nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒04‒04
nineteen papers chosen by

  1. A Data Envelopment Analysis toolbox for Matlab By Álvarez, Inmaculada; Barbero, Javier; Zofio Prieto, Jose Luis
  2. Development Accounting with Intermediate Goods By Jan Grobovsek
  3. Public expenditure, growth and productivity of Vietnam’s provinces. By Duc-Anh Le; Phu Nguyen-Van; Thi Kim Cuong Pham
  4. Agricultural growth in Ethiopia (2004-2014): Evidence and drivers: By Bachewe, Fantu Nisrane; Berhane, Guush; Minten, Bart; Taffesse, Alemayehu Seyoum
  5. Estimation of Technical Change and Price Elasticities: A Categorical Time-varying Coefficient Approach By Guohua Feng; Jiti Gao; Xiaohui Zhang
  6. The effect of local taxes on firm performance: evidence from geo referenced data By Federico Belotti; Edoardo di Porto; Gianluca Santoni
  7. Management Practices, Workforce Selection and Productivity By Stefan Bender; Nicholas Bloom; David Card; John Van Reenen; Stefanie Wolter
  8. Do large departments make academics more productive? Sorting and agglomeration economies in research By Clément Bosquet; Pierre-Philippe Combes
  9. Teacher Applicant Hiring and Teacher Performance: Evidence from DC Public Schools By Brian Jacob; Jonah E. Rockoff; Eric S. Taylor; Benjamin Lindy; Rachel Rosen
  10. Does the United States have a productivity slowdown or a measurement problem? By Byrne, David M.; Fernald, John G.; Reinsdorf, Marshall B.
  11. Input Diffusion and the Evolution of Production Networks By Vasco M. Carvalho; Nico Voigtländer; ;
  12. Efficient Local Government Service Provision: The Role of Privatization and Public Sector Unions By Rhiannon Jerch; Matthew E. Kahn; Shanjun Li
  13. The efficiency of economics departments reconsidered By Wohlrabe, Klaus; Friedrich, Elisabeth
  14. Managerial Delegation, Law Enforcement, and Aggregate Productivity By Jan Grobovsek
  15. Productivity Slowdown in Japan's Lost Decades: How Much of It Can Be Attributed to Damaged Balance Sheets? By Ichiro Muto; Nao Sudo; Shunichi Yoneyama
  16. Sectoral Systems or Distance-to-the-Frontier Effects in Innovation? A Comparison of Three Medium-Technology Sectors in Germany, Italy and Spain By Fassio, Claudio
  17. The Educational Consequences of Language Proficiency for Young Children By Yao, Yuxin; Ohinata, Asako; van Ours, Jan C.
  18. Environment, Energy, and Environmental Productivity of Energy: A Decomposition Analysis in China and the US By Mohamad Taghvaee, Vahid; Hajiani, Parviz
  19. Environmental Kuznets curve and environmental convergence: A unified empirical framework for CO2 emissions. By Roberto Martino; Phu Nguyen-Van

  1. By: Álvarez, Inmaculada (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Barbero, Javier (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Zofio Prieto, Jose Luis (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: Data Envelopment Analysis Toolbox is a new package for MATLAB that includes functions to calculate the main DEA models. The package includes code for the standard additive and radial input and output measures, allowing for constant and variable returns to scale, as well as recent developments related to the directional distance function, and including both desirable and undesirable outputs when measuring efficiency and productivity; i.e., Malmquist and Malmquist-Luenberger indices. Bootstrapping to perform statistical analysis is also included. This paper describes the methodology and implementation of the functions and reports numerical results with well-known examples to illustrate their use.
    Keywords: Data Envelopment Analysis, Distance functions, Technical efficiency, Matlab
    JEL: D20 D24 C44
    Date: 2016–03
  2. By: Jan Grobovsek
    Abstract: Do intermediate inputs help explain aggregate and relative productivity differences across countries? They do, based on new stylized facts on cross-country relative prices and input-output relationships. That evidence motivates a simple development accounting framework that distinguishes between goods and service industries on the one hand, and nal and intermediate output on the other. The model diagnoses the impact of TFP on productivity, and yields the following results. Poorer countries are particularly ine cient in the production of intermediate relative to nal output, but they are not necessarily ine cient in goods relative to service industries. They feature low measured labor productivity in goods industries because these are intensive intermediate users, and because intermediate TFP is relatively low. The elasticity of aggregate TFP with respect to sector-neutral TFP is large, in the range of 1.8 to 2.2
    Keywords: Development Accounting, Productivity, Intermediate Goods, TFP
    JEL: O10 O41 O47
    Date: 2015–12–01
  3. By: Duc-Anh Le; Phu Nguyen-Van; Thi Kim Cuong Pham
    Abstract: This paper proposes a structural approach to investigate total factor productivity and economic growth of Vietnam’s provinces during the 2000-2007 period. TFP is composed of three components: an autonomous technological change, an observed deterministic part depending on external factors, and an unobserved stochastic part. Estimation results do not show any evidence regarding the impacts of national and local public spending on TFP and economic growth of Vietnam’s provinces. Human capital and the local economy’s structure (shares of industry, services, and agriculture) can play a significant role in explaining the cross-province differences in terms of productivity. Finally, TFP of Vietnam’s provinces does not converge in the long run as it displays a polarization feature around two main groups of provinces, a large group with low TFP levels and much smaller group with high TFP levels. This bipolar pattern of TFP distribution helps to explain the competitiveness disparity among the Vietnam’s provinces.
    Keywords: Structural modeling, national public expenditure; local public expenditure; total factor productivity; Vietnam’s provinces.
    JEL: C23 H50 H70 O40
    Date: 2016
  4. By: Bachewe, Fantu Nisrane; Berhane, Guush; Minten, Bart; Taffesse, Alemayehu Seyoum
    Abstract: Ethiopia’s agricultural sector has recorded remarkable rapid growth in the last decade. This paper documents aspects of this growth process. Over the last decade, there have been significant increases - more than a doubling - in the use of modern inputs, such as chemical fertilizers and improved seeds, explaining part of that growth. However, there was also significant land expansion, increased labor use, and Total Factor Productivity (TFP) growth, estimated at 2.3 percent per year. The expansion in modern input use appears to have been driven by high government expenditures on the agricultural sector, including agricultural extension, but also by an improved road network, higher rural education levels, and favorable international and local price incentives.
    Keywords: agricultural sector, productivity, agricultural growth, economic growth, farm inputs, poverty, farmland, total factor productivity, poverty alleviation,
    Date: 2015
  5. By: Guohua Feng; Jiti Gao; Xiaohui Zhang
    Abstract: In this paper we outline new procedure for estimating technical change and price elasticities. Specifically, we propose a categorical time-varying coefficient translog cost function, where each coefficient is expressed as a nonparametric function of a categorical time variable, thereby allowing each time period to have its own set of coefficients. Our application to U.S. electricity firms reveals that compared with the traditional time trend representation of technical change that has remained a cornerstone of the productivity literature, this model offers two advantages: (1) it is capable of producing estimates of productivity growth that closely track those obtained using the Törnqvist approximation to the Divisia index; and (2) it can solve a well-known problem commonly referred to as "the problem of trending elasticities", i.e. estimated price elasticities show little temporal variation even when in fact they do.
    Keywords: Semiparametric method, categorical time-varying coefficient model, technical change and productivity
    JEL: C33 D24
    Date: 2016
  6. By: Federico Belotti; Edoardo di Porto; Gianluca Santoni
    Abstract: This paper investigates the impact of business property taxation on firms' performance using a panel of italian manufacturing firms. To account for endogeneity in local taxation, we exploit a pairwise spatial differenced generalized method of moments estimator. As well as providing robust inference, we also improve on existing work by exploiting the exogenous variation in local taxes generated by the political alignment of each local government with the central one. We find that property taxation exerts a negative impact on firms' employment, capital and sales to such an extent as to significantly affect total factor productivity.
    Keywords: local taxation;endogeneity;spatial differencing;two-way clustering
    JEL: H22 H71 R38
    Date: 2016–02
  7. By: Stefan Bender; Nicholas Bloom; David Card; John Van Reenen; Stefanie Wolter
    Abstract: Recent research suggests that much of the cross-firm variation in measured productivity is due to differences in use of advanced management practices. Many of these practices – including monitoring, goal setting, and the use of incentives – are mediated through employee decision-making and effort. To the extent that these practices are complementary with workers’ skills, better-managed firms will tend to recruit higher-ability workers and adopt pay practices to retain these employees. We use a unique data set that combines detailed survey data on the management practices of German manufacturing firms with longitudinal earnings records for their employees to study the relationship between productivity, management, worker ability, and pay. As documented by Bloom and Van Reenen (2007) there is a strong partial correlation between management practice scores and firm-level productivity in Germany. In our preferred TFP estimates only a small fraction of this correlation is explained by the higher human capital of the average employee at better-managed firms. A larger share (about 13%) is attributable to the human capital of the highest-paid workers, a group we interpret as representing the managers of the firm. And a similar amount is mediated through the pay premiums offered by better-managed firms. Looking at employee inflows and outflows, we confirm that better-managed firms systematically recruit and retain workers with higher average human capital. Overall, we conclude that workforce selection and positive pay premiums explain just under 30% of the measured impact of management practices on productivity in German manufacturing.
    JEL: J01 L2 M2 O32 O33
    Date: 2016–03
  8. By: Clément Bosquet (Spatial Economic Research Center); Pierre-Philippe Combes (Département d'économie)
    Abstract: We study how departments’ characteristics impact academics’ quantity and quality of publications in economics. Individual time-varying characteristics and individual fixed-effects are controlled for. Departments’ characteristics have an explanatory power at least equal to a fourth of that of individual characteristics and possibly as high as theirs. An academic’s quantity and quality of publications in a field increase with the presence of other academics specialised in that field and with the share of the field’s output in the department. By contrast, department’s size, proximity to other large departments, homogeneity in terms of publication performance, presence of colleagues with connections abroad, and composition in terms of positions and age matter at least for some publication measures but only when individual fixed effects are not controlled for. This suggests a role for individual positive sorting where these characteristics only attract more able academics. A residual negative sorting between individuals’ and departments’ unobserved characteristics is simultaneously exhibited.
    Keywords: Research productivity; Peer effects; Local externalities
    Date: 2016–03
  9. By: Brian Jacob; Jonah E. Rockoff; Eric S. Taylor; Benjamin Lindy; Rachel Rosen
    Abstract: Selecting more effective teachers among job applicants during the hiring process could be a highly cost-effective means of improving educational quality, but there is little research that links information gathered during the hiring process to subsequent teacher performance. We study the relationship among applicant characteristics, hiring outcomes, and teacher performance in the Washington DC Public Schools (DCPS). We take advantage of detailed data on a multi-stage application process, which includes written assessments, a personal interview, and sample lessons, as well as the annual evaluations of all DCPS teachers, based on multiple criteria. We identify a number of background characteristics (e.g., undergraduate GPA) as well as screening measures (e.g., applicant performance on a mock teaching lesson) that strongly predict teacher effectiveness. Interestingly, we find that these measures are only weakly, if at all, associated with the likelihood of being hired, suggesting considerable scope for improving teacher quality through the hiring process.
    JEL: I2 J2 M51
    Date: 2016–03
  10. By: Byrne, David M. (Federal Reserve Board); Fernald, John G. (Federal Reserve Bank of San Francisco); Reinsdorf, Marshall B. (International Monetary Fund)
    Abstract: After 2004, measured growth in labor productivity and total-factor productivity (TFP) slowed. We find little evidence that the slowdown arises from growing mismeasurement of the gains from innovation in IT-related goods and services. First, mismeasurement of IT hardware is significant prior to the slowdown. Because the domestic production of these products has fallen, the quantitative effect on productivity was larger in the 1995-2004 period than since, despite mismeasurement worsening for some types of IT—so our adjustments make the slowdown in labor productivity worse. The effect on TFP is more muted. Second, many of the tremendous consumer benefits from smartphones, Google searches, and Facebook are, conceptually, non-market: Consumers are more productive in using their nonmarket time to produce services they value. These benefits do not mean that market-sector production functions are shifting out more rapidly than measured, even if consumer welfare is rising. Moreover, gains in non-market production appear too small to compensate for the loss in overall wellbeing from slower market-sector productivity growth. Third, other measurement issues we can quantify (such as increasing globalization and fracking) are also quantitatively small relative to the slowdown. Finally, we suggest high-priority areas for future research.
    Date: 2016–03–01
  11. By: Vasco M. Carvalho; Nico Voigtländer; ;
    Abstract: The adoption and diffusion of inputs in the production network is at the heart of technological progress. What determines which inputs are initially considered and eventually adopted by innovators? We examine the evolution of input linkages from a network perspective, starting from a stylized model of network formation. Producers direct their search for new inputs along vertical linkages, screening the network neighborhood of existing suppliers to identify potentially useful inputs. A subset of these is then adopted, following a tradeoff between the benefits from input variety and the costs of customizing new inputs. Guided by this framework, we document a novel stylized fact at both the sector and the firm level: producers are more likely to adopt inputs that are already used – directly or indirectly – by their current suppliers. In particular, using disaggregated input-output data, we show that initial network proximity of a sector in 1967 significantly increases the likelihood of adoption throughout the subsequent four decades. A one-standard deviation decrease in network distance is associated with an increase in the adoption probability by one third to one half. Similarly, U.S. firms are significantly more likely to develop new input linkages among their suppliers’ network neighborhood. Our results imply that the existing production network plays a crucial role in the diffusion of inputs and the evolution of technology.
    Keywords: Input adoption, directed network search, dynamics of production networks
    JEL: O33 C67 D57 L23
    Date: 2015–03–10
  12. By: Rhiannon Jerch; Matthew E. Kahn; Shanjun Li
    Abstract: Local governments spend roughly $1.6 trillion per year to provide a variety of public services ranging from police and fire protection to public schools and public transit. However, we know little about public sector’s productivity in delivering key services. To understand the productivity both over time and across space, we examine public bus service, which represents a standardized output for benchmarking the cost of local government service provision. There is significant dispersion across transit agencies in the operating cost per bus mile with the highest being more than three times as high as the lowest among top 20 largest cities by population. We estimate the cost savings from privatization and explore the political economy of why privatization rates are lower in high cost unionized areas. Our analysis finds that the full privatizaton could result in cost savings of $5.7 billion in 2011 and that the gain in economic efficiency from more closely aligning bus fares with production costs would be worth at least half a billion dollars.
    JEL: J3 J45 R4 R5
    Date: 2016–03
  13. By: Wohlrabe, Klaus; Friedrich, Elisabeth
    Abstract: Employing data envelopment analysis and the free disposal hull approach, we evaluate the efficiency of 206 economics departments around the world. We use one input, full-time equivalents, and ten outputs which were both downloaded from RePEc website. By averaging over 1023 efficiency scores, obtained from all possible input-output combinations, we rank the economics departments. Furthermore, we provide some evidence that efficiency is not well correlated with reputation which is measured by the institutional ranking in RePEc.
    Keywords: efficiency; economics departments; data envelopment analysis; free disposal hull; RePEc
    JEL: I21 I23 J45
    Date: 2016–03–18
  14. By: Jan Grobovsek
    Abstract: This paper proposes a novel conceptual framework to quantify how law enforcement shapes the internal organization of rms and thereby aggregate equilibrium outcomes. First, we present empirical evidence on a signi cant positive cross-country correlation between the aggregate share of managerial workers and the degree of law enforcement. Second, we construct a tractable model that captures bene ts to managerial delegation in large organizations. The model features an agency problem between the owner of the rm and its middle managers. Ine ective law enforcement, allowing middle managers to divert revenue from the rm, constrains rm size by limiting the ecient delegation of managerial authority as well as managerial employment. Third, a calibrated version of the model measures the e ect of deteriorating legal protection. Decreasing law enforcement from the U.S. benchmark to a level associated with countries at ten percent of U.S. GDP per capita reduces aggregate productivity by 18 percent. Auxiliary statistics on the mean employer business size, self-employment, productivity dispersion, skill premium and human capital all paint a picture characteristic of low-income countries.
    Keywords: Growth and Development, TFP, Misallocation, Management, Delegation, Law Enforcement
    JEL: O10 O40 O43 O47
    Date: 2014–08–01
  15. By: Ichiro Muto (Bank of Japan); Nao Sudo (Bank of Japan); Shunichi Yoneyama (Bank of Japan)
    Keywords: Lost Decades; Total Factor Productivity; Balance Sheet Problem
    JEL: E20 E51
  16. By: Fassio, Claudio (LUISS School of European Political Economy)
    Abstract: This study analyzes empirically whether the Sectoral Systems of Innovation or the Distanceto-the-Frontier perspective more accurately describe the patterns of innovation in medium technology sectors in Germany, Italy and Spain. While the Sectoral Systems of Innovation predicts the existence of technology-related similarities in innovative patterns in the same sectors across countries, the Distance-to-the Frontier suggests the existence of important differences related with the level of technological development of each national sector. Using Community Innovation Survey data and applying an econometric strategy specifically devised for innovations survey I am able to test a set of hypotheses directly related with each of the two theories. The results of the econometric analysis show that relevant differences across countries exist with respect to the intensity of R&D activities and the economic impact of different types of innovations, confirming the Distance-to-the-Frontier hypothesis, while great cross-country similarity emerges among the sources of knowledge used to develop new innovations, in line with the Sectoral Systems of Innovation framework. The results highlight the importance to take into account both frameworks for a useful analysis of innovation within sectors.
    Keywords: Sectoral Systems of innovation; Distance-to-the-Frontier; R&D and productivity
    JEL: L60 O31
    Date: 2014–05–20
  17. By: Yao, Yuxin (Tilburg University); Ohinata, Asako (University of Leicester); van Ours, Jan C. (Tilburg University)
    Abstract: This paper studies the educational consequences of language proficiency by investigating the relationship between dialect-speaking and academic performance of 5-6 year old children in the Netherlands. We find that dialect-speaking has a modestly negative effect on boys' language test scores. In addition, we study whether there are spillover effects of peers' dialect-speaking on test scores. We find no evidence for spillover effect of peers' dialect-speaking. The test scores of neither Dutch-speaking children nor dialect-speaking children are affected by the share of dialect-speaking peers in the classroom.
    Keywords: dialect-speaking, test scores, spillover effects, language, academic performance
    JEL: J24 I2
    Date: 2016–03
  18. By: Mohamad Taghvaee, Vahid; Hajiani, Parviz
    Abstract: The global warming, if not global burning, is a dire warning about environmental pollution dangers to everyone, living on the only one Earth. This study aims to measure relative contributors to the environmental quality changes during 2002-2011 using Logarithmic Mean Divisia Index in China and the US. Since these countries are the biggest polluters in the world, the decomposition technique is used to cut their wide environmental issues into the tiny bits of problems, being easy to cope with. Moreover, we employed Environmental Performance Index (EPI) to evolve the concept of Environmental Productivity of Energy (EPE). The results suggest that economic growth and income equality are environmentallyfriendly while energy consumption is environmentally-unfriendly; and the Environmental Productivity of Energy (EPE) and technology progress are environmentally-moody (with various effects on environment). Consequently, the policy makers are advised to develop those economic sectors which are independent of pollutant energies; to replace the black energies by the green ones; and to invest on the research about the products whose demand is price inelastic.
    Keywords: Environment, Energy, Productivity, Decomposition
    JEL: Q5
    Date: 2015
  19. By: Roberto Martino; Phu Nguyen-Van
    Abstract: This paper provides a unified framework to investigate simultaneously environmental convergence and the environmental Kuznets curve hypothesis, which were usually separately investigated in existing literature. We propose an application on CO2 emissions data consisting of 106 countries observed over the period 1970-2010. We adopt an instrumental semiparametric panel data model and we compare the estimates with standard parametric methods. There is no evidence supporting the environmental Kuznets hypothesis, even for the OECD countries, while a convergence process takes place, even though it is not associated with a reduction in CO2 emissions. Results are robust across specifications.
    Keywords: CO2 emissions; environmental Kuznets curve; instrumental variable; semiparametric model; panel data.
    JEL: C23 Q50
    Date: 2016

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