nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒08‒30
sixteen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Intangible investment and technical efficiency: The case of software-intensive manufacturing firms in Turkey By Fındık, Derya; Tansel, Aysit
  2. Development of productivity and its components in Slovak agriculture before and after EU accession: Analysis of the impact of CAP introduction on the performance indicators of Slovak crop and livestock farms By Zbranek, Peter
  3. Bank ownership and cost efficiency in Russia, revisited By Mamonov, Mikhail; Vernikov , Andrei
  4. Capital Allocation and Productivity in South Europe By Gopinath, Gita; Kalemli-Ozcan, Sebnem; Karabarbounis, Loukas; Villegas-Sanchez, Carolina
  5. The impact of foreign firms on industrial productivity : evidence from Japan By Tanaka, Kiyoyasu
  6. On the Determinants of High Productivity Rice Farming in Irrigated Areas in Senegal: The Efficiency of Large Compared with Small-Scale Irrigation Schemes By Takeshi, Sakurai
  7. The Static and Dynamic Effects of Mergers and Acquisitions on Productivity in The period Post-Subprime Crise: An Empirical Application to the Banking Sector in the European Union By HASSEN, TOUMI; FAKHRI, ISSAOUI; BILEL, AMMOURI; WASSIM, TOUILI
  8. Estimating and explaining the efficiency of township hospitals in Shandong province in the context of the drug policy reform By Laurene Petitfour; Xiezhe Huangfu; Martine Audibert; Jacky Mathonnat
  9. Climatic Conditions and Productivity: An Impact Evaluation in Pre-industrial England By Stéphane Auray; Aurélien Eyquem; Frédéric Jouneau-Sion
  10. Time Use and Productivity: The Wage Returns to Sleep By Matthew Gibson; Jeffrey Shrader
  11. Robots at work: the impact on productivity and jobs By Georg Graetz; Guy Michaels
  12. Directed Technical Change and Capital Deepening: A Reconsideration of Kaldor’s Technical Progress Function By Schlicht, Ekkehart
  13. The Relation between Industry and Services in Terms of Productivity and Value Creation By Neil Foster-McGregor; Koenen Johannes; Sandra M. Leitner; Baker Paul; Julia Schricker; Robert Stehrer; Thomas Strobel; Jurgen Vermeulen; Hans-Günther Vieweg; Anastasia Yagafarova
  14. Forest planning and productivity-risk trade-off through the Markowitz mean-variance model By Antonello Lobianco; Arnaud Dragicevic; Antoine Leblois
  15. New Media, Competition and Growth: European Cities After Gutenberg By Jeremiah Dittmar
  16. Network Form and Performance. The Case of Multi-Unit Franchising By Muriel Fadairo; Cintya Lanchimba; Josef Windsperger

  1. By: Fındık, Derya; Tansel, Aysit
    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: 2013–08–05
  2. By: Zbranek, Peter
    Abstract: The common agricultural policy affects a broad range of issues on farms. Their productivity is no exception and CAP can affect it with different intensities and in different directions. CAP was introduced in the Slovak Republic after its accession to the EU in 2004. From that moment there was a significant increase in number of farms receiving subsidies. The aim of this paper was therefore to analyze the impact of these changes on the development of productivity and its components on the Slovak farms. The research consisted of two stages. The first stage we got a detailed picture of the evolving nature of the performance of Slovak crop and livestock farms in the period 2000-2012 by applying two approaches to evaluation of change in total factor productivity and its components, namely Malmquist Productivity Indices and Luenberger Productivity Indicators. We found that on average both types of farms increased their total factor productivity during the specified period. The driving force behind this development was the technological progress, the slowing factor was deterioration of technical efficiency of farms. By way of further decomposition of Malmquist indices we have also revealed Hicks-non-neutral technical change in the character of Slovak agriculture since the industry increasingly opted for automation and mechanization of production and mitigated use of the workforce. In the second stage we applied Random Effect Models for analyzing panel data to examine the effects of accession to the EU on the development of performance indicators of Slovak farms and input bias of technical change. We found that dependence on farm subsidy policy was significantly higher after joining the Union, while total factor productivity after 2004 developed worse for both types of farms. The effect of changes in the share of total subsidies received on total farm income was the net effect of investment induced productivity growth and the negative effect of efficiency loss. The first prevailed in the case of crop and the second one in the case of livestock farms.
    Keywords: Malmquist Productivity Indices, Luenberger Productivity Indicators, EU accession, Common Agricultural Policy, input bias of technical change, Agricultural and Food Policy, C23, C25, C44, Q18,
    Date: 2015–06
  3. By: Mamonov, Mikhail (BOFIT); Vernikov , Andrei (BOFIT)
    Abstract: This paper considers the comparative efficiency of public, private, and foreign banks in Russia, a transition economy with several unusual features. We perform stochastic frontier analysis (SFA) of Russian bank-level quarterly data over the period 2005–2013. The method of computation of comparative cost efficiency is amended to control for the effect of revaluation of foreign currency items in bank balance sheets. Public banks are split into core and other state-controlled banks. Employing the generalized method of moments, we estimate a set of distance functions that measure the observed differences in SFA scores of banks and bank clusters (heterogeneity in risk preference and asset structure) to explain changes in bank efficiency rankings. Our results for comparative Russian bank efficiency show higher efficiency scores, less volatility, and narrower spreads between the scores of different bank types than in previous studies. Foreign banks appear to be the least cost-efficient market participants, while core state banks on average are nearly as efficient as private domestic banks. We suggest that foreign banks gain cost-efficiency when they increase their loans-to-assets ratios above the sample median level. Core state banks, conversely, lead in terms of cost efficiency when their loans-to-assets ratio falls below the sample median level. The presented approach is potentially applicable to analysis of bank efficiency in other dollarized emerging markets.
    Keywords: banks; comparative efficiency; SFA; state-controlled banks; Russia
    JEL: G21 P23 P34 P52
    Date: 2015–07–27
  4. By: Gopinath, Gita (Harvard University); Kalemli-Ozcan, Sebnem (University of Maryland); Karabarbounis, Loukas (Federal Reserve Bank of Minneapolis); Villegas-Sanchez, Carolina (ESADE - Universitat Ramon Llull)
    Abstract: Following the introduction of the euro in 1999, countries in the South experienced large capital inflows and low productivity. We use data for manufacturing firms in Spain to document a significant increase in the dispersion of the return to capital across firms, a stable dispersion of the return to labor across firms, and a significant increase in productivity losses from misallocation over time. We develop a model of heterogeneous firms facing financial frictions and investment adjustment costs. The model generates cross-sectional and time-series patterns in size, productivity, capital returns, investment, and debt consistent with those observed in production and balance sheet data. We illustrate how the decline in the real interest rate, often attributed to the euro convergence process, leads to a decline in sectoral total factor productivity as capital inflows are misallocated toward firms that have higher net worth but are not necessarily more productive. We conclude by showing that similar trends in dispersion and productivity losses are observed in Italy and Portugal but not in Germany, France, and Norway.
    Keywords: Misallocation; Productivity; Dispersion; Capital flows; Europe
    JEL: D24 E22 F41 O16 O47
    Date: 2015–07–31
  5. By: Tanaka, Kiyoyasu
    Abstract: With a newly constructed dataset on foreign firms in Japan for the period 1995-2008 from firm-level surveys, this paper estimates the impact of foreign firms on industrial productivity at the regional level. A Bayesian-model averaging approach is taken to account for model uncertainty resulting from various linkages between foreign firms and domestic industries. The results show that the foreign firms may contribute to industrial efficiency directly through their above-average productivity and indirectly through positive spillovers in intra-industry and local backward linkages. Forward linkages with foreign firms may have a negative impact on industrial productivity. However, these impacts depend on the nationality and entry mode of foreign investors. Aggregating foreign firms may mask their distinctive impacts on productivity.
    Keywords: Japan, Foreign Affiliated Firm, Productivity, Econometric Model, Foreign Firm, Industrial Productivity, Bayesian Model Averaging
    JEL: C11 F21 F23
    Date: 2015–08
  6. By: Takeshi, Sakurai
    Abstract: Irrigated rice farming in the Senegal River Valley is known to be highly productive, as indicated by the average yield of nearly 5 tons per hectare, and the extensive adoption of modern seed-fertilizer technology. This study seeks to understand why rice farming is so productive in this region; analyzing this situation from the viewpoint of the management efficiency of large versus small scale irrigation schemes. Contrary to popular belief, the study found that farmers in large-scale irrigation schemes achieve significantly higher yields and profits than those in small-scale irrigation schemes.
    Keywords: large-scale irrigation schemes , small-scale irrigation schemes , roductivity , rice farming , Senegal river valley
    Date: 2015–04–23
    Abstract: This article aims to detect the dynamic effect of M & A of European banks on productivity during the period from 2005 to 2013. The estimation of our model by the GMM method allowed us to detect the following results. First, in the long term, the European banking structure seems to be submitted to the convergence phenomenon which means that the banking industry will probably governed by monopolistic structures which will share the market equally or nearly equal. Second, the production factors (labour and capital), had positive and significant effects on the banking product. However, the returns to scale are found to be decreasing as long as the sum of the labour coefficient (0.317) of fixed assets (0,132) and liquid assets (0.351) is less than unity. Third, the time had exerted a negative and significant effect on production which questions the validity of the chosen period characterized by the advent of the subprime crisis. Fourthly, the M & A had a significant positive instantaneous effect on production of banks which allows us to affirm that in a pessimistic environment; it seems that the M & A strategies can be effective solutions to overcome the crisis. Fifth, the dynamic effects of M & A are positive and significant on production which means that the advantage of said M & A appears better in the long term as long as in this time horizon the merged banks are more able to realize their mergers reducing the cost of restructuring and to release more than returns to scale.
    Keywords: M&A, productivity, dynamic effects, GMM
    JEL: G2 G20 G21
    Date: 2015–08–16
  8. By: Laurene Petitfour (CERDI - Centre d'études et de recherches sur le developpement international - CNRS - Université d'Auvergne - Clermont-Ferrand I); Xiezhe Huangfu (CERDI - Centre d'études et de recherches sur le developpement international - CNRS - Université d'Auvergne - Clermont-Ferrand I); Martine Audibert (CERDI - Centre d'études et de recherches sur le developpement international - CNRS - Université d'Auvergne - Clermont-Ferrand I); Jacky Mathonnat (CERDI - Centre d'études et de recherches sur le developpement international - CNRS - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: To cope with the rising price of drugs, in 2009 the Chinese government launched a large pharmaceutical reform. Its key element is the implementation of a National Essential Medicine List, leading to a reorientation of incentives for health services providers. Health facilities are not anymore allowed to make any profit on drug sales (“zero mark-up policy”), while this used to be their main source of financing. Different compensation schemes have been implemented by the authorities. In a context of refunding of the financing structure of health care facilities, it is crucial to understand how the reform has affected –or not- health care facilities activity and efficiency. This study relies on a survey data from a sample of 30 Township Hospitals of the rural prefecture of Weifang (Shandong province). Using a two-stage procedure, it aims at assessing the THs’ technical efficiency scores and then at identifying the determinants of this efficiency. The first stage is realized with a non-parametric frontier approach, the so-called ‘partial frontier’ method, order-m to deal with the problem of dimensionality. The identification of the determinants of efficiency requires panel data models, with random individual effects. Results show that the average efficiency remains constant between 2006-09 and 2010-12, around 0.65. The most significant and robust factors of technical efficiency are the share of subsidies in the TH incomes for the first sub-period (negative effect), and the number of covered inhabitants per bed (positive effect). It suggests that drug reform hasn’t improve primary health facilities efficiency, certainly because the reform did not tackle with success the issues of the financial barriers to universal access to healthcare -out-of-pocket payments from patients-, and of the perception of quality of public healthcare.
    Date: 2015–07–27
  9. By: Stéphane Auray (EQUIPPE - Economie Quantitative, Intégration, Politiques Publiques et Econométrie - Université Lille II - Droit et santé - Université Lille 1 - Sciences et technologies - Université Charles-de-Gaulle Lille 3 - Sciences humaines et sociales - PRES Université Lille Nord de France, CIRPEE - Universite Laval (Quebec), CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Aurélien Eyquem (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Frédéric Jouneau-Sion (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon)
    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.
    Date: 2014
  10. By: Matthew Gibson (Williams College); Jeffrey Shrader (University of California-San Diego)
    Abstract: We investigate the productivity effects of the single largest use of time - sleep. Using time use diaries from the United States, we demonstrate that later sunset time reduces worker sleep and wages. Sunset time one hour later decreases short-run wages by 0.5% and long-run wages by 4.5%. After investigating this relationship and ruling out alternative hypotheses, we implement an instrumental variables specification that provides the first causal estimates of the impact of sleep on wages. A one-hour increase in average weekly sleep increases wages by 1.5% in the short run and by 4.9% in the long run.
    JEL: J22 J24 J31
    Date: 2015–08
  11. By: Georg Graetz; Guy Michaels
    Abstract: Robots may seem dangerous not only to cinema action heroes but also to the average manufacturing worker.To assess whether such concerns are well founded, Guy Michaels and Georg Graetz analyse the labour market effects of industrial robots, which have been widely adopted in the past 25 years.
    Keywords: Robots, productivity, technological change
    JEL: E23 J23 O30
    Date: 2015–07
  12. By: Schlicht, Ekkehart
    Abstract: This note proposes a growth model that is derived from the standard Solow growth model by replacing the neoclassical production function with Kaldor’s technical progress function while maintaining a marginalist theory of factor prices in the spirit suggested by von Weizsäcker (1966, 1966b). The hybrid model so obtained accounts for balanced growth in a way that appears less arbitrary than the Solow model, especially because it directly accounts for Harrod neutral technical change, without any need for further assumptions.
    Keywords: directed technical change; directed technological change; bias in innovation; technical progress function; neoclassical production function; Harrod neutrality; Hicks neutrality; Cambridge theory of distribution; marginal productivity theory; Kaldor; Kennedy; von Weizsäcker; Solow model
    JEL: O30 O40 E12 E13 E25 B59 B31
    Date: 2015–06–19
  13. By: Neil Foster-McGregor (The Vienna Institute for International Economic Studies, wiiw); Koenen Johannes; Sandra M. Leitner (The Vienna Institute for International Economic Studies, wiiw); Baker Paul; Julia Schricker; Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Thomas Strobel; Jurgen Vermeulen; Hans-Günther Vieweg; Anastasia Yagafarova
    Abstract: Summary The share of manufacturing in GDP is declining, whereas the share of services – and business-related services in particular – is rising in almost all advanced economies. However, as these industries are mutually dependent in various ways this study focuses on the manufacturing sector as a user of activities provided by the services industries and – in particular – the way the latter contributes to productivity and value creation in the former. To the extent that this is the case, manufacturing industries benefit from a vibrant business-services industry and themselves play an important ‘carrier function’ of services – issues which are addressed by considering manufacturing activities in a value chain approach. As a consequence, EU Member States facing a declining share of manufacturing might still be part of the manufacturing value chain via the provision of services whereas other countries benefit from services provided by other countries. The role of cross-border flows of services and the patterns of outsourcing and offshoring of such activities across Europe is therefore gaining importance. It is argued that a differentiated pattern of specialisation emerged within Europe with a set of countries keeping a stronghold in manufacturing industries and others are specialising in the provision of related services, whereas some countries have faced a decline in their manufacturing shares, but have not succeeded in increasing their specialisation in business services either. The first four sections of the study present selected quantitative indicators concerning the ‘manufacturing value chains’, discuss the relative importance of the manufacturing–services interaction and its cross-border dimensions, and point towards differences across countries, industries and services activities, and the respective changes over time. Further, impacts of these interactions on manufacturing performance are addressed econometrically. The following two sections highlight important dimensions of services use in manufacturing and issues related to services trade and potential barriers in that respect for selected industries and countries, incorporating both quantitative and qualitative insights.
    Keywords: manufacturing-service interaction, EU-wide specialisation, manufacturing value chains, industry studies
    JEL: F10 L6 L8 O14 R15
    Date: 2015–07
  14. By: Antonello Lobianco (Laboratoire d'Economie Forestière, INRA - AgroParisTech); Arnaud Dragicevic (Chaire Forêts pour Demain, AgroParisTech-Office National des Forêts); Antoine Leblois (Laboratoire d'Economie Forestière, INRA - AgroParisTech)
    Abstract: Using the Markowitz mean-value (M-V) portfolio model, we study forest planning looking at arbitration between productivity and risk. By weighting the forest productivity with factors of future climate change effects, we compute the optimal tree species mixes, within reach of forest managers, in ninety French administrative departments. Considering three productivity measures (wood production, carbon sequestration and economic valorization) and their respective variances, we found that: a) optimizing productivity and carbon sequestration yields allocations close to the empirical ones; b) forest managers prefer low variance to high productivity, i.e. their revealed risk aversion is high; and c) unlike maximizing wood productivity or carbon sequestration, which lead to similar portfolios, maximizing the economic value of wood production increases (decreases) wood production and carbon sequestration under risk aversion (neutrality). Under high risk aversion, the economic valorization would lead to a high species specialization, which is very unlikely in reality. In all considered scenarios, the objectives set out in the Kyoto Protocol would be attained, which puts into question its relevance in terms of additionality.
    Keywords: bioeconomics, forest planning, mean-variance model, mixed-species forests, climate Change
    JEL: G17 Q2 Q54
    Date: 2015–07
  15. By: Jeremiah Dittmar
    Abstract: This research studies how variations in competition and in media content characterized the use and impact of Gutenberg's printing press technology during the European Renaissance. The research constructs annual firm-level panel data on the publications produced by 7,000+ printing firms operating in over 300 European cities 1454-1600. Evidence on the timing of the premature deaths of firm owner-managers is used to isolate shocks to competition. Firms where owner-managers died experienced large negative shocks to output. However, at the city-level deaths of incumbent managers were associated with significant increases in entrance and with a positive and persistent impact on competition and city output. Variations in city supply induced by heterogeneous manager deaths are used to study the relationship between the diffusion of ideas in print and city growth. A uniquely strong relationship is observed between the new business education literature and local growth. This is consistent with historical research on the transformative impact business education ideas had on commercial practices and European capitalism.
    Keywords: Information technology, IO, media, growth, history, business education
    JEL: L1 N13 N33 N93 O11 O18 O33
    Date: 2015–08
  16. By: Muriel Fadairo (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Cintya Lanchimba (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - UCBL - Université Claude Bernard Lyon 1 - UL2 - Université Lumière - Lyon 2 - Université Jean Monnet - Saint-Etienne - PRES Université de Lyon - ENS Lyon - École normale supérieure - Lyon); Josef Windsperger (University of Vienna [Vienna])
    Abstract: Multi-unit franchising (MUF) is a governance form inside franchising networks where the franchisor transfers to the franchisees the right to own and operate more than one outlet. While previous empirical literature has revealed various advantages of MUF as compared to single-unit franchising (SUF), we study the impact of this governance form on the network performance, taking into account different contexts. Our results from propensity score matching show that MUF leads to higher performance. However, non-parametric estimations highlight thresholds suggesting that a mix of SUF and MUF is a more efficient governance form than a pure MUF network.
    Date: 2015–03–09

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