nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒05‒28
seventeen papers chosen by

  1. A Comparison of Panel Data Models in estimating Technical Efficiency By Rashidghalam, Masoomeh; Heshmati, Almas; Dashti, Ghader; Pishbahar, Esmail
  2. Uniform Service, Uniform Productivity? Regional Efficiency of the Imperial German Postal, Telegraph and Telephone Service By Florian Ploeckl
  3. Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries By Carlos Carreira; Luís Lopes
  4. The Role of Crop Type in Cross-Country Income Differences By Eberhardt, Markus; Vollrath, Dietrich
  5. Firing Costs, Misallocation, and Aggregate Productivity By Jose-Maria Da-Rocha; Marina Mendes Tavares; Diego Restuccia
  6. The impact of ex-ante subsidies to researchers on researcher's productivity: Evidence from a developing country By Aboal, Diego; Tacsir, Ezequiel
  7. Technical Efficiency on Flue-cured Tobacco Productin and Its Hierarchical Influencing Factors: An Empirical Study in China By Peng, Yan-ling; Kong, Rong
  8. Effectiveness of promoting energy efficiency in Thailand -- the case of air conditioners By Kojima, Michikazu; Watanabe, Mariko
  9. A cost function analysis of trade-offs within climate smart agriculture: does mulching save the cost of crop production among smallholder farmers in Uganda? By Shikuku, Kelvin M.; Laderach, Peter; Winowiecki, Leigh; Mwongera, Caroline
  10. Skill use, skill deficits, and firm performance in formal sector enterprises : evidence from the Tanzania enterprise skills survey, 2015 By Tan,Hong W.; Bashir,Sajitha; Tanaka,Nobuyuki
  11. Reassessing the Productivity Gains from Trade Liberalization By JaeBin Ahn; Era Dabla-Norris; Romain A Duval; Bingjie Hu; Lamin Njie
  12. Why has the cyclicality of productivity changed? What does it mean? By Fernald, John G.; Wang, J. Christina
  13. Driving business performance: innovation complementarities and persistence patterns By Maurizio Baussola; Eleonora Bartoloni
  14. Technological change and productivity growth in the agrarian systems of New Zealand and Uruguay (1870-2010) By Jorge Álvarez
  15. Bank ownership, board characteristics and performance: Evidence from commercial banks in India By Jayati Sarkar; Subrata Sarkar
  16. Labour Productivity in Kenyan Manufacturing and Service Industries By Heshmati, Almas; Rashidghalam, Masoomeh
  17. The impact of water users' associations on the productivity of irrigated agriculture in Pakistani Punjab By Mekonnen, Dawit; Channa, Hira; Ringler, Claudia

  1. By: Rashidghalam, Masoomeh (Department of Agricultural Economics,University of Tabriz, Tabriz, Iran); Heshmati, Almas (Jönköping International Business School (JIBS), Centre of Excellence for Science and Innovation Studies (CESIS),& Department of Economics, Sogang University, Seoul, South Korea); Dashti, Ghader (Department of Agricultural Economics,University of Tabriz, Tabriz, Iran); Pishbahar, Esmail (Department of Agricultural Economics,University of Tabriz, Tabriz, Iran)
    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 production using 2000-2012 panel data from Iran's 13 cotton producing provinces. The results indicate that labor and seeds are determinants of cotton production. Further, an investigation of the sources of technical inefficiency reveals that inorganic fertilizers result in reducing technical efficiency. The mean technical efficiency according to most of the models is found to be around 80 per cent. The empirical results show evidence of variations in the distribution of estimated efficiency amongst the different models. We also find a large difference in technical efficiency levels between provinces, which shows that geography and management’s impacts on technical efficiency are quite different among the provinces.
    Keywords: Technical efficiency; panel data modeling; time-variant; persistent inefficiency; individual heterogeneity; model comparison; cotton production; Iran.
    JEL: C23 D24 Q12
    Date: 2016–04–06
  2. By: Florian Ploeckl (School of Economics, University of Adelaide)
    Abstract: Using the regional productivity of the Reichspost, the postal service of the German Empire, I investigate whether a public monopolist operates with uniform regional productivity. Using DEA efficiency scores we derive the relative productivity of the post, telegraph and telephone sectors from 1891 to 1908. Results show a fairly stable system with substantial raw productivity differences between postal districts and that the expansion of the service offset technological productivity increases for the mail service.
    Keywords: Productivity, Public Monopoly, Information Technology
    JEL: D24 L32 L87 L96 N74
    Date: 2016–05
  3. By: Carlos Carreira (GEMF and Faculty of Economics, University of Coimbra, Portugal); Luís Lopes (GEMF and Faculty of Economics, University of Coimbra, Portugal)
    Abstract: This paper revisits the puzzling question regarding the role of spatial agglomeration of production activities and knowledge on firm’s total factor productivity (TFP). In particular, it addresses the overlooked issue of a plausible non-linear effect and different across industries. Using a panel of Portuguese manufacturing firms, we found that specialization economies have a positive impact on firms’ productivity, especially for those operating in medium-high and high-tech sectors. Diversity externalities, for its part, have an inverted U-shaped relationship with firms’ TFP in low, medium-low and medium-high tech sectors. The relationship between regional R&D employment and productivity differs across sectors: in all manufacturing firms and firms from medium-low and high-tech sectors, there is an inverted U-shaped relationship; in low-tech sector, there is a U-shaped relationship and a positive elasticity for any employment level higher than the 20th percentile. Overall, agglomeration economies differ substantially across industries and they are non-linear.
    Keywords: Regional knowledge spillovers, agglomeration economies, low-tech vs. high-tech industries, total factor productivity. JEL Classification:
    Date: 2016–05
  4. By: Eberhardt, Markus; Vollrath, Dietrich
    Abstract: Labor productivity and labor share in the agricultural sector are key determinants of living standards across countries. We show that differences in agricultural technology -- the coefficients on factor inputs in the production function -- account for a substantial portion of cross-country differences in agricultural labor productivity, agricultural labor share, and per capita income. In a panel of 100 countries we document differences in technology estimates associated with major crops, and then illustrate the quantitative implications for development. Counterfactually eliminating crop-type technology heterogeneity reduces variance in log income per capita by 25%, and raises the median by 60%.
    Keywords: agricultural development; crop type; structural change; technology heterogeneity
    JEL: C23 F63 O11 O47 Q16
    Date: 2016–04
  5. By: Jose-Maria Da-Rocha; Marina Mendes Tavares; Diego Restuccia
    Abstract: We assess the quantitative impact of firing costs on aggregate total factor productivity (TFP) in a dynamic general-equilibrium framework where the distribution of establishment-level productivity is not invariant to the policy. We show that firing costs not only generate static misallocation, but also a worsening of the productivity distribution substantially contributing to large aggregate TFP losses. In a calibrated version of the model, firing costs equivalent to 5 years' wages imply a drop in TFP of more than 20 percent. Consistent with the existing literature on firing costs, static misallocation only generates a small drop in TFP, accounting for around 20 percent of the total loss, whereas the remaining 80 percent arises from the endogenous change in the productivity distribution.
    Keywords: firing costs, inaction, misallocation, establishments, productivity.
    JEL: O1 O4 E1 E6
    Date: 2016–05–19
  6. By: Aboal, Diego (Centro de Investigaciones Económicas (CINVE), and Universidad ORT Uruguay, Montevideo, Uruguay); Tacsir, Ezequiel (UNU-MERIT, Maastricht University, and Universidad de la República, Montevideo, Uruguay.)
    Abstract: In this paper we perform a short-run (two years after the programme) impact evaluation of a programme that provides ex-ante subsidies to researchers in Paraguay. The analysis of the effects of this type of subsidies, that are prevalent in Latin America, has received little attention in the literature. Thanks to the availability of data coming from electronic CVs of applicants we are able to analyse the impact of the programme in dimensions of researchers' productivity that have been mostly overlooked previously, such as technical production, own education, the training of other researchers and other dimensions of the bibliographic production different to published articles. We also provide estimations of the impact on quantity and quality of publications based on more traditional sources of data. We find some positive impacts of the programme. However, some of the results are not robust to alternative methods of estimation.
    Keywords: Economics of Science, Scientific Subsidies, Policy Impact Evaluation
    JEL: O30 O38 H43 C21
    Date: 2016–04–18
  7. By: Peng, Yan-ling; Kong, Rong
    Abstract: This is one of the first empirical studies to estimate the technical efficiency of farmers’ flue-cured tobacco production, and explore the influencing factor of technical inefficiency on the perspective of within effects and between effects, aiming to provide a basic evaluation of farmers’ flue-cured tobacco production, and promote producers optimize their production. Results showed that the average technical efficiency level of flue-cured tobacco farmers was 0.7685; the scale elasticity was 2.67. Our study also revealed that the variation of farm household factors contributed 80.07% to technical inefficiency, and the other could be attributed to the variation of regional factors. Technical inefficiency of flue-cured tobacco production was significantly relative to producers’ education, planting scales, and planting years. In addition, regional disaster increased the possibility of technical inefficiency, while subsidies from flue-cured tobacco companies and government were to benefit reducing the technical inefficiency.
    Keywords: Agricultural and Food Policy, Research and Development/Tech Change/Emerging Technologies,
    Date: 2015
  8. By: Kojima, Michikazu; Watanabe, Mariko
    Abstract: This paper aims to identify the magnitude of energy efficiency improvement, which has been promoted through energy efficiency labeling and the Minimum Energy Performance Standard, and to compare this against the increase in the number of products and the average increase in cooling capacity. Air conditioners (ACs) are one of the major contributors to energy consumption in a household. To assess the magnitude of this factor, we developed a formula to decompose total energy consumption from ACs into the number of ACs, their average cooling capacity, and energy efficiency. In the case of ACs in Thailand, energy efficiency improvement has offset the increase in the average AC cooling capacity. However, energy consumption from ACs increases with the number of ACs.
    Keywords: Energy, Household, Energy Efficiency, Standard and Labeling, Thailand
    JEL: D19 Q49 Z00
    Date: 2016–03
  9. By: Shikuku, Kelvin M.; Laderach, Peter; Winowiecki, Leigh; Mwongera, Caroline
    Abstract: Climate-smart agriculture (CSA) is increasingly being promoted among scientists, policy makers and donors as an approach towards sustainably increasing agricultural productivity, building and increasing resilience of farming systems to climate change, and reduction of greenhouse gases. Successful implementation of CSA, however, depends on the ability to identify and quantify the trade-offs involved in its adoption. This study investigates the trade-offs involved in the adoption of mulching among smallholder farmers in Rakai district of Uganda. It specifically examines the effect of mulching on the expenditure shares of herbicides, pesticides, fertilizer, and labour. A translog cost function is estimated jointly with expenditure shares on these inputs using seemingly unrelated regression analysis. Results indicate a negative relationship between mulching and expenditure share on herbicides on one hand, and a positive relationship between mulching and expenditure share on pesticides, fertilizer, and labour on the other hand. The paper discusses the policy implications.
    Keywords: Mulching, demand for farm inputs, translog cost function, climate-smart agriculture, trade-offs, Farm Management, International Development, C5, D1, O33,
    Date: 2015
  10. By: Tan,Hong W.; Bashir,Sajitha; Tanaka,Nobuyuki
    Abstract: Inadequacies in Tanzania's education and training systems compromise the quality of workforce skills, giving rise to skill shortages, and constraining the operations and growth of formal sector firms in the country. This study addressed these concerns using data from a unique Enterprise Skills Survey that asked Tanzanian employers about the education, training, and occupational mix of their workforce, the skill gaps in cognitive, noncognitive, and job-specific competencies affecting their operations, and the strategies they are using to overcome these skill gaps. The study investigates the consequences for firm productivity of employers'choices about their optimal skills mix, and their strategies to mitigate shortfalls in skills supply. Compared with noninnovators and firms primarily serving the domestic market, exporters and innovators face greater skill demand and suffer from skill shortages that are more likely to constrain their operations in such areas as quality assurance, use of new technology, and introducing new products and services. In analyzing firm performance and its relation to skill mix, the study found that firms with higher shares of tertiary-educated workers are more productive; it found no impact, however, from secondary education and technical vocational education and training qualifications, possibly reflecting the universally acknowledged poor quality of secondary education in Tanzania. Employers use a range of strategies to address skill deficiencies, from hiring new workers, to training current workers in-house or externally, using high-skill expatriate workers, or outsourcing professional services. Almost all were associated with higher labor productivity. The exception, employer provided in-house training, had no measurable impact on productivity.
    Keywords: ICT Policy and Strategies,Education For All,Effective Schools and Teachers,Access&Equity in Basic Education,Primary Education
    Date: 2016–05–12
  11. By: JaeBin Ahn; Era Dabla-Norris; Romain A Duval; Bingjie Hu; Lamin Njie
    Abstract: This paper reassesses the impact of trade liberalization on productivity. We build a new, unique database of effective tariff rates at the country-industry level for a broad range of countries over the past two decades. We then explore both the direct effect of liberalization in the sector considered, as well as its indirect impact in downstream industries via input linkages. Our findings point to a dominant role of the indirect input market channel in fostering productivity gains. A 1 percentage point decline in input tariffs is estimated to increase total factor productivity by about 2 percent in the sector considered. For advanced economies, the implied potential productivity gains from fully eliminating remaining tariffs are estimated at around 1 percent, on average, which do not factor in the presumably larger gains from removing existing non-tariff barriers. Finally, we find strong evidence of complementarities between trade and FDI liberalization in boosting productivity. This calls for a broad liberalization agenda that cuts across different areas.
    Keywords: Trade liberalization;Tariffs;Total factor productivity;Cross country analysis;Econometric models;Time series;Trade, Productivity, Tariffs, Inputs, Liberalization, FDI, Reforms, Growth.
    Date: 2016–03–23
  12. By: Fernald, John G. (Federal Reserve Bank of San Francisco); Wang, J. Christina (Federal Reserve Bank of Boston)
    Abstract: U.S. labor and total factor productivity have historically been procyclical—rising in booms and falling in recessions. After the mid-1980s, however, TFP became much less procyclical with respect to hours while labor productivity turned strongly countercyclical. We find that the key empirical “fact” driving these changes is reduced variation in factor utilization—conceptually, the workweek of capital and labor effort. We discuss a range of theories that seek to explain the changes in productivity’s cyclicality. Increased flexibility, changes in the structure of the economy, and shifts in relative variances of technology and “demand” shocks appear to play key roles.
    JEL: E22 E23 E32 O47
    Date: 2016–04–01
  13. By: Maurizio Baussola (DISCE, Università Cattolica); Eleonora Bartoloni (ISTAT, Regional Office for Lombardy)
    Abstract: Complementarities between technological and non-technological innovation are crucial determinants of firm performance. This topic has not received the attention that it merits, as the focus has been primarily placed on technological innovation alone or on innovation efforts as measured by R&D or patent activities. The capacities to develop market-oriented behaviour and introduce new organisational innovations are the drivers - together with technological innovation - of a firm's productivity and profitability. We also underline how the impact of such activities is larger when they persist over time, thus introducing a more general concept of innovation persistency. We present an empirical model based on a large and new panel of Italian manufacturing firms covering the period 2000-2012 that enables us to derive the precise impacts of a firm's innovative effort - based on a broad definition that incorporates non-technological innovation and persistence - on its productivity and profitability.
    Keywords: Technological and non-technological innovation, Complementarities, European Community Innovation Survey, Profitability, Productivity, Unbalanced panel data
    JEL: L25
    Date: 2016–03
  14. By: Jorge Álvarez (Programa de Historia Económica y Social, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: New Zealand and Uruguay were typical settler economies and were alike in many ways throughout their histories but there were also big differences in how they developed. They were similar as regards size of population, surface area, markets, natural resource endowments, production and trade specialization patterns and the fact that they both attained high levels of income per capita in the early 20th century. They differed in that they had divergent patterns of economic growth and different agricultural productivity growth rates for their main products (wool, meat, dairy produce and leather), which accounted for around 70% of their exports in the hundred years from 1870 to 1970. The main aim of this paper is to use a systematic case-oriented comparison and the evolutionary theoretical approach to technological change to understand the development of the technological trajectories that boosted productivity in the two countries’ pastoral systems in the long-term (1870-2010). I will analyse this in interaction with geographical environment, intensity of resource use (extensive or intensive) and the institutional environment in which technological innovations to raise land productivity were produced, disseminated and adapted. My main results show that in the 19th century Uruguay had more favourable conditions for pastoral production than New Zealand and, up to the 1930s, higher production volumes per hectare. New Zealand had higher growth rates in all livestock physical productivity indicators from 1870 to 1970 and overtook Uruguay’s levels by the mid 20th century. As regards increased land productivity, New Zealand changed completely from an extensive to an intensive pastoral system. This process required technology to improve the soil, thus increasing capital and job investment and changes to the original production function of the pastoral system. In Uruguay livestock rearing was based on natural pasture, extensive production systems and low capital investment, and this stable model remained the same for a relatively long time. This inertia meant that in the long run Uruguay’s technological trajectory lagged far behind New Zealand’s in the development of soil-improvement technologies. I argue that these differences have, through different channels, conditioned the export performance and the economic growth of both countries.
    Keywords: settler economies, technological change, pastoral production, productivity growth
    JEL: N56 N57 O13 O33
    Date: 2015–12
  15. By: Jayati Sarkar (Indira Gandhi Institute of Development Research); Subrata Sarkar (Indira Gandhi Institute of Development Research)
    Abstract: The role of governance mechanisms in determining bank outcomes has been studied mostly in the context of developed economies and focused mainly on private banks. In this paper we examine the importance of board size and board composition in determining bank outcomes using data from an emerging economy, India, and using a sample that includes both public and private banks. Relatedly, we also examine the effect of CEO tenure in influencing bank outcomes, a topic that acquires particular importance in context of public sector banks where the tenure of the CEO is relatively short. Using data that spans over ten years from 2003-2012 that witnessed a large number of governance reforms in India, the results of our empirical analysis suggest that while board size plays an insignificant role in determining bank outcomes, board independence plays a significant role. There is a strong ownership effect with board independence having a significant effect on performance of private sector banks and negatively impacting the performance of private sector banks. The analysis also reveals that longer tenure of the CEO has significant effects in improving bank outcomes both in terms of financial performance and asset quality. These positive effects strengthen in the later years of CEO tenure. Our results have governance implications for strengthening the composition of board of directors and CEO tenure, especially in publicly owned banks.
    Keywords: Banks, Regulation, Ownership, Board of Directors, CEO Duality, CEO Tenure
    JEL: G21 G28 G32 G34 L32 L33
    Date: 2016–05
  16. By: Heshmati, Almas (Jönköping University, Sogang University); Rashidghalam, Masoomeh (University of Tabriz)
    Abstract: Labour productivity reflects a firm's ability to generate higher production or value-added. This paper analyses labour productivity and its determinants in the manufacturing and service sectors in Kenya. As the largest economy in East Africa, it is crucial for Kenya to have high labour productivity as it has strong implications for economic growth and welfare. The paper also provides practitioners with a better understanding of the state of labour productivity in the country. Using the World Bank's Enterprise Survey's database for 2013, we find that capital intensity and wage significantly and positively affected labour productivity. A higher female share in the labour force reduced labour productivity. We also found that training and education were associated with higher labour productivity. Reliance on technologies such as emails and websites for communication had a positive but insignificant impact on firms' labour productivity. On the basis of these observations we make a number of recommendations to promote higher productivity of labour.
    Keywords: labour market, labour productivity, manufacturing, services, firms, Kenya
    JEL: J01 J16 J24 L60 O14
    Date: 2016–04
  17. By: Mekonnen, Dawit; Channa, Hira; Ringler, Claudia
    Abstract: This study explores the impact of water users' associations (WUAs) on farmers' productivity in Punjab province of Pakistan. We find that the presence of WUAs provide a productivity gain of ten and eight percent for farmers at the tail end of watercourses and those that rely solely on groundwater. The productivity impact of WUAs on farmers that rely more on groundwater suggests that improving the management of surface water through functioning watercourse level institutions can be a viable option in reducing over-utilization of groundwater resources and the pressure it creates on the already strained energy situation in the country. However, we find no evidence of WUAs improving productivity for those at the head and middle of watercourses, indicating that the performance of WUAs is likely to face challenges from these groups.
    Keywords: Agricultural and Food Policy, Environmental Economics and Policy,
    Date: 2015

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.