nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2014‒12‒29
ten papers chosen by

  1. On the information and communication technologies - productivity nexus: a long-lasting adjustment period By Benjamin David
  2. Does Trade Liberalization Increase Average Plant Productivity? By Timothy Kehoe; Pau Pujolas; Wyatt Brooks
  3. Deregulation and productivity: selection or within-firm effect? By Oleksandr Shepotylo
  4. Birthplace diversity and productivity spill-overs in firms By René Böheim; Thomas Horvath; Karin Mayr
  5. Importers, Exporters and Multinationals: Exploring the Hierarchy of International Linkages By Gullstrand, Joakim; Olofsdotter, Karin; Thede, Susanna
  6. Exporting and Firm Performance: Evidence from a Randomized Trial By David Atkin; Amit K. Khandelwal; Adam Osman
  7. Branching Efficiency in Indian Banking: An Analysis of a Demand-Constrained Network By Subhash C. Ray
  8. The Value of Bosses By Edward P. Lazear; Kathryn L. Shaw; Christopher T. Stanton
  9. Do agglomeration forces bring productivity gains to manufacturing firms in Russian urban agglomerations? By Tatiana Ratnikova; Ksenia Gonchar
  10. Agglomeration economies and global activities: impact on firm survival By Anna Maria Ferragina; Fernanda Mazzotta

  1. By: Benjamin David
    Abstract: This paper investigates the relationship between Information and Communication Technologies (ICT) and productivity within 240 industries from 8 OECD countries. Specifically, it aims at providing explanations for the coexistence of this strong technological evolution together with the absence of break in the productivity trend during the last decades. We calculate the total factor productivity changes and their components (technical progress and pure efficiency changes) over the period 1973-2005 using the Malmquist productivity index and we then relate these measures with data on ICT diffusion using regression trees. Our results suggest that ICT diffusion is accompanied by opposite movements that conceal the potential of these technologies. Indeed, we find evidence of a clearly identifiable positive relationship between computerization and technical progress, while ICT diffusion negatively affects pure efficiency changes. Our findings support the existence of an adjustment period and are consistent with the fact that the economies under consideration are still in a phase of adaptation.
    Keywords: Information and Communication Technologies, General Purpose Technologies, Malmquist productivity index, Data envelopment analysis, regression tree.
    JEL: C14 D24 O33
    Date: 2014
  2. By: Timothy Kehoe (University of Minnesota); Pau Pujolas (McMaster University); Wyatt Brooks (University of Notre Dame)
    Abstract: In the standard heterogeneous firm model of Hopenhayn (1992) and Melitz (2003), more efficient firms export and trade liberalization leads to higher average efficiency among firms. In data for Columbian plants 1981–1991, we see that the average level of productivity among exporters is higher than that among non exporters and that trade liberalization led to an increase in average firm productivity. Are there facts in the data explained by the Hopenhayn-Meltiz model? The measure of product in the data differs from the measure of efficiency in the model. In fact, in a calibrated version of the Hopenhayn-Meltiz model, the average level of productivity among exporters is lower than that among non exporters and trade liberalization leads to an increase in average firm productivity. The impact of trade liberalization on productivity is a puzzle for the standard model.
    Date: 2014
  3. By: Oleksandr Shepotylo
    Abstract: In the literature, trade liberalization increases industry productivity through two channels. First, firms increase productivity due to better and wider choice of inputs. In addition, at least theoretically, the mechanism of selection eliminates the least productive firms from the industry. To disentangle the sources of industry productivity increase, we apply the recently developed quantile approach (Combes et al., 2012) to the episode of trade and services liberalization in Ukraine. We modify the methodology in order to study changes in productivity distribution within an industry over time. We start with the Melitz model of an industry with heterogeneous firms. Unlike in the original model, we allow for productivity distribution to change over time as a result of deregulation. By looking at changes in productivity distribution of manufacturing and services firms in Ukraine in 2001-2009, we estimate the left-truncation, dilation, and shift in distribution for each NACE 2 digit sector. We compare relative importance of the within firm channel of productivity increase vis-à-vis the selection channel. We further relate the estimates of the left-truncation, dilation, and shift to industry measures of trade and services liberalization that include input tariffs liberalization and input services liberalization.
    Keywords: selection; productivity; distribution; quantile method
    Date: 2014–11
  4. By: René Böheim; Thomas Horvath; Karin Mayr
    Abstract: We determine workforce composition and wages in firms in the presence of productivity spill-overs between co-workers. In equilibrium, workers' wages depend on the production struc- ture of firms, own group size, and aggregate workforce composition in the firm. We estimate the wage effects of workforce diversity and own group size by birthplace and the implied pro- duction structure in Austrian firms using a comprehensive matched employer-employee data set. In our data, we identify a positive effect of workforce diversity and a negative effect of own group size on wages, which suggest that workers of different birthplaces are complements in production on average.
    JEL: D21 D22 F22 J31
    Date: 2014–08
  5. By: Gullstrand, Joakim (Department of Economics, Lund University); Olofsdotter, Karin (Department of Economics, Lund University); Thede, Susanna (Institute for European Studies, University of Malta)
    Abstract: The purpose of this paper is to empirically explore two dimensions of the firm hierarchy of international market-specific linkages using data for Swedish manufacturing firms over the 1997 to 2007 period. First, we investigate the productivity ordering with respect to importing, exporting and investing abroad. Second, we investigate the productivity ordering with respect to linkage complexity (i.e. the number of linkages at firm level). Our findings support a general productivity hierarchy from importing to exporting and then investing abroad as well as from low- to high-linkage complexity. However, an industry-by-industry examination shows that the hierarchical structure is only generally upheld for linkage complexity while the ordering of the three linkages does not exhibit the same regularity across industries. In extending the analysis, we find these irregularities to be upheld by industry characteristics. Lastly, we go beyond the productivity ordering and explore firm characteristics correlated with the linkage complexity.
    Keywords: manufacturing firms; productivity ordering; market linkages
    JEL: F14 F21 F23
    Date: 2014–12–05
  6. By: David Atkin; Amit K. Khandelwal; Adam Osman
    Abstract: We conduct a randomized control trial that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact of exporting on firm performance. Treatment firms report 15-25 percent higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce. Instead, we find evidence of learning-by-exporting whereby exporting improves technical efficiency. First, treatment firms have higher productivity and quality after accounting for rug specifications. Second, when asked to produce an identical domestic rug using the same inputs, treatment firms receive higher quality assessments despite no difference in production time. Third, treatment firms exhibit learning curves over time. Finally, we document knowledge transfers with quality increasing most along the specific dimensions that the knowledge pertained to.
    JEL: F10
    Date: 2014–11
  7. By: Subhash C. Ray (University of Connecticut)
    Abstract: In the present study we evaluate the overall cost efficiency of a network of branches of a single large public sector bank in India within the city of Calcutta using the data for the year 2012. Our objective is to determine the optimal number of branches within a postal district that could provide the observed amounts of banking services to the customers in that area at the minimum operating cost. Our DEA results show that there is an evidence of ‘over-branching’ and for the entire network reducing the total number of branches would be more cost efficient. However, there are numerous instances, where increasing the number of branches within a market area would be optimal.
    Keywords: Network Efficiency; DEA; Banking
    JEL: G21 C61
    Date: 2014–11
  8. By: Edward P. Lazear; Kathryn L. Shaw; Christopher T. Stanton
    Abstract: How and by how much do supervisors enhance worker productivity? Using a company-based data set on the productivity of technology-based services workers, supervisor effects are estimated and found to be large. Replacing a boss who is in the lower 10% of boss quality with one who is in the upper 10% of boss quality increases a team's total output by more than would adding one worker to a nine member team. Workers assigned to better bosses are less likely to leave the firm. A separate normalization implies that the average boss is about 1.75 times as productive as the average worker.
    Keywords: Bosses, supervisors, productivity
    JEL: M50 C13 C23 D20 L23
    Date: 2014–12
  9. By: Tatiana Ratnikova; Ksenia Gonchar
    Abstract: The difficulties of agglomeration effects estimation are caused by the problem of unobserved features of heterogeneous cities, industries, enterprises and even employees, related to both the dependent variable (enterprise-level labor productivity) and the specific characteristics of agglomerations. The selection of an enterprise for the analysis of agglomeration effect may result in identification errors, given that an enterprise located in an urban community in a densely populated Western region of Russia will be observationally equivalent to an enterprise in the Siberian rarefied space in terms of its external scale economy if their sizes, specialization, political status and other urban characteristics correspond. We consider that our subject of analysis is nested in several external environments, i.e., that the enterprise is located within a city, that the city is located within a region, and that it is likely that these environments, similar by nature, would work differently, modified in turn by the nature of the enterprise. Another form of self-selection, the exit of less productive firms driven out by intense competition in urban agglomerations, can hardly be disregarded. This form of self-selection is controlled in our research with help of truncated regressions. Therefore, at the regional level of analysis, a measure of the region's involvement in international trade (exports plus imports as a percentage share of the Gross Regional Product (GRP)) is included in regression and then it is analyzing to what extent the power of urban agglomeration effects depend on the location within the region opened to trade and competition. The results suggest that plants in urban agglomerations enjoy 17-21% higher labor productivity. Productivity gained from urban agglomeration is the highest in towns with populations of 100,000 to 250,000 people. This benefit arises as a result of urbanization and external scale economy. Localization and clustering in the city is not associated with higher labor productivity. While regional own-industry clustering satisfactorily explains the productivity premium, suggesting that efficient clustering requires a scale economy larger than only a city. Another result: the urban agglomeration benefit is statistic significant in the firms with middle labor productivity and is absent in high- and low- productive firms. JEL classification: R10, R12, D24 Key words: productivity, city, urban, agglomeration
    Date: 2014–11
  10. By: Anna Maria Ferragina; Fernanda Mazzotta
    Abstract: The focus of our contribution is to shed light on the importance of firm agglomerations and FDI as drivers of firm survival in Italy. We focus upon different types of agglomeration economies related to the geographical context checking how these economies impact differently on heterogeneous firms survival and whether effects are robust to different estimators (Probit, Cox hazard models, Probit Heckman) and to different assumptions about inter-and intra-regional spillovers. The novelty our paper with respect to previous studies is twofold. First of all, we focus both on external economies and on firm internationalization, two crucial determinants of firm productivity and competitiveness and ultimately of firm survival. Hence, we consider the intertwined role of firm global activities with respect to the local drivers of firm dynamics by comparing foreign investors in Italy and Italian firms' investing abroad to domestic firms to catch a crucial source of heterogeneity of firm behavior with respect to external economies (correcting for the endogeneity of the FDI variables and for sample selection). Secondly, we use a very large dataset at firm level which takes into account several different dimensions at firm, industry and province level (previous studies are mostly at sectoral or at province/regional level) for more than 500,000 observations concerning Italian manufacturing corporate firms disaggregated by sector and by 103 provinces over a long span of time (2002-2010) which allows to also catch the effect of the crisis. With respect to agglomeration economies the paper analyses whether and how firms' exit choices are influenced by five different agglomeration indicators related to the geographical context: 1) External economies arising from localization economies due to the spatial concentration of firms in the same industry (GLAESER et al., 1992) and to 2) local production systems (Industrial districts); 3) External economies available to all local firms irrespective of sector and arising from urban size and density (urbanization economies); 4) External economies available to all local firms stemming from specialisation of firms in different varieties which may favour intra- and inter industry knowledge spillovers via Jacobs externalities (JACOBS, 1969); 5) diversification due to unrelated variety to capture the portfolio effect arising from the spatial concentration of firms belonging to different and non-complementary industries which may protect the region from sector-specific shocks (FRENKEN et al., 2007). We check whether the relevance of these agglomeration economies differ substantially between Italian firms and firm which invest in active or passive FDI. We get evidence on three issues: 1) Benefits from geographically and industry bounded specialisation for survival; 2) Industrial districts economies impact on firm survival 3) Diversification economies relevance.
    JEL: C41 F21 F23 L25
    Date: 2014–11

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