nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2014‒12‒03
23 papers chosen by

  1. PRODUCTIVITY AND EFFICIENCY OF SOUTHEASTERN U.S. MEAT GOAT FARMS By Qushim, Berdikul; Gillespie, Jeffrey; McMillin, Kenneth
  2. Integrating Efficiency Concepts in Technology Approximation: A Weighted DEA Approach By Minegishi, Kota
  3. A Comparison of Parametric and Nonparametric Estimation Methods for Cost Frontiers and Economic Measures By Parman, Bryon; Featherstone, Allen; Amanor-Boadu, Vincent
  4. Pre- and Post- Recession Input Allocation Decisions of Farm Credit System Lending Units By Song, Minrong; Escalante, Cesar L.
  5. R&D investment, productivity and rates of return: A meta-analysis of the evidence on OECD firms and industries By Ugur, Mehmet; Guidi, Francesco; Solomon, Edna; Trushin, Eshref
  6. Efficiency Gains from Removing Trade Barriers: Evidence from Asian Banking Industries By Kai Du
  7. How do business practices affect micro and small firms’ performance in a low-income economy? An analysis using dynamic panel data By Trinh, Long; Sonobe, Tetsushi
  9. Elasticity of substitution and the slowdown of Italian productivity By Daniela Federici; Enrico Saltari
  10. Does Intermunicipal Cooperation Increase Efficiency? Evidence from the Hessian Wastewater Sector By F. Blaeschke; Peter Haug
  11. Agricultural Productivity in the EU: A TFP Comparison between the Old (EU-15) and New (EU-10) EU Member States By Barath, Lajos; Ferto, Imre
  12. Peer Effects in Agricultural Extension: Evidence of Endogenous Social Interaction in the Performance of Community Knowledge Workers (CKWs) in Uganda By Amadu, Festus O.; McNamara, Paul E.; Baylis, Kathy
  13. Product market regulation, innovation and productivity By Bruno Amable; Ivan Ledezma; Stéphane Robin
  14. Effects of Peers on Agricultural Productivity in Rural Northern India By Songsermsawas, Tisorn; Baylis, Kathy; Chhatre, Ashwini
  15. Innovation, Productivity, and Training By Dostie, Benoit
  17. How important is innovation? A Bayesian factor-augmented productivity model on panel data By Bresson G.; Etienne J.; Mohnen P.
  18. Longevity and technological change By Gehringer, Agnieszka; Prettner, Klaus
  19. Estimating Returns to Scale in Imprecise Data Envelopment Analysis By Adel Hatami-Marbini; Zahra Ghelej Beigi; Jens Leth Hougaard; Kobra Gholami
  20. The value of environmental health in agricultural production across nonparametric efficiency quantiles By Gregg, Daniel; Rolfe, John
  21. Information, Misallocation and Aggregate Productivity By Venky Venkateswaran; Hugo A. Hopenhayn; Joel David
  22. Top Team Diversity and Business Performance: Latent Class Analysis for Firms and Cities By Nathan, Max
  23. Markket Integration and Energy Trade Efficiency: An Application of Malmqvist Index to Analyse Multi-Product Trade By Yu SHENG; Yanrui WU; Xunpeng SHI; Dandan ZHANG

  1. By: Qushim, Berdikul; Gillespie, Jeffrey; McMillin, Kenneth
    Abstract: This study determines efficiency drivers, scale and technical efficiencies, and other economic performance measures for Southeastern U.S. meat goat farms. We estimate an input distance function (IDF) using stochastic production frontier (SPF) techniques. Empirical Monte Carlo (MC) simulation techniques are employed to show the consistency of small-sample properties for the IDF.
    Keywords: Meat goat, technical efficiency, scale efficiency, performance measures, simulation, Farm Management, Livestock Production/Industries, Production Economics, Productivity Analysis,
    Date: 2014
  2. By: Minegishi, Kota
    Abstract: A method is developed to integrate the efficiency concepts of technical, allocative, and scale inefficiencies (TI, AI, SI) into the variable returns to scale (VRS) frontier approximation in Data Envelopment Analysis (DEA). The proposed weighted DEA (WDEA) approach takes a weighted average of the profit, constant returns to scale (CRS), and VRS frontiers, so that the technical feasibility of a VRS frontier is extended toward scale- and allocatively-efficient decisions. A weight selection rule is constructed based on the empirical performance of the VRS estimator via the local confidence interval of Kneip, Simar, and Wilson (2008). The resulting WDEA frontier is consistent and more efficient than the VRS frontier under the maintained properties of a data generating process. The potential estimation efficiency gain arises from exploiting sample correlations among TI, AI, and SI. Application to Maryland dairy production data finds that technical efficiency is on average 5.2% to 7.8% lower under the WDEA results than under the VRS counterparts.
    Keywords: Data Envelopment Analysis, Technical Efficiency, Allocative Efficiency, Scale Efficiency, Agricultural Economics, Livestock Production/Industries, Production Economics, Productivity Analysis, D22, Q12, C44,
    Date: 2014
  3. By: Parman, Bryon; Featherstone, Allen; Amanor-Boadu, Vincent
    Abstract: This research examines the robustness of four different estimation approaches to evaluate their ability to estimate a “true” cost frontier and associated economic measures. The manuscript evaluates three parametric methods including a two-sided error system, OLS with only positive errors, and the stochastic frontier method. The fourth method is the nonparametric DEA method augmented to calculate multi-product and product-specific economies of scale. The robustness of the four estimation methods is examined using simulated data sets from two different distributions and two different observation quantity levels. The theoretical condition of curvature for the estimated cost functions was checked for the input price, and output quantity matrices. Calculation of the Eigenvalues revealed that all three parametric estimation methods violated curvature of either the price or quantity matrix, or both. Calculation of the estimated economic efficiency measures shows the parametric methods to be susceptible to distributional assumptions. However, the DEA method in all three simulations is fairly robust in estimating the “true” cost frontier and associated economic measures while maintaining curvature of the cost function.
    Keywords: Production, Productivity Analysis, Data Envelopment Analysis, Frontier Analysis, Agribusiness, Farm Management, Production Economics, Productivity Analysis,
    Date: 2014
  4. By: Song, Minrong; Escalante, Cesar L.
    Abstract: This paper applies the stochastic Translog input distance function and stochastic frontier analysis (SFA) method to evaluate the operational efficiency of lending units within the Farm Credit System (FCS). This study’s model is applied as a comparative analytical frame work to analyze operating strategies and efficiencies of FCS banks versus credit associations (ACA) as well as among various size categories of FCS lending units. This study also adopts an intertemporal perspective by looking at comparative FCS efficiency before and after the most recent financial crisis. The study’s analyses of changes in both technical efficiency (TE) and allocative efficiency (AE) will help FCS make operating adjustments to maximize total factor productivity.
    Keywords: stochastic frontier analysis, Farm Credit System, technical efficiency, allocative efficiency, Agricultural Finance, Financial Economics, Productivity Analysis,
    Date: 2014–05
  5. By: Ugur, Mehmet; Guidi, Francesco; Solomon, Edna; Trushin, Eshref
    Abstract: The volume of work on productivity effects of research and development (R&D) investment has expanded significantly following the contributions of Zvi Griliches and others to microeconometric work in late 1970s and early 1980s. This study aims to meta-analyse the research findings based on OECD firm and industry data, with a view to establish where the balance of the evidence lies and what factors may explain the variation in reported evidence. Drawing on 1,262 estimates from 64 primary studies, we report that the average effect of R&D capital on productivity and the average rate of return on R&D investment are both positive, but smaller than the summary measures reported in previous narrative reviews and meta-analysis studies. We also report that a range of moderating factors have significant effects on the variation among productivity and rates-of-return estimates reported in primary studies. Moderating factors with significant effects include: (i) measurement of inputs and output; (ii) model specifications; (iii) estimation methods; (iv) levels of analysis; (v) countries covered; and (vi) publication type among others.
    Keywords: Research and Development (R&D), Innovation, Productivity, Firm, Industry, OECD, Meta-Analysis
    JEL: C49 C80 D24 O30 O32 O33
    Date: 2014–08–10
  6. By: Kai Du (School of Economics, University of Adelaide)
    Abstract: This paper employs two stage data envelopment analysis (DEA) to investigate the efficiency effects of removing trade barriers on banking performance for a sample of Asian developing economies over the period 1997-2006. First, the DEA is employed to estimate the efficiency scores of banks. After that, the estimated DEA scores are analysed by density analysis and regressed on indices of trade barriers (Dinh 2008) that represent how restrictive the national trade policies are in the selected banking industries. The empirical evidence shows that deregulation policies that reduce restrictions on foreign banks have enhanced bank efficiency, while the deregulation of domestic banks has not resulted in significant efficiency gains.
    Keywords: Data envelopment analysis, financial deregulation, banking services
    JEL: D21 D24 G21
    Date: 2014–06
  7. By: Trinh, Long; Sonobe, Tetsushi
    Abstract: There has been an increasing interest among economists in the impact of management practices on firm’s productivity. This paper explores how business practices affect firm productivity by using Vietnam’s bi-annual surveys of small firms conducted from 2006 to 2011. We constructed a simple weighted business practice index from 8 indicators. This index is simple but rather suitable for small and medium firms in developing countries. To examine the role of business practices in determining firm performance, production function and determinants of business practice adoption are estimated using the GMM-system method, which allows us to control for the endogeneity of production input, business practices index, and other factors. The results indicate that business practice index has a positive and statistically significant impact on firm productivity, employment and sales growth. As business practice index increases by 1 standard deviation (e.g. by 0.194 points over 1 and 0.173 points), the firm's value added increases by 19.1% to 24.0%. There is no evidence that the education level of the business owners/managers, percentage of employees with college degree on firm productivity. The results suggest that education may have indirect effects on productivity through business practice index. The effect of business practice on firm performance is found to vary across different sub-samples.. Both direct and indirect effects of competition lose their significance when we separately estimate production functions for each group of firms. We also find that for whole sample and for sole proprietorship businesses, the adoption of business practice in last period have a positive and statistically significant effects on the adoption of business practice in this period. However, total factor productivity (estimated from production function without business practice index) in the previous period does not have a strong impact on a firm’s adoption of business practice in this period while previous revenue and value added have a statistically significant impact.
    Keywords: business practice, dynamic panel data, productivity growth, small medium enterprises, microenterprise, Vietnam, Industrial Organization, Production Economics, Productivity Analysis,
    Date: 2014–05
  8. By: Wigier, Marek; Wieliczko, Barbara; Fogarasi, Jozsef
    Keywords: Productivity Analysis,
    Date: 2014–05–30
  9. By: Daniela Federici; Enrico Saltari
    Abstract: The aim of this paper is to investigate the roots of the slowdown in the Italian total factor productivity (TFP). The analysis focusses on the specific pattern of technical progress in determining the dynamics of the TFP. This analysis can not be done with Cobb—Douglas technology but requires the employment of a CES function that allows distinguishing between the direction and the bias of technical progress. We employ a CES specification embodying both labor- and capitalaugmenting technical change, with a  less than 1. We obtain three main results. 1) There seems to have been a structural break around the mid-1990s in the direction and bias of technological change; 2) The first half of the sample features a labor-augmenting technical change and a capital bias; 3) In the second part of the sample, both these characteristics seem to disappear, and the evolution of factor endowments assumes a key role. This fact may be seen as one of the potential causes of the stagnation in Italian productivity.
    Keywords: CES production function, Elasticity of substitution, Factor-augmenting technical progress and ICT technical change
    JEL: C30 E E23 O33
  10. By: F. Blaeschke; Peter Haug
    Abstract: This paper analyzes the relationship between intermunicipal cooperation and efficiency of public service provision. The organizational arrangements, including self-provision, joint pro-vision or contracting, affect politicians’ and bureaucrats’ incentives as well as internal transaction costs. Hence, cooperation gains from scale effects have to be weighed against technical inefficiencies. We analyze wastewater disposal for a unique dataset of small and medium-sized Hessian municipalities. We employ a two-stage DEA (DEA = Data Evelopment Analysis) bootstrap approach to calculate relative efficiency measures controlling for organizational arrangements and further environmental variables. Jointly providing municipalities and contractor municipalities score lower in terms of technical efficiency than self-providing and contracting municipalities. The scope for increasing scale efficiency turns out to be limited and hence, only small municipalities may benefit from scale economies from cooperation. The findings suggest that small municipalities should rely on contracting or on joint provision with a high degree of vertical integration.
    Keywords: municipal cooperation, local public finance, efficiency, DEA, sewage disposal
    JEL: D23 D24 D73 H72 R5
    Date: 2014–11
  11. By: Barath, Lajos; Ferto, Imre
    Keywords: Research Methods/ Statistical Methods,
    Date: 2014–05–19
  12. By: Amadu, Festus O.; McNamara, Paul E.; Baylis, Kathy
    Keywords: Productivity Analysis, Teaching/Communication/Extension/Profession,
    Date: 2014–06
  13. By: Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CEPREMAP - Centre pour la recherche économique et ses applications - 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 - Pôle de recherche interdisciplinaire en sciences du management - Université Paris I - Panthéon-Sorbonne : EA4101)
    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
  14. By: Songsermsawas, Tisorn; Baylis, Kathy; Chhatre, Ashwini
    Keywords: Agricultural and Food Policy, International Development,
    Date: 2014–05
  15. By: Dostie, Benoit (HEC Montreal)
    Abstract: The firm's stock of human capital is an important determinant of its ability to innovate. As such, any increase in this stock through firm-sponsored training might lead to more innovation. We test this hypothesis using detailed data on firms' human capital investments and innovation performance, the Canadian longitudinal linked employer-employee data from 1999-2006. Our results, with workplace fixed-effects and allowing for time-varying productivity shocks, demonstrate that more training leads to more product and process innovation, with on-the-job training playing a role that is as important as classroom training. We then demonstrate that on-the-job training has a positive impact on firm-level productivity through improved process innovation.
    Keywords: innovation, firm-sponsored training, productivity, linked employer-employee data
    JEL: J24 L22 M53 O32
    Date: 2014–09
  16. By: Bairagi, Subir K.; Perrin, Richard K.; Fulginiti, Lilyan E.
    Keywords: Production Economics, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,
    Date: 2014
  17. By: Bresson G.; Etienne J.; Mohnen P. (UNU-MERIT)
    Abstract: This paper proposes a Bayesian approach to estimate a factor augmented productivity equation. We exploit the panel dimension of our data and distinguish individual-specific and time-specific factors. On the basis of 21 technology, infrastructure and institution indicators from 82 countries over a 19-year period 1990 to 2008, we construct summary indicators of these three components and estimate their effect on the growth and the international differences in GDP per capita.
    Keywords: Single Equation Models; Single Variables: Models with Panel Data; Longitudinal Data; Spatial Time Series; Multiple or Simultaneous Equation Models: Classification Methods; Cluster Analysis; Factor Models; Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence;
    JEL: C23 C38 O47
    Date: 2014
  18. By: Gehringer, Agnieszka; Prettner, Klaus
    Abstract: We analyze the impact of increasing longevity on technological progress within an R&D-based endogenous growth framework and test the model's implications on OECD data from 1960 to 2011. The central hypothesis derived in the theoretical part is that - by raising the incentives of households to invest in physical capital and in R&D - decreasing mortality positively impacts upon technological progress and thereby also on productivity growth. The empirical results clearly confirm the theoretical prediction which implies that the ongoing demographic changes in industrialized economies are not necessarily detrimental to economic prosperity, at least as far as technological progress and productivity growth are concerned.
    Keywords: Demographic Change,Longevity,Productivity,Technological Progress,Economic Prosperity
    JEL: J11 O11 O40 O41
    Date: 2014
  19. By: Adel Hatami-Marbini (Louvain School of Management, Universite Catholique de Louvain); Zahra Ghelej Beigi (Department of Mathematics, Islamic Azad University); Jens Leth Hougaard (Department of Food and Resource Economics, University of Copenhagen); Kobra Gholami (Department of Science, Islamic Azad University)
    Abstract: The economic concept of Returns-to-Scale (RTS) has been intensively studied in the context of Data Envelopment Analysis (DEA). The conventional DEA models that are used for RTS classification require well-defined and accurate data whereas in reality data are often imprecise, vague, uncertain or incomplete. The purpose of this paper is to estimate RTS of Decision Making Units (DMUs) in Imprecise DEA (IDEA) where the input and output data lie within bounded intervals. In the presence of interval data, we introduce six types of RTS involving increasing, decreasing, constant, non-increasing, non-decreasing and variable RTS. The situation for non-increasing (non-decreasing) RTS is then divided into two partitions; constant or decreasing (constant or increasing) RTS using sensitivity analysis. Additionally, the situation for variable RTS is split into three partitions consisting of constant, decreasing and increasing RTS using sensitivity analysis. Finally, we present the stability region of an observation while preserving its current RTS classification using the optimal values of a set of proposed DEA-based models.
    Keywords: Returns-to-scale; Interval data; Data envelopment analysis
    JEL: C61 D24 D80
    Date: 2014–11
  20. By: Gregg, Daniel; Rolfe, John
    Abstract: The valuation of environmental assets is a key current issue in the analysis of environmental assets from an economic viewpoint. Economic assessment often involves the assessment of community values for environmental protection (public benefits) and any complementary or offsetting changes to production (net private benefits). Whilst the majority of studies focus on final demand aspects of environmental values (e.g. recreational use, existence and amenity values from better environmental protection) there is a need to consider any associated impacts on production of economic commodities. The shadow prices and elasticity of production with respect to environmental inputs is of interest in determining efficient public procurement mechanisms for environmental improvements. In particular, distributional aspects of the use of environmental assets by agricultural enterprises may have implications for the efficiency of different approaches to environmental benefit procurement. We use production data from rangelands beef enterprises in Australia and nonparametric conditional quantiles to show that the efficiency of enterprises may be associated with the efficiency of utilisation of environmental inputs and thus may indicate that environmental procurement mechanisms may be benefiting relatively inefficient producers.
    Keywords: Environmental Economics and Policy,
    Date: 2014
  21. By: Venky Venkateswaran (NYU Stern School of Business); Hugo A. Hopenhayn (UCLA); Joel David (USC)
    Abstract: We propose a theory linking imperfect information to resource misallocation and hence to aggregate productivity and output. In our setup, firms learn from both private sources and imperfectly informative stock market prices. We devise a novel calibration strategy that uses a combination of firm-level production and stock market data to pin down the information structure in the economy. Applying this methodology to data from the US, China, and India reveals substantial losses in productivity and output due to informational frictions - even when only one factor, namely capital, is subject to the friction. Our estimates for these losses range from 5-19% for productivity and 8-28% for output in China and India, and are smaller, though still significant, in the US. Losses are substantially higher when labor decisions are also made under imperfect information. Private learning plays a significant role in mitigating uncertainty and improving aggregate outcomes; learning from financial markets contributes little, even in the US.
    Date: 2014
  22. By: Nathan, Max (London School of Economics)
    Abstract: A growing number of studies find linkages between workforce diversity and business performance, but key aspects of this relationship remain unclear. First, within the firm, the role of 'top team' demography on firm outcomes is surprisingly little understood. Second, urban location may amplify firm-level processes, but almost no studies test these firm-area interactions. I deploy English cross-sectional data to explore these issues, using latent class analysis to tackle firm-level heterogeneity. I find evidence of positive links in some firm classes, both linear and non-linear, and suggestive evidence that ethnic top team diversity is amplified in the London city-region.
    Keywords: firm-level analysis, business performance, diversity, ethnicity, gender, cities
    JEL: J15 L21 R23
    Date: 2014–09
  23. By: Yu SHENG (Australian National University); Yanrui WU (University of Western Australia); Xunpeng SHI (National University of Singapore); Dandan ZHANG (Peking University)
    Abstract: As This paper uses the data envelope analysis method to investigate the Malmquist index-based gravity relationship between bilateral energy trade flows and their determinants throughout the world. Using a balance panel data of 40 countries between 1995 and 2008, this paper shows that market integration will increase energy trade by improving trade efficiency between trade partners, though allowing for a flexible substitution between different energy products tends to weaken these effects. This result highlights cross-product substitution and its implications for the aggregate energy trade pattern, providing insights on the importance of prioritising product-specific trade facilitating policies.
    Keywords: energy trade efficiency, energy market integration, Malmquist index; energy trade efficiency, energy market integration, Malmquist index
    JEL: Q27 Q47 O47
    Date: 2014

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