nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒08‒21
twelve papers chosen by

  1. Synopsis, Productivity and efficiency of smallholder teff farmers in Ethiopia By Bachewe, Fantu Nisrane; Koru, Bethlehem; Taffesse, Alemayehu Seyoum
  2. Row planting teff in Ethiopia: Impact on farm-level profitability and labor allocation By Vandercasteelen, Joachim; Dereje, Mekdim; Minten, Bart; Taffesse, Alemayehu Seyoum
  3. Synopsis, Cereal productivity and its drivers: The case of Ethiopia By Bachewe, Fantu Nisrane; Koru, Bethlehem; Taffesse, Alemayehu Seyoum
  4. Structural transformation and intertemporal evolution of real wages, machine use, and farm size–productivity relationships in Vietnam By Liu, Yanyan; Violette, William; Barrett, Christopher B.
  5. A Hedonic Output Index based Approach to Modeling Polluting Technologies By Malikov, Emir; Bokusheva, Raushan; Kumbhakar, Subal C.
  6. Do age complementarities affect labor productivity? Evidence from German firm level data By Peters, Jan Cornelius
  7. Does Proximity to Foreign Invested Firms Stimulate Productivity Growth of Domestic Firms? Firm-level Evidence from Vietnam By Daniel Rais
  8. Regional development in Spain 1989-2010: capital widening and productivity stagnation By Montes-Solla, Paulino; Faiña Medín, J. Andres; Lopez-Rodriguez, Jesus
  9. Firm performance and (Foreign) Debt Financing before and During the Crisis: Evidence from Firm-Level Data By Mateja GabrijelÄ iÄ; UroÅ¡ Herman; Andreja LenarÄ iÄ
  10. Can labor market imperfections explain changes in the inverse farm size-productivity relationship?: Longitudinal evidence from rural India By Deininger, Klaus; Jin, Songqing; Liu, Yanyan; Singh, Sudhir K.
  11. Quantitative Analysis of European Union Agriculture Performance By Marian Reiff; Kvetoslava Surmanova; Adam P. Balcerzak; Michal Bernard Pietrzak
  12. Product Mix and Firm Productivity Responses to Trade Competition By Thierry Mayer; Marc Melitz; Gianmarco Ottaviano

  1. By: Bachewe, Fantu Nisrane; Koru, Bethlehem; Taffesse, Alemayehu Seyoum
    Abstract: A large proportion of Ethiopians derive their livelihoods 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. In this study, we investigate the productivity of smallholder teff farmers in Ethiopia, since this is an important crop in terms of cultivated area, food expenditure, and gross domestic product. Despite the remarkable growth in the production of teff 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. This study employs data envelopment analysis on a recently collected large farm household survey dataset from Ethiopia to measure relative productivity and efficiency of teff farmers and to identify the factors that explain differences in relative productivity and efficiency.
    Keywords: ETHIOPIA, EAST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, teff, smallholders, productivity, efficiency, households, food production,
    Date: 2015
  2. By: Vandercasteelen, Joachim; Dereje, Mekdim; Minten, Bart; Taffesse, Alemayehu Seyoum
    Abstract: Improved technologies are increasingly promoted to farmers in sub-Saharan-African countries to address low agricultural productivity in their staple crops. There is, however, a lack of evidence on how adoption affects farmers’ labor use and profitability at the farm level, as well as the importance gender roles play, all essential drivers for the successful up-scaling of the use of the improved technologies. This paper analyses the labor and profitability impact of the recently introduced row planting technology in teff production in Ethiopia. Based on agronomic evidence in experimental settings, the Government of Ethiopia has focused extension efforts on promoting the widespread uptake of row planting to address low teff yields, replacing the traditional broadcasting method of plant teff. Using an innovative Randomized Controlled Trial set-up, we show that the implementation of row planting at the farm level significantly increases total labor use, but not teff yields, relative to broadcast planting, resulting in a substantial drop in labor productivity when adopting row planting. Moreover, the implementation of row planting has important consequences for inter- and intra-household labor allocation, with relatively more use of non-family labor. The adoption of row planting was further found not to be profitable for farmers in the first year of the promotion campaign, seemingly explaining the limited success in up-scaling the adoption of the technology by farmers in the second year of the program.
    Keywords: ETHIOPIA, EAST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, teff, line planting, productivity, yields, smallholders, labor, broadcast sowing, planting, randomized controlled trial, Q12 Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets, Q15 Land Ownership and Tenure, Land Reform, Land Use, Irrigation, Agriculture and Environment, Q16 Agricultural R&, D, Agricultural Technology, Biofuels, Agricultural Extension Services,
    Date: 2016
  3. By: Bachewe, Fantu Nisrane; Koru, Bethlehem; Taffesse, Alemayehu Seyoum
    Abstract: Cereal production has exhibited unprecedented growth in Ethiopia, leading to important welfare improvements in the country. However, it is not well understood what the drivers have been of this growth and how it can be sustained. In particular, there is a lack of evidence on the contribution of improvements in productivity to growth in yields. Moreover, doubts exist on whether it is possible to sustain such growth on declining landholdings. We study cereal production using a unique large-scale survey of households and analyze productivity is-sues using stochastic frontier and data envelopment analyses, two conceptually dissimilar methods. Production frontier estimates indicate that modern inputs contribute significantly to improvements in yields. The two analytical methods used indicate that an average cereal producing household is less than half as efficient as optimally producing households, and, consequently, there is considerable opportunity for additional growth in cereal production in Ethiopia.
    Keywords: ETHIOPIA, EAST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, cereals, productivity, agricultural growth, sustainability, smallholders, farm inputs,
    Date: 2015
  4. By: Liu, Yanyan; Violette, William; Barrett, Christopher B.
    Abstract: This paper explores the evolution of real agricultural wages, machinery use, and the relationship between farm size and productivity in Vietnam during its dramatic structural transformation over the course of the 1990s and 2000s. Using six rounds of nationally representative household survey data, we find strong evidence that the inverse relationship between rice productivity and planting area attenuated significantly over this period and that the attenuation was most pronounced in areas with higher real wages. This pattern is also associated with sharp increases in machinery use, indicating a scale-biased substitution effect between machinery and labor. The results suggest that rural-factor market failures are receding in importance, making land concentration less of a cause of concern for aggregate food production.
    Keywords: VIET NAM, VIETNAM, SOUTH EAST ASIA, ASIA, productivity, structural change, farm size, food production, households, mechanization,
    Date: 2016
  5. By: Malikov, Emir; Bokusheva, Raushan; Kumbhakar, Subal C.
    Abstract: Despite some recent criticisms, the conventional radial distance function, which treats undesirable by-products as either frontier shifters or inputs, remains a popular go-to formulation of polluting production processes among practitioners. This unfading popularity is arguably driven by the ability of radial distance functions, unlike alternative directional distance functions, to allow for unit-free multiplicative changes in arguments as well as, by implicitly postulating the radial direction, to free researchers from the dilemma of having to explicitly choose the directional vector. In this paper, we offer a generalization of the standard radial distance function to polluting technologies that can accommodate undesirable by-products in a more economically meaningful way. Specifically, we propose modeling undesirable outputs via a hedonic output index, which is meant to ensure that pollutants are treated as outputs, as opposed to inputs or theoretically unregulated frontier shifters, while also recognizing their undesirable nature. By using a radial input distance function generalized to encompass an (unobservable) hedonic output index of desirable and undesirable outputs, we are able to meaningfully describe relationships between different products (including the complementarity of desirable and undesirable outputs) within producible output sets as well as to represent technically feasible polluting production possibilities given inputs. An empirical application of our methodology to the case of Dutch dairy farms in 2001-2009 demonstrates the complexity of interactions between outputs, thereby attesting to the value of more elaborate representations of production possibilities.
    Keywords: bad output, dairy production, input distance function, livestock, nitrogen pollution, shadow price
    JEL: D24 D62 Q12
    Date: 2016
  6. By: Peters, Jan Cornelius
    Abstract: In Germany, as in many other European countries, there will be a shift in the workforce age structure in the next decades. The number of older workers will increase, and the number of younger and middle aged workers will decline. This paper provides evidence how the shift in the relative labor supply affects labor productivity, taking into account that differently aged workers are suggested to be imperfect substitutes. Using a cross sectional linked employer-employee data set from 2012, translog cost functions are estimated. To control for the skill level of the workers a nested production structure is applied. This allows to analyze age complementarities within groups of workers that have a comparable skill level. Based on the estimated parameters, pairwise elasticities of complementarity and factor price elasticities are computed. The results indicate that workers that belong to different age groups are complementary factors. But the degree of complementarity differs, depending on the age and the skill level of the workers. The complementarities especially arise between younger and middle aged workers. The highest degree of complementarity is observed between younger and middle aged high skilled labor. Simulating how the expected shift in the age structure affects labor productivity indicates that the productivity of younger and middle aged workers will increase. In contrast, the productivity of older workers will significantly decline caused by their increasing share in the workforce.
    Keywords: age complementarities,demographic change,labor-labor substitution,linked employer-employee,translog
    JEL: C31 D24 J11 J31
    Date: 2016
  7. By: Daniel Rais
    Abstract: SECO Working Paper No. 10/2016 by Stephan Kyburz and Huong Quynh Nguyen
    Date: 2016–08–16
  8. By: Montes-Solla, Paulino; Faiña Medín, J. Andres; Lopez-Rodriguez, Jesus
    Abstract: This paper analyses the different factors that explain the pattern of economic growth in Spain along the 1989-2010 period. The results of our analysis provide strong evidence of stagnation in productivity throughout most of the period under study. The large investments and the strong growth in capital stocks were practically absorbed by an intense process of job creation. As a consequence, the capital/labour ratio and labour productivity levels had a very low growth, whereas total factor productivity (TFP) decreased over the period of analysis. Therefore unlike other European countries, Spain did not experience a phenomenon of capital deepening with an increase in productivity. The intense GDP pc growth in Spain was of a rather "extensive" type, mainly based on a capital widening process.
    Keywords: Regional development, Infrastructures, Capital widening, Productivity stagnation, Total Factor Productivity
    JEL: R10 R11 R12 R13 R14
    Date: 2015–11–03
  9. By: Mateja GabrijelÄ iÄ (Bank of Slovenia); UroÅ¡ Herman (GSEFM, Goethe University Frankfurt); Andreja LenarÄ iÄ (European Stability Mechanism)
    Abstract: We study the effects of financial leverage and foreign financing on firm performance before and during the recent crisis, using a large panel of Slovenian companies. We find a significant negative impact of leverage on firm performance, even when we explicitly control for the reverse causality between the two variables. The negative effect, albeit weaker, persists also in the crisis period. Firms with some foreign debt performed better on average than firms relying only on domestic financing. At the same time, they suffered a stronger decrease in performance if their total leverage increased. Moreover, when we explicitly control for the amount of foreign financing, we find that it has a positive and highly significant effect on firm performance. The significant positive effect of foreign financing in the pre-crisis period seems to be entirely driven by privately owned firms, while the effects are negative for the state owned companies. During the crisis, the effects are positive but insignificant for both ownership types. Finally, when comparing domestic and foreign owned firms, we see no substantial variation in the coefficients.
    Keywords: Leverage, foreign leverage, firm performance, instrumental variable, panel data, crisis
    JEL: F34 G15 G24 H63
    Date: 2016–07
  10. By: Deininger, Klaus; Jin, Songqing; Liu, Yanyan; Singh, Sudhir K.
    Abstract: To understand whether and how inverse relationship between farm size and productivity changes when labor market performance improves, we use large national farm panel from India covering a quarter-century (1982, 1999, 2008) to show that the inverserelationship weakened significantly over time, despite an increase in the dispersion of farm sizes. A key reason was the substitution of capital for labor in response to nonagricultural labor demand. In addition, family labor wasmore efficient than hired labor in the 1982–1999 period, but not during the 1999–2008period.In line with labor market imperfections as a key factor, separability of labor supply and demand decisions cannot be rejected in the second period,except in villages with very low nonagricultural labor demand.
    Keywords: INDIA, SOUTH ASIA, ASIA, farm size, farm structure, productivity, agricultural development, labor, markets, inverse farm size-productivity relationship, labor market imperfections, farm size in India,
    Date: 2016
  11. By: Marian Reiff (University of Economics in Bratislava, Slovakia); Kvetoslava Surmanova (University of Economics in Bratislava, Slovakia); Adam P. Balcerzak (Nicolaus Copernicus University, Poland); Michal Bernard Pietrzak (Nicolaus Copernicus University, Poland)
    Abstract: The main aim of the article is to analyze differences of agriculture performance across the European Union countries in the years 2010-2013. The special attention was devoted to the results obtained by New Member States. The research was conducted with application of multiple criteria analysis tools: the method proposed by Hellwig and Ward’s clustering method. The research was based on the collection of the World Bank development indicators. It confirms the existence of significant disparity in the performance of agricultural sector between the old and new member states that joined the UE after the year 2004.
    Keywords: Multiple Criteria Decision Analysis (MCDA), Hellwig Method, Cluster analysis, Economic performance, Agriculture
    JEL: C38 O13
    Date: 2016–08
  12. By: Thierry Mayer; Marc Melitz; Gianmarco Ottaviano
    Abstract: We document how demand shocks in export markets lead French multi-product exporters to re-allocate the mix of products sold in those destinations. In response to positive demand shocks, those French firms skew their export sales towards their best performing products; and also extend the range of products sold to that market. We develop a theoretical model of multi-product firms and derive the specific demand and cost conditions needed to generate these product-mix reallocations. Our theoretical model highlights how the increased competition from demand shocks in export markets-and the induced product mix reallocations-induce productivity changes within the firm. We then empirically test for this connection between the demand shocks and the productivity of multi-product firms exporting to those destinations. We find that the effect of those demand shocks on productivity are substantial-and explain an important share of aggregate productivity fluctuations for French manufacturing.
    Keywords: Multiproduct Firms;Productivity;Trade
    JEL: F1
    Date: 2016–07

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.