nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒02‒05
thirteen papers chosen by

  1. The Heterogeneity of FDI in Sub-Saharan Africa – How Do the Horizontal Productivity Effects of Emerging Investors Differ from Those of Traditional Players? By Birte Pfeiffer; Holger Görg; Lucia Perez Villar
  2. The Determinants of Efficiency and Productivity in the Swiss Insurance Industry By Biener, Christian; Eling, Martin; Wirfs, Jan Hendrik
  3. Incentives and Moral Hazard: Plot Level Productivity of Factory-Operated and Outgrower-Operated Sugarcane Production in Ethiopia By Mengistu Assefa Wendimu; Arne Henningsen; Tomasz Gerard Czekaj
  4. Explaining cross-country differences in productivity: is it efficiency or factor endowments? By Eddie Gerba; Emmanuel V. Pikoulakis
  5. Relative Prices and Sectoral Productivity By Margarida Duarte; Diego Restuccia
  6. The Impact of Foreign Firms on Industrial Productivity: A Bayesian-model averaging approach By TANAKA Kiyoyasu
  7. Internationalization and innovation of firms: evidence and policy By Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano
  8. ICT and environmental innovations in a complementary fashion. Is the joint adoption by firms economically visible? By Davide Antonioli; Grazia Cecere
  9. The value of bosses By Edward P. Lazear; Kathryn L. Shaw
  10. Testing for factor price equality with unobserved differences in factor quality or productivity By Andrew B. Bernard; Stephen J. Redding; Peter K. Schott
  11. Bt Cotton and Ecosystem Impacts of Pesticide Reductions By Chellattan Veettil, Prakashan; Krishna, Vijesh V.; Qaim, Matin
  12. Making do with less: working harder during recessions By Edward P. Lazear; Kathryn L. Shaw; Christopher Stanton
  13. Do large departments make academics more productive? agglomeration and peer effects in research By Clément Bosquet; Pierre-Philippe Combes

  1. By: Birte Pfeiffer; Holger Görg; Lucia Perez Villar
    Abstract: This paper analyzes the horizontal productivity effects of foreign direct investment (FDI) from industrialized and developing countries in 10 sub-Saharan African countries. We establish a unique data set by combining data from the World Bank Enterprise Surveys that allow us to distinguish between foreign investors from sub-Saharan Africa, Asia, Europe, the Middle East, and North Africa. We find strong evidence of horizontal productivity spillovers to domestic firms derived from foreign-firm presence. However, these effects are clearly dependent on domestic firms’ absorptive capacity. The largest productivity effects seem to be driven by investors from sub-Saharan Africa. Our analysis also shows that productivity effects differ according to the income level of host countries. Overall, the strongest productivity effects seem to materialize in lower-middle-income countries. These key findings emphasize the increasing importance of emerging investors, beyond the traditional players from industrialized countries, in sub-Saharan Africa
    Keywords: foreign direct investment, productivity, South–South firms, spillovers, sub-Saharan Africa
    JEL: F23
    Date: 2015–01
  2. By: Biener, Christian; Eling, Martin; Wirfs, Jan Hendrik
    Abstract: Using state-of-the-art frontier efficiency methodologies, we study the efficiency and productivity of Swiss insurance companies in the life, property/casualty, and reinsurance sectors from 1997–2013. The broad scope of this study provides an opportunity to compare and cross-check the findings from other countries, across different time periods, and across different subsectors. Moreover, we are the first to analyze the internationalization strategies of insurance companies, a topic of high interest in the business and economics literature, but one that has not to date been the focus of efficiency studies in the insurance sector. We find that productivity and efficiency in the Swiss insurance market have improved for the property/casualty and reinsurer sectors, but not in the case of life insurance. The results suggest that the internationalization of the insurance business has a positive impact on insurer efficiency. We also illustrate the importance of analyzing nonlinear and interaction effects in second-stage regressions so as to obtain richer insight into the determinants of efficiency. These tests show that being either a small specialist or a large diversified company is optimal from an efficiency point of view. Our findings are of interest not only for Swiss insurance company managers, regulators, and policymakers, but also for academics in other fields and practitioners in other countries.
    Keywords: Data Envelopment Analysis, Two-stage Double-bootstrap, Internationalization, OR in Insurance
  3. By: Mengistu Assefa Wendimu (Danish Institute for International Studies (DIIS), Natural Resources and Development; Department of Food and Resource Economics, University of Copenhagen); Arne Henningsen (Department of Food and Resource Economics, University of Copenhagen); Tomasz Gerard Czekaj (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: We investigate the unique contractual arrangement between a large Ethiopian sugar factory and its adjacent outgrower associations. The only significant difference between the sugarcane production on the factory-operated sugarcane plantation and on the outgrower-operated plots is the remuneration system and thus, the incentives to the workers. We compare the productivity of the factory-operated plantation with the outgrower-operated plots based on a new cross-sectional plot-level data set that includes all plots that are operated by the sugar factory and its adjacent outgrower associations. As sugar-cane production depends on various exogenous factors that are measured as categorical variables (e.g. soil type, cane variety, etc.), we estimate the production function by a nonparametric kernel regression method that takes into account both continuous and categorical explanatory variables without assuming a functional form and without imposing restrictions on interactions between the explanatory variables. In order to obtain meaningful productivity measures, we impose monotonicity in input quantities using the constrained weighted bootstrapping (CWB) method. Our results show that outgrower-operated plots have−ceteris paribus−a statistically and economically significantly higher productivity than factory-operated plots, which can be explained by outgrowers having stronger incentives to put more effort into their work than the employees of the sugar factory.
    Keywords: Productivity, Outgrower schemes, large-scale plantation, agricultural workers, incentives, Nonparametric regression, Sugarcane, Ethiopia
    JEL: D24 Q12 Q15
    Date: 2015–01
  4. By: Eddie Gerba; Emmanuel V. Pikoulakis
    Abstract: In this paper we develop a two-sector growth model of optimizing agents and apply this model to the data for the purpose of addressing the two interrelated questions that preoccupy the literature on development and growth accounting, namely: (1) What determines sustained growth and (2) What explains the vast cross-country differences in labor productivity. Concerning the first questions our findings support the view that to some extend the growth in effective human capital is a by-product of learning-by-doing. On the second question we find that differences in factors of production explain twice as much of the difference in labor productivity between developed and developing countries than differences in efficiency.
    Keywords: two-sector growth model; effective human capital; education quality
    JEL: J24 O41 O47
    Date: 2013–10
  5. By: Margarida Duarte; Diego Restuccia
    Abstract: The relative price of services rises with development. A standard interpretation of this fact is that cross-country productivity differences are larger in manufacturing than in services. The service sector comprises heterogeneous categories. We document that the behavior of relative prices is markedly different across two broad classifications of services: traditional services, such as health and education, feature a rising relative price with development and non-traditional services, such as communication and transportation, feature a falling relative price with income. Using a standard model of structural transformation with an input-output structure, we find that cross-country productivity differences are much larger in non-traditional services (a factor of 106.5-fold between rich and poor countries) than in manufacturing (24.5-fold). Moreover, this relative productivity difference is reduced by more than half when abstracting from intermediate inputs. Development requires an emphasis on solving the productivity problem in non-traditional services in poor countries.
    Keywords: Productivity, services, traditional, non-market, structural transformation, input-output structure.
    JEL: O1 O4 E0
    Date: 2015–01–21
  6. By: TANAKA Kiyoyasu
    Abstract: Inward foreign direct investment affects industrial productivity in a host country through a wide range of channels as the presence of foreign firms is heterogeneous across industries, regions, and their characteristics such as entry mode and nationality. Because a wide variety of potential variables pose serious model uncertainty, I adopt a Bayesian-model averaging (BMA) approach to estimate the impact of foreign firms on industry- and prefecture-level productivity in Japan. I find that the foreign presence may contribute to industrial efficiency directly through their above-average productivity and indirectly through positive spillovers in intra-industry and local backward linkages. These positive impacts are likely to occur as a result of the foreign firms being owned by North American and European investors and the foreign firms making joint venture and merger and acquisition (M&A) investments to enter the Japanese market. By contrast, the foreign presence in distant downstream sectors and local upstream sectors may have negative impacts.
    Date: 2015–01
  7. 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
  8. By: Davide Antonioli (Dipartimento di Economia e Management, Via Voltapaletto 11, Ferrara, Italy.); Grazia Cecere (Telecom Ecole de Management, Institut Mines-Telecom d Author-Name: Massimiliano Mazzanti)
    Abstract: We analyse how the joint adoption of ICT practices and environmental innovation affect the labour productivity of firms. We study complementarity in innovation adoption, with respect to the specific research hypotheses that the higher thediffusion and radicalness of ICT and EI, the higher might firm\rquote s productivitybe. As ICT are considered to be able to reduce the environmental footprint of different economics activities. We exploit original survey data which cover manufacturing firms for a dense SME area in the North-East of Italy (Emilia-Romagna region). We originally merge innovation survey data over 2006-2008 with firm\rquote s balance sheets over 2010-2011 to achieve this aim.The empirical evidence shows that for Emilia-Romagna manufacturing firms there are still wide margins for improving ICT-EIs integration in order to exploit their potential benefits on firm economic performance. However, the awareness of specific synergies seems to mainly characterizethe heavy polluting firms, subject to ETS schemes, while for the remaining firms prevalently emerge some substitutabilityrelations between ICT and EI. The latter firms are strategically less capable of exploiting the potential synergies between ICT and EI.
    Keywords: ICT, environmental innovation, adoption, SME, polluting sectors, Porter hypothesis, complementarity, labor productivity.
    JEL: D22 L23 L25 L60 M15
    Date: 2014–06
  9. By: Edward P. Lazear; Kathryn L. Shaw
    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: C13 C23 D20 L23 M50
    Date: 2014–12
  10. By: Andrew B. Bernard; Stephen J. Redding; Peter K. Schott
    Abstract: We develop a method for identifying departures from relative factor price equality that is robust to unobserved variation in factor productivity. We implement this method using data on the relative wage bills of nonproduction and production workers across 170 local labor markets comprising the continental United States for 1972, 1992, and 2007. We find evidence of statistically significant differences in relative wages in all three years. These differences increase in magnitude over time and are related to industry structure in a manner that is consistent with neoclassical models of production
    JEL: J31 J61 R23
    Date: 2013–05
  11. By: Chellattan Veettil, Prakashan; Krishna, Vijesh V.; Qaim, Matin
    Abstract: This paper examines the ecosystem impacts of transgenic Bt cotton technology resulting from reduced chemical pesticide use. Employing unique panel data from smallholder farmers in central and southern India, negative environmental and health effects of pesticide use are quantified with the environmental impact quotient (EIQ), with and without Bt technology. An environmentally-sensitive production function is estimated, treating the environmental risk of pesticide toxicity as an undesirable output in the production process. Negative externalities are significantly lower in Bt than in conventional cotton. The reduction in EIQ through Bt adoption has increased from 39% during 2002-2004 to 68% during 2006-2008. Bt adoption also contributes to higher environmental efficiency. We find that environmental efficiency is influenced by the quality of Bt technology; high-quality Bt seeds are associated with higher environmental efficiency than lower-quality seeds.
    Keywords: Bt cotton, Directional distance function, Environmental impact quotient, India, Pesticide externality, Crop Production/Industries, Environmental Economics and Policy, Production Economics, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy, D62, O44, Q12, Q16,
    Date: 2014–08
  12. By: Edward P. Lazear; Kathryn L. Shaw; Christopher Stanton
    Abstract: Why did productivity rise during recent recessions? One possibility is that average worker quality increased. A second is that each incumbent worker produced more. The second effect is termed “making do with less.” Using data from 2006 to 2010 on individual worker productivity from a large firm, these effects can be measured and separated. For this firm, most of the gain in productivity during the recession was a result of increased effort. Additionally, the increase in effort is correlated with the increase in the local unemployment rate, presumably reflecting the costs of losing a job.
    Keywords: Recession; productivity; sorting
    JEL: D20 E32 L22 M50
    Date: 2014–12
  13. By: Clément Bosquet; Pierre-Philippe Combes
    Abstract: We study the effect of a large set of department characteristics on individual publication records. We control for many individual time-varying characteristics, individual fixed-effects and reverse causality. Department characteristics have an explanatory power that can be as high as that of individual characteristics. The departments that generate most externalities are those where academics are homogeneous in terms of publication performance and have diverse research fields, and, to a lesser extent, large departments, with more women, older academics, star academics and foreign co-authors. Department specialisation in a field also favours publication in that field. More students per academic does not penalise publication. At the individual level, women and older academics publish less, while the average publication quality increases with average number of authors per paper, individual field diversity, number of published papers and foreign co-authors.
    Keywords: productivity determinants; economic geography; networks; economics of science; selection and endogeneity
    JEL: I3 J24 R12
    Date: 2013–04

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