nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒03‒19
fifteen papers chosen by

  1. Measurement of Total Factor Productivity and its Determinants: Case of Wheat Sector in Tunisia By Ali Chebil; Aymen Frija; Rached Alyani
  2. Technical Efficiency and Stability to Shocks: a Comparison Between Islamic Banks and Conventional Banks in MENA Region By Mohamed Chaffai
  3. Risk Sharing Vs Risk Bearing and Shifting: Evidence from Conventional and Islamic Banks of MENA Region Using Metafrontier Directional Distance Functions By Zouheir Bouchaddakh; Mohamed Mekki Ben Jemaa
  4. Firm and Regional Factors of Productivity: A Multilevel Analysis of Tunisian Manufacturing By Mohamed Amara; Khaled Thabet
  5. The domestic productivity effects of FDI in Greece: loca(lisa)tion matters! By Jacob A. Jordaan; Vassilis Monastiriotis
  6. Environmental regulations and competitiveness: evidence based on Chinese firm data By Ankai Xu
  7. What has happened to Sub-Regional Public Sector Efficiency in England since the Crisis? By Samya Beidas-Strom
  8. Determinantes y efectos de la productividad en la industria manufacturera uruguaya (2001 -2009) By Leonel Muinelo-Gallo; Macarena Suanes
  9. Heterogeneous exporters: quantitative differences and qualitative similarities By Casas, Camila; Diez, Federico J.; Gonzalez, Alejandra
  10. Skills, Aging, and Productivity: Evidence from Panel Data By Kotschy, Rainer; Sunde, Uwe
  11. Managers and Productivity Differences By Nezih Guner; Andrii Parkhomenko; Gustavo Ventura
  12. Credit Misallocation During the European Financial Crisis By Fabiano Schivardi; Enrico Sette; Guido Tabellini
  13. Bank Performance, Financial Stability and Market Competition: do Cooperative and Non-Cooperative Banks Behave Differently? By BARRA, Cristian; ZOTTI, Roberto
  14. Bank Size, Returns to Scale and Cost Efficiency By Sapci, Ayse; Miles, Bradley
  15. Do hospitals respond to rivals’ quality and efficiency? a spatial econometrics approach By Francesco Longo; Luigi Siciliani; Hugh Gravelle; Rita Santos

  1. By: Ali Chebil (International Center for Agricultural Research in the Dry Areas (ICARDA)); Aymen Frija; Rached Alyani
    Abstract: The main objectives of this study are to quantify the Total Factor Productivity (TFP) growth of the durum wheat sector in Tunisia and to identify its main determinants. The Malmquist index approach was applied for the calculation of TFP growth using one output (annual production) and four inputs (land, seeds, nitrogen, and phosphate fertilizers) for the period 1980-2012. Variables used to identify the main determinants of the TFP growth include expenditures on agricultural research and extension, share of irrigated durum wheat area with respect to its total cultivated area, drought index, and infrastructure development in rural areas. Almon distributed lag model is used to assess the impact of the research expenditures variable. Empirical results show that TFP grew with 1.9% per year, in average, during the study period 1980-2012. This average growth rate was highly variable: 5.9% for the period 1980-1991; -2.2% for the period 1992-2002; and 2.07% for the, period 2003-2012. TFP growth was mainly generated from technical change during the first period (1980-1991), and from technical efficiency change during the last period 2003-2012. Results also show that changes in the TFP growth have been mainly related to the R&D expenditure lags, and drought.
    Date: 2015–09
  2. By: Mohamed Chaffai (Faculté des Sciences Economiques et de Gestion de Sfax, Sfax University)
    Abstract: The banking industry market is shared by conventional and Islamic Banks in MENA. These latter banks have been expanding during the last decade. In an intensely competitive environment, it is interesting to compare banking performance and resiliency by considering two competing bank groups: Islamic and commercial banks. Using parametric distance function models, hyperbolic and output distance functions, two efficiency measures related to profit and revenue are compared. Results find evidence of technical efficiency differences, some evidence with bank size but reject the common technology assumption. We evaluate the business risk of each bank group by considering the impact of a sharp abrupt deterioration in their activities. Results show that Islamic banks have the lowest resiliency to shocks when compared to the two other bank categories while a shock on non lending activities has a much more impact on Islamic business banks’ business risk.
    Date: 2015–11
  3. By: Zouheir Bouchaddakh; Mohamed Mekki Ben Jemaa (University of Dammam)
    Abstract: A large empirical literature has been developed, in the two last decades, to compare performance of Islamic and conventional banks. This paper contributes to this literature using a new methodology allowing a better comparative performance evaluation between Islamic banking and conventional banking in MENA region over the period 2000-2012 and applies a new method based on the Metafrontier Directional Distance function. By adopting this technique, it was possible to consider a multioutput production process with Non-Performing Loans as undesirable output and to assume that bank groups are operating under different technologies. The objective is to assess empirically the effect of Risk-Sharing claimed theoretically by Islamic Finance literature on banking efficiency. It was found that conventional banks in the MENA region seem to be more efficient than Islamic banks even if Non Performing Loans are introduced as a penalizing undesirable output. It was found that there is no significant difference between the two groups of banks in terms of their gap between their own technology and the leading technology among the whole region.
    Date: 2016–01–09
  4. By: Mohamed Amara (University of Tunis); Khaled Thabet
    Abstract: In this paper, we use multilevel models to simultaneously analyze individual, sectoral and regional characteristics that might affect the total factor productivity of Tunisian manufacturing firms for the period 1998-2004. Our results show that the individual characteristics of the firm have an important effect on both total factor productivity and labor productivity. We find that the oldest small firms are more productive than larger firms. Regional context has a significant direct impact on firms’ performance. More specifically, industrial density has a positive influence on total factor productivity. Our results show also that interaction effects or indirect effects are mostly driven by sectoral context. The intra-industrial wage disparities are beneficial only for firms with higher human capital and R&D. The interaction effects also show that larger and older firms will benefit more from industrial agglomeration. We conclude that multilevel models better fit our research questions that combine firm and contextual characteristics simultaneously, because they allow firm-specific characteristics to be differently associated to their regional and sectoral contexts.
    Date: 2016–01–09
  5. By: Jacob A. Jordaan; Vassilis Monastiriotis
    Abstract: Despite an extensive empirical literature on the factors conditioning the size and prevalence of FDI productivity spillovers, the geographical dimension of these externalities remains relatively under-explored. In this paper we use firm level data from the Greek manufacturing sector to identify how three features of economic geography – spatial heterogeneity (location), spatial proximity (localisation) and spatial concentration (agglomeration) – influence the size and sign of FDI spillovers within and across industries. We find that FDI spillovers predominantly materialise at the sub-national level, with horizontal spillovers being more prominent at the regional scale (NUTS2) and vertical spillovers being highly localised (at the NUTS3 level). Furthermore, we find important synergies between spillovers from FDI and industry-region specific agglomeration. Also, FDI spillovers are found to be conditional on regional characteristics related to each region’s manufacturing base, FDI concentration, urban agglomeration and aggregate productivity. These results highlight the important role played by geography for the materialisation of productivity spillovers accruing from FDI and suggest that these key geographical features (location, localisation and agglomeration) ought to be taken into account both in the study of FDI spillovers and in the design of FDI-promotion and regional development policies.
    Date: 2016–12
  6. By: Ankai Xu
    Abstract: This paper provides empirical evidence in support of the Porter hypothesis that tighter environmental regulations can increase productivity under certain circumstances. It builds on a theoretical model in which environmental regulations induce firms to adopt more efficient technologies. Using Chinese firm-level data covering a ten-year period, the empirical study examines the effects of two specific policy instruments - the pollution levy and regulatory standards - on firm productivity. It finds a bell-shaped relationship between pollution levies and the total factor productivity of firms, indicating that an increase in the pollution levy rate can be associated with higher productivity. In addition, the study investigates the effect of pollution emission standards on firm productivity and identifes an initial negative effect which diminishes after a period of two to three years.
    Keywords: Environmental regulations, Innovation, Productivity, Porter hypothesis, China.
    JEL: D2 F18 Q52 Q55 Q56
    Date: 2016–12–15
  7. By: Samya Beidas-Strom
    Abstract: This paper estimates public sector service efficiency in England at the sub-regional level, studying changes post crisis during the large fiscal consolidation effort. It finds that despite the overall spending cut (and some caveats owing to data availability), efficiency broadly improved across sectors, particularly in education. However, quality adjustments and other factors could have contributed (e.g., sector and technology-induced reforms). It also finds that sub-regions with the weakest initial levels of efficiency converged the most post crisis. These sub-regional changes in public sector efficiency are associated with changes in labor productivity. Finally, the paper finds that regional disparities in the productivity of public services have narrowed, especially in the education and health sectors, with education attainment, population density, private spending on high school education and class size being to be the most important factors explaining sub-regional variation since 2003.
    Keywords: Public sector;United Kingdom;Government expenditures;Education;Health care;Public services;Expenditure efficiency;public sector efficiency or producivity, sub-regional fiscal federalism
    Date: 2017–02–14
  8. By: Leonel Muinelo-Gallo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Macarena Suanes (UniversitatAutònoma de Barcelona (Spain). Departamentd’Economia Aplicada)
    Abstract: This paper analyzes the relationship between investment in R&D, innovation generation and productivity changes in Uruguayan manufacturing firms during 2001-2009. The production function structural model is sequentially applied to data from the "Survey of innovation activities in enterprises" of Uruguay. The empirical results suggest a positive link between R&D activities and the generation of technological innovations, as well as a positive effect of the latter on firm’s productivity.
    Keywords: innovation, research, productivity, structural production function model
    JEL: O31 D24 J24 O4
    Date: 2017–01
  9. By: Casas, Camila (Banco de la República (Colombia)); Diez, Federico J. (Federal Reserve Bank of Boston); Gonzalez, Alejandra (Banco de la República (Colombia))
    Abstract: We combine two detailed datasets on Colombian manufacturing firms and document several stylized facts on exporter heterogeneity of total factor productivity (TFP) and export-market orientation, refining some previously known facts and unveiling some new others. We first show that the exporter productivity premium is remarkably robust across the methodologies used to recover TFP. We then document that the most productive exporters are those that export (1) a higher share of their total production, (2) to a larger number of countries, (3) to destinations less frequently reached by other exporters, (4) a larger number of products, and (5) with greater frequency and stability. In contrast, (6) the type of destination country or (7) the type of exported product has no significant effect on exporter productivity differences. These facts are robust to alternative definitions and specifications and can provide useful guidelines for policy makers.
    Keywords: productivity premium; export intensity; export extensive margins
    JEL: D24 F14 L60
    Date: 2017–01–13
  10. By: Kotschy, Rainer; Sunde, Uwe
    Abstract: The demographic change is one of the most important challenges for many developed economies in the twenty-first century. This paper examines the effect of workforce demographics and the distribution of skills on aggregated productivity and output. Population aging may lead to secular stagnation in developed economies. We provide estimates for an upper boundary of the skills-aging-elasticity that describes how much human capital is required to increase in order to offset negative effects of aging in the most favorable setting.
    JEL: J11 O47 J10
    Date: 2016
  11. By: Nezih Guner; Andrii Parkhomenko; Gustavo Ventura
    Abstract: We document that for a group of high-income countries (i) mean earnings of managers tend to grow faster than for non managers over the life cycle; (ii) the earnings growth of managers relative to non managers over the life cycle is positively correlated with output per worker. We interpret this evidence through the lens of an equilibrium life-cycle, span-of-control model where managers invest in their skills. We parameterize this model with U.S. observations on managerial earnings, the size-distribution of plants and macroeconomic aggregates. We then quantify the relative importance of exogenous productivity differences, and the size-dependent distortions emphasized in the misallocation literature. Our findings indicate that such distortions are critical to generate the observed differences in the growth of relative managerial earnings across countries. Thus, observations on the relative earnings growth of managers become natural targets to discipline the level of distortions. Distortions that halve the growth of relative managerial earnings (a move from the U.S. to Italy in our data), lead to a reduction in managerial quality of 27% and to a reduction in output of about 7% – more than half of the observed gap between the U.S. and Italy. We find that crosscountry variation in distortions accounts for about 42% of the cross-country variation in output per worker gap with the U.S.
    Keywords: Managers, Management, Practices, Distortions, Size, Skill Investments, Productivity Differences
    JEL: E23 E24 J24 M11 O43 O47
    Date: 2015–12
  12. By: Fabiano Schivardi (LUISS University, EIEF, IGIER and CEPR); Enrico Sette (Bank of Italy); Guido Tabellini (Bocconi University, IGIER, CEPR, CES-Ifo, CIFAR)
    Abstract: Do banks with low capital extend excessive credit to weak firms, and does this matter for aggregate efficiency? Using a unique data set that covers almost all bank-firm relationships in Italy in the period 2004-2013, we find that, during the Eurozone financial crisis: (i) Under-capitalized banks were less likely to cut credit to non-viable firms. (ii) Credit misallocation increased the failure rate of healthy firms and reduced the failure rate of non viable firms. (iii) Nevertheless, the adverse effects of credit misallocation on the growth rate of healthier firms were negligible, and so were the effects on TFP dispersion. This goes against previous in fluential findings that, we argue, face serious identification problems. Thus, while banks with low capital can be an important source of aggregate inefficiency in the long run, their contribution to the severity of the great recession via capital misallocation was modest.
    Date: 2017
  13. By: BARRA, Cristian (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy); ZOTTI, Roberto (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)
    Abstract: We explore the relationship between bank performances and financial stability of the banking system taking into account the Italian context during the period 2001-2014 and relying upon highly territorially disaggregated data taken at municipality level, in order to better capture the differences across geographical areas. The z-score is used as financial stability indicator, while the performance of financial intermediaries is measured using a parametric method recently developed (Kumbhakar et al., 2014). By focusing both on cooperative and non-cooperative banks, the role of the market power, measured through a bank specific market share based on loans, deposits and assets, on the performances-stability nexus has been analyzed. The empirical evidence shows a positive relationship between bank performance and financial stability; furthermore, we provide evidence in line with the “competition-stability” view for cooperative banks while supporting the “competition-fragility” view for non-cooperative banks. Robustness checks have been performed in order to explore whether the results change at different level of concentration of the banking system.
    Keywords: Management; Local banks; Market structure; Financial stability
    JEL: C14 D21 G21 G28
    Date: 2017–03–05
  14. By: Sapci, Ayse (Department of Economics, Colgate University); Miles, Bradley (Department of Economics, Colgate University)
    Abstract: Since the passage of Dodd-Frank, government regulators have become more interested than ever in the significant increase of bank size in the U.S. financial sector. To shed light on the reasons of the bank size increase and its effects on banks, we study the dynamic interactions between size, cos efficiency and returns to scale. Using Fourier flexible form, we show that banks of all but the largest sizes exhibit increasing returns to scale. As banks grow, they tend to benefit from cost efficiencies more, but they lose returns to scale gains. Banks seem to exploit increasing returns to scale until they become too large; however, they continue to enjoy their cost efficiency. We also analyze the effects of regulations in the past 25 years to understand whether imposing (or removing) limits on the size of banks causes real economic costs. Our findings show that both restrictive and loose regulation help larger banks, but hurt smaller banks by creating extra costs.
    JEL: C11 C14 G21 L11
    Date: 2017–03–01
  15. By: Francesco Longo (Department of Economics and Related Studies, University of York, York, UK); Luigi Siciliani (Department of Economics and Related Studies, University of York, York, UK); Hugh Gravelle (Centre for Health Economics, University of York, York, UK.); Rita Santos (Centre for Health Economics, University of York, York, UK.)
    Abstract: We investigate whether hospitals in the English National Health Service increase their quality (mortality, emergency readmissions, patient reported outcome, and patient satisfaction) or efficiency (bed occupancy rate, cancelled operations, and cost indicators) in response to an increase in quality or efficiency of neighbouring hospitals. We estimate spatial cross-sectional and panel data models, including spatial cross-sectional instrumental variables. Hospitals generally do not respond to neighbours’ quality and efficiency. This suggests the absence of spillovers across hospitals in quality and efficiency dimensions and has policy implications, for example, in relation to allowing hospital mergers.
    Keywords: quality, efficiency, hospitals, competition, spatial econometrics
    JEL: C21 C23 I11 L3 L11

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.