nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒08‒19
fourteen papers chosen by

  1. Firm Level Allocative Inefficiency: Evidence from France By Lionel Fontagné; Gianluca Santoni
  2. Intangible Investment and Technical Efficiency: The Case of Software-Intensive Manufacturing Firms in Turkey By Findik, Derya; Tansel, Aysit
  3. Cereal productivity and its drivers: The case of Ethiopia: By Bachewe, Fantu Nisrane; Koru, Bethlehem; Taffesse, Alemayehu Seyoum
  4. Former Foreign Affiliates: Cast Out and Outperformed? By Beata Javorcik; Steven Poelhekke
  5. Agricultural Extension and Technology Adoption for Food Security: Evidence from Uganda By Pan, Yao; Smith, Stephen C.; Sulaiman, Munshi
  6. Efficiency, Inefficiency and the MENA Frontier By Dimitris Christopoulos; Peter McAdam
  7. The Effects of Productvity and Demand-Specific Factors on Plant Survival and Ownership Change in the U.S. Poultry Industry By Tengying Weng; Tomislav Vukina; Xiaoyong Zheng
  8. What explains productivity differentials across spanish cities? By Díaz Serrano, Lluís
  9. Does Foreign Entry Spur Innovation? By Gorodnichenko, Yuriy; Svejnar, Jan; Terrell, Katherine
  10. Does Internal and External R&D Affect SMEs Innovation Performance? Micro Level Evidence from India and Pakistan By Rehman, Naqeeb, Ur
  11. A women’s boom in the boardroom: effects on performance? By Mareva Sabatier
  12. Low Quality, Low Returns, Low Adoption: Evidence from the Market for Fertilizer and Hybrid Seed in Uganda By Bold, Tessa; Kaizzi, Kayuki; Svensson, Jakob; Yanagizawa-Drott, David
  13. Energy efficiency determinants: An empirical analysis of Spanish innovative firms By Costa, M. Teresa (Maria Teresa), 1951-; García, José, 1963-; Segarra Blasco, Agustí, 1958-
  14. Performance Standards and Employee Effort: Evidence from Teacher Absences By Gershenson, Seth

  1. By: Lionel Fontagné; Gianluca Santoni
    Abstract: A large portion of productivity differentials among locations is related to density. Firms located in denser areas are more productive due to agglomeration economies (Combes et al., 2012). We provide in this paper an explanation of such economies: lower input misallocation. The distribution of resources among heterogeneous firms has relevant consequences on allocative efficiency and denser areas provide a more favorable environment for dynamic matching between employers and employees. Using a methodology proposed by Petrin and Sivadasan (2013) we are able to assess the degree of resource misallocation among firms within sectors for each of the 96 French "Départements". Based on firm-level productivity estimates, we identify in the gap between the value of the marginal product and marginal input price the output loss due to inefficiencies in inputs allocation. Over the period 1993- 2007 the average gap at firm level is around 10 thousands euro, showing a relevant increase starting from the early 2000s. Importantly, firms misallocations are lower in denser areas, suggesting that the matching mechanism is playing a role in explaining the productivity premium of agglomerated locations.
    Keywords: Misallocation;Productivity;Firm Level Data
    JEL: D24 L25 O47
    Date: 2015–07
  2. By: Findik, Derya (Middle East Technical University); Tansel, Aysit (Cornell University)
    Abstract: This chapter analyzes the effect of intangible investment on firm efficiency with an emphasis on its software component. Stochastic production frontier approach is used to simultaneously estimate the production function and the determinants of technical efficiency in the software intensive manufacturing firms in Turkey for the period 2003-2007. Firms are classified based on the technology group. High technology and low technology firms are estimated separately in order to reveal differentials in their firm efficiency. The results show that the effect of software investment on firm efficiency is larger in high technology firms which operate in areas such as chemicals, electricity, and machinery as compared to that of the low technology firms which operate in areas such as textiles, food, paper, and unclassified manufacturing. Further, among the high technology firms, the effect of the software investment is smaller than the effect of research and development personnel expenditure. This result shows that the presence of R&D personnel is more important than the software investment for software intensive manufacturing firms in Turkey.
    Keywords: intangible assets, software investment, efficiency, software intensive firms, stochastic frontier analysis, production function, firms, Turkey
    JEL: L21 L22 L23 L25
    Date: 2015–08
  3. By: Bachewe, Fantu Nisrane; Koru, Bethlehem; Taffesse, Alemayehu Seyoum
    Abstract: Cereal production has exhibited unprecedented growth in Ethiopia, leading to important welfare improvements in the country. However, it is not well understood what the drivers have been of this growth and how it can be sustained. In particular, there is a lack of evidence on the contribution of improvements in productivity to growth in yields. Moreover, doubts exist on whether it is possible to sustain such growth on declining landholdings. We study cereal production using a unique large-scale survey of households and analyze productivity is-sues using stochastic frontier and data envelopment analyses, two conceptually dissimilar methods. Production frontier estimates indicate that modern inputs contribute significantly to improvements in yields. The two analytical methods used indicate that an average cereal producing household is less than half as efficient as optimally producing households, and, consequently, there is considerable opportunity for additional growth in cereal production in Ethiopia.
    Keywords: cereals, productivity, agricultural growth, sustainability, smallholders, farm inputs,
    Date: 2015
  4. By: Beata Javorcik; Steven Poelhekke
    Abstract: The literature has documented a positive effect of foreign ownership on firm performance. But is this effect due to a one-time knowledge transfer or does it rely on continuous injections of knowledge? To shed light on this question we focus on divestments, that is, foreign affiliates that are sold to local owners. To establish a causal effect of the ownership change we combine a difference-in-differences approach with propensity score matching. We use plant-level panel data from the Indonesian Census of Manufacturing covering the period 1990-2009. We consider 157 cases of divestment, where a large set of plant characteristics is available two years before and three years after the ownership change and for which observationally similar control plants exist. The results indicate that divestment is associated with a drop in total factor productivity accompanied by a decline in output, markups as well as export and import intensity. The findings are consistent with the benefits of foreign ownership being driven by continuous supply of headquarter services from the foreign parent.
    JEL: F21 F23
    Date: 2015–06–16
  5. By: Pan, Yao (Aalto University); Smith, Stephen C. (George Washington University); Sulaiman, Munshi (Yale University)
    Abstract: This paper evaluates causal impacts of a large-scale agricultural extension program for smallholder women farmers on food security in Uganda through a regression discontinuity design that exploits an arbitrary distance-to-branch threshold for village program eligibility. We find eligible farmers experienced significant increases in agricultural production, savings and wage income, which lead to improved food security. Given minimal changes in the adoption of relatively expensive inputs including HYV seeds, these gains are mainly attributed to increased usage of improved cultivation methods that are relatively costless. These results highlight the role of improved basic methods in boosting agricultural productivity among poor farmers.
    Keywords: agriculture, extension, agricultural technology adoption, food security, regression discontinuity, Uganda, labor markets in developing economies
    JEL: O13 Q12 I30
    Date: 2015–07
  6. By: Dimitris Christopoulos (Panteion); Peter McAdam (University of Surrey and European Central Bank)
    Abstract: We examine technical efficiency in the Middle East and North Africa (MENA). In addition to economic indicators, political and social ones play a role in development and efficiency profiles. The MENA have been characterized by increasing economic efficiency over time but with marked polarization. We analyse and nest many key hypotheses e.g., the contributions of religion, of natural resources, demographic pressures, human capital etc. The originality of our contribution is the use of a large data set (including principal components), and extensive robustness checks. It should set a comprehensive benchmark and cross-check for related studies of development and technical efficiency.
    JEL: E23 O11
    Date: 2015–08
  7. By: Tengying Weng; Tomislav Vukina; Xiaoyong Zheng
    Abstract: In this paper we study the productivity-survival link in the U.S. poultry processing industry using the longitudinal data constructed from five Censuses of Manufactures between 1987 and 2007. First, we study the effects of physical productivity and demand-specific factors on plant survival and ownership change. Second, we analyze the determinants of the firm-level expansion. The results show that higher demand-specific factors decrease the probability of exit and increase the probability of ownership change. The effect of physical productivity on the probability of exit or ownership change is generally insignificant. Also, firms with higher demand-specific factors have higher probability to expand whereas the average firm-level physical productivity turns out to be an insignificant determinant of firm expansion.
    Keywords: Productivity; Demand-specific Factors; Poultry
    JEL: L66 D24
    Date: 2015–07
  8. By: Díaz Serrano, Lluís
    Abstract: This paper estimates the determinants of productivity differentials across urban areas in Spain. To do so we resort to Spanish Social Security administrative data (MCVL) matched with workers’ fiscal information. We use two-step approach that allows us to control for the confounding effects due to the sorting of more productive workers and more productive firms in bigger cities. Our results indicate that city size is a significant determinant of productivity differentials across Spanish urban areas. We estimate an elasticity of urban agglomeration of 3.3%, which is within the range of values already observed in other countries. We also find that the level of human capital, firm size and the level of industrial specialization also matters in order explain productivity differentials across Spanish cities. Keywords: Agglomeration, wages, productivity, city size. JEL codes: R10, R23, J31
    Keywords: Àrees metropolitanes, Espanya, Ciutats, Productivitat (Economia), Salaris, Economia regional, 332 - Economia regional i territorial. Economia del sòl i de la vivenda,
    Date: 2015
  9. By: Gorodnichenko, Yuriy (University of California, Berkeley); Svejnar, Jan (Columbia University); Terrell, Katherine (University of Michigan)
    Abstract: Our estimates, based on large firm-level and industry-level data sets from eighteen countries, suggest that FDI and trade have strong positive spillover effects on product and technology innovation by domestic firms in emerging markets. The FDI effect is more pronounced for firms from advanced economies. Moreover, our results indicate that the spillover effects can be detected with micro data at the firm-level, but that using linkage variables computed from input-output tables at the industry level yields much weaker, and usually insignificant, estimated effects. These patterns are consistent with spillover effects being rather proximate and localized.
    Keywords: innovation, FDI, spillovers, horizontal and vertical linkages, emerging markets, foreign competition
    JEL: F23 M16 O16 P23
    Date: 2015–08
  10. By: Rehman, Naqeeb, Ur
    Abstract: The purpose of this study is to investigate the impact of internal and external R&D on SMEs innovation performance. Micro level data was obtained from Enterprise Survey. For analysis, bivariate models have been used. The results show that internal and external R&D positively affects the product and process innovations. However, this effect is stronger for Indian SMEs. In comparison, only external R&D showed positive association to product and process innovation for Pakistani SMEs. Similarly, Pakistani SMEs are externally constrained (lack of access to credit) than Indian SMEs. Moreover, Indian SMEs are dominant in terms of undertaking internal R&D, generating product and process innovations than Pakistani SMEs. Lastly, the complementary relationship has been examined between internal and external R&D for both countries. Regarding contribution, this research study for the first time has examined the Indian and Pakistani SMEs innovation activities. The implication of this study suggests that business managers can utilize the balance combination of internal and external R&D to accelerate the SMEs innovation performance.
    Keywords: Internal and External R&D,SMEs
    JEL: O3
    Date: 2015
  11. By: Mareva Sabatier (IREGE - Institut de Recherche en Gestion et en Economie - Université de Savoie)
    Abstract: This article analyzes whether improving gender diversity in boardrooms improves firms' economic performance. In the context of French CAC40-listed companies between 2008 and 2012, this research uses instrumental variable panel regressions, including production frontier estimates, to arrive at two key results. First, gender diversity in boards depends on firms' attributes, including their previous gender promotion strategies. Second, promoting women in boardrooms has a significant and positive effect on economic performance, after accounting for the endogeneity of diversity. Gender diversity even reduces corporate inefficiencies and enables firms to come closer to their optimal performance.
    Date: 2015
  12. By: Bold, Tessa; Kaizzi, Kayuki; Svensson, Jakob; Yanagizawa-Drott, David
    Abstract: To reduce poverty and food insecurity in Africa requires raising productivity in agriculture. Systematic use of fertilizer and hybrid seed is a pathway to increased productivity, but adoption of these technologies remains low. We investigate whether the quality of agricultural inputs can help explain low take-up. Testing modern products purchased in local markets, we find that 30% of nutrient is missing in fertilizer, and hybrid maize seed contains less than 50% authentic seeds. We document that such low quality results in negative average returns. If authentic technologies replaced these low-quality products, average returns for smallholder farmers would be over 50%.
    Keywords: agriculture; substandard inputs; technology adoption
    JEL: O13 O33 Q16
    Date: 2015–07
  13. By: Costa, M. Teresa (Maria Teresa), 1951-; García, José, 1963-; Segarra Blasco, Agustí, 1958-
    Abstract: This paper examines the extent to which innovative Spanish firms pursue improvements in energy efficiency (EE) as an objective of innovation. The increase in energy consumption and its impact on greenhouse gas emissions justifies the greater attention being paid to energy efficiency and especially to industrial EE. The ability of manufacturing companies to innovate and improve their EE has a substantial influence on attaining objectives regarding climate change mitigation. Despite the effort to design more efficient energy policies, the EE determinants in manufacturing firms have been little studied in the empirical literature. From an exhaustive sample of Spanish manufacturing firms and using a logit model, we examine the energy efficiency determinants for those firms that have innovated. To carry out the econometric analysis, we use panel data from the Community Innovation Survey for the period 2008â€2011. Our empirical results underline the role of size among the characteristics of firms that facilitate energy efficiency innovation. Regarding company behaviour, firms that consider the reduction of environmental impacts to be an important objective of innovation and that have introduced organisational innovations are more likely to innovate with the objective of increasing energy efficiency. Keywords: energy efficiency, corporate targets, innovation, Community Innovation Survey. JEL Classification: Q40, Q55, O31
    Keywords: Energia, Economia ambiental, Tecnologia -- Innovacions, Empreses -- Espanya -- Aspectes ambientals, 33 - Economia, 504 - Ciències del medi ambient,
    Date: 2015
  14. By: Gershenson, Seth (American University)
    Abstract: The 2001 No Child Left Behind Act (NCLB) increased accountability pressure in U.S. public schools by threatening to impose sanctions on Title-1 schools that failed to make Adequate Yearly Progress (AYP) in consecutive years. Difference-in-difference estimates of the effect of failing AYP in the first year of NCLB on teacher effort in the subsequent year suggest that on average, teacher absences in North Carolina fell by about 10% and the probability of being absent 15 or more times fell by about 20%. Reductions in teacher absences were driven by within-teacher increases in effort.
    Keywords: performance standards, employee effort, teacher absences, accountability, NCLB
    JEL: J45 J48 J22 I2
    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.