nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒07‒04
eighteen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Offshoring, Total Factor Productivity and Skill-Biased Technological Change By Akhmetova, Zhanar; Ferguson, Shon
  2. Irrigation Technology Adoption, Water Effectiveness and Productivity Measurement By Konstantinos Chatzimichael; Dimitris Christopoulos; Spyro Stefanou; Vangelis Tzouvelekas
  3. Environmental efficiency of energy, materials, and emissions By Yagi, Michiyuki; Hidemichi, Fujii; Hoang, Vincent; Managi, Shunsuke
  4. Agglomeration Economies and Productivity Growth: U.S. Cities, 1880-1930 By Crafts, Nicholas; Klein, Alexander
  5. Unraveling the R&D-Innovation-Productivity relationship - a study of an academic endavour By Broström , Anders; Karlsson, Staffan
  6. Bank Ownership And Cost Efficiency In Russia, Revisited By Mikhail Mamonov; Andrei Vernikov
  7. Ontario's Productivity Performance, 2000-2012: A Detailed Analysis By Andrew Sharpe
  8. Investing in the cheapest form of energy: efficiency practices of SMEs in rural Ghana. By Ackah, Ishmael
  9. Health-Damaging Inputs, Workers' Health Status and Productivity Measurement By Konstantinos Chatzimichael; Margarita Genius; Vangelis Tzouvelekas
  10. Industry Productivity in the Manufacturing Sector: The Role of Offshoring By Sydor, Aaron; Tang, Jianmin; Couture, Lydia
  12. Ethnic Diversity and the Efficiency of Public Spending in Developing Countries By Urbain Thierry YOGO
  13. Determinants of Industrial Coagglomeration and Establishment-level Productivity By FUJII Daisuke; NAKAJIMA Kentaro; SAITO Yukiko
  15. Measuring Changes in the Economics of Medical Practice By Christopher Fleming; Eugene Rich; Catherine DesRoches; James Reschovsky; Rachel Kogan
  16. Product Differentiation, Export Participation and Productivity Growth: Evidence from Chinese Manufacturing Firms By Hu, Cui; Tan, Yong
  17. Competitiveness of the European Economy By Michael Landesmann; Sandra M. Leitner; Robert Stehrer
  18. Long-run effects of temporary incentives on medical care productivity By Celhay,Pablo A.; Gertler,Paul J.; Giovagnoli,Paula; Vermeersch,Christel M. J.

  1. By: Akhmetova, Zhanar (Department of Economics); Ferguson, Shon (Research Institute of Industrial Economics (IFN))
    Abstract: The paper answers two questions simultaneously. What is the effect of offshoring on firms' total factor productivity? What is the effect of offshoring on skill-biased technological change? We estimate a model of firm production that allows for the effect of offshoring on both total factor productivity and relative skilled labor productivity, and for spillovers between the two. The model is fitted to Swedish firm-level data between 2001–2011. We find positive effects of offshoring intensity on total factor productivity, particularly of small domestic firms and large foreign-owned firms, and on skill-biased technological change in production of firms with low offshoring intensity. Initiating offshoring results in skill-biased technological change in non-production activities of large domestic firms. We show that evaluating the impact of offshoring in a unified framework has implications for the estimation results.
    Keywords: Offshoring; Total factor productivity; Skill-biased technological change; Relative skilled labor demand
    JEL: D24 F14 F16
    Date: 2015–06–18
  2. By: Konstantinos Chatzimichael (Dept of Economics, University of Crete, Greece); Dimitris Christopoulos (Panteion University); Spyro Stefanou (Pennsylvania State University); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: This paper develops a consistent theoretical framework for measuring irrigation water effective- ness and it�s impact on productivity growth rates by assuming a smooth transition process from traditional to modern irrigation technologies among individual farmers. The econometric model is based on a two-stage estimation procedure incorporating the transition process within a primal TFP decomposition framework. An empirical investigation addresses a panel of 56 small-scale greenhouse farms in Crete, Greece during the 2010-13 period. The results indicate that technical change driven by irrigation water techology improvement constirbutes significantly to total factor productivity growth. Further, the impact of specific climatic and soil conditions do not allow farmers to fully explore the potential of the new irrigation technology delaying adoption rates.
    Keywords: irrigation technology adoption and diffusion; irrigation effectiveness; productivity growth; translog-transition model; greenhouse farms, Crete, Greece
    JEL: C41 O16 O33 Q25
    Date: 2015–06–24
  3. By: Yagi, Michiyuki; Hidemichi, Fujii; Hoang, Vincent; Managi, Shunsuke
    Abstract: This study estimates the environmental efficiency of international listed firms in 10 worldwide sectors from 2007-2013 by applying an order-m method, a non-parametric approach based on free disposal hull with subsampling bootstrapping. Using a conventional output of gross profit and two conventional inputs of labor and capital, this study examines the order-m environmental efficiency accounting for the presence of each of 10 undesirable inputs/outputs and measures the shadow prices of each undesirable input and output. The results show that there is greater potential for the reduction of undesirable inputs rather than bad outputs. On average, total energy, electricity, or water usage has the potential to be reduced by 50%. The median shadow prices of undesirable inputs, however, are much higher than the surveyed representative market prices. Approximately 10% of the firms in the sample appear to be potential sellers or production reducers in terms of undesirable inputs/outputs, which implies that the price of each item at the current level has little impact on most of the firms. Moreover, this study shows that the environmental, social, and governance activities of a firm do not considerably affect environmental efficiency.
    Keywords: Data envelopment analysis; Environmental efficiency; Shadow price; Free disposal hull; Linear programming
    JEL: C14 D24 Q50
    Date: 2015–05–23
  4. By: Crafts, Nicholas; Klein, Alexander
    Abstract: We investigate the role of industrial structure in productivity growth in U.S. cities between 1880 and 1930 using a new dataset constructed from the Census of Manufactures. We find that increases in specialization were associated with faster productivity growth but that diversity only had positive effects on productivity performance in large cities. We interpret our results as providing strong support for the importance of Marshallian externalities. Industrial specialization increased considerably in U.S. cities in the early 20th century, probably as a result of improved transportation, and we estimate that this resulted in significant gains in labor productivity
    Keywords: agglomeration economies; industrial structure; Jacobian externalities; manufacturing productivity; Marshallian externalities
    JEL: N91 N92 R32
    Date: 2015–06
  5. By: Broström , Anders (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Karlsson, Staffan (Swedish Research Council & Royal Institute of Technology (KTH))
    Abstract: This paper accounts for the development of the academic endavour to determine the firm-level relationship between investments in R&D and productivity. The impact of 28 highly cited publications within this line of study is investigated using a combination of bibliometric techniques and citation function analysis. We show how the attention paid to this line of research broadens and deepens in parallel to the diffusion of innovation as a research theme during 2000s. Our findings also suggest that the attraction of scholarly attention is driven by combination of broadening interest in the central research question under study and boundary-pushing methodological contributions made in the key contributions.
    Keywords: innovation; productivity; R&D; citation analysis; bibliometric analysis
    JEL: B21 B23 B41 C38 D24
    Date: 2015–06–29
  6. By: Mikhail Mamonov (National Research University Higher School); Andrei Vernikov (National Research University Higher School)
    Abstract: This paper adds to the literature on banking in transition with regard to the comparative efficiency of public, private and foreign banks. We perform stochastic frontier analysis (SFA) of Russian bank-level quarterly data from 2005 to 2013. The method of computation of comparative cost efficiency is amended to control for the effect of the revaluations of foreign currency items in bank balance sheets. All public banks are split into the core and other state-controlled banks. We employ the generalized method of moments to estimate a set of distance functions measuring the observed differences in the SFA scores of banks and bank clusters, depending on the heterogeneity in risk preference and asset structure. These distance functions explain the changes in bank efficiency rankings. Our results on comparative bank efficiency are qualitatively different from those in mainstream papers. The efficiency scores of Russian banks are higher and less volatile, and spreads between the scores of different bank types are narrower than hitherto believed. Foreign banks appear as the least cost-efficient type of market participants, while the core state banks are, on average, nearly as efficient as domestic private banks. We suggest that foreign banks are capable of being more cost efficient than others if they increase loans-to-assets ratios above the sample median level. Core state banks, conversely, lead in terms of cost efficiency if their loans-to-assets ratio falls below the sample median level. Our approach is potentially applicable to the analysis of bank efficiency in other dollarized emerging markets
    Keywords: banks, comparative efficiency, SFA, state-controlled banks, Russia
    JEL: G21 P23 P34 P52
    Date: 2015
  7. By: Andrew Sharpe
    Abstract: It is widely recognized that productivity growth is the key driver of long-run increases in living standards. Therefore, a slowdown in productivity growth is a major cause for concern. This has in fact been the situation in Ontario since 2000. After advancing at a 1.9 per cent average annual rate between 1987 and 2000, business sector productivity growth has fallen to 0.5 per cent per year between 2000 and 2012, the second lowest growth rate among the provinces. Indeed, given the relative size of Ontario’s economy, the province’s weak productivity growth has largely been responsible for Canada’s overall poor productivity performance. The objective of this report is to explain the slowdown in productivity growth in Ontario since 2000. The report provides an overview of the productivity performance of the Ontario economy, with a focus on the 2000-2012 period. The report also examines both the supply-side and demand-side factors that influenced Ontario’s productivity performance. The main cause of Ontario’s lackluster productivity growth is found to be the deterioration of external demand conditions. The drop in international exports, due to weak demand growth in the United States, loss of cost competitiveness linked to the appreciation of Canadian dollar and increasing international competition, played a direct role in the slowdown in Ontario’s productivity growth.
    Keywords: Ontario, Canada, Productivity, Cost Competitiveness, International Trade
    JEL: D24 J24 O47 N12 N32 N52 N62 N72 N92
    Date: 2015–06
  8. By: Ackah, Ishmael
    Abstract: Efficiency has been identified as the cheapest and cleanest source of fuel. Whilst effort has been made in the advanced countries to promote technology and efficiency, little is known about efficiency in emerging economies in Africa. The purpose of this study is to identify the energy efficiency practices of SMEs in rural Ghana and also examine the barriers to energy efficiency practices. First, a descriptive analysis was used to examine the barriers and energy efficiency indicators. Finally, autometrics is used to examine the relationship between energy efficiency and productivity at the aggregate level. The study finds that lack of information on energy efficiency practices is the most important barrier to energy efficiency. On the practices, methods such as putting off electrical appliances when not in use or when closed, using new electrical appliances and using less appliances to achieve the same goal are some of the common ones adopted by SMEs in rural Ghana. The study recommends that the Ghana Energy Commission should intensify its energy efficiency education and extend this to rural areas.
    Keywords: Efficiency, Small and Medium Scale Enterprises (SMEs), autometrics, Energy Consumption
    JEL: Q2 Q20 Q21 Q4 Q42
    Date: 2015–05–14
  9. By: Konstantinos Chatzimichael (Dept of Economics, University of Crete, Greece); Margarita Genius (Department of Economics, University of Crete, Greece); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: In many sectors technological conditions of rm production require the use of specic inputs that are at the same time hazardous for firm workers, i.e., health-damaging inputs. Safety rules on the application of these health damaging inputs are not always followed due to lack of knowledge on the adverse long-run health effects and improper firm management. This in turn implies that firms suffer from important productivity losses due to deterioration of their human capital. Along these lines, we develop a primal decomposition framework to analyze the effects of human capital on individual productivity growth rates while considering the adverse eects of health-damaging inputs. Workers' health indices are estimated using the recently developed generalized propensity score (GPS) methods with continuous treatments (Hirano and Imbens, 2004). The approach is implemented in a unique dataset of greenhouse producers in Western Crete, Greece that combines individual worker health with production data.
    Keywords: health-damaging inputs; workers' health index; TFP growth; greenhouse farms
    JEL: I12 I30 Q12 D24
    Date: 2015–06–19
  10. By: Sydor, Aaron; Tang, Jianmin; Couture, Lydia
    Abstract: Two sources of industry productivity growth are firm productivity improvements and the reallocation of productive resources from less productive to more productive firms. This paper studies the role of offshoring in improving industry productivity through these two channels, using a new Canadian manufacturing data base that links the Annual Survey of Manufactures and the Importer Register database at the commodity level. The database provides information on direct imports of intermediate inputs by firms. This allows us to estimate offshoring intensity in Canada at the firm level, and to differentiate those imports by region of origin.
    Keywords: Economic accounts, Manufacturing, Productivity accounts
    Date: 2015–06–22
  11. By: Jan Vavra (Unversity of Pardubice); Jan Suchy (University of Pardubice); Ondrej Slezak (Hermetic Pumpen)
    Abstract: Purpose – Production effectiveness have been recently, viewed as a critical factor in manufacturing system. A theoretical maximum capacity must be compared with the actual output and production time, equipment speed and quality of production processes must be adequately considered. The OEE approach is the only production indicator combining the factors of time, speed and quality in useful and straightforward way. The OEE is calculated by multiplying the availability rate, performance rate and quality rate, representing simple and valid way to measure production effectiveness, but literature does not discuss difficulties with determination of all the factors of the OEE calculation, especially causes of time losses and determination of productive and non-productive time. Measurement of availability loses due to breakdowns, changeover, waiting or administration activities must be closer supervised to identify potential decrease of performance and related costs. Design/methodology/approach - Based on theoretical basis concerning determination of relevant productive and non-productive administrative activities, there was performed research and time analyses in manufacturing company by realized measurement of OEE and time analyses.Findings – Realized study and time analyses contribute to understand the OEE value calculation and identification of time loss causes. The discussion of the industrial case shows the importance of crucial identification of productive and non-productive time for efficient OEE calculation. Originality/value – The paper deals with industrial case, performed in collaboration with important enterprise of electronic industry; by realized measurement of productive and non-productive times in relation to OEE calculation there was obtained an original qualitative analysis, showing contribution to OEE value and identified difficulties with proper identification of availability loses due to non-productive and non-value added activities.
    Keywords: production efficiency; operation management; value-added activities; corporate effectiveness
    JEL: D20 D24 L23
    Date: 2015–06
  12. By: Urbain Thierry YOGO
    Abstract: This paper examines the effect of ethnic diversity on the efficiency of public spending in a set of developing countries. For this purpose, we use Data Envelopment Analysis to assess the efficiency of public spending in the sectors of health, education and infrastructure in 77 developing countries over the period 1996-2012. Further, we investigate the effect of ethnic diversity on the cross country variation in efficiency. Two main findings emerge. First, barely 12% of the sample of countries under study makes an efficient use of public expenditure. Second, no matters the level of aggregation, ethnic polarization is positively associated with higher efficiency. In contrast, ethnic fractionalization does have a negative or at the best no effect on efficiency, especially at the finest level of disaggregation.
    Keywords: Ethnic diversity, Public spending efficiency, developing countries
    JEL: O23 O11 H5
    Date: 2015–06
  13. By: FUJII Daisuke; NAKAJIMA Kentaro; SAITO Yukiko
    Abstract: This paper investigates the relationships between the determinants of industrial coagglomeration and establishment-level productivity. For each pair of industries, we first construct the degree of coagglomeration and indices for three factors of coagglomeration: inter-firm transactions, knowledge spillover, and labor market pooling. We then examine the correlation between these three factors and the degree of coagglomeration. Overall, inter-firm transactions and labor market pooling are positively correlated with the degree of coagglomeration whereas knowledge spillover has no significant relationship with it. We also find that the determinants of coagglomeration are quite different across industries. Further, we examine the relationships between these factors and establishment-level productivity. We find that the determinants of coagglomeration are not necessarily positively associated with the productivity of establishments.
    Date: 2015–06
  14. By: Jitao Tang (Ernst&Young LLP); Rosanne Altshuler (Rutgers University)
    Abstract: Most studies of foreign direct investment (FDI) spillovers focus on externalities of inward FDI to host country firms. However, spillovers may also be generated from outward FDI and flow to home country firms. We test for the presence of spillovers from U.S. multinational corporations to domestic U.S. firms in the same industry, downstream industries and upstream industries using firm level information from Standard and Poor’s Compustat data and industry level data on U.S. outward FDI from the U.S. Bureau of Economic Analysis. We find evidence of positive and significant spillovers flowing from multinational customers to their domestic suppliers. This is consistent with most previous studies of spillovers from inward FDI and may suggest a role for domestic policies that subsidize outward FDI. We also find that the presence of beneficial spillovers depends on several firm characteristics in
    Keywords: Multinational enterprises, Foreign direct investment, Productivity spillovers, Absorptive capacity
    JEL: F21 F23
    Date: 2015–01–04
  15. By: Christopher Fleming; Eugene Rich; Catherine DesRoches; James Reschovsky; Rachel Kogan
    Abstract: For the latter third of the twentieth century, researchers have estimated production and cost functions for physician practices. Today, those attempting to measure the inputs and outputs of physician practice must account for many recent changes in models of care delivery.
    Keywords: physician practice, input, output, scale economy, efficiency
    JEL: I
    Date: 2015–06–24
  16. By: Hu, Cui; Tan, Yong
    Abstract: In this paper, we investigate how the degree of export participation and product differentiation affect firms’ productivity growth through learning-by-exporting. We extend the model of Melitz and Ottaviano (2008) to endogenize the effort firms allocate to learning. This choice depends on both the degree to which firms enter export markets and the extent to which products are differentiated across producers. Using a firm-level dataset from China’s manufacturing industries, we implement propensity score matching methods to test the model’s predictions. Our results indicate that the degree of export participation is positively correlated with TFP improvements. Simultaneously, we empirically verify that firms exporting less differentiated products experience faster TFP growth than those exporting more differentiated products.
    Keywords: Export participation, Product differentiation, TFP, Learning-by-exporting.
    JEL: D24 F1 L1
    Date: 2015–01–27
  17. By: Michael Landesmann (The Vienna Institute for International Economic Studies, wiiw); Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Summary This paper uses the World Input-Output Database (WIOD) to analyse changes of Europe’s position in global specialisation and location patterns of exporting activity within Europe by means of a number of competitiveness indicators. We consider both manufacturing as well as tradable services. The study analyses the increasing role of services–industry linkages, the differentiation in specialisation and competitiveness patterns amongst groups of EU member countries pointing to the increasing concentration of manufacturing activity in the ‘Central European Manufacturing Core’ and to competitive weaknesses of some of the EU’s core economies as well as of some of the lower- and medium-income economies (‘Europe’s periphery’). We also undertake an econometric analysis of the determinants of a range of competitiveness indicators, including explanatory variables such as labour productivity, skill composition or labour compensation per employee as highlighted by traditional trade theories as well as domestic and foreign business services linkages or vertical cross-border production integration to account for phenomena which have come to shape the global trade landscape more recently. 
    Keywords: competitiveness, European economy, Europe’s periphery, global trade specialisation, international production networks, vertical trade integration, services–manufacturing linkages
    JEL: F02 F14 F15
    Date: 2015–05
  18. By: Celhay,Pablo A.; Gertler,Paul J.; Giovagnoli,Paula; Vermeersch,Christel M. J.
    Abstract: The adoption of new clinical practice patterns by medical care providers is often challenging, even when the patterns are believed to be efficacious and profitable. This paper uses a randomized field experiment to examine the effects of temporary financial incentives paid to medical care clinics for the initiation of prenatal care in the first trimester of pregnancy. The rate of early initiation of prenatal care was 34 percent higher in the treatment group than in the control group while the incentives were being paid, and this effect persisted at least 15 months and likely 24 months or more after the incentives ended. These results are consistent with a model where the incentives enable providers to address the fixed costs of overcoming organizational inertia in innovation, and suggest that temporary incentives may be effective at motivating improvements in long-run provider performance at a substantially lower cost than permanent incentives.
    Keywords: Disease Control&Prevention,Health Systems Development&Reform,Health Monitoring&Evaluation,Population Policies,Labor Policies
    Date: 2015–06–30

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