nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒09‒11
ten papers chosen by

  1. Does Public Sector Inefficiency Constrain Firm Productivity: Evidence from Italian Provinces By Raffaela Giordano; Sergi Lanau; Pietro Tommasino; Petia Topalova
  2. U.S. Total Factor Productivity Slowdown: Evidence from the U.S. States By Roberto Cardarelli; Lusine Lusinyan
  3. Italy: Selected Issues By International Monetary Fund. European Dept.
  4. Measuring Industry Productivity Across Time and Space and Cross Country Convergence By Diewert, Erwin; Inklaar, Robert
  5. A Cost System Approach to the Stochastic Directional Technology Distance Function with Undesirable Outputs: The Case of U.S. Banks in 2001-2010 By Malikov, Emir; Kumbhakar, Subal C.; Tsionas, Efthymios
  6. A Tale of Two Tails: Plant Size Variation and Comparative Labor Productivity in U.S. and German Manufacturing in the Early 20th Century By Joost Veenstra; Herman de Jong
  7. Learning Efficiency Shocks, Knowledge Capital and the Business Cycle : A Bayesian Evaluation By Alok Johri; Muhebullah Karimzada
  8. Testing the "separability" condition in two-stage nonparametric models of production By Cinzia Daraio; Leopold Simar; Paul W. Wilson
  9. ‘Good’ Firms, Worker Flows and Local Productivity By Michel Serafinelli
  10. Does Basel Compliance Matter for Bank Performance? By Rym Ayadi; Sami Ben Naceur; Barbara Casu; Barry Quinn

  1. By: Raffaela Giordano; Sergi Lanau; Pietro Tommasino; Petia Topalova
    Abstract: This paper studies the effect of public sector efficiency on firm productivity using data from more than 400,000 firms across Italy’s provinces. Exploiting the large heterogeneity in the efficiency of the public sector across Italian provinces and the intrinsic variation in the dependence of industries on the government, we find that public sector inefficiency significantly reduces the labor productivity of private sector firms. The results suggest that raising public sector efficiency could yield large economic benefits: if the efficiency in all provinces reached the frontier, output per employee for the average firm would increase by 9 percent.
    Keywords: Italy;public sector efficiency, firm productivity, public, public sector, government, General
    Date: 2015–07–21
  2. By: Roberto Cardarelli; Lusine Lusinyan
    Abstract: Total factor productivity (TFP) growth began slowing in the United States in the mid-2000s, before the Great Recession. To many, the main culprit is the fading positive impact of the information technology (IT) revolution that took place in the 1990s. But our estimates of TFP growth across the U.S. states reveal that the slowdown in TFP was quite widespread and not particularly stronger in IT-producing states or in those with a relatively more intensive usage of IT. An alternative explanation offered in this paper is that the slowdown in U.S. TFP growth reflects a loss of efficiency or market dynamism over the last two decades. Indeed, there are large differences in production efficiency across U.S. states, with the states having better educational attainment and greater investment in R&D being closer to the production “frontier.â€
    Keywords: Production;Productivity;Industrial efficiency;Total factor productivity;Technological innovation;United States;growth, stochastic frontier analysis, U.S. states, tfp, capital, General, Analysis of Growth, Development, and Changes,
    Date: 2015–05–28
  3. By: International Monetary Fund. European Dept.
    Abstract: This Selected Issues paper establishes a causal link between public sector efficiency at the provincial level and firm productivity using data for about 450,000 Italian firms. It emphasizes that significant productivity gains could be realized if public sector efficiency improves from currently low levels. If efficiency rises to the frontier in all provinces, output per employee would increase 9 percent for the average firm. Implementing the public administration reform agenda and recommendations of the 2014 spending review and competition authority could help deliver some of these productivity gains.
    Keywords: Italy;public, public sector, public sector efficiency, per, services
    Date: 2015–07–07
  4. By: Diewert, Erwin; Inklaar, Robert
    Abstract: The paper introduces a new method for simultaneously comparing industry productivity levels across countries and over time. The new method is similar to the method for making multilateral comparisons of Caves, Christensen and Diewert (1982b) but their method can only compare gross outputs across production units and not compare real value added of production units across time and space. The present paper uses the translog GDP methodology for measuring productivity levels across time that was pioneered by Diewert and Morrison (1986) and adapts it to the multilateral context. The new method is illustrated using an industry level data set and shows that productivity dispersion across 38 countries between 1995 and 2011 has decreased faster in the traded sector than in the non-traded sector. In both sectors, there is little evidence of decreasing distance to the productivity frontier.
    Keywords: Productivity, index numbers, Purchasing Power Parities, multilateral comparisons, convergence, value added functions, efficiency, world production fro
    JEL: C43 C82 D24 E01 E23 E31 F14 O47
    Date: 2015–09–03
  5. By: Malikov, Emir; Kumbhakar, Subal C.; Tsionas, Efthymios
    Abstract: This paper offers a methodology to address the endogeneity of inputs in the directional technology distance function (DTDF) based formulation of banking technology which explicitly accommodates the presence of undesirable nonperforming loans --- an inherent characteristic of the bank's production due to its exposure to credit risk. Specifically, we model nonperforming loans as an undesirable output in the bank's production process. Since the stochastic DTDF describing banking technology is likely to suffer from the endogeneity of inputs, we propose addressing this problem by considering a system consisting of the DTDF and the first-order conditions from the bank's cost minimization problem. The first-order conditions also allow us to identify the "cost-optimal" directional vector for the banking DTDF, thus eliminating the uncertainty associated with an ad hoc choice of the direction. We apply our cost system approach to the data on large U.S. commercial banks for the 2001-2010 period, which we estimate via Bayesian MCMC methods subject to theoretical regularity conditions. We document dramatic distortions in banks' efficiency, productivity growth and scale elasticity estimates when the endogeneity of inputs is assumed away and/or the DTDF is fitted in an arbitrary direction.
    Keywords: Bad Outputs, Commercial Banks, Directional Distance Function, Endogeneity, MCMC, Nonperforming Loans, Productivity, Technical Change
    JEL: C11 C33 D24 G21
    Date: 2015
  6. By: Joost Veenstra; Herman de Jong
    Abstract: This paper presents a German/U.S. comparison of labor productivity in mining and manufacturing for two benchmark years, 1909 and 1936/35. German manufacturing productivity had a level of ca 56 per cent of the U.S. level in 1909, and around 50 per cent in 1935. Variation across industries was large. Next we analyze for 1909 whether the scale of production has been a decisive factor in the differences in performance between Germany and the U.S. American data on state level show no direct relationship between the average plant size and labor productivity. We do find a positive relationship between labor productivity and the skewness of the distribution of plants size. In turn, skewness is strongly correlated with the number of plants established in a state. From this we draw the tentative conclusion that skewness provides a measure of plant-concentration and captures external economies of scale, flexibility and competition, driving the positive relation with labor productivity. With respect for the transatlantic labor productivity gap, these findings suggest that the comparatively low average establishment size in Germany did not necessarily convey a disadvantage. More important may have been the setting in which small German establishments operated that kept them from attaining U.S. levels of labor productivity. We conjecture that Germany’s poor average productivity performance in manufacturing was a combined effect of low wages and heterogeneous demand patterns.
    Date: 2015–02
  7. By: Alok Johri; Muhebullah Karimzada
    Abstract: We incorporate shocks to the efficiency by which firms learn from production activity and accumulate knowledge into an otherwise standard real DSGE model with imperfect competition. Using real aggregate data from the United States and Bayesian inference techniques, we find that learning efficiency shocks are an important source of observed variation in the growth rate of aggregate consumption and hours worked in post-war US data. The estimated shock processes suggest much less exogenous variation in preferences and total factor productivity are needed by our model to account for the joint dynamics of consumption and hours. This occurs because learning efficiency shocks induce shifts in labour demand uncorrelated with current TFP, a role usually played by preference shocks. At the same time, knowledge capital acts like an endogenous source of productivity variation in the model. Measures of model fit prefer the specification with learning efficiency shocks.
    Keywords: business cycles, learning-by-doing, learning efficiency shocks, knowledge capital.
    JEL: E32
    Date: 2015–08
  8. By: Cinzia Daraio; Leopold Simar; Paul W. Wilson
    Abstract: Simar and Wilson (J. Econometrics, 2007) provided a statistical model that can rationalize two-stage estimation of technical efficiency in nonparametric settings. Two-stage estimation has been widely used, but requires a strong assumption: the second-stage environmental variables cannot affect the support of the input and output variables in the first stage. In this paper, we provide a fully nonparametric test of this assumption. The test relies on new central limit theorem (CLT) results for unconditional efficiency estimators developed by Kneip et al. (Econometric Theory, 2015a) and new CLTs for conditional efficiency estimators developed in this paper. The test can be implemented relying on either asymptotic normality of the test statistics or using bootstrap methods to obtain critical values. Our simulation results indicate that our tests perform well both in terms of size and power. We present a real-world empirical example by updating the analysis performed by Aly et al. (R. E. Stat., 1990) on U.S. commercial banks; our tests easily reject the assumption required for two-stage estimation, calling into question results that appear in hundreds of papers that have been published in recent years.
    Keywords: technical efficiency, conditional efficiency, two-stage estimation, bootstrap, separability, data envelopment analysis (DEA), free-disposal hull (FDH).
    Date: 2015–08–31
  9. By: Michel Serafinelli (Department of Economics, University of Toronto, Canada)
    Abstract: This paper is the first to present direct evidence showing how localized knowledge spillovers arise from workers changing jobs within the same local labor market. Using a unique dataset combining Social Security earnings records and balance sheet information for the Veneto region of Italy, I first identify a set of highly productive firms, then show that hiring workers with experience at these firms significantly increases the productivity of other firms. My findings imply that worker flows explain around 10 percent of the productivity gains experienced by incumbent firms when new highly productive firms are added to a local labor market.
    Date: 2015–08
  10. By: Rym Ayadi; Sami Ben Naceur; Barbara Casu; Barry Quinn
    Abstract: The global financial crisis underscored the importance of regulation and supervision to a well-functioning banking system that efficiently channels financial resources into investment. In this paper, we contribute to the ongoing policy debate by assessing whether compliance with international regulatory standards and protocols enchances bank operating efficiency. We focus specifically on the adoption of international capital standards and the Basel Core Principles for Effective Bank Supervision (BCP). The relationship between bank efficiency and regulatory compliance is investigated using the (Simar and Wilson 2007) double bootstrapping approach on an international sample of publicly listed banks. Our results indicate that overall BCP compliance, or indeed compliance with any of its individual chapters, has no association with bank efficiency.
    Keywords: Bank supervision;Basel Core Principles;Banks;Bank compliance;Bank regulations;BCP, Efficiency, Regulatory Compliance, bank, bank performance, interest, banking, Truncated and Censored Models, Government Policy and Regulation,
    Date: 2015–05–05

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