nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒02‒16
twenty-one papers chosen by

  1. Economic efficiency analysis of vegetable production systems during 2011-2014 By Ursu, Ana
  2. Can capital grants help microenterprises reach the productivity level of SMEs? Evidence from an experiment in Sri Lanka By Laurin Janes
  3. Land Misallocation and Productivity By Diego Restuccia; Raul Santaeulalia-Llopis
  4. The Great Recession, entrepreneurship, and productivity performance By Diez, Federico J.
  5. Climatic Conditions and Productivity : An Impact Evaluation in Pre-industrial England By Stéphane Auray; Aurélien Eyquem; Frédéric Jouneau-Sion
  6. Efficiency of sugar industry in Sudan: Data Envelopment Analysis By onour, Ibrahim
  7. Retail Productivity: Investigating the Influence of Market Size and Regional Hierarchy By Öner, Özge
  8. An Update on Depreciation Rates for the Canadian Productivity Accounts By Statistics Canada
  9. On the efficiency of public health expenditure in Sub-Saharan Africa: Does corruption and quality of public institutions matter? By Novignon, Jacob
  10. Technical efficiency of local public institutions in Colombia By William Orlando Prieto Bustos
  11. Computer model for evaluating performance and economic risk at the level of farms of different sizes By Berevoianu, Rozi Liliana
  12. Pass-through of Trade Costs to U.S. Import Prices By Hakan Yilmazkuday
  13. Capital- and Labor-Augmenting Technical Change in the Neoclassical Growth Model By Tabakovic, Amer; Irmen, Andreas
  14. The Heterogeneous Effects of Bonus Pay on Performance Outcomes: Evidence from Personnel Data By Sauermann, Jan
  15. China's R&D explosion: Analyzing productivity effects across ownership types and over time By Boeing, Philipp; Mueller, Elisabeth; Sandner, Philipp
  16. Productivity versus Transparency: Information Technology Adoption in Emerging Markets By K. Sudhir; Debabrata Talukdar
  17. Enhancing the reliability of performance measures in empirical based research: leverage ratios and theoretical based research By Ojo, Marianne
  19. Do Wages Affect Politicians' Performance? A regression discontinuity approach for Dutch municipalities By Daan van der Linde; Swantje Falcke; Ian Koetsier; Brigitte Unger
  20. Real Capital Input in OECD Agriculture: A Multinational Comparison By Carlos San Juan Mesonada; V. Eldon Ball; Jean-Pierre Butault; Richard Nehring
  21. Competition and the Operational Performance of Hospitals: The Role of Hospital Objectives By Andritsos , Dimitrios; Aflaki , Sam

  1. By: Ursu, Ana
    Abstract: Economic efficiency plays an important role in the foundation and farm level decisions, constituting a basic criterion in assessing the level of economic activity and development prospects. The study aimed to analyze the economic efficiency of crop production systems, measured through indicators that contribute to an overall picture of the actual conditions of economic efficiency for the analyzed period. For this study were quantified following indicators: income from operations, operating costs, labor productivity and rate of return on different types of farms of different sizes. The analysis concluded that indicators production year 2013-2014 has showed a lower level of economic efficiency compared with 2011-2012 production year; comparison of the two production systems that irrigated production system provides a rate of return of about 9-10% higher than non-irrigated system. Comparing labor productivity in terms of value (lei / Man-hour) the types of farms of different sizes that hourly labor productivity increases with economic size of holding and decreases as the number of man-hours to 1000 lei incomes increase.
    Keywords: economic efficiency, production systems, labor productivity, profitability
    JEL: D24 O44 P49 P52 Q12
    Date: 2014–11–20
  2. By: Laurin Janes
    Abstract: Using data from a randomized control trail in Sri Lanka, this paper explores whether cash and in-kind grants helped microenterprises approach the productivity level of SMEs.  The paper first estimates production functions and subsequently treatment effects on TFP levels.  Most significantly, more able and more risk-averse owners benefit from the larger in-kind grant.  Also, the larger in-kind grants allowed for increases in productivity to the least productive firms.  The paper then uses data from a representative sample of formal firms to put the TFP levels and treatment effects in the microenterprises into perspective.  The results suggest that the least productive firms were able to catch up with the average microenterprise and formal SMEs, while a gap remains with large firms.  This finding encourages a positive view of the potential for productivity growth in microenterprises.
    Keywords: Economic development, microenterprises, formal informal, total factor productivity, embodied technology
    JEL: L25 O12 O14 O17 O33
    Date: 2013–11–20
  3. By: Diego Restuccia; Raul Santaeulalia-Llopis
    Abstract: Using detailed household-farm level data from Malawi, we measure real farm total factor productivity (TFP) controlling for a wide array of factor inputs, land quality, and transitory shocks. The distribution of farm TFP has substantial dispersion but factor inputs are roughly evenly spread among farmers. The striking fact is that operated land size and capital are essentially unrelated to farm TFP implying a strong negative effect on agricultural productivity. A reallocation of factors to their efficient use among existing farmers would increase agricultural productivity by a factor of 3.6-fold. We relate factor misallocation to severely restricted land markets as the vast majority of land is without a title and a very small portion of operated land is rented in. The gains from reallocation are 2.6 times larger for farms with no marketed land than for farms that operate marketed land.
    Keywords: misallocation, land, productivity, agriculture, Malawi, micro data.
    JEL: O1 O4
    Date: 2015–02–01
  4. By: Diez, Federico J. (Federal Reserve Bank of Boston)
    Abstract: In recent years, it is argued, the level of entrepreneurial activity in the United States has declined, causing concern because of its potential macroeconomic implications. In particular, it is feared that a lower rate of firm creation may be associated with lower productivity growth and, hence, lower economic growth in the coming years. This paper studies the issue, focusing on the dynamics of entrepreneurship and productivity around the time of the Great Recession. The author looks first at the recent evolution of alternative measures of entrepreneurship and of productivity, and then analyzes the relationship between the two concepts.
    Keywords: entrepreneurship; firm creation; productivity; TFP
    JEL: D24 L26 O47
    Date: 2014–11–01
  5. By: Stéphane Auray (CREST-Ensai, ULCO (EQUIPPE), and CIRP´EE.); Aurélien Eyquem (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Frédéric Jouneau-Sion (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France)
    Abstract: In this paper, we bridge economic data and climatic time series to assess the vulnerability of a pre-industrial economy to changes in climatic conditions. We propose an economic model to extract a measure of total productivity from English data (real wages and land rents) in the pre-industrial period. This measure of total productivity is then related to temperatures and precipitations. We find that lower (respectively higher) precipitations (resp. temperatures) enhance productivity. Further, temperatures also have non-linear effects on productivity : large temperature variations lower productivity. We perform counterfactual exercises and quantify the effects of large increases in temperatures on productivity, GDP and welfare.
    Keywords: Climatic conditions, TFP shocks, real wages, real rents
    JEL: C22 N13 O41 O47 Q54
    Date: 2014
  6. By: onour, Ibrahim
    Abstract: The primary aim of this paper to assess the output loss due to inefficient management of Sugar industry in Sudan. An industrial firm is scale inefficient if there is under utilization of production inputs. In this paper we employed nonparametric Data Envelopment Analysis (DEA) to estimate scale efficiency of the major sugar producers in Sudan: Kenana sugar company and Sudan sugar company (SSC) manufacturers: Sennar, Assalaya, New Halfa, and Al-Genied. The finding of the paper indicate Kenana and Al-Genied manufacturers exhibit constant return to scale, whereas the other three sugar manufacturers of SSC: Sennar, Assalaya, and New Halfa exhibit increasing return-to-scale. Increasing return to scale implies inefficient utilization of available input mix. The average output loss due to scale inefficiency for SSC during the periods 2009, 2010, 2011, and 2012 are respectively 6%, 12%, 14%, and 16% of the benchmark company output level of Kenana. This result implies that for SSC company to increase its efficiency level, needs to manage cane production in Assalya, Sennar, and New Halfa projects on commercial basis, as in Al-Genied, by renting the agriculture land with its infrastructure to private firms to produce sugar cane on commercial basis.
    Keywords: Sugar efficiency, DEA, Sudan
    JEL: F3 M2
    Date: 2015–02–03
  7. By: Öner, Özge (Research Institute of Industrial Economics (IFN))
    Abstract: This paper investigates the determinants of the productivity of independent retail stores in Sweden by focusing on the impact of market size and regional hierarchy while controlling for several store and employee characteristics over time. The analysis utilizes Swedish store-level data for the years 2002–2008. To capture the urban-periphery interaction in retail markets, the analysis (i) uses an accessible market potential measure, which captures the impact of the potential demand both in close proximity in the region, and from outside the region separately, and (ii) investigates the stores that are located in central and non-central markets respectively. The results show an approximately 10 percent higher productivity premium associated with the market size in close proximity for centrally located independent stores, whereas regional market size is found to play an equally important role for both stores located in central markets and stores located in peripheral markets. The findings also show that employee characteristics do not contribute to the productivity of stores in central markets but that small but significant productivity returns are captured for stores located in peripheral markets. The differences in the impact arising from the market potential measures highlight the importance of taking the spatial continuum and regional hierarchy into account in an examination of the market size–productivity relationship for retailers.
    Keywords: Retail; Productivity; Urban rural hierarchy; Market accessibility
    JEL: D24 L81 R11 R12
    Date: 2014–11–06
  8. By: Statistics Canada
    Abstract: This paper generates updated estimates of depreciation rates to be used in the Canadian Productivity Accounts for the calculation of capital stock and the user cost of capital. Estimates are derived of depreciation profiles for a diverse set of assets, based on patterns of resale prices and retirement ages. A maximum likelihood technique is used to jointly estimate changes in the valuation of assets over the course of their service life, as well as the nature of the discard process used to dispose of assets to generate depreciation rates. This method is more efficient than others in producing estimates with less bias and higher efficiency. The earlier estimates that were derived for the period from 1985 to 2001 are compared with those for the latest period, from 2002 to 2010.
    Keywords: Capital consumption allowance, Capital cost allowance, Official estimates
    Date: 2015–01–26
  9. By: Novignon, Jacob
    Abstract: Health expenditure in Sub-Saharan Africa (SSA) has improved over the years with several recent efforts to improve resource commitments to the health sector. Health outcomes in the region have, however, seen little improvements over the years. Several reasons, including the efficiency of health expenditure, have been given to justify this mismatch. Studies on health expenditure efficiency have mainly focused on developed regions with little attention to SSA. The objective of the study was, therefore, to examine The effects of corruption and public institution quality on efficiency. The efficiency of health expenditure was also compared across selected SSA countries. Data for the study was sourced from the World Bank's World Development Indicators for 45 countries covering the period 2005 to 2011. The two-stage Data Envelopment Analysis (DEA) was employed for the analysis. The first stage computes efficiency scores while the second stage examines the determinants of efficiency using the Tobit model. Per capita health expenditure was used as input while infant, under-five mortality and crude death rates were used as outputs. The results show that health expenditure efficiency was low with average scores of approximately 0.5. This suggests that there exist significant potential for SSA countries to improve population health outcomes given the level of expenditure. There was significant variation across countries with Cape Verde, Eritrea and Mauritius among the efficient countries while Equatorial Guinea, Sierra Leone and Swaziland were relatively inefficient. High corruption and poor public sector institutions reduced health expenditure efficiency. The findings emphasize the fact that, while increased health spending is necessary, it is also important to ensure efficiency in resource use across SSA countries. This can be achieved by effective monitoring and evaluation programmes that ensure reduced corruption and improved public institutions.
    Keywords: Health expenditure efficiency, Tobit model, DEA, SSA, Corruption, Public institutions
    JEL: H51 I10 I18
    Date: 2015–02–04
  10. By: William Orlando Prieto Bustos
    Abstract: Using a theoretical recursive model based on cognitive synergy measured by five dimensions (economical, judiciary, civil conflict, geography, and urban) as restrictions to allow better results on institutional quality, the research shows a link between economic, social, and political environment with public efficiency in local governments. Impacts on local public government efficiency of different levels of advancement for each dimension are estimated for 23 major cities in Colombia in 2010 by implementing a Data Envelopment Analysis followed by a Tobit model similar to what has been proposed in recent literature of public efficiency analysis. The main findings showed an average of public local efficiency of 76% when an output oriented DEA model is adjusted using a Financial Public Performance index (FPI) as input and the Multidimensional Poverty Index (MPI) as output. After correcting for technology differences public average efficiency score reduces to 60% meaning that local government can increased their performance by 40% in poverty results measured by IPM with the same level of inputs measured by FPI. In order to narrow gap performances between cities reductions in unemployment levels, informal markets and transaction costs of doing business are required, there is also a positive significant impact of internet access and a negative impact of increasing urban population. The decentralization process is showing a negative impact over local public efficiency measured by the distance in square kilometers towards the central government capital. Other dimensions relevant such as the civil conflict and the judiciary system efficiency show negative and positive impacts as expected however they are not statically significant. Constraint aggregate effect on cognitive synergy developments over institutional quality reduces is impact to 38% when calculated following the structural equation on institutional determinants defined by the theoretical model.
    JEL: D02 H11 H79 R5 R51
    Date: 2013–12–30
  11. By: Berevoianu, Rozi Liliana
    Abstract: Computer Model for performance evaluation and economic risk is a model complex based on appropriate methodologies with specific indicators, necessary to administer the agricultural farm, management, efficient and increase its productivity. System of indicators is intended as a centralized source of information necessary to improve economic performance and efficient use of production factors by which to ensure the development of commercial farms, efficient use of input, raising yields and improve economic performance.
    Keywords: computer model, agricultural management, economic and financial indicators, economic risk
    JEL: D24 D81 L86 Q12 R0 R00
    Date: 2014–11–20
  12. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper measures the pass-through of trade costs into U.S. import prices by using actual data on duties/tariffs and freight-related costs. The key innovation is to decompose the indirect effects of trade costs (on prices) into the effects on markups, quality and productivity while measuring/interpreting the pass-through of trade costs into welfare. Robust to the consideration of variable versus constant markups, there is evidence for incomplete pass-through, mostly due to the negative indirect effects of trade costs on marginal costs, suggesting that lower trade costs are associated with imports that have higher marginal costs; markups are affected relatively less. When the effects of trade costs on marginal costs are further decomposed into their components, the positive contribution of quality dominates in all cases, followed by the negative effects of productivity, suggesting that lower trade costs are associated with higher-quality imports that have been produced with lower productivity.
    Keywords: Pass-through, Trade Costs, Variable Markups, Quality, Productivity.
    JEL: F12 F13 F14
    Date: 2015–01
  13. By: Tabakovic, Amer; Irmen, Andreas
    Abstract: The determinants of the direction of technical change and the implications for economic growth are studied in the one-sector neoclassical growth model of Ramsey (1928), Cass (1965), and Koopmans (1965) extended to allow for endogenous capital- and labor-augmenting technical change. For this purpose, we develop a novel micro-foundation for the competitive production sector. It rests upon the idea that the fabrication of the final good requires tasks to be performed by capital and labor. Firms may engage in innovation investments that increase the productivity of capital and labor in the performance of their respective tasks. These investments are associated with new technological knowledge that accumulates over time. We analyze a version of the model with only labor-augmenting and one with capital- and labor-augmenting technical change. When only labor-augmenting technical change is allowed for we find that steady-state growth depends on the efficient capital intensity and, thus, on household preferences. When it is included, capital-augmenting technical change must vanish in the steady state. Moreover, the mere feasibility of capital-augmenting technical change drastically changes the comparative-static properties of the steady state, e.\,g., household preferences loose their effect on steady-state growth.
    JEL: O31 O33 O41
    Date: 2014
  14. By: Sauermann, Jan
    Abstract: This study uses rich information on performance outcomes to estimate the effect of bonus pay on worker productivity. We use a policy discontinuity in the call centre of a multi-national telephone company in which management introduced monetary bonuses upon achieving pre-defined performance thresholds. The results show that the bonus is associated with an increase of a third of a standard deviation in the underlying performance outcome. This effect is mostly driven by low-ability agents whose performance improvement is about three times as large as for the average worker. Conversely, the treatment effect for high-ability agents is even negative. Furthermore, we find that other, non-incentivised performance outcomes are positively affected.
    JEL: J33 M52 L96
    Date: 2014
  15. By: Boeing, Philipp; Mueller, Elisabeth; Sandner, Philipp
    Abstract: In the past years Chinese firms increased their spending on R&D substantially and worked on achieving a higher quality level of R&D. We analyze whether different R&D activities show a positive influence on total factor productivity (TFP) for firms of different ownership types and across two time periods. Our panel dataset with annual information allows us to study listed firms over the two time periods 2001-2006 and 2007-2011. Privately owned enterprises (POEs) not only obtain higher returns from own R&D than majority and minority state-owned enterprises (SOEs), they are also able to increase their leading position. Overall strong increases in the size of patent stocks are related to a decreasingly positive or even vanishing influence on TFP. POEs not only produce R&D of the highest quality but are also the only ownership type profiting from higher quality. Up to now research collaborations allow almost no benefit with the only exception stemming from domestic collaborations with individuals. Our comprehensive analysis depicts strengths but also weaknesses of the corporate sector in China. We derive implications for the further development of economic policies.
    Keywords: productivity,R&D,China,ownership type,patents
    JEL: O32 O33
    Date: 2015
  16. By: K. Sudhir (Cowles Foundation & School of Management, Yale University); Debabrata Talukdar (State University of New York at Buffalo)
    Abstract: Firms make investments in technology to increase productivity. But in emerging markets, where a culture of informality is widespread, information technology investments leading to greater transparency can impose a cost through higher taxes and need for regulatory compliance. We examine this tradeoff between productivity and transparency by examining IT adoption in the Indian retail sector.  We find that computer technology adoption is lower when firms have motivations to avoid transparency. Specifically, technology adoption is lower when there is greater corruption, but higher when there is better enforcement and auditing. So firms have a higher productivity gain threshold to adopt computers in corrupt business environments with patchy and variable enforcement of the tax laws. Not accounting for this motivation to hide from the formal sector underestimates productivity gains from computer adoption. Thus in addition to their direct effects on the economy, enforcement, auditing and corruption can have indirect effects through their negative impact on adoption of productivity enhancing technologies that also increase operational transparency.
    Keywords: Retailing, Information technology, Productivity, Corruption, Informal economy, Emerging markets, Propensity score matching, Treatment effects models
    JEL: C31 D22 D33 E26 H26 L81 M15 O33 O53
    Date: 2015–01
  17. By: Ojo, Marianne
    Abstract: As well as incorporating and exploring the role of formal analytical methods as a means of highlighting and discovering foundational and fundamental strategy issues, such as the determinants/causes of performance differences between banking institutions and other corporate structures across various jurisdictions, this paper aims to contribute to the literature on how limitations of empirical based research can be mitigated. Such causes of performance differences will incorporate a consideration of what these determinants are, how they operate, how performance should be measured, the extent to which such differences persist, the extent to which such performance measures should be relied upon. Performance measures to be incorporated in this paper will focus primarily on firm performance measures, such as leverage ratios, as well as a brief discussion of macro-economic indicators. From this perspective, the rise of macroeconomics, micro economic inefficiency debates - as well as the validity of such debates will be considered. In its aim to accentuate why many doubts have arisen as regards the reliability of the Basel III Leverage Ratio as a performance measure, and principally in respect of calibration issues, this paper will also provide an analysis of the recent updates which have taken place in respect of the Basel III Leverage Ratio and the Basel III Supplementary Leverage Ratio – both in respect of recent amendments introduced by the Basel Committee and proposals introduced in several jurisdictions such as the United Kingdom and the United States. The paper will also aim to highlight the role of enforcement and the enforceability of rules, ratios and standards, in ensuring that more comparable, consistent, objective and ultimately reliable performance measures are generated.
    Keywords: Basel III; Capital Requirements Directive IV; leverage ratios; enforcement; supervision; Binding Technical Standards; Keynesian revolution; macroeconomics; micro economic inefficiency
    JEL: D8 E3 G2 G3 G38 K2 M4
    Date: 2015–02–02
  18. By: Triebs, Thomas; Tumlinson, Justin
    Abstract: Communism in East Germany sought to dampen the effect of market forces on firm productivity for nearly 40 years. How did East German firms respond to the free market after being thrust into it in 1990? We use a formal learning model and German business survey data to analyze the lasting impact of this far-reaching treatment on the way firms in former East Germany predicted their own productivity relative to firms in former West Germany during the two decades since Reunification. We find in confirmation of our formal model's predictions, that Eastern firms forecast productivity less accurately, particularly in dynamic and uncertain markets, but that the gap gradually closed over 12 to 13 years. Second, by analyzing the direction of firm level errors in conjunction with contemporaneous market signals we find that, in the years immediately following Reunification, Eastern firms estimate the market's role as generally less potent than Western firm do, an observation consistent with overweighting experiences from the communist era; however, over roughly 14 years both converge to the same (incorrect) overestimate of the market's role on their productivity.
    JEL: D21 D22 D83
    Date: 2014
  19. By: Daan van der Linde; Swantje Falcke; Ian Koetsier; Brigitte Unger
    Abstract: This paper examines the effects of local politician pay on performance for Dutch municipalities. Although literature has argued wages partly determine the value of holding political office and thereby higher wages may improve the quality of a candidate pool, no straightforward theoretical prediction exists relating politicians’ remuneration to performance. Data on municipal finances is used in a regression discontinuity design that exploits population thresholds which exogenously determine the wages of local politicians. We find higher wages significantly increase municipal net debt and local budgets, at the same time finding some evidence for increased satisfaction with public space. We contrast our findings to previous research on Italy which found similar effects concerning significance, albeit differences regarding the direction. We argue that even though the direction of the effect may differ, both findings could entail better performance given institutional differences between the two countries.
    Keywords: politicians' wages, local finance, regression discontinuity design
    Date: 2014–10
  20. By: Carlos San Juan Mesonada; V. Eldon Ball; Jean-Pierre Butault; Richard Nehring
    Abstract: This paper provides a farm sector comparison of relative levels of capital input for seventeen OECD countries for the period 1973-2011. The starting point for construction of a measure of capital input is the measurement of capital stock. Estimates of depreciable capital are derived by representing capital stock at each point of time as a weighted sum of past investments. The weights correspond to the relative efficiencies of capital goods of different ages, so that the weighted components of capital stock have the same efficiency. The capital stocks of land are measured as implicit quantities derived from balance sheet data. We convert estimates of capital stock into estimates of capital service flows by means of capital rental prices. Implicit rental prices for each asset are based on the correspondence between the purchase price of the asset and the discounted value of future service flows derived from that asset. Finally, comparisons of levels of capital input among countries require data on relative prices of capital input. We obtain relative price levels for capital input via relative investment goods prices, taking into account the flow of capital input per unit of capital stock in each country.
    Date: 2015–01
  21. By: Andritsos , Dimitrios; Aflaki , Sam
    Abstract: The authors examine the effect of a hospital's objective (i.e., non-profit versus for-profit) in hospital markets for elective care. Using game-theoretic analysis and queueing models to capture the operational performance of hospitals, they compare the equilibrium behavior of three market settings in terms of such criteria as waiting times and the total patient cost from waiting and hospital care payments. In the first setting, patients are served exclusively by a single non-profit hospital; in the second, patients are served by two competing non-profit hospitals. In the third setting, the market is served by one non-profit hospital and one for-profit hospital. A non-profit hospital provides free care to patients, although they may have to wait; for-profit hospitals charge a fee to provide care with minimal waiting. A comparison of the first two settings reveals that competition can hamper a hospital's ability to attain economies of scale and can also increase waiting times. A comparison between the second and third settings indicates that, when the public funder is not financially constrained, the presence of a for-profit sector may allow the funder to lower both the financial costs of providing coverage and the total costs to patients. The authors' analysis suggests that the public funder should exercise caution when using policy tools that support the for-profit sector -- for example, patient subsidies -- because such tools may increase patient costs in the long run; it might be preferable to raise the level of reimbursement to the non-profit sector.
    Keywords: hospitals; for-profit healthcare; non-profit healthcare; queueing models; service provider competition
    Date: 2014–05–26

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