nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒11‒15
nineteen papers chosen by

  1. Productivity Indexes under Hicks Neutral Technical Change By Hideyuki Mizobuchi
  2. The Impact of Part-Time Work on Firm Total Factor Productivity: Evidence from Italy By Francesco Devicienti; Elena Grinza; Davide Vannoni
  3. FDI, Intermediate Inputs and Firm Performance: Theory and Evidence from Italy By Michele Imbruno; Rosanna Pittiglio; Filippo Reganati
  4. Environmental investment and firm performance: A panel VAR approach By Zhang, Shanshan; Lundgren, Tommy; Zhou, Wenchao
  5. World TFP By Bart Hobijn; John Fernald
  6. Working Paper 06-15 - Labour productivity growth in Belgium - Long-term trend decline and possible actions By Bernadette Biatour; Chantal Kegels
  7. Productivity Drivers of Efficiency in Banking: Importance of Model Specifications By Natalya Zelenyuk; Valentin Zelenyuk
  8. Human Resources and Innovation: Total Factor Productivity and Foreign Human Capital. By Fassio, Claudio; Kalantaryan, Sona; Venturini, Alessandra
  9. Analyzing the TFP Performance of Chinese Industrial Enterprises By Li, Kui-Wai
  10. Firms’ heterogeneity and performance in manufacturing during the great recession By A. Arrighetti; R. Brancati; A. Lasagni; A. Maresca
  11. Working Paper 04-15 - Potential output growth in Belgium since the crisis - Lower and more uncertain By Igor Lebrun
  12. The Impact of Contract Enforcement Costs on Outsourcing and Aggregate Productivity By Johannes Boehm
  13. Hiring, separations, vacancies and productivity By Manolis Galenianos; Ija Trapeznikova; Francois Fontaine; Jesper Bagger
  14. Healthcare: how competition can improve management quality and save lives By Nicholas Bloom; John Van Reenen
  15. Risk governance and performance of the Italian banks: an empirical analysis By Elisa Cavezzali; Gloria Gardenal
  16. What effect does development aid have on productivity in recipient countries? An analysis using quantiles and thresholds By Felicitas Nowak-Lehmann D.; Elena Gross
  17. State-Aid, Stability and Competition in European Banking By Fiordelisi, Franco; Mare, Davide Salvatore; Molyneux, Philip
  18. Network Effects on Worker Productivity By Lindquist, Matthew; Sauermann, Jan; Zenou, Yves
  19. Global value chains and the effects of outsourcing and offshoring on firms: Evidence from matched firm-employee data By Lindic, Mojca

  1. By: Hideyuki Mizobuchi (Faculty of Economics, Ryukoku University)
    Abstract: The Malmquist and Hicks–Moorsteen productivity indexes are the two most widely used indexes for measuring productivity growth of firms, industries and countries. We indicate that these two indexes coincide under constant returns to scale technology and Hicks neutral technical change. While the conditions on production technology under which two indexes coincide have been examined before, this is the first study on the types of technical change under which they coincide. We shed new insight on the relationship between these popular indexes.
    Keywords: Hicks neutral technical change, Malmquist productivity index, Hicks–Moorsteen productivity index
    JEL: C14 D24 O47 O51
    Date: 2015–10
  2. By: Francesco Devicienti; Elena Grinza; Davide Vannoni
    Abstract: In this paper, we explore the impact of part-time work on firm productivity. Using a large panel data set of Italian corporations' balance sheets for the period 2000- 2010, we first estimate the total factor productivity (TFP) of each firm for each year. We use different approaches aimed at solving input simultaneity, including a version of Ackerberg et al. [2006]'s control function approach, which accounts for firm fixed effects. We then match the TFP estimates with rich information on the firms' use of part-time work obtained from survey data and estimate the impact of part-time work on TFP at the firm level. We find that an increase of 1 standard deviation in the part- time share reduces TFP by 2.03%. The results suggest that this harmful effect stems from horizontal rather than vertical part-time arrangements. We also find that firms declaring that they use part-time work to accommodate workers' requests suffer the most. Moreover, we show that the so-called 'flexible' and 'elastic' clauses are successful in reducing the negative impact associated with part-time work.
    Keywords: Part-time work; Horizontal and vertical part-time contracts; Flexible and elastic clauses; Firm total factor productivity (TFP); Semiparametric estimation methods
    JEL: L23 L25 J23
    Date: 2015
  3. By: Michele Imbruno; Rosanna Pittiglio; Filippo Reganati
    Abstract: This paper theoretically and empirically studies – using data from Italian manufacturing firms – how the foreign presence in the intermediate good sector (i.e. input FDI) affects firm efficiency and aggregate productivity within final good sector. We show that an important role is played by the absorptive capacity. More specifically, if all firms are able to use intermediate inputs from foreign-owned suppliers, then all of them will enjoy productivity gains from input FDI without any reallocation effect. Conversely, if only the most productive firms can use intermediate inputs from foreign-owned suppliers, while these firms can enhance further their efficiency, the other firms might suffer productivity losses from input FDI, causing some reallocation effects within final good sector.
    Keywords: Heterogeneous firms, multinationals, FDI, intermediate inputs, productivity
    Date: 2015
  4. By: Zhang, Shanshan (CERE, SLU); Lundgren, Tommy (CERE, Umeå University, SLU); Zhou, Wenchao (CERUM, Umeå University)
    Abstract: This paper analyzes the relation between three dimensions of firm performance – productivity, energy efficiency, and environmental performance – and shed light on the role of environmental investment. Data from Swedish industry between 2002 and 2008 is utilized to generate the three performance measures at the firm level. Environmental investments are efforts to reduce environmental impact, which may also affect firm competitiveness, in terms of changes in productivity, and spur more (or less) efficient use of energy. A panel vector auto-regression (VAR) methodology is utilized to investigate the causal relationship between the three dimensions of performance and environmental investment. Results show that energy efficiency and environmental performance are integrated. Improved environmental performance and energy efficiency - induced by external or internal policy - boosts next period productivity, which would corroborate the Porter hypothesis and the notion of strategic corporate social responsibility (CSR). An increase in productivity constrains next period environmental performance and energy efficiency, while increasing environmental investments. This is indicative of “managerial opportunism” or the “available funds” hypothesis. The former suggesting in good times managers allocate resources to e.g. managerial perks rather than improving environmental and/or energy performance, while still, to avoid regulatory penalty, uphold some level of environmental investment. The latter explanation argues that managers invest in environmental capital in order to reduce environmental impacts and boost goodwill for their business, but this investment requires resources and, in the short-term, harms energy and environmental performance. Finally, an increase in environmental investment improves next period environmental performance, which would suggest that environmental investments have the intended and expected effect; it reduces the environmental burden caused by the firm. As a consequence, in a second step, the increased environmental performance will tend to increase productivity in the next period, which suggests that environmental investments can boost productivity channeled via enhanced environmental performance.
    Keywords: Energy Efficiency; Environmental Performance; Panel VAR; Malmquist Index; Investment
    JEL: D22 D24 M14 Q40 Q41
    Date: 2015–11–09
  5. By: Bart Hobijn (Federal Reserve Bank of San Francisco); John Fernald (Federal Reserve Bank of San Francisco)
    Abstract: We construct a measure of global TFP growth that covers output of the world's forty largest economies. We decompose this measure to address questions such as, which countries and industries are the main sources of global productivity growth? And how has globalization, by reducing misallocation of resources across global producers, contributed to world productivity? We thus quantify how the world production frontier has shifted out over time and, in a proximate sense, the geographic and industry sources of growth. We also discuss the geographic and industry sources of cost pressures, as well as the extent to which reallocation reflects relative unit production costs. Among other findings, reduced misallocation was more important in the 1990s than in the 2000s. And TFP growth in frontier economies slowed in the runup to the Great Recession. But world TFP growth remained strong because of a speedup in TFP growth in emerging economies. Finally, we discuss implications for understanding patterns of world trade.
    Date: 2015
  6. By: Bernadette Biatour; Chantal Kegels
    Abstract: The paper analyses the long-term trend of Belgian economic growth and the more recent evolution of labour productivity including the impact of the crisis. It identifies the causes of declining trend of productivity gains by analysing the structural changes in the economy and by applying the growth accounting methodology on industry-level data. Finally, possible policy actions are detailed which minimise the negative short term impact on aggregate demand while maximising the positive effect on labour productivity growth.
    JEL: C82 D24 O11 O33 O47
    Date: 2015–10–02
  7. By: Natalya Zelenyuk (UQ Business School, The University of Queensland, Australia); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia)
    Abstract: We use nonparametric method with various specifications to estimate efficiency of banks and then use truncated regression with double-bootstrap (Simar and Wilson, 2007) to analyze how various bank-specific factors explain the differences in the estimated levels of inefficiency across the banks in Ukraine, with a particular focus on foreign ownership. We show that some results are very robust, yet others depend on the chosen Data Envelopment Analysis specification for the efficiency model. We also find that the efficiency of banks with foreign ownership is not distinguishable from the efficiency of the locally-owned banks if the degree of ownership control is not accounted for. On the other hand, when we account for degree of control, we find evidence that banks that were 100% foreign-owned were significantly more efficient than the locally owned banks, while the partially foreign-owned banks were significantly less efficient than the locally owned banks (on average and ceteris paribus), thus providing empirical support for the agency and corporate governance theories in economics.
    Keywords: Foreign ownership, Banking, Efficiency, DEA, Truncated regression, Double-bootstrap
    JEL: C1 C13 C14 G2
    Date: 2015–09
  8. By: Fassio, Claudio; Kalantaryan, Sona; Venturini, Alessandra (University of Turin)
    Abstract: The objective of this paper is to analyse the role of migrants in innovation in Europe. We use Total Factor Productivity as a measure of innovation and focus on the three largest European countries – France, Germany and the United Kingdom – in the years 1994-2007. Unlike previous research, which mainly employs a regional approach, we analyse ù the link between migration and innovation at the sectoral level. This allows us to measure the direct contribution of migrants in the sector in which they are actually employed. Moreover, it allows a distinction between the real contribution of migrants to innovation from possible inter-sectoral complementarities, which might as well foster innovation. We control for the different components of human-capital, such as age, education and diversity of origin. To address the possible endogeneity of migration we draw on an instrumental variable strategy originally devised by Card (2001) and adapt it at the sector level The results show that overall migrants are relevant in all sectors, but some important differences emerge across sectors: highlyeducated migrants show a larger positive effect in the high-tech sectors, while middle- and loweducated ones are more relevant in manufacturing. The diversity of countries of origin contributes to innovation only in the services sectors, confirming that in empirical analyses at the regional or national level the diversity measure might capture the complementarity between sectors rather than the contribution of different national skills.
    Date: 2015–10
  9. By: Li, Kui-Wai
    Abstract: After nearly four decades of rapid growth, the China economy is faced with various challenges. The 2008 crisis would have served as the last straw as China experienced falls and volatilities in industrial output, export and foreign direct investment. The new policy focuses on expansion of domestic consumption and rebalancing. Given the unreliability of Chinese products, there is a need to rebuild product acceptability and market confidence. The structure of industrial enterprises, especially the small- and medium-sized enterprises, will play a crucial role in the next phase of development in the China economy. This paper uses the data on Chinese industrial enterprises to estimate the productivity performance of enterprises across region and industries. The discussion is placed on the impact of the 2008 financial crisis on the China economy and industries enterprises. By using a simple methodology and OLS regression analysis on the estimation of total factor productivity, the empirical results show that SMEs and non-SMEs do perform differently in different industries and across regions, but SMEs suffered more than non-SMEs since the 2008 crisis.
    Keywords: China regions, small- and medium-sized enterprises, total factor productivity, industrial enterprises
    JEL: O4 O53
    Date: 2015–11–21
  10. By: A. Arrighetti; R. Brancati; A. Lasagni; A. Maresca
    Abstract: This paper highlights how the heterogeneity of manufacturing firms impacted their performance and survival during the “Great Recession”. The findings indicate that firms that assumed a strategically proactive and innovative strategy in the pre-crisis period showed better economic performance during the crisis in terms of both sales and value added. The evidence also shows that the youngest firms and those that had a lower level of financial exposure were favored in terms of performance. Finally, the results also confirm the increased importance of different technological regimes. In contrast, survival estimates demonstrate the non-significance of pre-crisis strategic profiles: ceteris paribus, the results indicate that the most innovative, internationalized and dynamic firms did not register a greater likelihood of survival than other businesses. This result casts doubt on the efficiency and direction of the selection process.
    Keywords: Crisis and Restructuring; Heterogeneity, Growth; Firms’ Performance; Firms’ Survival; Manufacturing Industry; Italy
    Date: 2015
  11. By: Igor Lebrun
    Abstract: The uncertainty surrounding the estimates of potential output has risen in the euro area countries since the outbreak of the financial crisis. Moreover, potential growth in the euro area has fallen since 2009. In this working paper we examine both phenomena for Belgium based on potential GDP estimates produced by the Federal Planning Bureau. We also analyse the evolution of the three main underlying determinants of potential growth, namely the contribution of labour, capital and total factor productivity.
    JEL: C5 E1 O47
    Date: 2015–06–23
  12. By: Johannes Boehm
    Abstract: I thank Francesco Caselli, Veronica Rappoport, Catherine Thomas, and Luis Garicano for invaluable guidance, and Lorenzo Caliendo, Swati Dhingra, Ben Faber, Jason Garred, Sergei Guriev, Beata Javorcik, Kalina Manova, Thierry Mayer, Michael Peters, Markus Riegler, John Sutton, Silvana Tenreyro, John Van Reenen, and seminar participants at Alicante, ECARES, Edinburgh, Essex, Illinois, Insead, Johns Hopkins SAIS, LSE, LMU Munich, Oxford, Paris Trade Seminar, Rochester, Sciences Po, Stockholm School of Economics, Surrey, Warwick, and Yale, as well as audiences at many conferences for helpful comments. I am grateful to LexisNexis UK for granting me access to their data, and to the ESRC and a Bagri Fellowship for financial support.
    Keywords: Contract enforcement costs, contracting frictions, transaction costs, outsourcing, aggregate productivity
    JEL: D23 F11 O43 L22
    Date: 2015–11
  13. By: Manolis Galenianos (Royal Holloway, University of London); Ija Trapeznikova (Royal Holloway, University of London); Francois Fontaine (CREST-LMA and University Paris 1); Jesper Bagger (Royal Holloway, University of London)
    Abstract: We study empirically and theoretically the flows of workers across firms of different productivity and the hiring effort of these firms. We combine four datasets from Denmark with very detailed information on workers, firms and vacancies posted. Using the data, we derive the patterns of hiring, separations and vacancy posting for firms of different productivity levels. We observe that some of the patterns are not fully consistent with the simple job-ladder model and propose a parsimonious theoretical model that can capture these patterns.
    Date: 2015
  14. By: Nicholas Bloom; John Van Reenen
    Abstract: NHS hospitals in England are rarely closed in constituencies where the governing party has a slender majority. This means that for near random reasons, those parts of the country have more competition in healthcare - which has allowed Nicholas Bloom and John Van Reenen to assess its impact on management quality and clinical performance.
    Keywords: management, hospitals, competition, productivity
    Date: 2015–11
  15. By: Elisa Cavezzali (Dept. of Management, Università Ca' Foscari Venice); Gloria Gardenal (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The paper investigates the relation between the adoption of good practices in risk management and the level of performance and riskiness of banks. In particular, we aim at understanding if the application of the Enterprise Risk Management approach to banks helps increasing their stability. We test the hypothesis that those banks using an integrated risk management approach have, ceteris paribus, a lower level of risk and a higher performance. Our analysis focuses on 21 Italian listed banking groups, in the time period 2005-2013. Our preliminary results show that the risk management function influences the risk and performance of the bank; however, it is not possible from our data to define an optimal model of risk governance.
    Keywords: Irisk management, risk governance, enterprise risk management, banking system
    Date: 2015–10
  16. By: Felicitas Nowak-Lehmann D. (Georg-August-Universität Göttingen / Germany); Elena Gross (University of Bayreuth / Germany)
    Abstract: Development aid does not always exert the desired positive effect on economic growth in recipient countries and it is even feared that it may reduce total factor productivity (TFP) and may discourage recipient countries’ efforts. This study seeks to contribute to the research on aid transmission channels, in particular on macroeconomic channels such as private investment, domestic savings and the real exchange rate. By using panel data from 27 recipient countries over a 25-year period (1985-2009) this study aims to analyze the impact of the different forms of aid (grants, loans, bilateral and multilateral) on productivity, controlling for institutional factors and economic policy, using time-series panel techniques and focusing solely on the aid-productivity link. In order to examine possible vicious circles of aid, we run quantile regressions to ascertain whether aid is less effective in countries from the lowest TFP quantiles. To check for TFP-impeding conditions that are supposedly present in those quantiles, threshold regressions are performed to detect the ineffectiveness of aid below certain thresholds, including those of institutional quality, investment-to-GDP ratio, or domestic savings-to-GDP ratio. We find differences between the impact of aid in the form of grants and loans and the impact of bilateral and multilateral aid, with evidence that aid reduces TFP growth in the 0.1 and 0.25 quantiles. The search for sensible threshold values of aid impeding factors (institutional quality or key macroeconomic variables) was without result.
    Keywords: TFP growth, foreign aid, quantile regression, smooth transition models
    JEL: O4 O11 F35 C21 C22
    Date: 2015–10–20
  17. By: Fiordelisi, Franco; Mare, Davide Salvatore; Molyneux, Philip
    Abstract: What is the relationship between bank fragility and competition during a period of market turmoil? Does market power in European banking involve extra-gains after discounting for the cost of government intervention? We answer these questions in the context of Eurozone banking over 2005-2012 and show that greater market power increases bank stability implying aggregate extra-gains of 57% of EU12 gross domestic product for the banking sector after discounting for the costs associated with government intervention. The negative influence of competition on bank stability is non-monotonic and reverses for lower degrees of competition. Capital injections, guarantees and asset relief measures elicit greater bank soundness.
    Keywords: Bank Stability, Prudential Regulation, Competition, Global Financial Crisis, European Banking Union, Government Bailouts
    JEL: C23 G21 G28
    Date: 2015–09
  18. By: Lindquist, Matthew; Sauermann, Jan; Zenou, Yves
    Abstract: We use data from an in-house call center of a multi-national mobile network operator to study how co-worker productivity affects worker productivity via network effects. We also exploit data from a field experiment to analyze how exogenous changes in worker productivity due to on-the-job training affect co-worker productivity, including non-trained workers. We show that there are strong network effects in co-worker productivity. This effect is driven by conformist behavior. We also show that exposure to trained workers increases the productivity of non-trained workers. This effect works through strategic complementarities (knowledge spillovers). We demonstrate how our network model of worker productivity can be used to inform a variety of practical decisions faced by personnel managers including the design of optimal training policy.
    Keywords: on-the-job training; peer effects; social networks; worker productivity
    JEL: J24 M53 Z13
    Date: 2015–11
  19. By: Lindic, Mojca
    Abstract: This paper studies the effects of outsourcing and offshoring on the skill structure of firms. The study verifies whether controlling for both activities in one model alters previous empirical studies, which controlled only for one factor in their models; whether controlling for destination country of outsourcing and offshoring brings new insights; and whether controlling for occupational level of workers when defining skills brings additional contribution to the results. Regarding the latter, besides the conventional approach for defining skills, i.e. the educational level, skills are also defined by three major occupational groups; Managers, Professionals and Technicians. To empirically estimate the abovementioned hypotheses, a matched employer-employee dataset for Slovenian manufacturing and service firms during 1997 to 2010, and the methods for panel data analysis were used. Results of the model on average show a positive impact of offshoring on the skill share of firms, while the results for outsourcing are uncommon. When controlling for high- and low-income countries, the results for manufacturing firms show a positive and similar effect of offshoring to both groups of countries on the share of skilled employees. In service firms, results show a weaker impact of offshoring to high-income countries on the relative employment of skilled, compared to offshoring to low-income countries. When taking into account also occupational levels for defining skills, the results show that the impact of education differs between occupational groups, indicating that firms differentiate between more and less educated individuals within the same occupational group.
    Keywords: offshoring, outsourcing, skill structure of firms
    JEL: F14 F16
    Date: 2015–11

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