nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒07‒18
twelve papers chosen by

  1. Inputs, productivity, and agricultural growth in Africa South of the Sahara: By Nin-Pratt, Alejandro
  2. Economic Perspectives on DEA By Førsund, Finn
  3. The Influence of Risk-Taking on Bank Efficiency: Evidence from Colombia By Miguel Sarmiento; Jorge E. Galán
  4. Integration, Productivity, and Inclusion in Mexico: A Macro Perspective By Robert A. Blecker
  5. Competitive tendering versus performance-based negotiation in Swiss public transport By Massimo Filippini; Martin Koller; Giuliano Masiero
  6. Statistical Inference and Efficient Portfolio Investment Performance By Shibo Liu; Tom Weyman-Jones; Karligash Glass
  7. Innovation and exporting: a study on Eastern European firms By Silvia Bertarelli; Chiara Lodi
  8. The impact of investment in agricultural research and development and agricultural productivity: By Perez, Nicostrato D.; Rosegrant, Mark W.
  9. "Land Productivity and Economic Development: Caloric Suitability vs. Agricultural Suitability" By Oded Galor; Omer Ozak
  10. The French Productivity Puzzle By Askenazy, Philippe; Erhel, Christine
  11. The Production Possibility Frontier under Strong Input-generated Externalities By Li, Gang
  12. Worker-level and Firm-level Effects of a Wage Subsidy Program for Highly Educated Labor: Evidence from Denmark By Kaiser, Ulrich; Kuhn, Johan Moritz

  1. By: Nin-Pratt, Alejandro
    Abstract: The evidence of improved performance of agriculture in Africa south of the Sahara (SSA) in recent years has indeed been quite striking when compared with the past. For the first time, the sector has maintained a real growth rate of 3.4 percent per year, well above the population growth rate of 2.5 percent. Despite this improved performance, agricultural productivity growth in SSA continues to lag behind every other region of the world, growing at rates that are roughly half of the average rate of developing countries. Previous studies concluded that SSA should increase investment in agricultural research and development (R&D), highlighting the need to facilitate farmers access to technology, markets, and the necessary support services for raising agricultural productivity. This study introduces a new dimension to the puzzle of agricultural productivity growth in SSA: the role of the input mix and the need to increase capital and inputs per worker not only to boost output per worker but also to accelerate technology adoption and total factor productivity (TFP) growth. According to the appropriate technology hypothesis, advanced countries invent technologies that are compatible with their own factor mix, but these technologies are less productive with the very different factor mix of poor countries.
    Keywords: Agriculture, productivity, farm inputs, Agricultural growth, technology, Investment, Labor, Appropriate technology, total factor productivity,
    Date: 2015
  2. By: Førsund, Finn (Dept. of Economics, University of Oslo)
    Abstract: Research on productive efficiency at the firm level has developed as an important and active strand of research the last decades, both within operations research, management science and economics. However, the interests pursued within the fields have had some differences regarding sound theoretical foundations. The perspective within economics is highlighted and a critique of some research directions judged as unfortunate is offered.
    Keywords: Efficiency measures; data envelopment analysis; shadow prices; weight restrictions; cross efficiency
    JEL: C61 D24
    Date: 2015–04–30
  3. By: Miguel Sarmiento (Banco de la República de Colombia); Jorge E. Galán
    Abstract: We present a stochastic frontier model with random inefficiency parameters which is able to capture the influence of risk-taking on bank efficiency and that distingues those effects among banks with different characteristics. Cost and profit efficiency are found to be over- and underestimated when risk measures are not accurately modeled. We find that more capitalized banks are more cost and profit efficient, while banks assuming more credit risk are less cost efficient but more profit efficient. The magnitude of these effects vary with bank’s size and affiliation. Liquidity is found to affect cost efficiency only for domestic banks. Large and foreign banks benefit more from higher credit and market risk exposures, while small and domestic banks find more advantageous to be more capitalized. We identify some channels that explain these differences and provide insights for macroprudential regulation. Classification JEL: C11, C23, C51, D24, G21, G32
    Keywords: Bank Efficiency, Bayesian Inference, Heterogeneity, Random Parameters, Risk-Taking, Stochastic Frontier Models.
    Date: 2015–07
  4. By: Robert A. Blecker
    Date: 2015
  5. By: Massimo Filippini (Institute of Economics (IdEP), University of Lugano; Swiss Federal Institute of Technology (ETH), Zurich, Switzerland); Martin Koller (Swiss Federal Institute of Technology (ETH), Zurich, Switzerland); Giuliano Masiero (Department of Management, Information and Production Engineering (DIGIP), University of Bergamo, Italy; Institute of Economics (IdEP), University of Lugano, Switzerland)
    Abstract: The purpose of this study is to assess differences in the levels of cost efficiency of bus lines operated under competitively tendered contracts and performance-based negotiated contracts. Following the revision of the Swiss railways act in 1996, regional public authorities were given the choice between two different contractual regimes to procure public passenger transport services. We directly compare the impact of competitive tendering and performance-based negotiation by applying a stochastic frontier analysis to the complete dataset of bus lines (n=630) operated by the main Swiss company (Swiss Post) at the same time (in 2009) throughout the country. The overall results show that the differences in the levels of cost efficiency between the two contractual regimes are not signi?cant. Our findings are in line with recent evidence of cost convergence between competitive tendering and performance-based negotiation, and suggest that the practice of using both contractual regimes is challenging for the operators in terms of competitive pressure. The threat of competitive tendering may have a disciplining effect on negotiation since it prevents bus companies from bargaining inadequate rents and inducing asymmetric information advantages.
    Keywords: public bus contracts, competitive tendering, performance-based negotiation, cost efficiency
    JEL: C21 D24 H57 L92
    Date: 2015–06
  6. By: Shibo Liu (School of Business and Economics, Loughborough University); Tom Weyman-Jones (School of Business and Economics, Loughborough University); Karligash Glass (School of Business and Economics, Loughborough University)
    Abstract: The original Morey and Morey (1999) paper was the first to explicitly link the efficient theoretical frontier of the Markowitz portfolio balance model to the concept of the efficient empirical frontier in data envelopment analysis. The contribution of this paper is to extend the application of this linked research strategy to incorporate both sampling error addressed through bootstrapping and contextual explanation of the efficiency results through statistically robust second stage analysis. This paper first applies the procedures in Morey and Morey (1999) to a new modern data set comprising a multi-year sample of investment funds and then utilises Simar-Wilson (2008) bootstrapping algorithms to develop statistical inference and confidence intervals for the indexes of efficient investment fund performance. For the second stage analysis, robust-OLS regression, Tobit models and Papke-Wooldridge (PW) models are conducted and compared to evaluate contextual variables affecting the performance of investment funds.
    Keywords: nonlinear-DEA, portfolios, bootstrapping, second stage DEA
    JEL: C14 G1 G23
    Date: 2015–01
  7. By: Silvia Bertarelli; Chiara Lodi
    Abstract: This paper provides an empirical analysis about the relationship among innovation, productivity and exporting propensity within manufacturing firms of seven Eastern European Union countries. We analyse marginal effects of product, process and organisational-marketing innovations and test complementarity among them when the objective function is represented by the exporting propensity of a firm. Analysing CIS2008 data, we obtain that productivity improves exporting propensity; the more firms innovate the higher is their exporting probability; complementarity between process and organisational-marketing innovations is accepted in medium high and high technology firms. Complementary innovation strategies are detected for Bulgarian firms, even if Bulgaria is one of the least innovative Eastern European countries.
    Keywords: Propensity to export; Eastern Europe countries; Productivity; Complementarity; Product innovations; Process innovations; Organisational/Marketing innovations
    JEL: F14 O33
    Date: 2015–07–10
  8. By: Perez, Nicostrato D.; Rosegrant, Mark W.
    Abstract: This study was conducted to determine the impact on world prices, agricultural commodities production, and food security and nutrition of raising the annual growth in agricultural total factor productivity (TFP) from the current estimate of 1.6 percent to 2 percent by 2030 through investment in agricultural research and development (R&D). The study also compared three R&D investment strategies: (1) gradual TFP increase, (2) accelerated TFP increase, and (3) developing-countries-only TFP increase. Results show that compared with the baseline scenario of business as usual, R&D investment strategies to increase TFP to 2 percent can lower world prices of cereals and meat by as much as 17 and 15 percent, respectively, as well as increase area planted in crops by 2.4 percent and crop yields by 8.5 percent by 2030. World cereal and meat production can also be increased by 12.5 and 3.9 percent, respectively, and consumption by 4.5 and 3.9 percent, respectively. The number of malnourished children can be reduced by 7 million (5.4 percent), and the population at risk of hunger can be reduced by 160 million (23.2 percent).
    Keywords: agricultural research, productivity, children, malnutrition, nutrition, hunger, risk, investment, prices, yields, agricultural products, total factor productivity, research and development, IMPACT model, undernourishment, malnourishment,
    Date: 2015
  9. By: Oded Galor; Omer Ozak
    Abstract: This paper establishes that the Caloric Suitability Index (CSI) dominates the commonly used measure of agricultural suitability in the examination of the effect of land productivity on comparative economic development. The analysis demonstrates that the agricultural suitability index does not capture the large variation in the potential caloric yield across equally suitable land, reflecting the fact that land suitable for agriculture is not necessarily suitable for the most caloric-intensive crops. Hence, in light of the instrumental role played by caloric yield in sustaining and supporting population growth, and given importance of pre-industrial population density for the subsequent course of economic development, the Caloric Suitability Index dominates the conventional measure in capturing the effect of land productivity on pre-colonial population density and the subsequent course of economic development.
    Keywords: Caloric Suitability, Agricultural Suitability, Agricultural Productivity, Land Productivity, Economic Development, Population Density
    Date: 2015
  10. By: Askenazy, Philippe (Paris School of Economics); Erhel, Christine (University of Paris 1 Panthéon-Sorbonne)
    Abstract: Since 2008, France experiences a sharp productivity slowdown. Both output per hour and total factor productivity are particularly deceptive in the market economy. This recent trend contrasts with the acceleration of productivity during the previous crisis in the 1990's and the continuous increase during the following decade. This text provides the first comprehensive exploration of this puzzling break. The direct impacts of the Great Recession on industry composition or reallocation of capital are not significant suspects for a slowdown occurring across business activities. Labour market mechanisms are better candidates. On the one hand, the French labour market policy has massively boosted the creation of low-productive jobs including very-short term employees and self-employed workers. On the other hand, firms, which benefit from massive tax cuts, have hoarded their high-skilled workforce. In addition, the spread of innovative HRM incentives, e.g. employee shareholding, seems to have turned productivity more sensitive to the business cycle (and especially to the fall of stock markets).
    Keywords: productivity slowdown, France, labour market policies, recession
    JEL: O40 J20 D20 E24
    Date: 2015–07
  11. By: Li, Gang
    Abstract: Factor inputs often generate joint products (by-product) that impair production. In some cases, called strong input-generated production externalities in this paper, these negative effects can be so strong that full use of factors becomes ineffcient, and therefore factor use along the production possibility frontier (PPF) is endogenously determined. This paper examines monotonicity, continuity, convexity and other properties of the PPF in such situation. I show that the PPF is strictly decreasing and continuous, but may jump at the corner. The PPF is convex if the by-product generation function is quasi-concave. Moreover, the PPF is either entirely strictly convex or linear if the by-product generation function is linear.
    Keywords: Production possibility frontier, joint product, input-generated, convexity
    JEL: C02 D62 H41
    Date: 2015–07
  12. By: Kaiser, Ulrich (University of Zurich); Kuhn, Johan Moritz (CEBR, Copenhagen)
    Abstract: We study the effects of a Danish wage subsidy program for highly educated workers on the labor market outcomes of the persons participating in the program and on the performance of the firms that hired these subsidized workers. Using data on the population of program participants, both individuals and firms, we find that the program had positive effects on employment and wages the year individuals participate in the program. For wages, we also find positive and statistically significant effects for the two subsequent years. At the program participating firm level, we find statistically significant effects on the number of highly educated employees for both the period of program participation and the subsequent time period.
    Keywords: wage subsidies, firm performance, program evaluation
    JEL: D04 O31 O38
    Date: 2015–07

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.