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on Efficiency and Productivity |
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Issue of 2016‒01‒18
twelve papers chosen by |
| By: | Hashiguchi, Yoshihiro |
| Abstract: | This paper develops a quantitative measure of allocation efficiency, which is an extension of the dynamic Olley-Pakes productivity decomposition proposed by Melitz and Polanec (2015). The extended measure enables the simultaneous capture of the degree of misallocation within a group and between groups and parallel to capturing the contribution of entering and exiting firms to aggregate productivity growth. This measure empirically assesses the degree of misallocation in China using manufacturing firm-level data from 2004 to 2007. Misallocation among industrial sectors has been found to increase over time, and allocation efficiency within an industry has been found to worsen in industries that use more capital and have firms with relatively higher state-owned market shares. Allocation efficiency among three ownership sectors (state-owned, domestic private, and foreign sectors) tends to improve in industries wherein the market share moves from a less-productive state-owned sector to a more productive private sector. |
| Keywords: | China, Productivity, Business enterprises, Economic growth, Macroeconomics, Misallocation, Firm-level productivity, Structural estimation |
| JEL: | D24 O47 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper544&r=eff |
| By: | Fernald, John G. (Federal Reserve Bank of San Francisco); Wang, J. Christina (Federal Reserve Bank of Boston) |
| Abstract: | Historically, U.S. labor productivity (output per hour) and total factor productivity (TFP) rose in booms and fell in recessions. Different models of business cycles explain this procyclicality differently. Traditional Keynesian models relied on "factor hoarding," that is, variations in how intensively labor and capital were utilized over the business cycle. Real business cycle (RBC) models instead posit that procyclical technology shocks drive the business cycle. Since the mid-1980s, however, the procyclicality of productivity has waned. TFP has been roughly acyclical with respect to inputs, whereas labor productivity has become significantly countercyclical. The slow pace of productivity growth after 2010, when the post-Great- Recession recovery gained a firm footing, is broadly consistent with these patterns. In this paper, the authors seek to understand empirically the forces behind the changing cyclicality of productivity. |
| Keywords: | procyclical productivity; labor hoarding; business cycles; growth-accounting; DSGE models |
| JEL: | E22 E23 E32 O47 |
| Date: | 2015–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbcq:2015_006&r=eff |
| By: | Tomas Havranek; Zuzana Irsova; Jitka Lesanovska |
| Abstract: | An important component of monetary policy transmission is the pass-through from financial market interest rates, directly influenced or targeted by central banks, to the rates that banks charge firms and households. Yet the available evidence on the strength and speed of the pass-through is mixed and varies across countries, time periods, and even individual banks. We examine the pass-through mechanism using a unique data set of Czech loan and deposit products and focus on bank-level determinants of pricing policies, especially cost efficiency, which we estimate employing both stochastic frontier and data envelopment analysis. Our main results are threefold: First, the long-term pass-through was close to complete for most products before the financial crisis, but has weakened considerably afterward. Second, banks that provide high rates for deposits usually charge high loan markups. Third, cost-efficient banks tend to delay responses to changes in the market rate, smoothing loan rates for their clients. |
| Keywords: | Bank pricing policies, cost efficiency, data envelopment analysis, monetary transmission, stochastic frontier analysis |
| JEL: | E43 E58 G21 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2015/09&r=eff |
| By: | Andres Kuusk; Karsten Staehr; Uku Varblane |
| Abstract: | This paper assesses the extent of structural or sectoral change and its importance for aggregate productivity growth during times of boom, bust and recovery. The analysis covers 10 EU countries from Central and Eastern Europe over the years 2001–2012. The reallocation of labour across sectors was substantial during the boom, very extensive in 2009 at the depth of the crisis and modest in the subsequent recovery period. The contribution of sectoral change to aggregate productivity growth is computed using various decomposition methods. Changes in labour productivity within sectors play the dominant role for aggregate productivity growth, while reallocation of labour between sectors is less important. This pattern is found through most of the sample period despite large differences in the extent of sectoral change during the boom, crisis and recovery |
| Keywords: | labour productivity, structural change, reallocation, productivity decomposition |
| JEL: | L16 E32 P23 |
| Date: | 2015–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2015-2&r=eff |
| By: | Małgorzata Pawłowska |
| Abstract: | The aim of this study is to examine the impact of banking-sector structure and macroeconomic changes on bank profitability in the Polish banking sector over the past fifteen years (i.e., prior to and during the global financial crisis of 2008). The model developed in this paper incorporates the Structure-Conduct-Performance (SCP) hypothesis, as well as the Relative Market Power (RMP) hypothesis created by Smirlock (1985). Furthermore, this paper also examines the overall effect of financial structure and macroeconomic conditions to determine whether financial development and business cycles affect the profit of Polish banks. Finally, t his paper tests the impact of foreign capital on the profitability of Polish banks and attempts to determine if there is a link between the context of the parent banks and the profitability of their affiliates. Empirical results based on two panel data sets describing both micro-level and the macro-level data are ambiguous, and find evidence of the RMP hypothesis, as well as the traditional SCP, in the Polish banking sector. This paper also finds that increased foreign ownership and intermediation have a positive effect on bank profitability. Furthermore, this paper finds a positive correlation between the context of parent banks and the profitability of their affiliates. Also, the profitability of commercial banks in Poland are contingent upon the business cycle. |
| Keywords: | bank profitability, foreign–owned banks, concentration, market power, market structure, Lerner index, Polish banks, business cycle. |
| JEL: | F36 G2 G21 G34 L1 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:nbp:nbpmis:229&r=eff |
| By: | Bakker, Gerben (London School of Economics); Crafts, Nicholas (Department of Economics University of Warwick); Woltjer, Pieter (Wageningen University) |
| Abstract: | We develop new aggregate and sectoral Total Factor Productivity (TFP) estimates for the United States between 1899 and 1941 through better coverage of sectors and better measured labor quality, and show TFP-growth was lower than previously thought, broadly based across sectors, strongly variant intertemporally, and consistent with many diverse sources of innovation. We then test and reject three prominent claims. First, the 1930s did not have the highest TFP-growth of the twentieth century. Second, TFP-growth was not predominantly caused by four leading sectors. Third, TFP-growth was not caused by a ‘yeast process’ originating in a dominant technology such as electricity. |
| Keywords: | Harberger diagram ; mushrooms ; productivity growth ; total factor productivity ; yeast |
| JEL: | N11 N12 O47 O51 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1099&r=eff |
| By: | Andrea Caggese |
| Abstract: | I provide new empirical evidence on a negative relation between financial frictions and productivity growth over firms’ life cycle. I show that a model of firm dynamics with incremental innovation cannot explain such evidence. However also including radical innovation, which is very risky but potentially very productive, allows for joint replication of several stylized facts about the dynamics of young and old firms and of the differences in productivity growth in industries with different degrees of financing frictions. These frictions matter because they act as a barrier to entry that reduces competition and the risk taking of young firms. |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:865&r=eff |
| By: | Giovanis, Eleftherios |
| Abstract: | There is an increasing concern on the quality of jobs and productivity that is witnessed in the flexible employment arrangements. However, the effects of the employment flexible types on workplace performance has not been explored in Britain. In this study the relationship between two employment arrangements and the workplace performance is examined. More specifically, teleworking and compress hours are two main employment types examined using the Workplace Employee Relations Survey (WERS) in years 2004 and 2011. The workplace performance is measured by the financial performance and labour productivity. A positive relationship between these two types of flexible employment arrangements and workplace performance is presented. This can have various profound policy implications for employees, employers and the society overall. However, the positive association holds for employees who have high influence on their job, while it becomes negative in the case of teleworkers who have low influence. |
| Keywords: | Financial Performance, Labour Productivity, Propensity Score, Teleworking, Workplace Employment Relations Survey |
| JEL: | D24 J20 J28 J6 M54 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68670&r=eff |
| By: | Patterson, Christina (Massachusetts Institute of Technology); Sahin, Aysegul (Federal Reserve Bank of New York); Topa, Giorgio (Federal Reserve Bank of New York); Violante, Giovanni L. (New York University) |
| Abstract: | The UK experienced an unusually prolonged stagnation in labor productivity in the aftermath of the Great Recession. This paper analyzes the role of sectoral labor misallocation in accounting for this “productivity puzzle.” If jobseekers disproportionately search for jobs in sectors where productivity is relatively low, hires are concentrated in the wrong sectors and the post-recession recovery in aggregate productivity can be slow. Our calculations suggest that, quantified at the level of three-digit occupations, this mechanism can explain up to two-thirds of the deviations from trend-growth in UK labor productivity since 2007. |
| Keywords: | misallocation; productivity |
| JEL: | E24 E32 J24 |
| Date: | 2016–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:757&r=eff |
| By: | Francesco Longo; Luigi Siciliani; Andrew Street |
| Abstract: | Prospective payment systems fund hospitals based on a fixed-price regime that does not directly distinguish between specialist and general hospitals. We investigate whether current prospective payments in England compensate for differences in costs between specialist orthopaedic hospitals and trauma and orthopaedics (T&O) departments in general hospitals. We employ reference cost data for a sample of hospitals providing services in the trauma and orthopaedics specialty. Our regression results suggest that specialist orthopaedic hospitals have on average 13.5% lower profit margins. Under the assumption of break-even for the average trauma and orthopaedics department, two of the three specialist orthopaedic hospitals appear to make a loss on their activity. The same holds true for almost 34% of departments in our sample. Variations in the salary of doctors, scale economies, other hospital status (e.g. foundation trust, teaching hospital), and quality of care explain only a small proportion of such differences. |
| Keywords: | specialist hospitals, orthopaedics, hospital costs, HRG, tariff, reference costs |
| JEL: | I18 H51 D24 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:15/30&r=eff |
| By: | Jeffrey S. Racine |
| Abstract: | Li & Racine (2004) have proposed a nonparametric kernel-based method for smoothing in the presence of categorical predictors as an alternative to the classical nonparametric approach that splits the data into subsets (‘cells’) defined by the unique combinations of the categorical predictors. Li, Simar & Zelenyuk (2014) present an alternative to Li & Racine’s (2004) method that they claim possesses lower mean square error and generalizes and improves upon the existing approaches. However, these claims do not appear to withstand scrutiny. A number of points need to be brought to the attention of practitioners, and two in particular stand out; a) Li et al.’s (2014) own simulation results reveal that their estimator performs worse than the existing classical ‘split’ estimator and appears to be inadmissible, and b) the claim that Li et al.’s (2014) estimator dominates that of Li & Racine (2004) on mean square error grounds does not appear to be the case. The classical split estimator and that of Li & Racine (2004) are both consistent, and it will be seen that Li & Racine’s (2004) estimator remains the best all around performer. And, as a practical matter, Li et al.’s (2014) estimator is not a feasible alternative in typical settings involving multinomial and multiple categorical predictors. |
| Keywords: | Kernel regression, cross-validation, finite-sample performance, replication. |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2016-01&r=eff |
| By: | Nezih Guner; Andrii Parkhomenko; Gustavo Ventura |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:861&r=eff |