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on Efficiency and Productivity |
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Issue of 2016‒03‒10
twenty papers chosen by |
| By: | Orea, Luis; Wall, Alan |
| Abstract: | Eco-efficiency has been defined by the OECD as “the efficiency with which ecological resources are used to meet human needs” and can be considered a measure of environmental performance that takes into account both the environmental and economic objectives of firms. Frontier models are an ideal tool for measuring eco-efficiency. While the literature applying frontier models to the empirical measurement of eco-efficiency has been growing steadily in recent years, it has exclusively relied on non-parametric Data Envelopment Analysis (DEA) methods to measure eco-efficiency and its determinants. We propose a parametric Stochastic Frontier (SF) model to measure eco-efficiency, arguing that this has several potential advantages. We provide an empirical application using cross-sectional data from Spanish dairy farms which includes information on environmental and economic indicators as well as a series of potential socio-economic determinants of eco-efficiency. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:oeg:wpaper:2015/02&r=eff |
| By: | Massimo Filippini (Institute of Economics (IdEP), University of Lugano; Department of Management, Technology and Economics, ETH Zurich, Switzerland); William Greene (Department of Economics, Stern School of Business, New York University, USA); Giuliano Masiero (Department of Management, Information and Production Engineering (DIGIP), University of Bergamo, Italy; Institute of Economics (IdEP), University of Lugano, Switzerland) |
| Abstract: | The productive efficiency of a firm can be decomposed into two parts, one persistent and one transient. So far, most of the cost efficiency studies estimated frontier models that provide either the transient or the persistent part of productive efficiency. This distinction seems to be appealing also for regulators. During the last decades, public utilities such as water and electricity have witnessed a wave of regulatory reforms aimed at improving efficiency through incentive regulation. Most of these regulation schemes use benchmarking, namely measuring companies' efficiency and rewarding them accordingly. The purpose of this study is to assess the level of persistent and transient efficiency in an electricity sector and to investigate their implications under price cap regulation. Using a theoretical model, we show that an imperfectly informed regulator may not disentangle the two parts of the cost efficiency; therefore, they may fail in setting optimal efficiency targets. The introduction of minimum quality standards may not offer a valid solution. To provide evidence we use data on 28 New Zealand electricity distribution companies between 1996 and 2011. We estimate a total cost function using three stochastic frontier models for panel data. We start with the random effects model (RE) proposed by Pitt and Lee (1981) that provides information on the persistent part of the cost effciency. Then, we apply the true random effects model (TRE) proposed by Greene (2005a, 2005b) that provides information on the transient part. Finally, we use the generalized true random effects model (GTRE) that allows for the simultaneous estimation of both transient and persistent efficiency. We find weak evidence that persistent efficiency is associated to higher quality, and wrong efficiency targets are associated to lower quality compliance. |
| Keywords: | CCost efficiency, Regulation, Persistent and transient productive efficiency, Electricity distribution |
| JEL: | C1 C23 D24 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:lug:wpidep:1603&r=eff |
| By: | Anthony Makrydemetres; Panagiotis D. Zervopoulos; Maria-Eliana Pravita |
| Abstract: | The focus of this study is the evaluation of the efficiency and effectiveness of Central Government Departments (CGDs) in Greece. Measurements are compared with those defined by the Administrative Reform 2013 (AR2013) to assess whether the reforms introduced by the AR2013 to the CGDs attain the objectives of efficiency and effectiveness. The efficiency and effectiveness measurements of 19 CGDs drew on four Data Envelopment Analysis (DEA) models (i.e. Variable Returns to Scale DEA; Targeted factor-oriented radial DEA; Stochastic DEA; and Quality-driven Efficiency-adjusted DEA). This analytical methodology does more than merely attempt to defend or argue against the AR2013. It rather provides a concrete analytical framework for evaluating the performance of public organisations across the board, suggesting reforms that promote efficiency and effectiveness, and advance managerial capacity. |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:hel:greese:97&r=eff |
| By: | Hakan Güneş (Department of Economics, METU); Dilem Yıldırım (Department of Economics, METU) |
| Abstract: | This study aims to investigate the cost efficiency of Turkish commercial banks over the restructuring period of the Turkish banking system, which coincides with the 2008 financial global crisis and the 2010 European sovereign debt crisis. To this end, within the stochastic frontier framework, we employ a modified version of the true fixed effect model of Greene (2005), where the unobserved bank heterogeneity is integrated in the inefficiency distribution at a mean level. To select the cost function with the most appropriate inefficiency correlates, we first adopt a search algorithm and then utilize the model averaging approach of Huang and Lai (2012) to verify that our results are not exposed to model selection bias. Overall, our empirical results reveal that cost efficiencies of Turkish banks have improved over time, with the effects of the 2008 and 2010 crises remaining rather limited. Furthermore, not only the cost efficiency scores but also impacts of the crises on those scores appear to vary with regard to bank size and ownership structure, in accordance with much of the existing literature. |
| Keywords: | Stochastic Frontier, Cost Efficiency, Turkish commercial banks, Panel Data |
| JEL: | C23 C24 D21 G21 G28 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:met:wpaper:1603&r=eff |
| By: | Tabuchi, T. (University of Tokyo); Thisse, J.-F. (Université catholique de Louvain, CORE, Belgium); Zhu, X. (Zhejiang University) |
| Abstract: | We show that how technological innovations and migration costs interact to shape the space-economy. Regardless of the level of transport costs, rising labor productivity fosters the agglomeration of activities, whereas falling transport costs do not affect the location of activities. When labor is heterogeneous, the number of workers residing in the more productive region increases by decreasing order of productive efficiency when labor productivity rises. This process affects in opposite directions the welfare of those who have a lower productivity. |
| Date: | 2015–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2015011&r=eff |
| By: | AGRELL, P (Université catholique de Louvain, CORE, Belgium); BREA-SOLÍS, H. (HEC Management School, University of Liege) |
| Abstract: | Latent class modelling (LC) has been advanced as a promising alternative for addressing heterogeneity in frontier analysis models, in particular those where the individual scores are used in regulatory settings. If the production possibility set contains multiple distinct technologies, pooled approaches would result in biased results. We revisit the fundamentals of production theory and formulate a set of criteria for identification of heterogeneity: completeness (the inclusion of all data in the analysis), stationarity (the temporal stability of the identified production technologies), and endogeneity (no ad hoc determination of the cardinality of the classes). We also distinguish between the identification of a sporadic idiosyncratic shock, an outlier observation, and the identification of a time-persistent technology. Using a representative data set for regulation (a panel for Swedish electricity distributors 2000-2006), we test LC modelling for a Cobb-Douglas production function using the defined criteria. The LC results are compared to the pooled stochastic frontier analysis (SFA) model as a benchmark. Outliers are detected using an adjusted DEA super-efficiency procedure. Our results show that about 78% of the distributors are assigned to a single class, the remaining 22% split into two smaller classes that are non-stationary and largely composed of outliers. It is hardly conceivable that a production technology could change over this short horizon, implying that LC should be seen more as an enhanced outlier analysis than as a solid identification method for heterogeneity in the production set. More generally, we argue that the claim for heterogeneity in reference set deserves a more rigorous investigation to control for the multiple effects of sample size bias, specification error and the impact on functional form assumptions. |
| Keywords: | Frontier analysis, latent class models, SFA, DEA, outliers, regulation |
| JEL: | D72 L51 |
| Date: | 2015–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2015047&r=eff |
| By: | Jitka Lesanovska; Laurent Weill |
| Abstract: | The aim of our research is to analyze the relation between capital and bank efficiency by considering both directions of the Granger causality for the Czech banking industry. We use an exhaustive dataset of Czech banks from 2002 to 2013. We measure the cost efficiency of banks using stochastic frontier analysis. We perform Granger-causality tests to check the sign and significance of the causal relation between capital and efficiency. We embed Granger-causality estimations in the GMM dynamic panel estimator. We find no relation between capital and efficiency, as neither the effect of capital on efficiency, nor the effect of efficiency on capital is significant. The financial crisis does not influence the relation between capital and efficiency. Our findings suggest that tighter capital requirements like those under Basel III do not affect financial stability through the efficiency channel. Policies favoring capital levels and efficiency of the banking industry can therefore be designed separately. |
| Keywords: | Bank capital, Basel III, efficiency |
| JEL: | G21 G28 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:cnb:wpaper:2015/10&r=eff |
| By: | Abutu, Usman Ojonugwa |
| Abstract: | The public enterprises have generally failed to provide the social and economic development sought by the post-independence era in African countries, hence privatization has been central to policy making in the recent times. This paper offers insight into the validity of the efficacy of privatization by investigating not only whether privatization has improved financial (profitability) performance of firms but also whether such improvement has impact on the operational efficiency of privatized firms for the period 1990-2001 in Nigeria. Using a panel data for a sample of 20 privatized firms obtained from the Nigerian Stock Exchange and Securities and Exchange Commission, the result shows an increase in all the profitability ratios after privatization. However, only the return on assets and return on sales are significant in explaining the difference between pre- and post-privatization performance of firms in Nigeria. The result of the operational efficiency shows a significant increase in the mean (median) values of sale efficiency and income efficiency. Interestingly, while output (real sales) and employee income of firm significantly increase after privatization, the number of employees insignificantly decreases after privatization. The paper concludes that privatization in Nigeria has worked in the sense that it improves the financial and operational efficiency performance of firms. |
| Keywords: | Privatization, Firm Performance, Operational Efficiency, Profitability, Nigerian Stock Exchange |
| JEL: | L33 |
| Date: | 2015–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:69675&r=eff |
| By: | Era Dabla-Norris; Giang Ho; Annette Kyobe |
| Abstract: | This paper empirically assesses the role of structural and institutional reforms in driving productivity growth across countries at different stages of development, using a distance-to-frontier framework. It gauges whether particular policies and reforms matter more for increasing productivity growth at the aggregate and sectoral levels for some emerging market and developing economies (EMDEs) than others. Recognizing the possibility of time lags between reform implementation and reform payoffs, the paper also examines how productivity gains from various reforms evolve over the the short- and medium-term. |
| Keywords: | Fiscal reforms;Labor productivity;Total factor productivity;Labor market reforms;Agricultural sector;Manufacturing sector;Services sector;Emerging markets;Developing countries;Total factor productivity; Labor productivity; Economic Growth; Structural Reforms; Institutions; Emerging Market and Developing Countries; Agriculture; Industry; Services |
| Date: | 2016–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:16/15&r=eff |
| By: | Bruno Merlevede; Angelos Theodorakopoulos |
| Abstract: | In this paper we confirm the existence of improvements of firm productivity when domestic upstream and downstream firms become more internationalized and therefore offshore (import intermediate inputs) and inshore (export final output for intermediate input usage) intensively. China’s accession to the WTO, which in the case of Belgium reduced trade barriers to China, help us confirm that these inter-industry productivity improvements can also be generated form a quasi-trade liberalization event. Upstream linkages are the dominant source of these productivity benefits and are reaped mainly from medium-low tech, labor intensive and upstream industries. Finally, we draw upon the importance of biases in our results from misspecifications common in the literature. From ignoring the dynamic nature of productivity, results appear overestimated or with sign reversals. From estimating a value-added instead of a gross-output production function, results become spurious. |
| Keywords: | Offshoring, supply chain, spillovers, productivity |
| JEL: | F2 F14 F15 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:wpaper:y:2016:i:165&r=eff |
| By: | Pilar Cuadrado (Banco de España); Enrique Moral-Benito (Banco de España) |
| Abstract: | This paper presents an estimate of the Spanish economy’s potential growth. This estimate is based on a production function methodology that includes certain refi nements on previous versions and generates less procyclical potential output growth estimates than those traditionally considered in the literature. As a result, the (positive) output gap estimated in expansions is higher and that estimated in recessions is lower. According to these results, given the available population projections and under the assumption that total factor productivity (TFP) and structural unemployment will behave in line with historical patterns, the Spanish economy’s potential growth is expected to recover gradually over the coming years but, in line with projections by international organisations, to lower rates than those in the expansion period. However, per capita growth rates fully recover to the pre-crisis levels, which highlights the importance of population projections in shaping the Spanish potential growth. |
| Keywords: | potential growth, output gap, Spain |
| JEL: | E23 E32 E13 O47 O52 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:1603&r=eff |
| By: | Voeten, Jaap (Tilburg University, School of Economics and Management); Bos, Marijke (Tilburg University, School of Economics and Management) |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:e761036c-8d31-4261-9f32-5f957ea99f69&r=eff |
| By: | Rangan Gupta (Department of Economics, University of Pretoria); Zinnia Mukherjee (Department of Economics, Simmons College, 300 The Fenway, E-203J, Boston, MA 02115, USA); Peter Wanke (COPPEAD Graduate Business School, Federal University of Rio de Janeiro, Rua Paschoal Lemme, 355. 21949-900 Rio de Janeiro) |
| Abstract: | This paper evaluates the operational practices of three lobster fishing zones in Long Island using a finite mixture model that allows controlling for unobserved heterogeneity. More precisely, a stochastic frontier latent class model is adopted in this research to estimate the production frontiers for each of the different technologies embedded within this heterogeneity. Therefore, this model not only enables the identification of different groups within the fishing zones, but it also permits the analysis of their productive efficiency. Results indicate the existence of five different technology groups within the sample, suggesting that production technologies in lobster fishery are themselves quite heterogeneous despite the environmental conditions. Policy implications are also derived. |
| Keywords: | Long Island Sound, lobster fishery, stochastic production frontier, latent class model, technical efficiency, panel data |
| JEL: | Q22 Q57 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201614&r=eff |
| By: | Hanh Pham (University of Greenwich) |
| Abstract: | This paper investigates whether firms with foreign capital participation are more productive than domestically-owned firms in Vietnam; and whether the presence of firms with foreign capital has a crowding-out effect on domestically-owned firms. We utilize a rich dataset compiled by the Vietnamese General Statistical Office (GSO) from 2001–2010 and a dynamic panel data approach proposed by Arellano and Bond (1991) and Blundell and Bond (1998) to address the issue of endogeneity. We report that the share of foreign capital in firm equity has a positive and significant effect on productivity of foreign-owned firms in Vietnam. With respect to crowding-out effects, we identify opposing dynamics at work. On the one hand, we observe a firm-level crowding-out effect due to higher shares in turnover as the level of foreign capital increases. On the other hand, we observe an industry-level crowding-in effect as the share of both domestic and foreign-owned firms in turnover is higher when the industry-level of foreign capital intensity increases. Finally, we report that the crowding-in and crowding-out effects do not differ as the level of foreign capital share differs between firms and industries. The findings indicate that domestically-owned Vietnamese firms tend to lose market share to their foreign-owned competitors when they compete head to head; but they also tend to benefit from higher levels of foreign capital invested in their industry. |
| Keywords: | dynamic panel, foreign direct investment, market-stealing effect, productivity, Vietnamese enterprises |
| JEL: | A10 C13 D20 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iefpro:3205904&r=eff |
| By: | Wided Bouaine; Lanouar Charfeddine; Mohamed Arouri; Frédéric Teulon |
| Date: | 2016–02–18 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-87&r=eff |
| By: | Flores-Szwagrzak, Karol (Department of Business and Economics); Treibich, Rafael (Department of Business and Economics) |
| Abstract: | Consider a database of academic papers where each paper has a scientific worth and a group of authors. We propose a new way of measuring individual academic productivity by evaluating authorship, the extent of an author's contribution to each paper. Our method, CoScore, uses the varying levels of success of all academic partnerships to infer, simultaneously, overall individual productivity and authorship: the worth of a paper is distributed proportionally to each co-author's productivity, defined as the sum of her contributions to all papers. The CoScores of all authors are determined endogenously via the solution of a fixed point problem. We show that CoScore is well-defined and that it is uniquely characterized by three properties: consistency, invariance to merging papers, and invariance to merging scholars. We illustrate CoScore for the two thousand most cited papers in economics. |
| Keywords: | Authorship; Co-authorship network; Ranking methods; PageRank |
| JEL: | D70 D71 D89 |
| Date: | 2015–12–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2015_017&r=eff |
| By: | Wouterse, Fleur Stephanie |
| Abstract: | Niger is a landlocked Sahelian country, two-thirds of which is in the Sahara desert, with only one-eighth of the land considered arable. Nevertheless, more than 90 percent of Niger’s labor force is employed in agriculture, which is predominantly subsistence oriented. Since the great famines of the 1970s and 1980s, the country has pursued agrarian intensification through technological change to address challenges to the food security situation. However, this approach has failed to recognize that the main characteristic of the Sahelian part of West Africa is the intricate complexity of the social, environmental, and economic dimensions that differentially affect male and female rural dwellers. One example is the patrilineal tenure system, which under increased population pressure has led to the exclusion of women and youth from agriculture in some areas. The Women’s Empowerment in Agriculture Index (WEAI) indicates that access to land is one important dimension of empowerment. In order to assess the role of empowerment in agricultural production, we use new household- and individual-level WEAI data from Niger and regression analysis. Our results show that empowerment is important for agricultural production and that households in which adult individuals are more empowered are more productive. This means that other and possibly more effective pathways to agrarian intensification exist and important agricultural productivity gains could be made by empowering men and women in rural households. |
| Keywords: | households, productivity, gender, women, intensification, agricultural production, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1509&r=eff |
| By: | Jean-Philippe Boussemart (University of Lille 3 and IESEG School of Management (LEM-CNRS)); Walter Briec (University of Perpignan); Hervé Leleu (CNRS-LEM and IESEG School of Management); Paola Ravelojaona (University of Perpignan) |
| Abstract: | From a theoretical point of view, a-returns to scale is a relevant alternative to traditional Data Envelopment Analysis models for estimating production technologies under global returns to scale assumptions such as strictly increasing or strictly decreasing returns to scale. However, from a methodological and empirical point of view, the estimation of a remains a question that must be answered. This paper proposes an effective methodology to estimate an optimal value of a based upon a goodness-of-fit strategy. A global method using a grid-search is presented first. In addition, for generalized Free Disposal Hull technologies, a minimum extrapolation principle is developed to estimate directly the optimal a-returns from a linear program. This study examined 63 US industries over the period 1987-2012 to demonstrate the relevancy of our approach. |
| Keywords: | a-Returns to Scale, Data Envelopment Analysis, Increasing Returns |
| JEL: | D24 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e201601&r=eff |
| By: | Dilek Cetin; Michele Cincera |
| JEL: | F14 O33 |
| Date: | 2015–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ict:wpaper:2013/227532&r=eff |
| By: | Agnani, Betty; Aray, Henry |
| Abstract: | This article tests the effects of Oscar awards on the production of feature films. Time series data for Spain over the 1953-2014 period are used and a production function is estimated assuming that the Oscar effects accrue through the total factor productivity. A lag structure is introduced which allows for a general specification so that the Oscar awards could have constant or diminishing effects over time. The results show that the Oscar wins have significant positive effects on movie production and that some of them have caused structural breaks, while others have vanishing effects over time. The results are fairly robust to the introduction of control variables and different methods of estimation. |
| Keywords: | Movie production,Oscar awards,Cobb-Douglas Production Function |
| JEL: | Z10 L82 C13 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:20168&r=eff |