nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒09‒18
sixteen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Efficiency and Capital Structure in the Italian Cereal Sector By Tiberti, Marco; Stefani, Gianluca; Lombardi, Ginevra
  2. Labor Productivity Slowdown in the Developed Economies. Another Productivity Puzzle? By Georg Erber; Ulrich Fritsche; Patrick Harms
  3. Using nonparametric conditional approach to integrate quality into efficiency analysis: Empirical evidence from cardiology departments By Varabyova, Yauheniya; Blankart, Carl Rudolf Berchtold; Schreyögg, Jonas
  4. Productivity and reallocation: evidence from the universe of Italian firms By Andrea Linarello; Andrea Petrella
  5. The impact of loan financing on SME’s from transitional countries By Jens Hoelscher; Peter Howard-Jones; Allan Webster
  6. Back to the Future. The effect of digital technology on the performance of public historical archives By Calogero Guccio; Marco Martorana; Isidoro Mazza; Ilde Rizzo
  7. Did EU accession improve efficiency of firms from transitional countries? By Jenifer Piesse; Dragana Radicic; Allan Webster
  8. The Measuring the Efficiency of Food Chains – Selected Approaches By Jarzębowski, Sebastian; Bezat-Jarzębowska, Agnieszka
  9. Management as a technology? By Nicholas Bloom; Raffaella Sadun; John Van Reenen
  10. Production with Storable and Durable Inputs: Nonparametric Analysis of Intertemporal Efficiency By Laurens Cherchye; Bram De Rock
  11. Modelling the effect of crime on economic activity: The case of Mexican states By Álvarez, Antonio; Garduño, Rafael; Núñez, Héctor
  12. Information Asymmetry and Market Power in the African Banking Industry By Agyenim Boateng; Simplice Asongu; Raphael Akamavi; Vanessa Tchamyou
  13. How Does Energy-Cost Lead to Energy Efficiency? Panel Evidence from Canada By Samuel Gamtessa; Adugna Olani
  14. Firm size distortions and the productivity distribution: evidence from France By Luis Garicano; Claire Lelarge; John Van Reenen
  15. Agglomeration Economies, Productivity, and Quality Upgrading By SAITO Hisamitsu; MATSUURA Toshiyuki
  16. Does competition from private surgical centres improve public hospitals’ performance? Evidence from the English National Health Service By Zack Cooper; Stephen Gibbons; Matthew Skellern

  1. By: Tiberti, Marco; Stefani, Gianluca; Lombardi, Ginevra
    Abstract: Farm capital structure may have contrasting effects on farm efficiency as a strand of the farm efficiency literature as pointed out ( for a review see for example Davidova and Latruffe 2007). Farmers often use external funding both to cover productions costs and to finance investments (machinery, equipment, buildings) to enhance farm economic performance. The debt is necessary to maintain or improve farm productivity and competitiveness by adopting technological innovation needed to increase farm efficiency. At the same time leverage may affects farm efficiency by influencing farm production decision constrained by lower farm expenditure capacity. In this case, farms response may rely on reducing the necessary expenditures to maintain the production assets with negative consequences on farm productivity, growth and efficiency. Finally, farm leverage may affects the farms capacity to react to market shocks adopting the needed strategic adjustments to maintain productivity, efficiency and competitiveness. A relevant case study for assessing this last effect would be the recent surge in price volatility that affected European and world cereal markets starting from 2008.
    Keywords: Agribusiness,
    Date: 2016–05
  2. By: Georg Erber (formerly DIW); Ulrich Fritsche (Universität Hamburg (University of Hamburg)); Patrick Harms (Universität Hamburg (University of Hamburg))
    Abstract: The paper addresses the topic of an overall long-term productivity slowdown in labor productivity for a panel of 25 developed countries. Besides studying individual long-term trends of single countries using filtering techniques we also test for multiple structural breakpoints in the long-term trends. Furthermore after determining the country specific long-term productivity trends using state-space approaches, we extract a common factor from these long-term trend series using factor analysis. The country specific differences are only of second order importance. Dominant is an overall long-term productivity slowdown. The beginning of this slowdown already started in the 1970s and has persisted without any significant structural breakpoint afterwards until now. The same analysis for GDP growth and hours worked data were performed. We found similar results for the GDP growth data compared to the productivity data but not for the hours worked data. Furthermore Granger causality tests reveal that the trend productivity slowdown is driven by the downward trending GDP growth and not vice versa. For the hours worked data no significant relation to productivity growth could be confirmed.
    Keywords: Productivity slowdown, labor productivity, GDP measurement, Granger causality, factor analysis, Kalman filter, structural break
    JEL: E01 O47 C22 C38
    Date: 2016–09
  3. By: Varabyova, Yauheniya; Blankart, Carl Rudolf Berchtold; Schreyögg, Jonas
    Abstract: In the past decades, hospitals have been facing pressure to increase the efficiency of resource allocation. One way to achieve higher levels of technical efficiency is to treat more patients with the same amount of personnel, which could potentially lead to a trade-off between improving efficiency and maintaining good patient service. The aim of this study is to demonstrate how the nonparametric conditional approach can be used to integrate quality into the analysis of efficiency. The conditional approach allows investigating the mechanism through which quality enters the production process. Generally, an external variable may enter the production process by affecting either the attainable frontier or the distribution of inefficiencies inside the production set. To account for the heterogeneity of hospital services, we focus on a hospital department as the unit of analysis. We use data from 178 departments of interventional cardiology and consider three different measures of quality: patient satisfaction, risk-adjusted mortality, and patient radiation exposure. Our empirical assessment shows that the impact of quality on the production process differs according to the utilized quality measure. Patient satisfaction does not affect the attainable frontier but does have an inverted U-shaped effect on the distribution of inefficiencies; risk-adjusted mortality negatively impacts the attainable frontier at high values of mortality but does not impact the distribution of inefficiencies; and patient radiation exposure is not associated with the production process. Our results refute the existence of a clear trade-off between efficiency and quality. The conditional approach can be applied to deal with the complexity of the underlying relationships between efficiency and quality.
    Keywords: quality,efficiency,cardiology department,conditional approach,data envelopment analysis (DEA)
    Date: 2016
  4. By: Andrea Linarello (Banca d'Italia); Andrea Petrella (Banca d'Italia)
    Abstract: This paper investigates the contribution of allocative efficiency to aggregate labor productivity growth in Italy between 2005 and 2013. Exploiting a unique dataset that covers the universe of active firms, we find that allocative efficiency accounted for 35 per cent of aggregate productivity in 2005 and its weight increased by almost 7 percentage points during the period of observation. We show that the dynamics of aggregate labor productivity benefited from the reallocation of resources among continuing firms and from the net effect of business demography. Among industries, we find that reallocation has been stronger in industries that are more exposed to import competition from developing countries. Moreover, we document that the observed adjustments have not evenly affected all firms across the productivity distribution: selection has become tougher for firms belonging to the lower tail, forcing the exit of the least productive firms and favoring the reallocation of the workforce to the best performing firms.
    Keywords: aggregate labor productivity, allocative efficiency
    JEL: L25 O47
    Date: 2016–09
  5. By: Jens Hoelscher (Bournemouth University, Executive Business Centre); Peter Howard-Jones (Bournemouth University, Executive Business Centre); Allan Webster (Bournemouth University, Executive Business Centre)
    Abstract: This study considers the impact of finance (loans) on the performance and productive efficiency of a sample of 8037 SMEs from transitional countries. An extensive macro-economic literature supports the importance of finance to growth. For this to be truly convincing it is necessary to show that firm performance is strengthened by loans. There are very few firm level studies of the linking loans and firm performance. This study extends the firm level literature using the 2013 BEEPS survey .It uses three different methodologies, all incorporating firm heterogeneity. Firstly, we use propensity score matching to test whether loans result in enhanced performance and finds that loans did indeed improve performance. Secondly, we re-enforce these conclusions using inverse probability weighted regression adjustment (IPWRA) analysis. Finally we employ a stochastic frontier approach to (a) measure firm inefficiency and (b) to show that loans create a statistically significant reduction in this inefficiency.
    Keywords: SMEs; finance; transition; efficiency
    JEL: L25 G21 P27
    Date: 2016–07
  6. By: Calogero Guccio (Department of Economics and Business, University of Catania); Marco Martorana (Department of Economics and Business, University of Catania); Isidoro Mazza (Department of Economics and Business, University of Catania); Ilde Rizzo (Department of Economics and Business, University of Catania)
    Abstract: The diffusion of social media platforms in public services calls for investigating their role in terms of supply and consumption. In cultural heritage, the application of such technologies has manifold implications ranging from preservation, to production and usage of cultural goods. This paper explores the scope for the use of new media in cultural heritage using website services. More specifically, we investigate the efficiency of public historical archives (PHAs) in Italy over the period 2009-2014 and try to assess the influence of websites on their efficiency. We use a two-stage approach involving the estimation of the frontier using Data Envelopment Analysis (DEA) and Window DEA (WDEA) to obtain PHAs efficiency scores and evaluate the effect of the use of websites on efficiency.
    Keywords: Innovation; Public services; Cultural heritage; Archives; Non parametric frontier
    JEL: Z1 D24
    Date: 2016–09
  7. By: Jenifer Piesse (Bournemouth University and University of Stellenbosch); Dragana Radicic (University of Cambridge); Allan Webster (Bournemouth University, Executive Business Centre)
    Abstract: This empirical study examines the effect of EU accession on firm efficiency in a sample of 27 transitional countries using data from the 2005 and 2013 BEEPS surveys. Using stochastic frontier analysis and a separate propensity score matching approach it finds a statistically significant association between EU membership and firm performance in both cross-sections. Since EU membership involves more than the liberalisation required for the single market it also uses propensity score matching to find a statistically significant association between EU membership and the internationalisation of firms in transitional countries. Finally it uses inverse probability weighted regression adjustment (IPWRA) to test the proposition that stronger firm performance in transitional countries was associated with firms with higher levels of internationalisation (exports and foreign ownership). Our results support the view that EU membership enhanced firm efficiency in new members from transitional economies and that internationalisation was an important mechanism in that process.
    Keywords: firm efficiency; productivity; European Union; transition
    JEL: F14 F15 D22 I25
    Date: 2016–08
  8. By: Jarzębowski, Sebastian; Bezat-Jarzębowska, Agnieszka
    Abstract: The aim adopted in the paper is to review methods for assessing the efficiency of supply chains and to carry out their critical evaluation. Literature studies, interviews, analysis of processes in the chains are used for analyzing of interdependence between the individual stages of supply chain and identifying the efficiency of entire supply chain. An important aspect is to determine the possibility of assessing the efficiency of supply chains in selected sectors of agribusiness by using approaches presented in the paper. Within the analyzed methods, the stochastic frontier approach can be an useful tool for estimating the efficiency on the firm level. However, the efficiency scores obtained from estimation of the stochastic frontier have a little use for policy implications and management purposes if the empirical studies do not investigate the sources of the inefficiency. Thus, it is recommended to include into the models external factors like, for instance, the degree of competitive pressure, the ownership form, various managerial characteristics, network characteristics and production quality indicators of inputs or outputs.
    Keywords: supply chain management, food supply chains, efficiency, Agribusiness,
    Date: 2016–05
  9. 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 nonmanagerial 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: 2016–05
  10. By: Laurens Cherchye; Bram De Rock
    Abstract: We propose a nonparametric methodology for intertemporal production analysis that accounts for durable as well as storable inputs. Durable inputs contribute to the production outputs in multiple consecutive periods. Storable inputs are non-durable and can be stored in inventories for use in future periods. We explicitly model the possibility that firms use several vintages of the durable inputs, i.e. they invest in new durables and scrap older durables over time. Furthermore, we allow for production delays of durable inputs. We characterize production behavior that is dynamically cost efficient, which allows us to evaluate the efficiency of observed production decisions. For cost inefficient behavior, we propose a measure to quantify the degree of inefficiency. An attractive feature of this measure is that it can be decomposed in period-specfic cost inefficiencies. We demonstrate the usefulness of our methodology through an application to Swiss railway companies.
    Keywords: cost minimization; storable inputs; durable inputs; production delay; dynamic efficiency
    JEL: D21 D24 D92
    Date: 2016–09
  11. By: Álvarez, Antonio; Garduño, Rafael; Núñez, Héctor
    Abstract: We estimate the technical efficiency of Mexican states using stochastic production frontier models. In particular, we study the effect of crime on efficiency. The empirical section uses panel data over the period 1988-2008. A distinctive feature of the paper is the use of socioeconomic and location data in order to control for the heterogeneity of the states. The main contribution of this paper is to test for the existence of a threshold effect of crime. We find that crime rate negatively affects the efficiency of the states and that its effect is only significant after a certain level.
    Keywords: Regional efficiency, stochastic frontier, Mexico, panel data, crime
    JEL: D24 O18 R11
    Date: 2016
  12. By: Agyenim Boateng (Glasgow Caledonian University, UK); Simplice Asongu (Yaoundé, Cameroon); Raphael Akamavi (Hull, UK); Vanessa Tchamyou (Yaoundé, Cameroon)
    Abstract: This study investigates the role of information sharing offices and its association with market power in the African banking industry. The empirical evidence is based on a panel of 162 banks from 42 countries for the period 2001-2011. Five simultaneity-robust estimation techniques are employed, namely: (i) Two Stage Least Squares; (ii) Instrumental Fixed effects to control for the unobserved heterogeneity; (iii) Instrumental Tobit regressions to control for the limited range in the dependent variable; (iv) Generalised Method of Moments (GMM) to control for persistence in market power and (v) Instrumental Quantile Regressions (QR) to account for initial levels of market power. The following findings have been established from non-interactive regressions. First, the effects of information sharing offices are significant in Two Stage Least Squares, with a positive effect from private credit bureaus. Second, in GMM, public credit registries increase market power. Third, from Quintile Regressions, private credit bureaus consistently increase market power throughout the conditional distributions of market power. Given that the above findings are contrary to theoretical postulations, we extended the analytical framework with interactive regressions in order to assess whether the anticipated effects can be established if information sharing offices are increased. The extended findings show a: (i) negative net effect from public credit registries on market power in GMM regressions and; (ii) negative net impacts from public credit registries on market power in the 0.25th and 0.50th quintiles of market power.
    Keywords: Financial access; Market power; Information asymmetry
    JEL: G20 G29 L96 O40 O55
    Date: 2016–09
  13. By: Samuel Gamtessa (University of Regina); Adugna Olani (Queen's University)
    Abstract: An increase in energy-cost can induce energy efficiency improvement - a reduction in energy-output ratio. There are well-established theoretical conjectures of how this can take place. As the relative energy-cost increases, it induces firms to reallocate and selectively utilize the most energy-efficient vintages. In the long-run firms could also achieve energy efficiency through investments in energy-efficient capital. This study uses the Canadian KLEMS panel data set to investigate these relationships. We employ panel vector auto regressions as well as co-integration and error correction techniques to test whether the conjectures hold in the data. Our findings support the theoretical conjectures. The channels we empirically identify suggest that the effect of increased energy-cost can be an increase in energy efficiency: by decreasing energy-capital ratio and increasing output-capital ratio. The latter effect is observed only in the long-run through induced investments in new capital.
    Keywords: Energy intensities, Capital productivity, Energy price, Panel data
    JEL: Q41 Q43 Q48 C33
    Date: 2016–09
  14. By: Luis Garicano; Claire Lelarge; 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 date 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: J8 L11 L25 L51
    Date: 2016–06
  15. By: SAITO Hisamitsu; MATSUURA Toshiyuki
    Abstract: Empirical studies on agglomeration have focused on the identification of its productivity-enhancement effects. A reduction in marginal costs due to agglomeration economies increases the operating profit of firms, which enables them to employ more inputs to produce higher-quality products. This study examines such effects of agglomeration on product quality by using plant-product-level data for Japanese manufacturing. Empirical findings confirm that product quality increases with the market size of regions, suggesting that agglomeration-inducing polices are effective for increasing firms' profits by improving both productivity and product quality. Stated differently, our results indicate that the benefits of agglomeration on profits are underestimated in previous studies by ignoring its contribution to quality upgrading.
    Date: 2016–08
  16. By: Zack Cooper; Stephen Gibbons; Matthew Skellern
    Abstract: This paper examines the impact of competition from government-facilitated entry of private, specialty surgical centres on the efficiency and case mix of incumbent public hospitals within the English NHS. We exploit the fact that the government chose the location of these surgical centres (Independent Sector Treatment Centres or ISTCs) based on nearby public hospitals’ waiting times – not length of stay or clinical quality – to construct treatment and control groups that are comparable with respect to key outcome variables of interest. Using a difference-in-difference estimation strategy, we find that ISTC entry led to greater efficiency – measured by presurgery length of stay for hip and knee replacements – at nearby public hospitals. However, these new entrants took on healthier patients and left incumbent hospitals treating patients who were sicker, and who stayed in hospital longer after surgery.
    Keywords: Hospital Competition; Public-Private Competition; Market Entry; Market Structure; Outsourcing; Hospital Efficiency; Risk Selection; Cherry Picking
    JEL: C23 H57 I11 L1 L33 R12
    Date: 2016–06

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