nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒08‒07
seventeen papers chosen by

  1. Total factor productivity heterogeneity: channelling the impact of institutions By Agostino, Mariarosaria; Nifo, Annamaria; Trivieri, Francesco; Vecchione, Gaetano
  2. Multi-factor CES Elasticity and Productivity Growth: A Cross-Sectional Approach By Jiyoung Kim; Satoshi Nakano; Kazuhiko Nishimura
  3. Productivity Spillovers from Foreign Direct Investment: The Case of Ethiopia By Abeba Nigussie Turi
  4. Strengthening competition in network sectors and the internal market in Canada By Corinne Luu
  5. Operational performance management of the power industry: A distinguishing analysis between effectiveness and efficiency By Ke Wang; Chia-Yen Lee; Jieming Zhang; Yi-Ming Wei
  6. Efficiency in South African Agriculture: A Two-Stage Fuzzy Approach By Goodness C. Aye; Rangan Gupta; Peter Wanke
  7. Academic Inbreeding and Research Productivity Of Russian Faculty Members By Olga Gorelova; Andrey Lovakov
  8. Firm size distortions and the productivity distribution: evidence from France By Luis Garicano; Claire Lelargez; John Van Reenen
  9. Are migrants more productive than stayers? Some evidence for a set of highly productive academic economists By Ruiz-Castillo, Javier; Carrasco, Raquel; Albarrán, Pedro
  10. “Attitudes to Leadership and Voting: Finding the Efficient Frontier” By Davis, Brent
  11. Assessing health facility performance in Indonesia using the Pabón Lasso Model and unit cost analysis of health services By Firdaus Hafidz; Tim Ensor; Sandy Tubeuf
  12. Ethnic Minority Concentration: A Source of Productivity Growth for Italian Provinces? By Alessandra, Michelangeli; Nicola, Pontarollo
  13. Carbon Taxes, Path Dependency, and Directed Technical Change: Evidence from the Auto Industry By Aghion, Philippe; Dechezleprêtre, Antoine; Hemous, David; Martin, Ralf; Van Reenen, John
  14. Reforms for the Ease of Doing Business in Vietnam: Implications for Total Factor Productivity in Manufacturing Industries By Daniel Rais
  15. Efficiency measurement in health facilities: Literature review in low- and middle-income countries By Firdaus Hafidz; Tim Ensor; Sandy Tubeuf
  16. Impact of Structural Reforms on Regional Growth: Distance to the Frontier Matters By Sabine D'Costa; Enrique Garcilazo; Joaquim Oliveira Martins
  17. Recovery from Work and the Productivity of Working Hours By Pencavel, John

  1. By: Agostino, Mariarosaria; Nifo, Annamaria; Trivieri, Francesco; Vecchione, Gaetano
    Abstract: This paper aims to contribute to the debate on the determinants of differentials in firms’ productivity. We test the hypothesis that macro factors, especially the quality of local institutions, play a role in explaining firm productivity in Italy. To this end, following Fӓre et al. (1994), we decompose the Malmquist index of total factor productivity (TFP) change for approximately 7,500 manufacturing small and medium-sized firms, and we proxy province-level institutional quality using the IQI index (Nifo and Vecchione, 2014). The results of our stimations suggest that better local institutions might help firms better combine inputs, approach the optimal size, and ultimately be more productive.
    Keywords: TFP, Malmquist index, Institutional quality, Italian manufacturing SMEs
    JEL: C31 C33 D24 L60 O43 O47 O50 R11
    Date: 2016–05–01
  2. By: Jiyoung Kim; Satoshi Nakano; Kazuhiko Nishimura
    Abstract: Sector-wise productivity growths are measured, along with the sectoral elasticity of substitutions, under the multi-factor CES framework, by regressing the growths of factor-wise cost shares against the growths of relative factor prices. We use linked input-output tables for Japan and Korea as the data source for factor price and cost shares in two timely distant states. We then construct a multi-sectoral general equilibrium model using the system of estimated CES unit cost functions, and evaluate the economy-wide propagation of an exogenous productivity gain, in terms of welfare. Further, we examine the differences between models based on a priori elasticities such as Leontief and Cobb-Douglas.
    Date: 2016–08
  3. By: Abeba Nigussie Turi (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)
    Abstract: This paper presents the spillover effect resulting from the foreign direct investment with a focus on the manufacturing firms in Ethiopia. Being one of the pillars of the Growth and Transformation Plan (GTP), identifying the productivity spillovers arising from the FDI to the sector is timely. The research covers extensive econometric analysis based on the Central Statistics Agency’s (CSA) survey, for the years 2004 up to 2010, on the manufacturing firms and an Input-Output matrix, for the year 2005/6, constructed by the Ethiopian Development Research Institute (EDRI). My analysis suggests that there is an econometric evidence for positive Backward spillovers and negative Forward spillovers to the total productivity of the manufacturing firms in the country. The paper’s findings on this aspect are limited. Because, the analysis entirely rely on industry level secondary data and only one year Input-Output matrix. Therefore, there is a potential for further research work; given this benchmark finding.
    Keywords: Foreign Direct Investment, Spillover Effect, Total Factor Productivity
    JEL: F2 F21 F23
    Date: 2015–12
  4. By: Corinne Luu
    Abstract: Canada’s productivity performance has lagged that of many other OECD countries, despite some improvement in recent years. One measure to enhance overall efficiency would be to strengthen competition on the domestic market to drive future multi-factor productivity improvements. The potential gains are large: about a half a percent per year over a fairly long horizon. This paper focuses on increasing competition in network sectors, including energy, telecommunication services and broadcasting, and transportation, which are key inputs to production in the broader economy. Improving regulatory conditions, efficiency and/or cost competitiveness could yield more productive outcomes in these sectors, as well as in downstream industries. Competition could also be increased by lowering barriers to interprovincial trade and the movement of labour, which act to fragment Canada’s already small domestic market. To this end, reforms of the Agreement on Internal Trade and measures to reduce sectoral barriers to trade are also discussed. This Working Paper relates to the 2016 OECD Economic Survey of Canada ( Concurrence dans les industries de réseau et renforcement du marché intérieur au Canada La productivité canadienne est inférieure à celle de nombreux pays de l’OCDE malgré quelques progrès ces dernières années. Il serait possible d’accroître l’efficience globale en renforçant la concurrence sur le marché intérieur afin de favoriser les futurs gains de productivité globale. Ces gains sont importants, de l’ordre d’un demi pour cent par an sur une période plutôt longue. Ce document porte principalement sur l’intensification de la concurrence dans les industries de réseau, comme l’énergie, les télécommunications, la diffusion audiovisuelle et les transports, qui jouent un rôle essentiel dans le processus de production de l’ensemble de l’économie. L’amélioration de la réglementation, l’augmentation de l’efficience et/ou le renforcement de la compétitivité-coût pourraient accroître la productivité dans ces secteurs, ainsi que dans les secteurs d’aval. La concurrence pourrait également être intensifiée par la réduction des obstacles aux échanges entre provinces et à la mobilité de la main-d’oeuvre, qui fragmentent un marché intérieur déjà petit. Ce document examine donc également les réformes possibles de l’Accord sur le commerce intérieur et les mesures visant à réduire les obstacles sectoriels aux échanges. Ce Document de travail se rapporte à l’Étude économique de l’OCDE du Canada 2016 ( ique-canada.htm)
    Keywords: productivity, network industries, competition, regulation, integration, productivité, concurrence, intégration, industries de réseaux, réglementation
    JEL: J44 L1 L3 L5 L66 L9 O43 Q18
    Date: 2016–08–03
  5. By: Ke Wang; Chia-Yen Lee; Jieming Zhang; Yi-Ming Wei (Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology)
    Abstract: The trend toward a more competitive electricity market has led to efforts by the electric power industry to develop advanced efficiency evaluation models that adapt to market behavior operations management. The promotion of the operational performance management of the electric power industry plays an important role in China's efforts toward energy conservation, emission control and sustainable development. Traditional efficiency measures are not able to distinguish sales effects from productive efficiency and thus are not sufficient for measuring the operational performance of an electricity generation system for achieving its specific market behavior operations management goals, such as promoting electricity sales. Effectiveness measures are associated with the capacity of an electricity generation system to adjust its input resources that influence its electricity generation and, thus, the capacity to match the electricity demand. Therefore, the effectiveness measures complement the efficiency measures by capturing the sales effect in the operational performance evaluation. This study applies a newly developed data envelopment analysis-based effectiveness measurement to evaluate the operational performance of the electric power industry in China's 30 provincial regions during the 2006-2010 periods. Both the efficiency and effectiveness of the electricity generation system in each region are measured, and the associated electricity sales effects and electricity reallocation effects are captured. Based on the results of the effectiveness measures, the alternative operational performance improvement strategies and potentials in terms of input resources savings and electricity generation adjustments are proposed. The empirical results indicate that the current interregional electricity transmission and reallocation efforts are effective in China overall, and a moderate increase in electricity generation with a view to improving the effect on sales is more crucial for improving effectiveness.
    Keywords: China; Data envelopment analysis (DEA); Electricity generation system; Electricity reallocation; Electricity sales effect
    JEL: Q54 Q40
    Date: 2016–04–25
  6. By: Goodness C. Aye (Department of Economics, University of Pretoria, Pretoria); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria); Peter Wanke (COPPEAD Graduate Business School, Federal University of Rio de Janeiro)
    Abstract: This paper presents an efficiency assessment of agricultural production in South Africa from 1970-2014, using an integrated two-stage fuzzy approach. More precisely, Fuzzy TOPSIS is used to assess the relative efficiency of agriculture in South Africa over the course of the years. In the second stage, fuzzy regressions based on different rule-based systems are used to predict the impact of socio-economic and demographic variables on agricultural efficiency. They are confronted with the bootstrapped truncated regressions with conditional α-levels proposed in Wanke et al. (2016a). The results reveal that R&D, land quality, health expenditure-population growth ratio have a significant, positive impact on efficiency levels, besides the GINI index. Specifically in terms of accuracy, fuzzy regressions outperformed the bootstrapped truncated regressions with conditional α-levels. Policy implications are derived.
    Keywords: Agriculture, South Africa, Fuzzy TOPSIS, Fuzzy Regression, Performance
    JEL: C6 D24 Q10 Q28
    Date: 2016–07
  7. By: Olga Gorelova (National Research University Higher School of Economics); Andrey Lovakov (National Research University Higher School of Economics)
    Abstract: The literature on the consequences of academic inbreeding shows ambiguous results: some papers show that inbreeding positively influences research productivity, measured in the quantity and quality of publications, while others show the opposite effect. There are contradictory results both in studies of different countries and within countries. Such a variety of results makes it impossible to transfer the findings from one academic system to another, and in Russia this problem has been under explored. This paper focuses on the relationship between inbreeding and publication activity among Russian faculty members. The results, using Russian data from the Changing Academic Profession survey, showed no substantial effect of academic inbreeding on research productivity. Inbred and non-inbred faculty members do not differ substantially in terms of the probability of having publications, or how many, although for inbreds such probability is slightly higher. These results are robust for different operationalizations of inbreeding and measures of publication activity. However the absence of significant differences in the number of publications may not mean the absence of a difference in their quality. The possible explanations and limitations of the standard measures of research productivity are discussed.
    Keywords: Academic profession, Academic inbreeding, Research productivity, Faculty members, Russian higher education, Changing Academic Profession
    JEL: I23 I28
    Date: 2016
  8. By: Luis Garicano; Claire Lelargez; John Van Reenen
    Abstract: We show how size-contingent laws can be used to identify the equilibrium and welfare effects of labor regulation. Our framework incorporates such regulations into the Lucas (1978) model and applies it to France where many labor laws start to bind on firms with 50 or more employees. Using population data on firms between 1995 and 2007, we structurally estimate the key parameters of our model to construct counterfactual size, productivity and welfare distributions. We find that the cost of these regulations is equivalent to that of a 2.3% variable tax on labor. In our baseline case with French levels of partial real wage inflexibility welfare costs of the regulations are 3.4% of GDP (falling to 1.3% if real wages were perfectly flexible downwards). The main losers from the regulation are workers - and to a lesser extent, large firms - and the main winners are small firms.
    Keywords: Firm size; productivity; labor regulation; power law
    JEL: J1 N0
    Date: 2016
  9. By: Ruiz-Castillo, Javier; Carrasco, Raquel; Albarrán, Pedro
    Abstract: This paper compares the average productivity of migrants (who work in a country different from their country of origin) and stayers (whose entire academic career takes place in their country of origin) in a set of 2,530 highly productive economists that work in 2007 in a selection of the top 81 Economics departments worldwide. The main findings are the following two. Firstly, productivity comparisons between migrants and stayers depend on the cohort and the type of department where individuals work in 2007. For example, in the top U.S. departments, foreigners are more productive than stayers only among older individuals; in the bottom U.S. departments, foreigners are more productive than stayers for both cohorts, while in the other countries with at least one department in the sample the productivity of foreigners and stayers is indistinguishable for both cohorts. Secondly, when we restrict our attention to an elite consisting of economists with above average productivity, all productivity differences between migrants and stayers in the U.S. vanish. These results are very robust. However, our ability to interpret these correlations is severely limited by the absence of information on the decision to migrate.
    Date: 2016–07–01
  10. By: Davis, Brent
    Abstract: Winning elections is essentially a matter of translating the attitudes of voters into votes. Although this proposition may sound simple, the reality is considerably more challenging. Despite vast scholarship over many years we know very little, if anything, about the efficiency with which the inputs (voter attitudes) to the political process are converted into outputs (vote support). Data Envelopment Analysis (DEA) provides a statistical method to measure the efficiency with which inputs are converted into outputs. The results of the DEA analysis and associated modelling find marked differences in the political efficiency of recent Australian political leaders.
    Keywords: campaigns; election; politimetric modelling; Data Envelopment Analysis; voter behaviour; political marketing; Australian elections
    JEL: C1 C13 C5 C51 C53 C54 H1 H11 K0
    Date: 2016–08
  11. By: Firdaus Hafidz (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds); Tim Ensor (Leeds Institute of Health Sciences, University of Leeds); Sandy Tubeuf (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds)
    Abstract: Total health care costs have dramatically increased in Indonesia and health facilities consume the largest share of health resources. This study aims to provide a better understanding of the characteristics of the best performing health facilities and identify potential drivers of service efficiency. We employ four cross-sectional national Indonesian datasets for 2011 and analysed 200 hospitals and 95 health centres. We first apply the Pabón Lasso Model to assess the relative performance of health facilities in terms of bed occupancy rate and the number of admission per bed; the model groups health facilities into four sectors representing different levels of productivity. We then use a step-down costing method to estimate the cost per outpatient visit, inpatient, and bed-days in hospitals and health centres. We also apply bivariate analyses, including difference and correlation tests to identify the internal and external factors affecting health facility performance. Forty percent of hospitals and 33 percent of health centres were located in the high performing sector of the Pabón Lasso model. A wide variation in unit costs across health facilities present a basis for benchmarking and identifying relatively efficient units. The major components of cost were human resources and materials such as pharmaceuticals and medical supplies. Combining the unit cost analysis and Pabón Lasso model, we find that health facility performance is likely affected by both internal (size and capacity, financing, ownership, accreditation status, and staff availability) and external factors (economic status, market competition, population education level, location, and insurance coverage). Our study demonstrates that it is feasible to identify the best performing health facilities and provide information about how to improve efficiency using simplistic methods.
    Keywords: Efficiency, performance, health facilities, costing study, Pabón Lasso model
    JEL: I10 D24
    Date: 2016
  12. By: Alessandra, Michelangeli; Nicola, Pontarollo
    Abstract: This paper aims at assessing the contribution of ethnic minorities to the productivity of the main sectors of Italian provinces. To this end, we consider the first ten nationalities by numbers of regularised persons observed at the provincial level (NUTS-3) between 2003 and 2011. We use an empirical panel growth model with spatially augmented specifications, which allows to capture both the direct (marginal) and indirect (spillover) effects of each community on local productivity at the provincial level. Our findings show that two communities out of ten have a positive impact on economic performance of Italian provinces. Other foreign groups have significant effects only indirectly, meaning that these groups do not affect growth of provinces where they live, but the neighbouring provinces likely because of commuting.
    Keywords: productivity growth, specialisation, spatial econometrics, foreigners
    JEL: R11 R12 R23
    Date: 2016–08–02
  13. By: Aghion, Philippe; Dechezleprêtre, Antoine; Hemous, David; Martin, Ralf; Van Reenen, John
    Abstract: Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between "dirty" (internal combustion engine) and "clean" (e.g. electric and hybrid) patents across 80 countries over several decades. We show that firms tend to innovate relatively more in clean technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation both from aggregate spillovers and from the firm's own innovation history. Using our model we simulate the increases in carbon taxes needed to allow clean to overtake dirty technologies.
    Date: 2016
  14. By: Daniel Rais
    Abstract: SECO Working Paper 9/2016
    Date: 2016–07–27
  15. By: Firdaus Hafidz (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds); Tim Ensor (Leeds Institute of Health Sciences, University of Leeds); Sandy Tubeuf (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds)
    Abstract: Limited health care resources and budget restrictions in low-and middle- income countries (LMICs) have led policy makers to improve efficiency. Therefore, it is essential to understand how efficiency has been measured in the LMICs setting. To date, no systematic review has been conducted to assess efficiency measurement in health facilities in LMICs. This paper synthesises studies of efficiency measurement in health facilities in LMICs. A systematic search of Embase, MEDLINE, Econlit and Global Health identified 4944 articles with a further 15 articles identified through manual searching. A total of 95 papers were eligible for inclusion. These covered a wide range type of health facilities with more than half of the studies (61%) were hospitals. Most studies (67%) employed Data Envelopment Analysis (DEA,) as efficiency measurement method. Studies usually included physical and financial inputs while they used the number of outpatients, inpatients, or bed-days as outputs. We identified main internal and external contextual factors applied to explore the determinant of health facility efficiency. Most studies suggested policies focused on input optimisation, rather than increasing production. The paper concludes by highlighting the need for routine benchmarking as a monitoring and evaluation tool to improve efficiency
    Keywords: efficiency, health facility, low- and middle-income countries
    JEL: I10 D24
    Date: 2016
  16. By: Sabine D'Costa; Enrique Garcilazo; Joaquim Oliveira Martins
    Abstract: This paper aims to understand the impact of nation-wide structural policies on the productivity growth of OECD regions. In particular we explore how this impact varies with the productivity gap of regions with their country's frontier region. We use a policy-augmented growth model that allows us to estimate the effects of macroeconomic and structural policies on regional productivity growth. We estimate our model with an unbalanced panel dataset consisting of 265 regions from 24 OECD countries covering the period 1997 to 2007. We find that the effects on regional productivity growth are differentiated with respect to the regional productivity gap: Relaxing employment protection legislation on temporary contracts or lowering barriers to trade and investment would enhance productivity growth in lagging regions, whereas reducing the amount of state control has the opposite effect on lagging regions. Macroeconomic factors also influence regional performance: trade openness and the government debt to GDP ratio are more beneficial to lagging regions. These results reveal that average relationships between nation-wide policies and the productivity of regions can hide strong differentiated effects according to the distance to the country frontier. This carries important policy implications, mainly that these region-specific effects should be taken into account in the policy design.
    Keywords: structural reforms, regional growth, lagging regions
    JEL: R11 R58 O18
    Date: 2016–07
  17. By: Pencavel, John (Stanford University)
    Abstract: Observations on munition workers are organized to examine the relationship between their output each week, their working hours and days each week, and their working hours and days in adjacent weeks. The hypothesis is that workers need to recover from work and a long working week results in greater fatigue and stress and yet provides insufficient time for recuperation before the next week's work opens. Workers require time off the job to restore their physical, mental, and emotional capacities and, if a long working week provides inadequate time to repair, their subsequent work performance suffers.
    Keywords: working hours, output, productivity, recovery
    JEL: J24 J22 N34
    Date: 2016–07

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