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on Efficiency and Productivity |
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Issue of 2017‒03‒12
twenty papers chosen by |
| By: | Fujii, Hidemichi; Managi, Shunsuke; Matousek, Roman; Rughoo, Aarti |
| Abstract: | The objective of this study is three-fold. First we estimate and analyse bank efficiency and productivity changes in the EU28 countries with the application of a novel approach, a weighted Russell directional distance model. Second, we take a disaggregated approach and analyse the contribution of the individual bank inputs on bank efficiency and productivity growth. Third, we test for convergence in EU28 bank productivity as well as in the inefficiency of individual bank inputs. We find that bank efficiency has been undermined by the financial crisis in banks notably from the EU15 countries. We also argue that bank efficiency and productivity in EU countries vary across the banking sector with banks from the ‘old’ EU showing higher efficiency levels. Nonetheless, a noticeable catching up process is observed for banks from the ‘new’ EU countries. Consequently, we do not find evidence of group convergence for bank productivity but there is evidence of convergence in bank efficiency change and technical change among the EU28 countries throughout the period 2005-2014. The driving force seems to be convergent technical change from the old EU Member States’ banks. On the other hand, almost no convergence is detected for the banks’ individual inputs while the transition paths show heightened diversity during the crisis years. |
| Keywords: | European Union; Bank Efficiency; Convergence |
| JEL: | F65 G21 O4 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:77237&r=eff |
| By: | Heshmati, Almas; Rashidghalam, Masoomeh |
| Abstract: | This paper models and estimates total factor productivity (TFP) growth parametrically. The model is a generalization of the traditional production model where technology is represented by a time trend. TFP growth is decomposed into unobservable technical change, scale economies and observable technology shifter index components. The empirical results are based on an unbalanced panel data at the global level for 190 countries observed over the period 1996-2013. A number of exogenous growth factors are used in modeling four technology shifter indices to explore development infrastructure, finances, technology and human development determinants of TFP growth. Our results show that unobservable technical changes remain the most important component of TFP growth. The observable technology indices-based component is lower than the simple unobserved time trend model based one. By comparing the performance of the time trend and technology index models in terms of TFP growth rates, we arrive at the conclusion that the technology index model predicts a more realistic picture of the TFP growth pattern as compared to the traditional time trend model. Our results also indicate that technical change and TFP growth are negative across country groups and years in the technology index model influenced by the global economic crisis. |
| Keywords: | Technical change,total factor productivity growth,technology indicators,technology shifters |
| JEL: | C33 C43 D24 O33 O47 O50 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:8&r=eff |
| By: | Todtenhaupt, Maximilian; Voget, Johannes |
| Abstract: | We investigate the effect of international differences in corporate taxation on the realization of productivity gains in M&A deals. We argue that tax differentials distort the efficient allocation of productive factors following an M&A and thus mitigate the resulting productivity improvement. Using firm-level data on inputs and outputs of production as well as on corporate M&As, we estimate that a 1 percentage point increase in the absolute tax differential between the locations of two merging firms reduces the subsequent total factor productivity gain by 4.5%. This effect is less pronounced when firms can use international profit shifting to attenuate effective differences in taxation. In a complementary analysis, we use an event study design and a fixed effects model to explore the timing of the response of productivity, as well as, labor and capital input to the tax rate differential after the merger separately for the acquirer and the target. We show that our findings are mainly driven by deals with targets residing in locations with a tax advantage with respect to the acquirer. In these transactions, tax differentials reduce the post-merger adjustment in the target firm and inhibit the full realization of productivity gains. |
| Keywords: | M&A,productivity,international taxation |
| JEL: | F23 G34 H25 D24 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:17014&r=eff |
| By: | Tleubayev, Alisher; Bobojonov, Ihtiyor; Götz, Linde; Hockmann, Heinrich; Glauben, Thomas |
| Abstract: | Agriculture plays an important role for Kazakhstan not only because of rural employment, but also because of the diversity it brings to its oil dependent economy. A considerable increase in grain exports was achieved during the recent years, however, there still is a large room for increasing productivity and efficiency to boost the agricultural potential of the country further. The government of Kazakhstan has introduced several policy packages in the past to boost productivity and efficiency, however, the impact of these reforms has not been yet analyzed quantitatively. Micro level data collected from 200 farms in northern Kazakhstan in 2015 is used in the analysis, in order to fill this research gap. A mixture of evidences is found in terms of policy effect on productivity and efficiency. The results of the analysis showed that direct subsidy access reduced the efficiency, while access to supply chain infrastructure had the opposite effect and increased the efficiency. Therefore, the study concludes that the government should divert its policy support from direct subsidy payments to the improvement of agricultural infrastructure. This will influence positively not only productivity and efficiency, but also Kazakhstan's commitments towards international and regional trade agreements. |
| Keywords: | productivity,stochastic frontier approach,wheat production,technical efficiency,Produktivität,Stochastic-Frontier-Ansatz,Getreideproduktion,technische Effizienz |
| JEL: | Q12 Q14 Q18 Q58 P13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iamodp:160&r=eff |
| By: | Giuliano, Romina (University of Mons); Kampelmann, Stephan (Free University of Brussels); Mahy, Benoît (University of Mons); Rycx, Francois (Free University of Brussels) |
| Abstract: | This paper is one of the first to examine how the use of fixed-term employment contracts (FTCs) affects firm competitiveness (i.e. productivity, wages and profits) while controlling for key econometric issues such as time-invariant unobserved workplace characteristics, endogeneity and state dependence. We apply dynamic panel data estimation techniques to detailed Belgian linked employer-employee data covering all years from 1999 to 2010. Results show that the effects of FTCs on firm competitiveness vary across sectors: while temporary employment is found to enhance productivity and profits in (labour-intensive) services, this is not the case in manufacturing and construction. |
| Keywords: | fixed-term contracts, productivity, wages, profits, sectors, linked panel data |
| JEL: | D24 J24 J31 M12 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp10579&r=eff |
| By: | Lota D. Tamini; Bruno Larue; Gale E. West; Moise K.Ndegue Fongue |
| Abstract: | Despite imposition of strict environmental standards in Quebec, the impact of agricultural activities on water quality remains a concern, particularly in the Chaudi re-Appalaches region.This regionÕs intensive animal and plant productions lead to excess phosphorus, nitrogen and sediments.This paper analyzes the environmental efficiency of agricultural producers in the Chaudi re river watershed, located south of Quebec City. We adopt a stochastic approach applied to parametric distance functions to data collected from 210 farms. Results show that, on average, crop producers are more efficient than livestock producers. In terms of emissions of phosphorus and nitrogen, the environmental efficiencies of producers are similar, at 0.804 and 0.820 respectively.For sediment runoff, however, the environmental efficiencies are lower on average, at 0736. Overall, the agricultural producers from this watershed could have achieved productivity gains in excess of 20%, while simultaneously reducing their emissions of pollutants. |
| Keywords: | Hyperbolic distance function; Stochastic frontier analysis; Environmental efficiency |
| JEL: | C23 D24 L94 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:creacr:2016-2&r=eff |
| By: | Giesing, Yvonne; Laurentsyeva, Nadzeya |
| Abstract: | This paper establishes a causal link between the emigration of skilled workers and firm performance. We exploit time, country, and industry differences in the opening of EU labour markets from 2004 to 2014 as a source of exogenous variation in the emigration rates from new EU member states. Using firm-level panel data from ten East European countries, we show that the outflow of skilled workers reduces firm total factor productivity and increases personnel costs. One explanation for this effect is the increased job turnover, which lowers firm-specific human capital. We find that the most productive firms adapt more easily to emigration as they are better able to retain and train their workers. |
| JEL: | F22 O15 D24 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145850&r=eff |
| By: | Ryan A. 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. |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:17-17&r=eff |
| By: | McGrattan, Ellen R. (Federal Reserve Bank of Minneapolis) |
| Abstract: | Because firms invest heavily in R&D, software, brands, and other intangible assets—at a rate close to that of tangible assets—changes in measured GDP, which does not include all intangible investments, understate the actual changes in total output. If changes in the labor input are more precisely measured, then it is possible to observe little change in measured total factor productivity (TFP) coincidentally with large changes in hours and investment. This mismeasurement leaves business cycle modelers with large and unexplained labor wedges accounting for most of the fluctuations in aggregate data. To address this issue, I incorporate intangible investments into a multi-sector general equilibrium model and parameterize income and cost shares using data from an updated U.S. input and output table, with intangible investments reassigned from intermediate to final uses. I employ maximum likelihood methods and quarterly observations on sectoral gross outputs for the United States over the period 1985–2014 to estimate processes for latent sectoral TFPs—that have common and sector-specific components. Aggregate hours are not used to estimate TFPs, but the model predicts changes in hours that compare well with the actual hours series and account for roughly two-thirds of its standard deviation. I find that sector-specific shocks and industry linkages play an important role in accounting for fluctuations and comovements in aggregate and industry-level U.S. data, and I find that the model’s common component of TFP is not correlated at business cycle frequencies with the standard measures of aggregate TFP used in the macroeconomic literature. |
| Keywords: | Business cycles; Total factor productivity; Intangible investments; Input-output linkages |
| JEL: | D57 E32 O41 |
| Date: | 2017–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmsr:545&r=eff |
| By: | Pedro André Cerqueira (CeBER and Faculty of Economics of the University of Coimbra); Micaela Antunes (CeBER and Faculty of Economics of the University of Coimbra); Elias Soukiazis (CeBER and Faculty of Economics of the University of Coimbra) |
| Abstract: | Non-price competitiveness given by the ratio of the income elasticity of the demand for exports relatively to the income elasticity of the demand for imports is the key factor for measuring the competitiveness of an economy associated with the quality of the produced goods. This factor is essential in the export-led growth theory and the balance-of-payments constraint hypothesis advocated by Thirlwall´s Law (1979). Increasing returns to scale in the production process are also important for generating a cumulative causation growth circle and this factor has been earlier identified by Verdoorn (1949) and later by Kaldor (1966). According to Palley (2002) it is the non-price competiveness (through mostly changes in the income elasticity of the demand for imports) that adjusts to close the gap between the actual and the potential income. Setterfield (2012) on the other hand attributes higher importance to increasing returns to scale as the responsible for closing the income gap, implying changes in the Verdoorn coefficient. The aim of this paper is to shed light to this discussion bringing empirical evidence that shows how the non-price competitiveness (through the income elasticity of imports) and productivity (through increasing returns to scale) react with respect to previous income gaps. It is verified that both factors react significantly to changes in passed income gap but the reaction of the non-price competitiveness is more pronounced. |
| Keywords: | non-price competitiveness, increasing returns to scale, potential income, income gap, overlapping and non-overlapping regressions. |
| JEL: | C23 D24 F10 O47 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:gmf:papers:2017-04&r=eff |
| By: | Dincer, N. Nergiz; Tekin-Koru, Ayca |
| Abstract: | This paper focuses on gains from trade due to rising within-firm productivity in presence of services exporting. The complementarity between exporting and investing in productivity enhancements is investigated by using descriptive regressions using rich, firm-level data for the period 2003-2011 for Turkey. The authors use three productivity measures for robustness purposes. The results show that firms that export both goods and services throughout the sample have higher productivity compared to all other firms in the sample. Another important result of the paper is related to the firms that switch from being goods exporters to goods and services exporters, which exhibit higher productivity than firms that export only goods or firms that switch from services exporting to exporting both goods and services. Finally, within-firm gains from trade as measured by the productivity growth of firms is insensitive to the services exporting status. More importantly, the authors observe no effect of any of export status of firms considered in this paper on their productivity growth. |
| Keywords: | services trade,productivity,exporting status |
| JEL: | F10 F14 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:20177&r=eff |
| By: | Piva, Mariacristina; Tani, Massimiliano; Vivarelli, Marco |
| Abstract: | The aim of this paper is to investigate the productivity impact of business visits, relative to traditional drivers of productivity enhancement, namely capital formation and R&D. To carry out the analysis, we combine unique and novel data on business visits sourced from the U.S. National Business Travel Association with OECD data on R&D and capital formation. The resulting unbalanced panel covers on average 16 sectors per year in 10 countries during the period 1998-2011 (2,262 observations). Our results suggest that mobility through business visits is an effective mechanism to improve productivity. The estimated effect is about half as large as investing in R&D, supporting viewing business visits as a form of long-term investment rather than pure consumption expenditure. In a nutshell, our outcomes support the need to recognize the private and social value of business mobility. |
| Keywords: | Business visits,labour mobility,knowledge,R&D,productivity |
| JEL: | O33 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:14&r=eff |
| By: | Aldieri, Luigi; Kotsemir, Maxim; Vinci, Concetto Paolo |
| Abstract: | The aim of this paper is to investigate the role of Jacobian externalities stemmed from different technological sectors for international firms engaged both in environmental and in dirty activi- ties. Firms’ innovation, measured, as the development of new patents, is a key factor behind the achievement of desired economic performances. Empirical literature usually deals with the inte- gration between ecological efficiency and product value enhancement. The results of these stud- ies lead to the lack of integrated innovation adoption behind environmental productivity per- formance. In this work, we analyse the integration between more environmental goals in an original way, by applying different methodologies to compute technological proximity, based on the Mahalanobis approach. To this end, we use information from 240 large international firms, located in three economic areas: USA, Japan and Europe and we select their environmental and dirty patents from European Patent Office data. |
| Keywords: | Innovation; Technology spillovers; Environmental relatedness. |
| JEL: | O32 O33 Q5 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:77274&r=eff |
| By: | Jaumandreu, Jordi; Yin, Heng |
| Abstract: | We use data from 70,000 Chinese manufacturing firms, which are both domestic sellers and exporters, to estimate the joint distribution of unobserved productivity (cost advantages) and unobserved demand heterogeneity (product advantages) from 1998 to 2008. Product advantages are negatively correlated with cost advantages (positively correlated with marginal cost). We characterize growth and sketch examples to show that splitting the advantages produces useful analytical insights. The state is not good at developing product advantages. A fraction of firms specialize in low-cost-low-quality exports. Many marginal cost differences across firms come from heterogeneous output-embodied levels of quality and technology, not "price distortions." |
| Keywords: | cost advantages; demand heterogeneity; product advantages; productivity |
| JEL: | C33 D24 L11 O30 O47 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11862&r=eff |
| By: | Abdessalem Abassi; Lota Dabio Tamini |
| Abstract: | The objective of this paper is to analyze trade potential versus actual realized trade among North African trading partners. Following the literature on production economics, we built a stochastic frontier gravity model. The underlying assumption is that all deviation from trade potential is not due to white noise but could also be due to inefficiencies. Time-variant country-specific trade efficiency estimates are obtained and analyzed. Our results indicate that Mauritania as a country of destination and of origin is where the trading relationship is the least efficient. Conversely, Tunisia, followed by Morocco, faces the fewest ÒbehindÓ and ÒbeyondÓ the border effects. Our analysis of market integration and trade efficiency at the disaggregated level indicates that trade efficiency scores exhibit high variability between the categories of products. Moreover, North African market integration is worst when considering the goods from the category ÒTextiles; Footwear & HeadgearÓ. Our estimates indicate that trade efficiency for agricultural products is relatively low indicating the existence of significant ÒbehindÓ and ÒbeyondÓ border inefficiencies. Our estimates also point at the presence of poor and counterproductive regulatory environment and underline the importance of improving domestic policies to encourage entrepreneurial development and business facilities. Our findings confirm the need for the North African countries to improve their trade logistics at the national level to enhance trade efficiency and to implement trade facilitation reform programs. |
| Keywords: | Trade integration; Industrial products; Agricultural products; Stochastic frontier analysis; Gravity model; North Africa. |
| JEL: | F14 F15 O10 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:creacr:2016-4&r=eff |
| By: | Raphael Calel; Antoine Dechezlepretre |
| Abstract: | This paper investigates the impact of the European Union Emissions Trading System (EU ETS) on technological change, exploiting installations-level inclusion criteria to estimate the System's causal impact on firms' patenting. We find that the EU ETS has increased low-carbon innovation among regulated firms by as much as 10%, while not crowding out patenting for other technologies. We also find evidence that the EU ETS has not impacted patenting beyond the set of regulated companies. These results imply that the EU ETS accounts for nearly a 1% increase in European low-carbon patenting compared to a counterfactual scenario. |
| Keywords: | directed technological change; EU emissions trading system; policy evaluation |
| JEL: | C14 O3 Q55 Q58 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:62723&r=eff |
| By: | Murmann, Martin |
| Abstract: | Existing management research has so far dealt with the consequences of labor turnover for established firms, but has not addressed its effect on young entrepreneurial businesses. In this paper I assess, both theoretically and empirically, the productivity effects of worker replacement in young firms. Worker replacement isolates labor turnover due to employee replacement as a separate category of turnover and has been shown to positively affect the productivity of established firms in previous research. Using a large and representative sample of German start-ups, I show that worker replacement has negative effects on young firms' productivity that remain even when controlling for moderating factors. These effects are even more negative when the founder does not have prior managerial experience. |
| Keywords: | Firm productivity,Labour turnover,Churning,Entrepreneurship |
| JEL: | L26 M13 J24 J63 D22 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:17010&r=eff |
| By: | Hampf, Benjamin |
| Abstract: | In this paper we propose a novel approach to estimate the rational inefficiency of decision making units in the presence of adjustment costs. Using sequential definitions of the production technology, we show how cost inefficiency can be decomposed into rational and residual inefficiency as well as inefficiency caused by technical change. Furthermore, we estimate lower bounds for the unobserved adjustment costs based on unexploited cost reductions due to rational inefficiency. These adjustment costs are used to evaluate the feasibility of exploiting cost reductions caused by residual inefficiency. We demonstrate the empirical applicability of our model by estimating and decomposing the cost inefficiency of U.S. coal-fired power plants using panel data which cover the period between 1994 and 2009. |
| JEL: | D24 L20 O33 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc16:145796&r=eff |
| By: | Omer Siddique (Pakistan Institute of Development Economics, Islamabad); Ahmed Waqar Qasim (Pakistan Institute of Development Economics, Islamabad); Hafiz Hanzla Jalil (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | Retail petroleum business is an important sector of any economy, but the analysis of its structure and performance has hitherto been missing in Pakistan. This paper is first such attempt using primary survey data for Pakistan. The results obtained from the petrol pumps included in our sample indicate that the petrol pumps make handsome profits. The petrol pumps in urban regions as well as those on highways have higher sales and earn higher gross profits, indicating that location of a petrol pump LV DQLPSRUWDQW GHWHUPLQDQW RI D SHWURO SXPS¶V sales performance. Another locational variable that is statistically significant in contributing to higher sales and gross profits is the distance of the petrol pump from the nearest petrol pump. Size is one of the most important variables having a positive impact on the total sale volumes and gross profits of petrol pumps. As far as spatial differentiation is concerned, there is a non-linear relationship between the performance of the petrol pumps and the distance from their competitors. |
| Keywords: | Production, Cost, Retail Business, Firm Location |
| JEL: | D24 L81 R30 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:pid:wpaper:2016:145&r=eff |
| By: | Sean Dougherty (OECD); Julien Reynaud (University of Bern) |
| Abstract: | Mexico’s structural reforms are already boosting productivity, but more can be done. This paper focuses on issues that have led to the success of the “modern” Mexico, and have led to difficulties with the “traditional” Mexico. These include the success of Global Value Chains (GVCs) in advancing the trade integration and linkages of key sectors, as well as how competition problems, excessive local regulation, and weak legal institutions have led to misallocation across firms. This paper examines in particular Mexico’s successful integration into GVCs. OECD research suggests that GVC participation can bring economic benefits in terms of productivity, diversification and sophistication of production. Understanding what drives integration into GVCs provides policy guidance to support a wider integration. |
| Keywords: | competition, global value chains, international trade, misallocation, productivity |
| JEL: | F14 F23 F68 L16 O24 |
| Date: | 2017–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1376-en&r=eff |