nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒04‒09
thirteen papers chosen by

  1. A Comparison of Panel Data Models in Estimating Technical Efficiency By Rashidghalam, Masoomeh; Heshmati, Almas; Dashti, Ghader; Pishbahar, Esmail
  2. Productivity and efficiency of smallholder teff farmers in Ethiopia: By Bachewe, Fantu Nisrane; Koru, Bethlehem; Taffesse, Alemayehu Seyoum
  3. The role of production factor quality and technology diffusion in 20th century productivity growth. By A. Bergeaud; G. Cette; R. Lecat
  4. The Pre-Great Recession Slowdown in Productivity. By G. Cette; J. Fernald; B. Mojon
  5. Management standard certification and firm productivity: micro-evidence from Africa By Goedhuys, Micheline; Mohnen, Pierre
  6. Growing like Spain: 1995-2007 By Manuel García-Santana; Enrique Moral-Benito; Josep Pijoan-Mas; Roberto Ramos
  7. Quantifying the productivity e ects of global value chains By Sara Formai; Filippo Vergara Caffarelli; ;
  8. Public investment multipliers in EU countries: Does the efficiency of public sector matter? By Papaioannou, Sotiris
  9. Finding the Right Yardstick: Regulation under Heterogeneous Environments By Bjørndal, Endre; Bjørndal, Mette; Cullmann, Astrid; Nieswand, Maria
  10. Reconciling the Firm Size and Innovation Puzzle By Anne Marie Knott; Carl Vieregger
  11. The big trade-off between efficiency and equity - is it there? By Andersen, Torben M; Maibom, Jonas
  12. The Education Consequences of Language Proficiency for Young Children By Yao, Yuxin; Ohinata, Asako; van Ours, Jan
  13. International Trade and Productivity: The Role of Industry and Export Destination By Shevtsova, Yevgeniya

  1. By: Rashidghalam, Masoomeh (University of Tabriz); Heshmati, Almas (Jönköping University, Sogang University); Dashti, Ghader (University of Tabriz); Pishbahar, Esmail (University of Tabriz)
    Abstract: The purpose of this paper is two-fold. First, it compares the performance of various panel data models in estimating technical efficiency in production. Second, it applies various stochastic frontier panel data models to estimate the technical efficiency of Iran's cotton production and to provide empirical evidence on the sources of technical inefficiency of cotton producing provinces. The results indicate that labor and seeds are determinants of cotton production and inorganic fertilizers result in reducing technical efficiency. The mean technical efficiency of the models is around 80 percent. Variations in the distribution of estimated efficiency amongst the different models is large.
    Keywords: technical efficiency, labor use, panel data modeling, time-variant, persistent inefficiency, individual heterogeneity, model comparison, cotton production, Iran
    JEL: C23 D24 Q12
    Date: 2016–03
  2. By: Bachewe, Fantu Nisrane; Koru, Bethlehem; Taffesse, Alemayehu Seyoum
    Abstract: A large proportion of Ethiopians derive their livelihood from smallholder agriculture. This has provided the impetus for the smallholder agriculture focused policies that have guided agricultural development efforts in Ethiopia over the past two decades. This work studies smallholder teff producers. Teff is an important crop in terms of cultivated area, share of food expenditure, and contribution to gross domestic product. Despite the remarkable growth in teff production in the last decade, the drivers of this growth are not well understood. In particular, there is a lack of evidence on the contribution of improvements in productivity to this growth and the link between farm size and productivity. More-over, doubts exist on whether it is possible to sustain such growth on landholdings that are declining in size. This study employs data envelopment analysis on a recently collected large-scale farm household survey dataset to measure and explain the relative productivity and efficiency of smallholder teff producers.
    Keywords: teff, smallholders, productivity, efficiency, households, food production,
    Date: 2015
  3. By: A. Bergeaud; G. Cette; R. Lecat
    Abstract: 20th century growth has been an exceptional period in the history of mankind, relying mostly on increase in total factor productivity (TFP). Using a 1890-2013 17-OECD country database, this paper improves the measurement of TFP by taking into account production factor quality, i.e. the education level of the working-age population for labor and the age of equipment for the capital stock. However, our main contribution is to assess the role of technology diffusion to TFP growth through two emblematic general purpose technologies, electricity and information and communication technologies (ICT). Using both growth decomposition methodology and instrumental variables estimates, this paper finds that, among factor quality, education levels have posted the largest contribution to growth, while the age of capital has a significant, although limited, contribution. Quality-adjusted production factors explain less than half of labor productivity growth in the largest countries but Japan, where capital deepening posted a very large contribution. As a consequence, the “one big wave” of productivity growth (Gordon, 1999), as well as the ICT productivity wave for the countries which experienced it, remains only partially explained by quality-adjusted factors, although education and technology diffusion contribute to explain the US earlier wave in the 1930s-1940s. Finally, technology diffusion, as captured through our two general purpose technologies, leaves between 0.6 and 1 point of yearly growth, as well as a large share of the two 20th century technology waves, unexplained. These results support both a significant lag in the diffusion of general purpose technologies and a wider view on growth factors, encompassing changes in the production process, management techniques or financing practices.
    Keywords: Productivity, Total factor productivity, Education, Technological Change, Technology diffusion, Global History.
    JEL: N10 O47 E20
    Date: 2016
  4. By: G. Cette; J. Fernald; B. Mojon
    Abstract: In the years since the Great Recession, many observers have highlighted the slow pace of productivity growth around the world. For the United States and Europe, we highlight that this slow pace began prior to the Great Recession. The timing thus suggests that it is important to consider factors other than just the deep crisis itself or policy changes since the crisis. For the United States, at the frontier of knowledge, there was a burst of innovation and reallocation related to the production and use of information technology in the second half of the 1990s and the early 2000s. That burst ran its course prior to the Great Recession. Continental European economies were falling back relative to that frontier at varying rates since the mid-1990s. We provide VAR and panel-data evidence that changes in real interest rates have nfluenced productivity dynamics in this period. In particular, the sharp decline in real interest rates that took place in Italy and Spain seem to have triggered unfavorable resource reallocations that were large enough to reduce the level of total factor productivity, consistent with recent theories and firm-level evidence.
    Keywords: Productivity, ICT, Europe, convergence, capital flows, mis-allocation.
    JEL: E23 E32 O47 O52
    Date: 2016
  5. By: Goedhuys, Micheline (UNU-MERIT); Mohnen, Pierre (UNU-MERIT & SBE, Maastricht University)
    Abstract: Using micro evidence from manufacturing and services firms located in 55 African countries, this paper shows that better management practice, reflected by international management certification, helps firms to raise productivity. Larger and older firms and firms operating closer to the technological frontier are more likely to possess international management standards certification, as do firms engaged in international transactions. Certification in turn raises productivity levels further, in line with a process of continuous improvement. The findings hold for both manufacturing and services firms.
    Keywords: standards, productivity, Africa, manufacturing, services
    JEL: D02 D24 L15 O33 O55
    Date: 2016–03–15
  6. By: Manuel García-Santana; Enrique Moral-Benito; Josep Pijoan-Mas; Roberto Ramos
    Abstract: Spanish GDP grew at an average rate of 3.5% per year during the expansion of 1995-2007, well above the EU average of 2.2%. However, this growth was based on factor accumulation rather than productivity gains as TFP fell at an annual rate of 0.7%. Using firm-level administrative data for all sectors we show that deterioration in the allocative efficiency of productive factors across firms was at the root of the low TFP growth in Spain, while misallocation across sectors played only a minor role. Cross-industry variation reveals that the increase in misallocation was more severe in sectors where government influence is more important for business success, which represents novel evidence on the potential macroeconomic costs of crony capitalism. In contrast, sectoral differences in financial dependence, skill intensity, innovative content, tradability, or capital structures intensity appear to be unrelated to changes in allocative efficiency. All in all, the observed high output growth together with increasing firm-level misallocation in all sectors is consistent with an expansion driven by a demand boom rather than by structural reforms.
    Keywords: TFP, misallocation, Spain
    JEL: D24 O11 O47
    Date: 2016–03
  7. By: Sara Formai; Filippo Vergara Caffarelli; ;
    Abstract: This work analyses the relationship between international fragmentation of production and productivity growth. To identify the impact of fragmentation on productivity growth,we employ the methodology proposed in a different context by Rajan and Zingales (1996). In particular we interact the length and the width of sectoral production chains with a measure of countries' involvement in international fragmentation of production. We find evidence indicating that off-shoring increases labour productivity and total factor productivity in the externalising country.
    Date: 2015–12–11
  8. By: Papaioannou, Sotiris
    Abstract: This study examines whether differences in public sector efficiency are associated with diverging effects of public investment on growth. At first stage, we estimate public investment multipliers for each country of the European Union (EU). Their size varies considerably across countries. Then we construct measures of public sector efficiency which are used in the econometric analysis to study the relationship between public investment and growth. The main result of the econometric analysis is that the efficiency of public sector indeed matters in raising the influence of public investment on growth. This result remains robust to several changes in the econometric specification and to various measures of government efficiency which used as explanatory variables in the econometric estimations.
    Keywords: Public investments, Fiscal multipliers, Public sector efficiency, Economic growth.
    JEL: E62 H30 O40
    Date: 2016–03–22
  9. By: Bjørndal, Endre (Dept. of Business and Management Science, Norwegian School of Economics); Bjørndal, Mette (Dept. of Business and Management Science, Norwegian School of Economics); Cullmann, Astrid (DIW Berlin); Nieswand, Maria (DIW Berlin)
    Abstract: Revenue cap regulation is often combined with systematic benchmarking to reveal the managerial inefficiencies when regulating natural monopolies. One example is the European energy sector, where benchmarking methods are based on actual cost data, which are influenced by managerial inefficiency as well as operational heterogeneity. This paper demonstrates how a conditional nonparametric method, which allows the comparison of firms operating under heterogeneous technologies, can be used to estimate managerial inefficiency. A dataset of 123 distribution firms in Norway is used to show aggregate and firm-specific effects of conditioning. By comparing the unconditional model to our proposed conditional model and the model presently used by the Norwegian regulator, we see that the use of conditional benchmarking methods in revenue cap regulation may effectively distinguish between managerial inefficiency and operational heterogeneity. This distinction leads first to a decrease in aggregate efficient costs and second to a reallocation effect that affects the relative profitability of firms and relative customer prices, thus providing a fairer basis for setting revenue caps.
    Keywords: Data Envelopment Analysis; Yardstick Regulation; Electricity Distribution
    JEL: C44 L51 L94
    Date: 2016–02–25
  10. By: Anne Marie Knott; Carl Vieregger
    Abstract: Since Schumpeter, there has been a long-standing debate regarding the optimal firm size for innovation. Empirical results have settled into a puzzle: R&D spending increasing with scale while R&D productivity decreases with scale. Thus large firms appear irrational. We propose the puzzle stems from the fact that product and patent counts undercount large firm innovation. To test that proposition we use recently available NSF BRDIS survey data of firms R&D practices as well as a broader measure of R&D productivity. Using the broader measure, we find that both R&D spending and R&D productivity increase with scale—thus resolving the puzzle. We further find that while large firms and small firms differ in the types of R&D they conduct, there is no type whose returns decrease in scale—there are merely types for which the small firm penalty is less severe.
    Date: 2016–03
  11. By: Andersen, Torben M; Maibom, Jonas
    Abstract: Widely quoted cross-country evidence finds income to be negatively associated with inequality, which suggests that there is no trade-off between efficiency and equity. Such inference presumes that countries are at the frontier in the efficiency-equity space. We refute this for most OECD countries, and find that the best-practice frontier displays a trade-off. In accordance with standard economic theory, a larger tax burden is associated with lower efficiency and more equity. Interestingly, there is no evidence that the trade-off has become steeper over the sample period 1980-2010. Country positions differ significantly with some being consistently at or close to the frontier, while others are well inside the opportunity set.
    Keywords: efficiency; equity; trade-off.
    JEL: D61 D63 E02 H2
    Date: 2016–03
  12. By: Yao, Yuxin (Tilburg University, Center For Economic Research); Ohinata, Asako (Tilburg University, Center For Economic Research); van Ours, Jan (Tilburg University, Center For Economic Research)
    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
    JEL: J24 I2
    Date: 2016
  13. By: Shevtsova, Yevgeniya
    Abstract: The study explores the productivity effect associated with all types of firm’s export decisions across destinations. Using micro data on Ukrainian manufacturing firms operating during 2000-2005, I show that high-tech firms experience stronger productivity shocks associated with changes in their export status. Low-tech firms, instead, experience productivity improvements only when entering advanced export markets and are, on average, significantly less sensitive to changes in their export status. The results also show that firms’ characteristics, including productivity, not only improve the firm’s ability to self-select into exporting, but also increase its ability to penetrate a larger number of export markets.
    Keywords: exports; TFP; destination specific learning-by-exporting effect, export diversification, system GMM
    JEL: D24 F14 L25
    Date: 2015–10–10

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