leased assets in the Canadian System of National Accounts is ownership-based rather than user-based. The separation of capital ownership, in particular legal ownership, from the use of capital assets poses challenges to productivity measurement. To obtain consistent productivity measures at an industry level, leased and rented capital assets must be reallocated from owners? accounts to users? accounts. By using the General Index of Financial Information (GIFI) corporate balance sheets and detailed input-output tables, this paper tests the robustness of existing practices of data collection on leased and rented capital.
    Keywords: Economic accounts, Gross domestic product, Productivity accounts
    Date: 2014–07–22
  11. By: Jan de Kok; Sophie Doove; Peter Oeij; Karolus Kraan
    Abstract: Workplace innovation can be defined as the implementation of new and combined interventions in work organisation, HRM and supportive technologies, and strategies to improve performance of organisations and quality of jobs. Previous research confirms the presence of a positive relationship between workplace innovation and firm performance. Within this study we are interested in the scale effects in workplace innovation. Does firm size moderate the relationship between workplace innovation and organisational performance?
    Date: 2014–04–03
  12. By: Leppälä, Samuli (Cardiff Business School)
    Abstract: There is substantial empirical evidence that innovation is geographically concentrated. Unlike what is generally assumed, however, it is not clear that localised knowledge spillovers provide a theoretically valid explanation for this. Studying spillovers of cost-reducing technology between Cournot oligopolists we show that 1) localised knowledge spillovers of any level do encourage agglomeration, but 2) whether this leads to higher levels of effective R&D depends on the type and level of knowledge spillovers, the number of firms, and the industry's R&D efficiency.
    Keywords: knowledge spillovers; agglomeration economies; innovation; location
    JEL: O33 R32 L13
    Date: 2014–07
  13. By: Yin, Wei (Cardiff Business School); Matthews, Kent (Cardiff Business School)
    Abstract: Using a sample of 151 banks over the period 2003 to 2010, this paper estimates a model that examines the effect of switching costs in the Chinese loan market on banking profitability. In keeping with the extant empirical literature it reports a positive relationship between bank profitability and switching costs. Furthermore it reports the estimation of a systems model of switching costs and profitability. The main result is that bank size measured by total assets is has a complex relationship with switching costs. Competition between small banks creates the incentive for lock-in and increased switching costs whereas very large banks are less exercised by lock-in and switching costs. The study also finds that concentration has a negative relationship with switching costs and profitability, confirming the accepted view that the large state-owned banks are concerned with social as well as profit objectives.
    Keywords: Chinese banking; switching costs; bank profitability
    JEL: G21 C51 L14
    Date: 2014–07
  14. By: Kyriakos Drivas (Agricultural University of Athens); Athanasios T. Balafoutis (Agricultural University of Athens); Stelios Rozakis (Agricultural University of Athens)
    Abstract: This paper uses detailed data on funding information and research output from Agricultural University of Athens to examine how each type of funding source is related to the quantity and quality of academic research output. Of special interest are the corporate sponsors, the Greek government and European Union funding. We find that after controlling for unobserved heterogeneity from each research lab, all types of research sponsors are similarly related to both the count of publications and citations. Further, we find that research labs that have filed for at least one patent application, produce on average more publications and citations and receive more funding both from corporate and public sponsors.
    Keywords: research sponsor, corporate funding, government sponsor, European Union funding, publications, patents.
    JEL: O32 O33 O34
    Date: 2014
  15. By: William F. Maloney; Mauricio Sarrias
    Abstract: Using detailed survey data on management practices, this paper uses recent advances in unconditional quartile analysis to study the changes in the within country distribution of management quality associated with country convergence to the managerial frontier. It then decomposes the contribution of potential explanatory factors to the distributional changes. The US emerges as the frontier country, not because of on average better management, but because its best firms are far better than those of its close competitors. Part of the process of convergence to the frontier across the development process represents a trimming of the left tail, much es movement of the central mass and, for rich countries, it is actually the best firms than lag the frontier benchmark. Among potential explanatory variables that may drive convergence, ownership and human capital appear critical, the former especially for poorer countries and that latter for richer suggesting that the mechanics of convergence change across the process. These variables lose their explanatory power as firm and average country management quality rises. Hence, once in the advanced country range, the factors than improve management quality are less easy to document and hence influence.
    Keywords: management practices, convergence, development, quantile regression, RIF decomposition.
    JEL: C21 L2 M2 O33 O47
    Date: 2014–06–13
  16. By: Theodore R. Breton
    Abstract: I estimate a Solow model augmented with human capital in 42 countries for 1910-2000. Estimated TFP growth is 0.3%/year, and the steady-state rate for GDP/capita is 1.0%/year. Implicitly for high-income countries maintaining growth above this rate will be increasingly difficult.
    JEL: O41 O47
    Date: 2013–03–02
  17. By: Wang, Weimin; Macdonald, Ryan; Gu, Wulong; Baldwin, John R.; Yan, Beiling
    Abstract: Le present rapport decrit les revisions apportees a la mesure de la croissance de la productivite multifactorielle (PMF) et aux variables connexes dans le secteur des entreprises et pour differentes industries. Ces revisions ont decoule de la revision historique du Systeme de comptabilite nationale du Canada (SCNC) diffusee le 1 er octobre 2012, des revisions apportees aux comptes de la productivite du travail du 12 octobre 2012, ainsi que des modifications apportees a l?estimation de l?entree de capital en vue d?accroitre son uniformite dans les estimations de la croissance de la PMF par industrie. Le Programme de la productivite multifactorielle produit des indices de la PMF et des mesures connexes (production, entree de capital, entree de travail et entrees intermediaires) pour le secteur des entreprises, les differents sous secteurs economiques et les industries qui les composent. Le Programme de la PMF ventile la croissance de la productivite du travail en fonction de ses principaux determinants : l?intensite du capital (variations du capital par heure travaillee), l?investissement dans le capital humain et la PMF, qui englobe le changement technologique, l?innovation organisationnelle et les economies d?echelle.
    Keywords: Economic accounts, Gross domestic product, Productivity accounts
    Date: 2014–07–08
  18. By: Stefano Zambelli
    Abstract: Standard postulates concerning the aggregate production function are about marginal productivities - and the associated demand of labor and capital – which are to be negatively related to factor prices, namely the wage rate and the profit rate. The theoretical cases in which these neoclassical properties do not hold are regarded as anomalies. We compute the aggregate values for capital, production and labour and find that the neoclassical postulates do not hold for the whole dataset under consideration.
    Keywords: Aggregate Neoclassical Production Function, Cobb-Douglas, CES, Technological Change, Macroeconomics, Growth.
    JEL: C61 C63 C67 O47
    Date: 2014

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