nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒03‒05
seventeen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Technical efficiency, productivity change and environmental degradation By Halkos, George; Bampatsou, Christina
  2. Institutional Quality and International Differences in Firm Productivity By Issar Akash; Lim Jamus Jerome; Mohapatra, Sanket
  3. Trade protection and productivity differentials between multinationals and local firms in Vietnamese manufacturing By Thuyen, Truong Thi Ngoc; Jongwanich, Juthathip; Ramstetter, Eric D.
  4. Biased technological change and Kaldor’s stylized facts By Kemp-Benedict, Eric
  5. Declining Dynamism, Allocative Efficiency, and the Productivity Slowdown By Ryan Decker; John Haltiwanger; Ron S. Jarmin; Javier Miranda
  6. Why Does the Productivity of Investment Vary Across Countries? By Kevin S. Nell; A.P. Thirlwall
  7. Self-managed working time and firm performance: Microeconometric evidence By Beckmann, Michael
  8. Effect of non-farm work on agricultural productivity: Empirical evidence from northern Ghana By Benjamin Tetteh Anang
  9. Can Coffee Certification Promote Land-sharing and Protect Forest in Ethiopia? By Mitiku, Fikadu; Nyssen, Jan; Maertens, Miet
  10. Efficiency, innovation, and imported inputs: determinants of export performance among Indian manufacturing firms By Marco Grazzi; Nanditha Mathew; Daniele Moschella
  11. Firm Entry and Exit and Aggregate Growth By Asturias, Jose; Hur, Sewon; Kehoe, Timothy J.; Ruhl, Kim J.
  12. Taxation, infrastructure, and firm performance in developing countries By Lisa CHAUVET; Marin FERRY
  13. The empirics of agglomeration economies: the link with productivity By Ana Gouveia; Sílvia Santos; Marli Fernandes
  14. Estimating Total Factor Productivity Change When No Price or Value-Share Data are Available By C.J. O’Donnell
  15. Finance and productivity: A literature review By Mark Heil
  16. The Characteristics and Performance of Family Firms: Exploiting information on ownership, governance and kinship using total population data By Andersson, Fredrik; Johansson, Dan; Karlsson, Johan; Lodefalk, Magnus; Poldahl, Andreas
  17. Short-run effects of product markets’ deregulation: a more productive, more efficient and more resilient economy? By Ana Gouveia; Sílvia Santos; Gustavo Monteiro

  1. By: Halkos, George; Bampatsou, Christina
    Abstract: This study deals with the nonparametric frontier analysis in the case of the EU 28 countries for a period spanning from 1993 to 2012. It provides statistical inference about the radial output based measure of technical efficiency under the assumption of Constant Returns to Scale (CRS) and it performs scale analysis that allows determining the nature of scale inefficiency of each data point. Furthermore, an order-α approach is developed for determining partial frontiers. Both traditional Malmquist-Luenberger and bootstrapped Malmquist productivity indexes between 1993 and 2012 are constructed. Analysis of productivity change by decomposing the Total Factor Productivity Index into Efficiency Change and Technical Change is performed showing respectively whether productivity gains derive mainly from improvements in efficiency or are mostly the result of technological progress.
    Keywords: Data envelopment analysis; Environmental Economics; Carbon emissions; Eco-Efficiency; Total factor productivity index.
    JEL: O11 O57 Q01 Q4 Q40 Q43 Q48 Q50 Q58 R15
    Date: 2017–02
  2. By: Issar Akash; Lim Jamus Jerome; Mohapatra, Sanket
    Abstract: In this paper, we examine how firm-level productivity growth is dependent on a broad range of institutional quality measures at the country level. Using a sample of 3,446 firms in 58 advanced and emerging economics, we show that such institutions exert a statistically and economically significant effect on changes in firm TFP. We utilize data envelopment analysis to construct firm-level measures of Malmquist productivity, which we then condition on a range of country-level institutions, using both a full set of fixed effects and system generalized method of moments to address potential endogeneity concerns. The baseline effect is robust to alternative measures of institutions, variations in model specification, alternative temporal aggregations, and the inclusion of external instruments. Additional decompositions further reveal that the institutional effect operates via improved productive efficiency (rather than technological progress), and that the key institutions are those associated with rule of law and regulatory quality
  3. By: Thuyen, Truong Thi Ngoc; Jongwanich, Juthathip; Ramstetter, Eric D.
    Abstract: This paper investigates the how effective protection and firm ownership affected firm productivity in Vietnam during 2005-2010. In labour-intensive industries and industries with intermediate labour intensity, the level of effective protection in an industry had a significantly negative effect on firm productivity. Multinational enterprise (MNE) joint ventures (JVs) and state-owned enterprises (SOEs) had consistently higher productivity than private firms, with productivity usually being highest in JVs. Wholly-foreign MNEs (WOs) also had significantly higher productivity than private firms in 2005-2007, but lower productivity than JVs or SOEs, and in 2008-2010, WO-private differentials were insignificant. In capital-intensive industries, the pattern of productivity differentials (highest in JVs, followed by SOEs, WOs, and private firms) was similar in the earlier period, but not in the latter period or when all years were included in the sample. The level of effective protection also did not have a significant, independent effect on firm productivity in capital-intensive industries.
    Keywords: MNEs, trade policy, productivity, ownership mode, MNEs, trade policy, productivity, ownership mode
  4. By: Kemp-Benedict, Eric
    Abstract: This paper presents a theory of biased technological change in which firms pursue a random, local, search for productivity-enhancing innovations. They implement profitable innovations at fixed prices, subsequently adjusting prices and wages. Factor productivity growth rates are shown to respond positively to factor cost shares. Combined with price-setting behavior, an equilibrium is characterized by constant cost shares and productivity growth rates. Under target-return pricing, capital productivity growth is zero at equilibrium, yielding Kaldor’s “stylized facts” of constant capital productivity and rate of profit. Equilibrium can be disturbed by changes in the pricing regime or technological potential for productivity improvement.
    Keywords: post-Keynesian; biased technological change; induced technological change
    JEL: E12 E14 O33
    Date: 2017
  5. By: Ryan Decker; John Haltiwanger; Ron S. Jarmin; Javier Miranda
    Abstract: A large literature documents declining measures of business dynamism including high-growth young firm activity and job reallocation. A distinct literature describes a slowdown in the pace of aggregate labor productivity growth. We relate these patterns by studying changes in productivity growth from the late 1990s to the mid 2000s using firm-level data. We find that diminished allocative efficiency gains can account for the productivity slowdown in a manner that interacts with the within-firm productivity growth distribution. The evidence suggests that the decline in dynamism is reason for concern and sheds light on debates about the causes of slowing productivity growth.
    Keywords: Job reallocation ; Labor supply and demand ; Productivity
    JEL: O47 L11 E24 J63
    Date: 2017–02–07
  6. By: Kevin S. Nell; A.P. Thirlwall
    Abstract: A country's growth of output is identically equal to its ratio of investment to output and the productivity of investment. In 'new' growth theory regressions, which include the investment ratio, all other included variables pick up why the productivity of investment differs between countries. This paper converts a 'new' growth theory regression equation into productivity of investment equation which allows for the direct testing of the diminishing returns to capital hypothesis of neoclassical growth theory, and to identify the major determinants of differences in the productivity of investment using the general-to-specific model selection algorithm - Autometrics. Nineteen explanatory variables are considered, and export growth, property rights, latitude, and education turn out to be the most important. Eighty-four countries are taken over the period 1980-2011. There is no evidence of diminishing returns to capital across countries, so investment matters for long run growth.
    Keywords: 'new' growth theory; productivity of investment; cross-country growth regressions
    Date: 2017–03
  7. By: Beckmann, Michael
    Abstract: This paper empirically examines the impact of self-managed working time (SMWT) on firm performance using panel data from German establishments. As a policy for the decentralization of decision rights, SMWT provides employees with extensive control over scheduling individual working time. From a theoretical viewpoint, SMWT has ambiguous effects on both worker productivity and wages. Based on the construction of a quasi-natural experiment and the combination of a differences-in-differences approach with propensity score matching as an identification strategy, the empirical analysis shows that up to five years after introduction, SMWT increases firm productivity by about 9% and wage costs by about 8.5%. This implies that SMWT improves both individual and firm productivity, and supplemental evidence shows that these productivity enhancements can primarily be explained by incentive effects associated with decentralization policies in general.
    JEL: M50 J81 J24
    Date: 2016
  8. By: Benjamin Tetteh Anang
    Abstract: This paper investigates the factors influencing participation in non-farm work and the effect of participation on farmers’ productivity, using survey data from 300 smallholder farm households in northern Ghana. The study employs an endogenous switching regression model to address selection into non-farm work, and a treatment effects model to measure the effect of participation on productivity. Factors determining participation in off-farm activity include the head of household’s gender and years of formal education, the location of the farm, ownership of cattle, and the dependency ratio. Factors affecting productivity include gender, years of formal education, farm size, location of the farm, access to credit, herd ownership, and degree of specialization in rice production. Results from a treatment effects model indicate a positively significant effect of non-farm employment participation on farm productivity. Income diversification therefore remains an important livelihood strategy among smallholders, and earnings from off-farm work enable smallholders to improve their yields.
    Date: 2017
  9. By: Mitiku, Fikadu; Nyssen, Jan; Maertens, Miet
    Abstract: We analyze whether private sustainability standards can promote land-sharing between coffee cultivation and forest conservation in southwestern Ethiopia. We compare garden and forest coffee systems, including non-certified and Rainforest Alliance (RA) certified forest coffee, and evaluate yields, productivity and profits. We use original household- and plot-level survey data from 454 households and 758 coffee plots, and ordinary least squares and fixed effects regression models. We find that coffee intensification from semi-forest coffee to garden coffee does not yield any substantial economic benefits in terms of productivity or profit. We find that RA certification increases land and labor productivity and profits of semi-forest coffee production, mainly by guaranteeing farmers a better price and not by improving yields. These findings imply that in southwestern Ethiopia land-sharing between less intensive coffee production and conservation of forest tree species is a viable sustainability strategy from an economic point of view, and that coffee certification is a viable strategy to promote land-sharing and create the economic incentives for farmers to refrain from further coffee intensification.
    Keywords: Forest coffee, Land-sharing, Rainforest Alliance, Coffee intensification, Sustainability Standards, Ethiopia, Agricultural and Food Policy, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy,
    Date: 2017
  10. By: Marco Grazzi; Nanditha Mathew; Daniele Moschella
    Abstract: This paper investigates the determinants of export behavior among Indian manufacturing firms, focusing in particular on the role of technology, cost and imported intermediate inputs. Our evidence suggests that innovation, in particular R&D, positively affects both firmsù probability to export and firmsù export volumes. We also find that imported intermediate inputs, incorporating foreign technology, play an important role in expanding export activities of firms. On the other hand, we find that higher productivity or lower unit labour costs are not systematically associated with the probability to enter export market, but they do positively affect export volumes.
    Keywords: Export behavior, Innovation, Imported Inputs, Trade policy, India
    Date: 2017–02–28
  11. By: Asturias, Jose (Georgetown University Qatar); Hur, Sewon (University of Pittsburgh); Kehoe, Timothy J. (Federal Reserve Bank of Minneapolis); Ruhl, Kim J. (Pennsylvania State University)
    Abstract: Using data from Chile and Korea, we find that a larger fraction of aggregate productivity growth is due to firm entry and exit during fast-growth episodes compared to slow-growth episodes. Studies of other countries confirm this empirical relationship. We develop a model of endogenous firm entry and exit based on Hopenhayn (1992). Firms enter with efficiencies drawn from a distribution whose mean grows over time. After entering, a firm’s efficiency grows with age. In the calibrated model, reducing entry costs or barriers to technology adoption generates the pattern we document in the data. Firm turnover is crucial for rapid productivity growth.
    Keywords: Entry; Exit; Productivity; Entry barriers; Barriers to technology adoption
    JEL: E22 O10 O38 O47
    Date: 2017–02–21
  12. By: Lisa CHAUVET (IRD-DIAL); Marin FERRY (FERDI)
    Abstract: This paper investigates the relationship between taxation and firm performance in developing countries. Taking firm-level data from the World Bank Enterprise Surveys (WBES) and tax data from the Government Revenue Dataset (ICTD/UNU-WIDER), our results suggest that tax revenue benefits to firm growth in developing countries, especially in low-income countries and lower-middle income countries. These findings are robust to the inclusion of alternative covariates and specifications, and do not appear to be sample dependent. We also provide evidence that the positive effect of taxation on firm growth falls significantly when corruption is too pervasive, and when the origin of tax revenue origin reduces government accountability. Lastly, our paper finds that the positive effect of domestic revenue on firm performance could channel through the financing of public infrastructures vital to firms operating in lower-income countries.
    Date: 2016–09
  13. By: Ana Gouveia (GPEARI - Research and Economic Policy Division); Sílvia Santos; Marli Fernandes
    Abstract: There is a large branch of literature providing empirical evidence on the positive effects of agglomeration economies on productivity. However, for policy makers it is important to understand the role of agglomeration economies at a more micro level, disentangling the effects across industries, firm-level characteristics and time. The present survey reviews this literature, outlining the econometric approaches and methodological challenges. In general, results show that the magnitude of agglomeration economies differ substantially across industries and point to the presence of non-linear effects, also depending on the industry and product life cycles. The channels through which these effects operate may also differ – resulting from specialization externalities (within industries in the same region) and/or urbanisation externalities (across industries in the same region). Overall, the evidence reviewed in this survey highlights the need for policy makers to follow tailor-made approaches and to complement existing evidence with national level studies, maximizing potential productivity gains.
    Keywords: Agglomeration economies, Specialization externalities, Urbanization externalities, Productivity
    JEL: R1 O3 L6 D24
    Date: 2017–02
  14. By: C.J. O’Donnell (School of Economics, The University of Queensland)
    Abstract: Total factor productivity (TFP) is a measure of total output divided by a measure of total input. A TFP index is a measure of total output change divided by a measure of total input change (i.e., an output index divided by an input index). It is common to compute output and input index numbers using formulas that combine quantity data with either price or value-share data. Examples include the well-known Fisher and To ̈rnqvist indices. This paper explains how output and input index numbers (and there- fore TFP index numbers) can be computed using quantity data only. It draws heavily on O’Donnell (2012, 2014, 2016).
    Date: 2017–01
  15. By: Mark Heil (U.S. Department of the Treasury)
    Abstract: This paper surveys a broad range of studies and highlights the main findings of the empirical literature regarding business finance and productivity. Numerous studies analyse the productivity effects of financial development and frictions. The results suggest: 1) Financial development likely has favourable effects on productivity growth; 2) financial frictions that impede the efficient flow of finance can mitigate the positive effects through a variety of channels; and 3) the magnitudes of productivity costs of financial frictions generally appear modest in financially developed economies but are considerably larger in developing economies. The paper also reviews studies of the influence of specific mechanisms on productivity, such as human capital, corporate finance, financial sector efficiency, equity finance and venture capital. Some policies that hamper productivity growth include inefficient insolvency regimes that impede exit of low-productivity firms, poorly developed contract monitoring and enforcement systems between banks and firms, collateral constraints that impair resource reallocation and imperfect bank supervisory practices that diminish productive capital reallocation through distorted lending practices.
    Keywords: business cycle, finance, financial development, financial friction, human capital, insolvency regime, productivity, venture capital
    JEL: D2 G2 G3 J2 O4
    Date: 2017–03–02
  16. By: Andersson, Fredrik (Statistics Sweden); Johansson, Dan (Örebro University School of Business); Karlsson, Johan (Örebro University School of Business); Lodefalk, Magnus (Örebro University School of Business); Poldahl, Andreas (Statistics Sweden)
    Abstract: Family firms are often considered characteristically different from non-family firms, and the economic implications of these differences have generated significant academic debate. However, our understanding of family firms suffers from an inability to identify them in total population data, as this requires information on owners, their kinship and involvement in firm governance, which is rarely available. We present a method for identifying domiciled family firms using register data that offers greater accuracy than previous methods. We then apply it to data from Statistics Sweden concerning firm ownership, governance and kinship over the years 2004-2010. Next, we use Swedish data to estimate these firms’ economic contribution to total employment and gross domestic product (GDP) and compare them to private domiciled non-family firms in terms of their characteristics and economic performance. We find that the family firm is the prevalent organizational form, contributing to over one-third of all employment and GDP. Family firms are common across industries and sizes, ranging from the smallest producers to the largest multinational firms. However, their characteristics differ across sizes and legal forms, thereby indicating that the seemingly contradictory findings among previous studies on family firms may be due to unobserved heterogeneity. We furthermore find that they are smaller than private non-family firms in employment and sales and carry higher solidity, although they are more profitable. These differences diminish with firm size, however. We conclude that the term ‘family firm’ contains great diversity and call for increased attention to their heterogeneity.
    Keywords: entrepreneur; family firms; employment; GDP; register data
    JEL: D22 G32 J21
    Date: 2017–02–21
  17. By: Ana Gouveia (GPEARI - Research and Economic Policy Division); Sílvia Santos; Gustavo Monteiro
    Abstract: This paper assesses the short-term impact of product market deregulation in upstream sectors on the productivity growth of firms in downstream sectors (i.e. those firms using the output of the reformed sectors as inputs in their production process). Relying on a firm level database for the period 2004-2014 covering all Portuguese firms, we show that the most productive firms - those at the sectoral technological frontier - grasp short-run benefits from these reforms, which are then spread to the other existing firms via spillover mechanisms. In addition, reforms potentiate the exit of the least productive firms, improving the resource allocation in the economy. Finally, we show that the adoption of product market reforms in upstream sectors leads to a more resilient economy, better equipped to face adverse shocks.
    Keywords: Product Market Reforms, Total Factor Productivity, Growth, Exit Rates, Resource Allocation, Resilience
    JEL: D04 D22 L43 L51
    Date: 2017–03

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