nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒06‒09
nineteen papers chosen by

  1. Examining the Productivity Growth of Agricultural Cooperatives By Pokharel, Krishna; Featherstone, Allen
  2. Deregulation and Productivity – Empirical Evidence on Dairy Production By Frick, Fabian; Sauer, Johannes
  3. An Alternative Approach to Estimate the Economic Loss of Porcine Epidemic Diarrhea (PED) via Data Envelopment Analysis: The Case in Taiwan By Yang, Shang-Ho; Burdine, Kenneth H.; Hu, Wu-Yueh
  4. Bank ownership and cost efficiency in Russia, revisited By Mamonov, Mikhail; Vernikov, Andrei
  5. Asymptotic Theory for Aggregate Efficiency By Léopold Simar; Valentin Zelenyuk
  6. To What Extent Does Modified System of Rice Intensification (SRI) Training Increase Productivity of Small-Scale Rice Cultivation in a Rain-Fed Area? Evidence from Tanzania By Nakano, Yuko; Tanaka, Tuki; Otsuka, Keijiro
  7. Management as a Technology? By Nicholas Bloom; Raffaella Sadun; John Van Reenen
  8. Wage Growth, Landholding and Mechanization in Agriculture Evidence from Indonesia By Yamauchi, Futoshi
  9. The Price of Inefficiency in Indian Agriculture By Badau, Flavius; Rada, Nicholas
  10. Abatement costs of Emissions from Crop Residue Burning in major crop producing regions of China: Balancing food security with the environment By Hou, Lingling; Hoag, Dana; Keske, Catherine
  11. Agricultural R&D Policy in the Face of Climate and Economic Uncertainty By Cai, Yongyang; Golub, Alla A.; Hertel, Thomas W.; Judd, Kenneth L.
  12. Are dairy subsidies effective to increase milk productivity and income in Kosovo? A Propensity Score Matching Approach By Bajrami, Egzon; Wailes, Eric; Dixon, Bruce; Musliu, Arben
  13. Evaluating Scale and Technical Efficiency among Farms and Ranches with a Local Market Orientation By Bauman, Allison; Jablonski, Becca B.R.; Thilmany McFadden, Dawn
  14. FDI and Ownership in Czech Firms: Pre- and Post-crisis Efficiency By Jan Hanousek; Evzen Kocenda
  15. The Value of Being Socially Responsible. A DEA Approach for Analyzing Efficiency and Recovering Shadow Prices of CSR Activities By Puggioni, Daniela; Stefanou, Spiro E.
  16. Assessing the Contribution of Agricultural Productivity to Food Security levels in Sub-Saharan African countries By Ogundari, Kolawole; Awokuse, Titus
  17. Portfolio Selection in a Multi-Input Multi-Output Setting: a Simple Monte-Carlo-FDH Algorithm By Nalpas, Nicolas; Simar, Léopold; Vanhems, Anne
  18. Characteristics of hog producers and how those characteristics affect the rate of adoption of technologies used in the hog industry: Evidence from hog producers in the United States. By Carrillo, Mario Renato
  19. Heterogeneous Credit Union Production Technologies with Endogenous Switching and Correlated Effects By Malikov, Emir; Restrepo-Tobon, Diego A; Kumbhakar, Subal C.

  1. By: Pokharel, Krishna; Featherstone, Allen
    Abstract: This research examines productivity growth of agricultural cooperatives using the Malmquist productivity index (MI) under constant returns to scale and the biennial Malmquist productivity index (BMI) assuming variable returns to scale. A nonparametric data envelopment analysis approach is used to calculate both the MI and BMI. Results from the two methods are compared to evaluate whether the decomposition into technical and efficiency changes are similar under the MI and BMI methods.
    Keywords: Productivity, Malmquist Index, Biennial Malmquist Index, Productivity Analysis,
    Date: 2016
  2. By: Frick, Fabian; Sauer, Johannes
    Abstract: We investigate development of productivity and its relation to resource reallocation effects in the dairy sector in South-East Germany during the phase-out of the EU milk quota. We use a dataset containing dairy farm accounting data of 15 years. Farm-level productivity is estimated by applying a proxy approach recently discussed in the literature and compared to other estimation approaches and an index analysis. After aggregation we decompose sector productivity into unweighted mean productivity and a covariance term quantifying the allocation of production resources towards more productive farms. We observe an increase in the covariance term coinciding with a period of rather volatile milk prices. Therefore, we hypothesize that reallocation of production resources are triggered by extreme prices possibly powered by market deregulation. We seek to find support for this hypothesis in a regression analysis linking the covariance term and price variability. In this analysis we find some evidence for our hypothesis.
    Keywords: Dairy Farms, Total Factor Productivity, Sector Productivity, EU Milk Quota, Deregulation, Resource Reallocation, Agricultural and Food Policy, Productivity Analysis, Q12, Q18, O47,
    Date: 2016
  3. By: Yang, Shang-Ho; Burdine, Kenneth H.; Hu, Wu-Yueh
    Abstract: This study focuses on investigating how the PED (Porcine Epidemic Diarrhea) virus influenced the production efficiency of swine industry in Taiwan. A total 96 valid sample data were collected during March of 2014. The Data Envelopment Analysis (DEA) was adopted to evaluate production efficiency before, and after, the PED events. Results show that the PED events in Taiwan had weakened overall technical efficiency (TE) about 8.6%. Large scale farms, older farms, and Central area appeared to be the most heavily impacted. Meanwhile, the reproductive rate of Taiwanese hog farms was found to exhibit a polarization in that some farms were producing at a high efficiency, while others were not. Lastly, the percentage change in production efficiency in the DEA estimation are very close to the percentage changes in inventory on farms reported by government. This may imply that the DEA can be further discussed regarding the capability of estimation.
    Keywords: Porcine Epidemic Diarrhea (PED), Technical Efficiency, Data Envelopment Analysis (DEA), Livestock Production/Industries, Production Economics, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, D2,
    Date: 2016–07
  4. By: Mamonov, Mikhail; Vernikov, Andrei
    Abstract: This paper considers the comparative efficiency of public, private, and foreign banks in Rus-sia, a transition economy with several unusual features. We perform stochastic frontier anal-ysis (SFA) of Russian bank-level quarterly data over the period 2005–2013. The method of computation of comparative cost efficiency is amended to control for the effect of revalua-tion of foreign currency items in bank balance sheets. Public banks are split into core and other state-controlled banks. Employing the generalized method of moments, we estimate a set of distance functions that measure the observed differences in SFA scores of banks and bank clusters (heterogeneity in risk preference and asset structure) to explain changes in bank efficiency rankings. Our results for comparative Russian bank efficiency show higher efficiency scores, less volatility, and narrower spreads between the scores of different bank types than in previous studies. Foreign banks appear to be the least cost-efficient market participants, while core state banks on average are nearly as efficient as private domestic banks. We suggest that foreign banks gain cost-efficiency when they increase their loans-to-assets ratios above the sample median level. Core state banks, conversely, lead in terms of cost efficiency when their loans-to-assets ratio falls below the sample median level. The presented approach is potentially applicable to analysis of bank efficiency in other dollarized emerging markets.
    Keywords: banks, comparative efficiency, SFA, state-controlled banks, Russia
    JEL: G21 P23 P34 P52
    Date: 2015–07–27
  5. By: Léopold Simar (Institut de Statistique, Biostatistique et Sciences Actuarielles, Université Catholique de Louvain); Valentin Zelenyuk (School of Economics, The University of Queensland)
    Abstract: Applied researchers in the field of efficiency and productivity analysis often need to estimate and inference about aggregate efficiency, such as industry efficiency or aggregate efficiency of a group of distinct firms within an industry (e.g., public vs. private firms, regulated vs. unregulated firms, etc.). While there are approaches to obtain point estimates for such important measures, no asymptotic theory have been derived for it–the gap in the literature that we fill with this paper. Specifically, we develop full asymptotic theory for aggregate efficiency measures when the individual true efficiency scores being aggregated are observed as well as when they are unobserved and estimated via DEA or FDH. As a result, the developed theory opens a path for more accurate and theoretically better grounded statistical inference on aggregate efficiency estimates such as industry efficiency, etc.
    Keywords: DEA, FDH, Efficiency, Aggregation, Industry Efficiency, Asymptotics, Limiting distribution, Consistency, Convergence, Jackknife, Bias correction
    Date: 2016–05
  6. By: Nakano, Yuko; Tanaka, Tuki; Otsuka, Keijiro
    Abstract: This study investigates the impact of modified System of Rice Intensification (SRI) training provided by a large-scale private farm on the performance of surrounding small-scale rice farmers in a rain-fed area in Tanzania. We found that the training effectively increases the adoption of improved rice cultivation practices, paddy yield, and profit of rice cultivation by small-holder farmers. In fact, the trainees achieve paddy yield of 5 tons per hectare on average, which is remarkably high in rain-fed rice cultivation by any standard. Our results suggest high potential for achieving a rice Green Revolution in rain-fed areas and the importance of extension services by large-scale farms.
    Keywords: Green Revolution, Sub-Saharan Africa, Technology Adoption, Lowland Rice, Modified System of Rice Intensification, Environmental Economics and Policy, Research and Development/Tech Change/Emerging Technologies, O12, O13, O33, O55, Q12, Q16, Q18,
    Date: 2015
  7. By: Nicholas Bloom; Raffaella Sadun; John Van Reenen
    Abstract: Are some management practices akin to a technology that can explain company and national productivity, or do they simply reflect contingent management styles? We collect data on core management practices from over 11,000 firms in 34 countries. We find large cross-country differences in the adoption of basic management practices, with the US having the highest size-weighted average management score. We present a formal model of \Management as a Technology", and structurally estimate it using panel data to recover parameters including the depreciation rate and adjustment costs of managerial capital (both found to be larger than for tangible non-managerial capital). Our model also predicts (i) a positive effect of management on firm performance; (ii) a positive relationship between product market competition and average management quality (part of which stems from the larger covariance between management with firm size as competition strengthens); and (iii) a rise (fall) in the level (dispersion) of management with firm age. We find strong empirical support for all of these predictions in our data. Finally, building on our model, we find that differences in management practices account for about 30% of cross-country total factor productivity differences.
    Keywords: management practices, productivity, competition
    JEL: L2 M2 O32 O33
    Date: 2016–06
  8. By: Yamauchi, Futoshi
    Abstract: This paper examines dynamic patterns of land use, capital investments and wages in agriculture using farm panel data from Indonesia. The empirical analysis shows that with an increase in real wages that prevailed in both agricultural and non-agricultural sectors in rural areas, relatively larger farmers increased the size of operational farm land by renting in land. An increase in real wages has induced the substitution of labor by machines among relatively large farmers. Machines and land are complementary and, consistently, the inverse land-productivity relationship is reversed among relatively large holders.
    Keywords: Wage growth, farm size, mechanization, Indonesia, Agribusiness, Land Economics/Use, Research and Development/Tech Change/Emerging Technologies, J31, Q12, Q15,
    Date: 2015–06
  9. By: Badau, Flavius; Rada, Nicholas
    Abstract: We use an innovative approach to predict agricultural revenues had farmers optimally reallocated production among agricultural commodities in order to minimize inefficiency. To that end, we employ a newly constructed 1980-2008 state-level production account of Indian agriculture, a directional distance frontier specification, and an innovative output-reallocation predictive model to test whether India’s farmers have achieved maximum potential revenues from their choice of agricultural commodity mix given the various policy, environmental, and input supply constraints. The results show substantial levels of technical inefficiency in Indian agriculture (18%). The output reallocation model predicts that Indian agricultural revenues could have been 22 % higher had farmers optimally shifted their agricultural commodity mix in order to minimize inefficiency.
    Keywords: agriculture, efficiency, directional distance function, production, shadow prices, optimal reallocation, Agricultural and Food Policy, Crop Production/Industries, Food Security and Poverty, Livestock Production/Industries, Production Economics, Productivity Analysis,
    Date: 2016
  10. By: Hou, Lingling; Hoag, Dana; Keske, Catherine
    Abstract: This paper estimates the shadow price of CO2 from burning crop residue in the Chinese agricultural sector and explores the policy implications for decision makers. Using a parametric translog directional distance function, we evaluate the technical efficiency and shadow prices of CO2 reduction for 7 major maize provinces in China from 1996-2013. Our results show that crop yield, cost of total inputs, and percentage of burnt crop residue account for 30%, 10% and 20% of the inefficiency, respectively. The shadow price of CO2 from burning crop residue is estimated to range from 0-1.368 yuan/ha (or US$210.5/t) with an average of 0.496yuan/kg (or US$76/t). Further analysis indicates that the average efficiency will increase by 9% if conservation practices are adopted by assuming 10% decrease in yield and 50% decrease in burnt crop residue under conservation practices compared to conventional practices. The shadow prices in these two cases imply that the whole society will benefit if the government spends less than 201 yuan/ha to promote adoption of conservation practices. This government offset would compensate farmers for yield reductions in favor of implementing conservation practices that would substantially reduce CO2 emissions.
    Keywords: shadow prices, greenhouse gases, conservation tillage, distance function, China, Agricultural and Food Policy, Environmental Economics and Policy, Production Economics,
    Date: 2016
  11. By: Cai, Yongyang; Golub, Alla A.; Hertel, Thomas W.; Judd, Kenneth L.
    Abstract: Since the 1950s, increased agricultural productivity has allowed food supply growth to outpace demand on a global scale, resulting in a downward trend in world prices. Investments into agricultural research and development (R&D) have been the foundation for this achievement, but there is a long lag in agricultural productivity response to the investments. The optimal path of R&D spending depends on future population, income and climate change, all of which are highly uncertain. This study offers a dynamic framework for analyzing optimal agricultural R&D spending in the 21st century factoring in uncertainties in these drivers, as well as lagged pay offs on investments into improvements of agricultural productivity.
    Keywords: Agricultural R&D policy, Total Factor Productivity, Robust decision making under uncertainty, Agricultural and Food Policy, Risk and Uncertainty,
    Date: 2016
  12. By: Bajrami, Egzon; Wailes, Eric; Dixon, Bruce; Musliu, Arben
    Keywords: Livestock Production/Industries, Productivity Analysis,
    Date: 2016
  13. By: Bauman, Allison; Jablonski, Becca B.R.; Thilmany McFadden, Dawn
    Abstract: In recent years, the growth in local food marketing channels has been significant. Most of the research in this field examining the economic implication of these trends has focused post-farmgate including supply chain analysis (e.g. Hardesty et al., 2014; King et al., 2010), regional economic impacts (e.g. Brown et al., 2014; Hughes et al., 2008; Jablonski et al., 2016), and consumer values and motivations that have driven demand (e.g. Costanigro, 2014; Lusk and Briggeman, 2009). To date, with the exception of a few case studies examining expenses and sales by channel assessment (LeRoux et al., 2010; Hardesty and Leff, 2010; Jablonski and Schmit 2016) there has been little research that examines the impact on financial viability among farms selling through these markets. The goal of this paper is twofold: first, to identify the factors that have the greatest influence on the efficiency of farmers and ranchers that participate in local food systems, and second, to estimate the relationship between marketing strategy and farm financial efficiency, with a particular focus on variations across farm size. Analyzing the technical efficiency of local food system participants using stochastic frontier analysis, we find that variations across production specialty, market outlet, as well as share of expenses paid to taxes, and labor have the greatest influence on producer efficiency. Either participating in intermediated markets only or both direct-to-consumer and intermediated markets increases profitability compared to participating in direct-to-consumer markets only. At the same time gross cash farm income, an indication of scale, was not statistically significant even though past studies had found a significant relationship. Although scale largely influences choice of market outlet, these results suggest that market outlet has the largest influence on profitability, not scale.
    Keywords: Local foods, technical efficiency, farm profitability, Agricultural Finance, Productivity Analysis, Q14,
    Date: 2016
  14. By: Jan Hanousek (CERGE-EI, Charles University); Evzen Kocenda (Institute of Economic Studies, Charles University)
    Abstract: We analyze how efficiency of firms in the Czech Republic is affected by their size, age, competition, capital structure, ownership types, and global financial crisis. We employ the stochastic frontier approach, use a large and detailed dataset, and cover time span 2001-2012. We show that larger firms cannot be associated with better efficiency in general. Effect of their age has only negligible impact. Impact of the capital structure is shown to be strong in large and more leveraged firms. Higher competition is not contributive to efficiency neither on individual nor aggregate levels. While effects of firm characteristics are small, the effects of ownership are economically substantial. We show that majority owners are most contributive with respect to firm’s efficiency when compared to other categories we analyze. Minority owners with legally grounded power are able to impose significant efficiency improvement. The effect of the foreign ownership is strongest when foreign owners control firms with less than majority of voting power. Minority owners sharing the control do not seem to contribute to efficiency. The impact of crisis is not balanced but can be regarded as negative in general. The firms’ characteristics change only a little. In contrast, worsening impact of the crisis is evidenced for controlling ownership categories. Minority owners exhibit a limited disciplining effect to improve efficiency after the crisis.
    Keywords: efficiency; ownership structure; firms; panel data; stochastic frontier; Europe
    JEL: C33 D24 G32 L60 L80 M21
    Date: 2016–05
  15. By: Puggioni, Daniela; Stefanou, Spiro E.
    Keywords: CSR, Sustainability, Efficiency, Productivity analysis, Multi-output production, Production Economics, Productivity Analysis,
    Date: 2016
  16. By: Ogundari, Kolawole; Awokuse, Titus
    Abstract: The study investigates the effect of agricultural productivity on different food security measures in Sub-Saharan Africa (SSA). We identify food security indicators with per capita total food available in tonnes and per capita nutrient supply (e.g., calories and proteins), while agricultural–value-added per hectare and cereal production per hectare are taken as measures of agricultural productivity in the study. Using a panel data covering 41 countries from 1980-2009, we employ both the dynamic and linear models. The empirical results from both models show that an increase in agricultural productivity contributes positively and significantly to all measures of food security considered in the study. Thus suggesting that the key to improving food security is by boosting the current level of agricultural productivity growth in SSA. Accordingly, we contend that policies geared toward increasing government investment in agricultural research and development (R&D) would likely raise agricultural productivity and subsequently food security levels in the region.
    Keywords: agricultural productivity, food security, cross-country, sub-Saharan Africa, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, C01, C23, O11, O13, O4, O55,
    Date: 2016–08–02
  17. By: Nalpas, Nicolas; Simar, Léopold; Vanhems, Anne
    Abstract: This paper proposes a nonparametric efficiency measurement approach for the static portfo- lio selection problem in a general inputs-outputs space, where inputs can include variance and kurtosis and outputs can include mean and skewness. Our work is in the vein of Briec, Kerstens and Jokung (2007) and Jurzenko, Maillet and Merlin (2006) who develop a directional dis- tance (shortage function) approach to evaluate the performance of portfolios in Mean-Variance- Skewness and in Mean-Variance-Skewness-Kurtosis spaces. Our approach use the Free Disposal Hull (FDH) estimator to derive an algorithm avoiding the heavy and non-robust numerical op- timization approaches suggested so far. This new approach is much faster, more robust to reach the optimum and more exible since it can be extended to more general situations. We illustrate the algorithm with a data set on the French CAC 40 already used in the literature, to compare our method with the numerical optimization approaches.
    Keywords: Directional Distance function, FDH estimator, Efficient frontier, Portfolio performance.
    Date: 2016–05
  18. By: Carrillo, Mario Renato
    Abstract: This paper mainly focuses on the adoption of a bundle of technologies as a group that works well together and is considered complementary to each other. We generated a correlation matrix and then performed a factor analysis on this correlation matrix. This correlation will be an indicator of complementary and substitute technologies. Besides, as these technologies mature, we want to determine how the relationship among technologies changes. In this manner, we can establish which unobservable factors that we are not measuring explain why some farmers are more likely to adopt certain bundles of technologies. The results of this study imply that producers with a higher level of education and high ages are more likely to adopt several bundles of technologies. Large production size is positively correlated with adopting the technologies as bundles. Human capital is a strong factor on the adoption of the technologies as bundles. Because the technologies are complementary, the productivity of one technology is enhanced by the adoption of the other technologies. We find that large farms run by younger and more educated operators are the most likely to adopt multiple technologies.
    Keywords: Agribusiness, Consumer/Household Economics, Farm Management, Livestock Production/Industries,
    Date: 2016–05–25
  19. By: Malikov, Emir; Restrepo-Tobon, Diego A; Kumbhakar, Subal C.
    Abstract: Credit unions differ in the types of financial services they offer to their members. This paper explicitly models this observed heterogeneity using a generalized model of endogenous ordered switching. Our approach captures the endogenous choice that credit unions make when adding new products to their financial services mix. The model that we consider also allows for the dependence between unobserved effects and regressors in both the selection and outcome equations and can accommodate the presence of predetermined covariates in the model. We use this model to estimate returns to scale for U.S. retail credit unions from 1996 to 2011. We document strong evidence of persistent technological heterogeneity among credit unions offering different financial service mixes, which, if ignored, can produce quite misleading results. Employing our model, we find that credit unions of all types exhibit substantial economies of scale.
    Keywords: Credit Unions, Correlated Effects, Ordered Choice, Panel Data, Production, Returns to Scale, Switching Regression
    JEL: C33 C34 D24 G21
    Date: 2016–05

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