nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒11‒06
thirteen papers chosen by

  1. Technical Efficiency, Unions and Decentralized Labor Contracts By Devicienti, Francesco; Manello, Alessandro; Vannoni, Davide
  2. Misallocation, Establishment Size, and Productivity By Pedro Bento; Diego Restuccia
  4. Financial constraints: state aid to the rescue? By Ilona Sergant
  5. Animal health indicators and technical efficiency in milk production: A stochastic frontier analysis for Spanish dairy farms By Pérez, Jose Antonio; Roibás, David; Wall, Alan
  6. Distortions in the process of firm selection during the Great Recession: a comparison across European countries By Landini, Fabio
  8. Determinants of agricultural labour productivity across the European regions By Giannakis, Elias; Bruggeman, Adriana; Zoumides, Christos
  9. Why Has the Cyclicality of Productivity Changed? What Does It Mean? By J. Wang; John Fernald
  10. Research incentives and tradeoff for improving productivity of different crops By Lemarié, Stéphane; Parenty, Sébastien
  11. Local governments’ efficiency: A systematic literature review – Part I By Isabel Narbón-Perpiñá; Kristof De Witte
  12. Farm investment and performance in the French (Brittany) dairy sector By Lévi, Loïc; Latruffe, Laure; Ridier, Aude
  13. New evidence of environmental efficiency on the export performance By Sakamoto, Tomoyuki; Managi, Shunsuke

  1. By: Devicienti, Francesco (University of Turin); Manello, Alessandro (University of Turin); Vannoni, Davide (University of Turin)
    Abstract: This paper explores the link between the presence of unions in the workplace, the adoption of decentralized labor agreements and technical efficiency, using a large sample of Italian manufacturing firms. We apply the Data Envelopment Analysis, and its robust version based on bootstrap theory, to get reliable estimates of technical efficiency at the firm level in a standard first stage. We devote particular attention to the specific technology adopted, by distinguishing 20 different sector frontiers, as well as to the presence of outliers. The obtained efficiency scores are analyzed in a second stage applying a truncated regression model estimated via Maximum Likelihood, following the Simar and Wilson (2007, 2011) methodology. Our results highlight that the presence of workplace unionization decreases the level of technical efficiency, while aspects limiting the unions' power such as a strong exposure to international markets, high debt levels or the prevalence of flexible assets partially reduce the negative effect. However, when firms adopt decentralized labor contracts agreements, the effect on efficiency is positive and partially compensates the negative unions' effect. The results are robust to the inclusion of many firm characteristics and to different model specifications.
    Keywords: technical efficiency, trade unions, decentralized bargaining, data envelopment analysis, truncated regression model
    JEL: J51 D22 D24 C24 C44
    Date: 2016–10
  2. By: Pedro Bento; Diego Restuccia
    Abstract: We consider a tractable model of heterogeneous production units that features endogenous entry and productivity investment to assess the quantitative impact of policy distortions on aggregate output and establishment size. Relative to the standard factor misallocation framework, policy distortions featuring a positive productivity elasticity of distortions imply larger reductions in output through smaller investments in establishment productivity. A calibrated version of the model implies that when the productivity elasticity of distortions increases from 0.09 in the U.S. to 0.5 in India, aggregate output and average establishment size fall by 53 and 86 percent, compared to 37 and 0 percent in the standard factor misallocation model. Entry productivity investment and factor misallocation contribute equally to the reduction in output, whereas the effect of lower life-cycle productivity growth is fully offset by increased entry and reduced productivity dispersion. Establishment size differences in the model are consistent with evidence from a comprehensive dataset we construct on average establishment size in manufacturing using census data for 134 countries.
    Keywords: misallocation, establishment size, productivity, investment, idiosyncratic distortions, life-cycle growth.
    JEL: O1 O4
    Date: 2016–10–27
  3. By: Jeremy Jelliffe (University of Connecticut); Boris E. Bravo-Ureta (University of Connecticut); C. Michael Deom (University of Georgia); David Kalule Okello (National Semi-Arid Resources Research Institute)
    Abstract: The major objective of this study is to evaluate the adoption of groundnut varieties that are high yielding, drought tolerant, and groundnut rosette disease (GRD) resistant in eastern Uganda. In particular, this study examines differences in adoption and farm-level productivity associated with participation in the project entitled “Farmer-Led Multiplication of Rosette Resistant Groundnut Varieties for Eastern Uganda” (FGSM), which was carried out during the early 2000s following the prior diagnostic work under the LIFE project (Tino, Laker-Ojok, and Namisi 2004). We are particularly interested in the sustainability of the project outcomes 10-years after the end of the original intervention. The impact of the Multiplication Project is examined with respect to increased productivity (higher expected yields) and risk-reduction (improved disease resistance and drought tolerance). We also examine current levels of aflatoxin awareness, prevalence, and the use of mitigation practices in the study region. We find that participating farmers allocated 21% more of their available land to improved groundnut varieties. The results also show that, for improved varieties, beneficiaries produce 32% higher yields than the non-participating neighbor controls, and 55% higher yields relative to non-neighbor controls. This implies that the project led to a sustained significant increase in profitability for participating farmers. In addition, we observe significant spillover effects from the project, which is clearly revealed by the yield difference between non-participating neighboring control households and non-neighbor control households. These results imply that project beneficiaries transferred some benefits to the neighbor control group over the course of the 10-year period following the project. This is an important result suggesting that farmer-led programs offer significant advantages to developing communities and may provide a cost-effective means of information and technology dissemination.
    Keywords: groundnut, agricultural productivity, technology adoption, extension, impact evaluation, instrumental variables, propensity score matching, Uganda
    Date: 2016–07
  4. By: Ilona Sergant
    Abstract: This paper investigates the relationship between state aid measures as defined by Article 107 of the TFEU, and firm performance in terms of total factor productivity (𝑇𝐹𝑃). Under imperfect capital markets, firms might encounter difficulties in accessing sufficient resources to fund their optimal investment plans. The main focus of this paper lies in establishing whether state aid alleviates a firm from such constraints, and thereby enhances efficiency. To this end, we use all state aid cases that were active in Belgian manufacturing between 2002 and 2011. To determine the effects of state aid and financing constraints on performance, we first estimate TFP and classify firms according to their financial health in the absence of aid. The main results confirm the hypothesis but when allowing for firm heterogeneity, the mitigating role of state aid is only present for initially efficient firms.
    Date: 2016
  5. By: Pérez, Jose Antonio; Roibás, David; Wall, Alan
    Abstract: Health and reproductive disorders have been found to reduce milk yields in dairy cows. We combine information from two different sources to create an unbalanced panel data set of 214 dairy farms in northern Spain observed over the period 2006-2014 which includes data on production variables and health and reproduction indicators. We use this data to estimate a stochastic production frontier where the somatic cell count and the calving interval are included as determinants of technical efficiency. Higher somatic cell counts and longer calving intervals are found to decrease technical efficiency, translating into significant losses in revenue. In a simulation exercise, we find that a representative farm which reduced the values of these indicators from their median sample values to their first quartile values would increase its revenue by 13%.
    Date: 2016
  6. By: Landini, Fabio (LUISS School of European Political Economy)
    Abstract: Recent evidence documents the weakness of market selection based on productivity differentials and the absence of cleansing during recessions. This paper argues that a possible explanation lies in the role of competitive rents, i.e., market advantages due to idiosyncrasies of the firm’s demand. Competitive rents allow firms to sustain profit independently of their internal efficiency, creating a selection advantage. During an economic recession, this advantage increases because competitive rents operate as a resilience factor. The process of firm selection can thus be distorted with relatively inefficient firms that manage to survive. These predictions are tested on a sample of French, Italian, and Spanish manufacturing firms, looking at the selection that took place during the Great Recession. Ceteris paribus, firms with competitive rents are less likely to exit than firms without competitive rents. This effect is stronger in countries more severely impacted by the downturn. The implications of these results for policy interventions to sustain aggregate productivity growth are discussed.
    Keywords: firm selection; profit; productivity; competitive rents; Great Recession
    JEL: D24 L11 L25
    Date: 2016–10–21
  7. By: Britz, Wolfgang; Linda, Arata
    Abstract: We present a dual cost function estimation for total farm cost in a programming model setup, with individual crop shares and expected yields as arguments, estimated simultaneously with risk behaviour. Using large unbalanced samples of specialized arable farms from Northern Italy, the French Grandes Culture Region and Cologne-Aachen in Germany that are observed for at least three consecutive years over the time period 1995-2008, we find a quite satisfactory fit for crop shares and total costs. We implement two model variants where zero crop observations are considered only in the second variant. Our results indicate that the specialized arable crop farmers in the samples use crop shares only to a limited degree as an instrument of risk management. We find moderate technical progress and large efficiency differences between farms.
    Keywords: Risk, dual cost function estimation, programming model, Production Economics, Research Methods/ Statistical Methods, Risk and Uncertainty,
  8. By: Giannakis, Elias; Bruggeman, Adriana; Zoumides, Christos
    Keywords: Agricultural and Food Policy, Farm Management,
    Date: 2016
  9. By: J. Wang (FRB Boston); John Fernald (FRB San Francisco)
    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.
    Date: 2016
  10. By: Lemarié, Stéphane; Parenty, Sébastien
    Abstract: This paper addresses the balance between different crops and its determination by research investment. This balance results from the cropping-plan decision of the farmers. This decision depends on various factors such as the seed performance, the pest problems, the output prices, etc. We show how the introduction of a productivity decrease due to the market size of each crop is likely to set out a more equilibriated market. Further, our model analysis the main determinants of research investment by a monopoly, and shows that this investment tends to equilibrate the market.
    Keywords: Agricultural and Food Policy, Research and Development/Tech Change/Emerging Technologies,
    Date: 2016
  11. By: Isabel Narbón-Perpiñá (Department of Economics, Universitat Jaume I, Castellón, Spain); Kristof De Witte (Top Institute for Evidence Based Education Research-Maastricht University and Leuven Economics of Education Research-Katholieke Universiteit Leuven)
    Abstract: The efficient management of the available resources in local governments has been a topic of high interest in the field of public sector. We provide an extensive and comprehensive review of the existing literature on local governments’ efficiency from a global point of view, covering all articles from 1990 to August 2016. This paper is the first of two. It covers the basic aspects related to local governments’ efficiency measurement not taking into account the effect of environmental conditions. First we show a detailed overview of the studies investigating public sector efficiency across various countries, comparing the data and samples employed, and the main results obtained. Second, we describe which techniques have been used for measuring efficiency in the context of local governments. Third, we summarise the inputs and outputs used. Finally, we discuss some operative directions and considerations for further research in the field.
    Keywords: Efficiency, local government, survey
    JEL: H40 H72 D61 R50
    Date: 2016
  12. By: Lévi, Loïc; Latruffe, Laure; Ridier, Aude
    Abstract: This paper investigates the link between farm investment and farm performance considering two types of farms that may have a different investment strategy: farms that are intensive in capital, and farms that have a low capital intensity. Panel data on specialized dairy farms of one sub-region of French Brittany (Ille-et-Vilaine) for the period 2005-2014 were used. Results from adjustment cost models indicate that farms tend to smooth their investments to limit adjustment cost and that farm performance has a negative impact on investment.
    Keywords: farms, investment, adjustment cost model, performance, France, Brittany, dairy sector, panel data, Environmental Economics and Policy, Farm Management,
    Date: 2016
  13. By: Sakamoto, Tomoyuki; Managi, Shunsuke
    Abstract: This article investigates the relationship between the environment-related efficiency and export performance according to the recent international trade theory which has offered to a theoretical model to quantify the Ricardian comparative advantage. We find that the energy and environmental efficiency can be a source of the comparative advantage in industries. The largest magnitude and the smallest of the efficiency on exporting are estimated to be NOx and energy efficiency, respectively. The empirical results further show that the efficiency has a smaller impact on export performance in relatively less footloose industries, and the impact of the efficiency is found to depend on industrial characteristics.
    Keywords: Comparative advantage, trade and environment, energy efficiency, pollution emissions per production
    JEL: Q40 Q53 Q56
    Date: 2016

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