nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒01‒03
fourteen papers chosen by

  1. Productivity Interpretations of the Farrell Efficiency Measures and the Malmquist Index and its Decomposition By Førsund, Finn. R.
  2. The productivity gap among European countries. By Giorgio Calcagnini; Germana Giombini; Giuseppe Travaglini
  3. Efficiency in the highly market-segmented Chinese banking sector: A meta-frontier non-radial directional distance function approach By Dong Xiang; Ning Zhang; Andrew C Worthington
  4. Digitization and Productivity: Measuring Cycles of Technological Progress By Shushanik Papanyan
  5. Productivity and Organization in Portuguese Firms By Caliendo, Lorenzo; Mion, Giordano; Opromolla, Luca David; Rossi-Hansberg, Esteban
  6. The Effect of Trade Protection on Productivity in Uruguay By Carlos Casacuberta; Dayna Zaclicever
  7. Misallocation of Resources in Latvia: Did Anything Change During the Crisis? By Konstantins Benkovskis
  8. An empirical analysis of competition in the Indian Banking Sector in dynamic panel framework By Sinha, Pankaj; Sharma, Sakshi; Ghosh, Sayan
  9. Do Prizes in Economics Affect Productivity? A Mix of Motivation and Disappointment By Jean-Charles BRICONGNE
  10. The Impact of Electronic Payments on Bank Cost Efficiency: Nonparametric Evidence By G. Ardizzi; F. Crudu; C. Petraglia
  11. Local economic strategies for ageing labour markets: Management practices for productivity gains of older workers By Nicola Duell
  12. Productivity in Canada During the Auto Pact and the Free Trade Agreement By Loris Rubini
  13. Transport efficiency, downstream R&D, and spillovers By Takauchi, Kazuhiro
  14. Managers and Productivity Differences By Guner, Nezih; Parkhomenko, Andrii; Ventura, Gustavo

  1. By: Førsund, Finn. R. (Dept. of Economics, University of Oslo)
    Abstract: The ratio definition of efficiency has the form of a productivity measure. But the weights are endogenous variables and they do not function as weights in a productivity index proper. It is shown that extended Farrell measures of efficiency can all be given an interpretation as productivity measures as observed productivity relative to productivity at the various projection points on the frontier. The Malmquist productivity index is the efficiency score for a unit in a period relative to the efficiency score in a previous period, thus based on a maximal common expansion factor for outputs or common contraction factor for inputs not involving any individual weighting of outputs or inputs, as is the case if a Törnqvist or ideal Fisher index is used. The multiplicative decomposition of the Malmquist productivity index into an efficiency part and a frontier shift part should not be taken to imply causality.
    Keywords: Farrell efficiency measures; Technically optimal scale; Malmquist productivity index; Decomposition of the Malmquist productivity index
    JEL: C61 D24
    Date: 2015–08–31
  2. By: Giorgio Calcagnini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo"); Germana Giombini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo); Giuseppe Travaglini (Department of Economics, Society & Politics, Università di Urbino "Carlo Bo)
    Abstract: This paper aims at analyzing Total Factor Productivity (TFP) in four European countries (France, Germany, Italy and the Netherlands) between 1950 and 2011. It uses the common trend - common cycle approach to decompose series in trends and cycles. We find that the four economies share three common trends and a common cycle. Further, we show that in the case of Italy and the Netherlands trend and cycle innovations have a negative relationship that supports the ‘opportunity cost’ approach to productivity growth, and that trend innovations are generally larger than cycle innovations. Finally, while we do not explore what drives the three common trends, we show that countries’ differences in TFP performance in recent years may be due to the so-called “deep”determinants in growth literature such as the presence of efficient mechanisms of creation and transmission of knowledge, international integration, and efficient markets and institutions.
    Keywords: Total factor productivity, Cointegration analysis, Market imperfections
    JEL: D24 D43 E02 E23
    Date: 2015
  3. By: Dong Xiang; Ning Zhang; Andrew C Worthington
    Keywords: Meta-frontier analysis, Non-radial directional distance function, Chinese banks, Efficiency determinants
    JEL: G21 D24 C23
    Date: 2015–11
  4. By: Shushanik Papanyan
    Abstract: This paper investigates the dynamics of technological progress as the underlying trend in productivity growth. We employ a multi-factor approach to measuring the long-term productivity trend, where this trend encompasses everything that permanently raises output per hour
    Keywords: Digital economy , Economic Analysis , Global , Research , USA , Working Paper
    JEL: C32 E32 O3 O4 O51
    Date: 2015–12
  5. By: Caliendo, Lorenzo; Mion, Giordano; Opromolla, Luca David; Rossi-Hansberg, Esteban
    Abstract: The productivity of firms is, at least partly, determined by a firm’s actions and decisions. One of these decisions involves the organization of production in terms of the number of layers of management the firm decides to employ. Using detailed employer-employee matched data and firm production quantity and input data for Portuguese firms, we study the endogenous response of revenue-based and quantity-based productivity to a change in layers: a firm reorganization. We show that as a result of an exogenous demand or productivity shock that makes the firm reorganize and add a management layer, quantity-based productivity increases by about 4%, while revenue-based productivity drops by more than 4%. Such a reorganization makes the firm more productive, but also increases the quantity produced to an extent that lowers the price charged by the firm and, as a result, its revenue-based productivity.
    Keywords: firm size; layers; managers; organization; productivity; TFP; wages
    JEL: D22 D24 F16 J24 J31 L23
    Date: 2015–12
  6. By: Carlos Casacuberta (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Dayna Zaclicever (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: We analyze the effect of trade protection on firm’s performance using a panel of firms from the Annual Manufacturing Surveys of Uruguay from 1988 to 2005. We estimate total factor productivity using Levinsohn and Petrin (2003) methodology and relate such measures to protection. Firm-specific protection is measured as the average tariff within the four-digit harmonized system classes containing the firm’s products (rather than the usual four-digit ISIC averages), tracking more closely the relevant markets, both for firm’s product and input baskets, and separate indices are calculated. We find a positive effect of reduction in output protection on total factor productivity, while the effect of lower input protection, when significant, is negative, which we find related to the overall change in effective protection. Reductions in bilateral tariffs with Uruguay’s large neighbors in the context of MERCOSUR are not found to have a significant productivity enhancing effect. The results are robust to alternative protection measures, specification and controls.
    Keywords: Total factor productivity; Trade protection.
    JEL: D24 F14
    Date: 2015–04
  7. By: Konstantins Benkovskis (Bank of Latvia)
    Abstract: This paper evaluates misallocation of resources in Latvia during 2007–2013 using firm-level data. I found that allocation of resources worsened before 2010 and improved afterwards. Initially, misallocation of intermediate inputs was the major source of aggregate TFP losses, while the importance of capital misallocation increased after the financial crisis. Determinants of changes in allocation efficiency may include growing competition in domestic markets, tighter credit supply and legal issues. However, I show that fragmentation of production induces bias to the estimates of firm-specific distortions. Thus, in the absence of inter-firm trade data, the conclusions on misallocation should be treated with some caution.
    Keywords: misallocation, TFP, productivity, firm-level data, Latvia
    JEL: D24 L11 O11 O41 O47
    Date: 2015–12–15
  8. By: Sinha, Pankaj; Sharma, Sakshi; Ghosh, Sayan
    Abstract: Competition has been regarded as a positive phenomenon for banks; it is perceived that competition makes banks more efficient, stimulates financial innovation and open up new markets For empirical assessment of the nature of competitive conditions amongst scheduled Indian commercial banks over a period of 15 years, we use the ‘Panzar-Rosser educed form revenue model’ to compute the so-called H statistic by estimating the factor price elasticities. In this study alternative estimation techniques have been used for comparing the dynamic H-statistic with static H-statistic. The static H-statistic was found to have a downward bias. However, dynamic as well as static H-statistic, both pointed to the presence of monopolistic competition. The hypotheses of perfect collusion as well as of perfect competition can be rejected using dynamic as well as fixed panel-econometric model estimations using micro data of banks’ balance sheets and profit & loss accounts for the years 2000-2014. The division of the entire period into two sub-samples, i.e. before and after 2007 revealed a decrease in competition levels across the two periods. Although, empirical analysis supported the assertion that the nature of competition among the Indian Banks is monopolistic.But it showed a decrease in the level of competitionmay be due to consolidation exercises of top few large banks with smaller banks and also because of the shift from traditional financial business to off-balance sheet activities, which might have lead to the convergence of competitive levels in the second sub-sample period, i.e. after 2007.The second sub-period also corresponds to the global financial crisis of 2008, a possible reason for the lower H-statistic values. The low persistence of profit values (in the sub-periods) should be associated with higher competition, It is also found that the values of competitive conduct (H-statistic), does not coincide with the classical concentration approach (CR5, CR10), for the Indian Banking Industry. The unit cost of funds, capital, and labour were found to be positive and statistically significant. The unit cost of funds was the highest contributor to the overall H statistic. The control variables, such as size and risk were found to be positively affecting the revenue. The findings arrived in this study; highlight the possible links between Indian banking sector competitiveness, profitability, intermediation and regulatory scenario.
    Keywords: Competition, Competitive Structure, Dynamic Model, Indian Banking Sector, Monopolistic Competition, Panzar-Rosse H-statistic, Profitability
    JEL: D4 D40 D41 D42 D5 D50 G2 G21
    Date: 2015–11–05
  9. By: Jean-Charles BRICONGNE
    Keywords: , awards , diff-in-diff methodology , iterative diff-in-diff , John Bates Clark Medal , productivity
    Date: 2015
  10. By: G. Ardizzi; F. Crudu; C. Petraglia
    Abstract: This paper presents new evidence on the assessment of banks’ cost efficiency gains stemming from ICT adoption. With respect to the existing literature we introduce two novelties. First, a measure of banking operating costs is explained in terms of a commonly used measure of IT innovation (the relative diffusion of ATMs) and a new variable defined as automated payment transactions. Second, the results obtained via standard parametric estimation methods are compared with those obtained via nonparametric estimation techniques. Using an original dataset of Italian banks or banks operating in Italy observed in the period 2006-2010, we do not find clear cost efficiency enhancing effects due to ATMs diffusion. On the other hand, the diffusion of electronic payments shows a significant effect in terms of cost inefficiency reduction.
    Keywords: electronic payments, ATM, transaction technology, bank cost efficiency, nonparametric regression, cross-validation
    JEL: C14 C33 G2 L11 L8
    Date: 2015
  11. By: Nicola Duell
    Abstract: This paper analyses the efficacy of firm-level management practices in incorporating and retaining older workers. The paper notes that there are significant barriers to the integration of older workers into firms, and then outlines specific tools that could be used to enable older workers to contribute to enterprises. The OECD LEED Programme analysed age management practices in workplaces and found that a multi-faceted approach that targets multiple dimensions of the working experience of older workers should be pursued. Preserving flexibility, job training opportunities and mobility for older workers to a similar degree as the broader workforce is also encouraged.
    Date: 2015–12–23
  12. By: Loris Rubini
    Abstract: I study the evolution of productivity in Canada relative to the United States during two trade liberalization episodes: the 1965 Auto Pact and the 1989 Free Trade Agreement. I find that Canada's productivity grew more than U.S. productivity in the liberalized sector, which is consistent with the idea that openness increases productivity. This study reveals new evidence of productivity during the Auto Pact. Regarding the Free Trade Agreement, existing studies find that manufacturing productivity grew less in Canada than in the United States following the agreement. I argue that this is due to the use of prices that are not comparable across countries. Once these prices are made comparable, my findings are that manufacturing productivity grew more in Canada than in the United States. The results of this study suggest there are productivity gains associated with trade liberalization, and models of international trade should account for them.
    JEL: F11 F12 F13 F14
    Date: 2014
  13. By: Takauchi, Kazuhiro
    Abstract: This study examines the effects of higher transport efficiency on cost-reducing R&D investment and welfare in a two-way duopoly trade model with an imperfectly competitive transport sector. We show that, corresponding to the degree of the R&D spillover, higher transport efficiency can affect investment in a U-shaped fashion. We also show that higher transport efficiency can reduce total output and consumer surplus. By comparing the two cases of firm-specific carriers and duopoly carriers, we demonstrate that total output in the case of duopoly carriers is lower than that in the case of firm-specific carriers if the spillover is sufficiently large. Higher transport efficiency and competition in the transport sector may harm consumers.
    Keywords: Transport efficiency; Imperfectly competitive transport sector; Cost-reducing R&D; R&D spillover
    JEL: F12 L13
    Date: 2015–12–21
  14. By: Guner, Nezih (MOVE, Barcelona); Parkhomenko, Andrii (Universitat Autònoma de Barcelona); Ventura, Gustavo (Arizona State University)
    Abstract: We document that for a group of high-income countries (i) mean earnings of managers tend to grow faster than for non managers over the life cycle; (ii) the earnings growth of managers relative to non managers over the life cycle is positively correlated with output per worker. We interpret this evidence through the lens of an equilibrium life-cycle, span-of-control model where managers invest in their skills. We parameterize this model with U.S. observations on managerial earnings, the size-distribution of plants and macroeconomic aggregates. We then quantify the relative importance of exogenous productivity differences, and the size-dependent distortions emphasized in the misallocation literature. Our findings indicate that such distortions are critical to generate the observed differences in the growth of relative managerial earnings across countries. Thus, observations on the relative earnings growth of managers become natural targets to discipline the level of distortions. Distortions that halve the growth of relative managerial earnings (a move from the U.S. to Italy in our data), lead to a reduction in managerial quality of 27% and to a reduction in output of about 7% – more than half of the observed gap between the U.S. and Italy. We find that cross-country variation in distortions accounts for about 42% of the cross-country variation in output per worker gap with the U.S.
    Keywords: managers, management practices, distortions, size, skill investments, productivity differences
    JEL: E23 E24 J24 M11 O43 O47
    Date: 2015–12

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