nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒06‒04
seventeen papers chosen by

  1. Productivity effects of the ownership concentration in employee–owned companies By Agnieszka Matuszewska-Pierzynka
  2. Productivity of work and land: a comparison between three dissimilar countries By Katarzyna Grotkiewicz; Agnieszka Latawiec; Maciej Kubon; Anna Szelag-Sikora; Marcin Niemiec
  3. Analyse de l’efficacite des petits exploitants de legumes en zone de foret dans la region du sud-ouest cameroun By Fosso Djoumessi, Yannik
  4. Decomposition of Aggregate Productivity Growth with Unobserved Heterogeneity By KASAHARA Hiroyuki; NISHIDA Mitsukuni; SUZUKI Michio
  5. “Internet and enterprise productivity:evidence from Latin America” By Juan Jung; Enrique López-Bazo; Matteo Grazzi
  6. Pseudolikelihood estimation of the stochastic frontier model By Andor, Mark; Parmeter, Christopher
  7. Efficiency Analysis of ERDF and CF Co-financed Programmes Focusing on the Transport in Member States of the European Union By Michal Lukas Melecky
  8. Biodiversity Productive Capacity in Mixed Farms of North-West of France: a Multi-output Primal System By François Bareille; Pierre Dupraz
  9. Regional effectiveness of innovation – leaders and followers of the EU NUTS 0 and NUTS 2 regions By Agata Zoltaszek; Alicja Olejnik
  10. “On the regional impact of broadband on productivity: the case of Brazil” By Juan Jung; Enrique López-Bazo
  11. The Heterogeneity of Convergence in Transition Countries By Mateusz Pipieñ; Sylwia Roszkowska
  12. Macro and Micro Dynamics of Productivity: From Devilish Details to Insights By Lucia S. Foster; Cheryl A. Grim; John Haltiwanger; Zoltan Wolf
  13. Short-Run Elasticity of Substitution – Error Correction Model By Martin Lukáèik; Karol Szomolányi; Adriana Lukáèiková
  14. Trade, Education, Governance and Distance: Impact on Technology Diffusion and Productivity Growth in Asia and LAC By Schiff, Maurice; Wang, Yanling
  15. Endogenous Environmental Variables In Stochastic Frontier Models By Amsler, Christine; Prokhorov, Artem; Schmidt, Peter
  16. Do Performance Appraisals Decrease Employees’ Perception of Their Psychosocial Risks? By Rahma Daly; Marc-Arthur Diaye
  17. Manufacturing productivity in China: Deconstructing the role of Agglomeration By Chen, Yang; He, Ming; Rudkin, Simon

  1. By: Agnieszka Matuszewska-Pierzynka (University of Lodz Poland)
    Abstract: Empirical research on the influence of the degree of ownership concentration in the employee–owned companies on their sales revenues thematically fits into the issue of efficiency of the direct privatisation method, in particular giving a state–owned enterprise for use against payment. The main goal of this article is to verify the research hypothesis stating that in employee–owned companies an increase in the degree of ownership concentration leads to an increase in sales revenues. In conducted empirical studies parameters of a Cobb–Douglas production function were estimated by Ordinary Least Squares method for two variants, differing in the way of measuring the degree of ownership concentration. The research hypothesis formulated in this paper was verified negatively as the increase in the degree of ownership concentration in employee–owned companies caused the decrease in their sales revenues.
    Keywords: privatisation process; direct privatisation; employee–owned company; productivity; ownership structure
    JEL: D24 G32 L33
    Date: 2017–05
  2. By: Katarzyna Grotkiewicz (University of Agriculture in Krakow); Agnieszka Latawiec (International Institute for Sustainability, Department of Geography and the Environment, Pontificia Universidade Catolica); Maciej Kubon (University of Agriculture in Krakow); Anna Szelag-Sikora (University of Agriculture in Krakow); Marcin Niemiec (University of Agriculture in Krakow)
    Abstract: Research background: Analysis of economic and agricultural indicators are important tools to evaluate the performance of agriculture and describe scientific and technical progress (Agol et al., 2014, pp. 1-9; Archibugi and Coco, 2004, pp. 629–654). They also enable comparisons between the performances of different countries. In the comprehensive review by McConnell and Bockstael (2005, pp. 621-669), the measures of development show that competitiveness, both in the international and domestic arena, should be evaluated by two main indexes: the work productivity index and the land productivity index. Purpose of the article: The objective of this paper is to analyse social and economic factors that influence the efficiency of agriculture in three dissimilar countries: Poland, Unites States of America and China. The analysed countries have characteristic features that influence development of specific branches of agriculture including the level of social and economic growth, structural features of agriculture, agricultural policy, and market situations, thus shaping the level and structure of production. To our knowledge, this is the first study that discusses work and land productivity in these three countries. Methodology/methods: For calculation of final indexes of work and land productivity for the analysed countries, basic control and economic characteristics are necessary. These were calculated using the Eurostat database (2014) and the Yearbook of International Statistics CSO (2012; 2013a, 2013b) and include the area of agricultural land, number of farms and the average size of farms, the number of people active in agriculture, and gross national production in total and in agriculture. Findings & Value added: We found that Poland has not yet reached optimal land or work force productivity. The indicators suggest Poland is agriculturally closer to developing countries than developed. In particular, we indicate a low agricultural efficiency compared with Western countries. We conclude that to realise the full potential of Polish agriculture, considerable changes, such as farm consolidation and alternative employment options for farm workers, are necessary. According to the analysed data, Poland in comparison to China and the USA is at the last position in the ranking achieving 4% of the GNP in agriculture. Moreover, the structure of small farms in Poland with the average surface area of 10.38 is considerably lower than in the USA (190 ha) which causes that Poland is a less-competitive country. However, one should remember that not all experiences of leading countries may be directly translated into Polish conditions, where agriculture was shaping in completely different conditions and its present level has its historical preconditions.
    Keywords: agriculture, agri-economic indicators, work performance, land efficiency, metod
    JEL: B41 E24 O17
    Date: 2017–05
  3. By: Fosso Djoumessi, Yannik
    Abstract: This study examines the efficiency of smallholder vegetable farmers in the forest zone of the Southwest region of Cameroon. Data used was collected by means of a field survey within the framework of the Humidtropics program. This study aims to evaluate the technical efficiency levels of small-scale vegetable producers and to identify the sources of inefficiency. It therefore has two specific objectives: i) estimate the technical efficiency of smallholder vegetable farmers, (ii) identify the determinants of the technical efficiency of smallholder vegetable farmers. The efficiency scores for a sample of 100 producers are obtained using Data Envelopment Analysis and a Tobit model is used to identify the sources of inefficiency. The calculated technical efficiency scores range from 12% to 100%, with a mean technical efficiency index of 70% for the constant returns to scale (CRS) model. The technical efficiency scores for the variable returns to scale (VRS) model range from 23% to 100% with a mean score of 79%. Scale efficiency ranges from 40% to 100% with a mean of 87%. The mean technical efficiency scores indicate that there exist better ways of using resources which can push the production of the average producer right to the frontier. The findings show that farm size and access to credit influence efficiency significantly and positively. Age, household size, experience, manure, farm-related training and extension contact improve the efficiency of farmers. Meanwhile, education and membership of farmers’ association have no effect on the productive performance of vegetable farmers. Public and private stakeholders should therefore focus on these factors in order to reduce technical inefficiency
    Keywords: Data Envelopment Analysis, Forest-based System, Smallholder, Technical efficiency
    JEL: Q12
    Date: 2015–08–02
  4. By: KASAHARA Hiroyuki; NISHIDA Mitsukuni; SUZUKI Michio
    Abstract: Aggregate productivity growth and the role of input reallocation have been hotly debated. Yet, it has received little attention as to how the measurement of reallocation relies on the commonly-made assumption that a production technology is uniform within an industry. To quantify the effects of unobserved heterogeneity in production technology, we estimate a random-coefficient Cobb-Douglas production function. We identify plant type from the distribution of the intermediate inputs to sales ratio using the first order condition without permanent distortions in intermediate input markets. The empirical analysis uses plant-level data from the Census of Manufacture. We find that accounting for unobserved heterogeneity lowers the volatility of technical efficiency and reallocation contributions. For knitted garments industry that features large dispersion in the intermediate input share, the average growth rate of the reallocation component over the 5-year period after the bubble burst in Japan is -0.5% with heterogeneity, while it is 0.4% without heterogeneity.
    Date: 2017–05
  5. By: Juan Jung (AQR-IREA, University of Barcelona); Enrique López-Bazo (AQR-IREA, University of Barcelona); Matteo Grazzi (Inter-American Development Bank)
    Abstract: This paper tests three hypotheses regarding the link between internet and firm productivity: i) internet adoption and use constitute a source of productivity growth for firms in Latin America, ii) the intensity of its use also matters, and iii) the link between the new technologies and productivity levels is not uniform over the whole productivity distribution. The evidence in this paper fills the gap of scarce and fragmented literature focused on Latin America, and is aligned with previous research for more developed regions which has generally recognized that Information and Communication Technologies (ICTs) have radically changed how modern business are conducted, benefitting firm performances through several channels, such as increasing the efficiency of internal processes, expanding market reach or increasing innovation.Our findings suggest that low-medium productive firms benefit more from an expansion in internet adoption and use, in comparison with the most productive ones. If this evidence is supposed to reflect long-term effects, then public policies oriented to massify internet adoption and promote internet use intensively will surely contribute to reduce inequalities of enterprise’s productivity levels, promoting a level playing field among Latin American firms, something especially relevant for the most unequal region of the world.
    Keywords: ICT, Internet, Productivity, firms, Latin America JEL classification: D22, O31, O33, O54
    Date: 2017–05
  6. By: Andor, Mark; Parmeter, Christopher
    Abstract: Stochastic frontier analysis is a popular tool to assess firm performance. Almost universally it has been applied using maximum likelihood estimation. An alternative approach, pseudolikelihood estimation, decouples estimation of the error component structure and the production frontier, has been adopted in both the nonparametric and panel data settings. To date, no formal comparison has yet to be conducted comparing these methods in a standard, parametric cross sectional framework. We produce a comparison of these two competing methods using Monte Carlo simulations. Our results indicate that pseudolikelihood estimation enjoys almost identical performance to maximum likelihood estimation across a range of scenarios and performance metrics, and for certain metrics outperforms maximum likelihood estimation when the distribution of inefficiency is incorrectly specied.
    Keywords: stochastic frontier analysis,maximum likelihood,production function,Monte Carlo simulation
    JEL: C1 C5 D2
    Date: 2017
  7. By: Michal Lukas Melecky (VSB-Technical University of Ostrava, Czech Republic)
    Abstract: European Union provides financial support to the Member States through various financial tools currently from European Structural and Investment Funds that represent the main instrument of EU Cohesion Policy to sustain territorial development, to increase competitiveness and to eliminate regional disparities. The overall impact of EU Funds depends on the structure of funding and absorption capacity of the country. Efficiency of funding across EU Member States is a fundamental issue for the EU development as a whole. The author considers determining the efficiency of EU Funds as an issue of high importance and therefore this study provides a contribution to the debate on the role of the EU Cohesion Policy in EU Member States. The paper focuses on the territorial effects of selected EU Funds in programming period 2007–2013 in theme of infrastructure through transport efficiency analysis. Efficiency analysis is based on data at country level originating from ex-post evaluation of Cohesion Policy programmes 2007–2013 representing the input and output variables to analyse whether the goal of fostering growth in the target countries have been achieved with the funds provided and whether or not more resources generated stronger growth effects in transport accessibility. Study deals with comparative cross-country analysis, descriptive data analysis and multicriteria approach to Data Envelopment Analysis (DEA) in the form of output oriented BCC VRS model. The study aims at testing several factors in form of two inputs and five outputs, trying to elucidate the differences obtained by the EU Member States in efficient using of the European Regional Development Fund and the Cohesion Fund in transport sector. Paper determines if the countries have been more efficient in increasing their levels of competitive advantages linked with transport. Preliminary results reveals that mostly countries with lower amount of funding achieve higher efficiency, especially from the group of EU15.
    Keywords: DEA; Efficiency; European Regional Development Fund, Ex-post evaluation; Cohesion Fund.
    JEL: C67 O11 O52 R11 R12
    Date: 2017–05
  8. By: François Bareille; Pierre Dupraz
    Abstract: Previous studies on the productive value of biodiversity emphasized that crop diversity increases crop yields. Here, we focus on the productivity of crop diversity and permanent grasslands for crops and milk. Using a GMM approach, we estimate detailed production functions using a sample of 3960 mixed farms from the FADN between 2002 and 2013. We highlight that permanent grasslands enhance crop production. We confirm that crop diversity increases crop and milk yields. Permanent grasslands and crop diversity are however substitute inputs. We also find that both of these biodiversity productive capacities influence variable input productivities. These results suggest the potential adaptations of farmers’ choices to environmental measures.
    Keywords: ecosystem services, agriculture, permanent grassland, crop diversity
    JEL: Q12 Q57 D22
    Date: 2017
  9. By: Agata Zoltaszek (Faculty of Economics and Sociology, University of Lodz); Alicja Olejnik (Faculty of Economics and Sociology, University of Lodz)
    Abstract: Innovation constitutes an important factor for growth in all EU countries. Regions of the EU play a principle role in shaping new innovation trajectories and in bringing out the hidden potential for national growth. However, it is not only the level of innovation that diversifies regions, but also the innovative potential and the level of its realization. Therefore, the aim of this paper is to assess the realization of innovative potential, defined as effectiveness, in EU NUTS 0 and, if possible, NUTS 2 regions. To accomplish this goal a relative effectiveness method in used. The DEA (Data Envelopment Analysis) makes it possible to analyse the relative technical effectiveness based on regional inputs and outputs, without incorporating the legal and technological specifications of innovations, thus treating it like a production process. The inputs of the process are employment in technology and knowledge-intensive sectors and R&D expenditure, while the outputs include the number of patents and GDP. All variables are standardized by the size of the economically active population. DEA results divide regions in to two groups – effective, being the leaders; and ineffective, or followers. The DEA approach was combined and extended by ESDA (Exploratory Spatial Data Analysis) in order to pinpoint spatial patterns of innovation efficiency across NUTS 2 regions. Defining the best practices and implementing the learning-from-the-best policy is important in the process of regional development and specialization
    Keywords: regional innovation, effectiveness, DEA (data envelopment analysis), regional development, spatial autocorrelation, ESDA (exploratory spatial data analysis)
    JEL: C44 C46 C38 O31 O11
    Date: 2017–05
  10. By: Juan Jung (AQR-IREA, University of Barcelona); Enrique López-Bazo (AQR-IREA, University of Barcelona)
    Abstract: This paper analyses the incidence of broadband on regional productivity in Brazil, intending to find out if the economic impact is uniform across all territories of the country. The possibility of performing a regional approach, instead of the usual country-level analysis, means an opportunity to disentangle the economic impact of broadband at territories which share a common institutional and regulatory framework as are the regions inside a country. Results suggest that the impact of broadband on productivity is positive although not uniform across regions. On the one hand, it seems to depend on connection quality and network effects. Faster download speed and critical-mass accounting for network externalities in the region enhance the economic impact of broadband. On the other hand, higher productivity gains are estimated for the less developed regions. The fact that the less productive regions in Brazil seem to be benefiting more from broadband may suggest that it can constitute a factor favoring regional convergence in the country.
    Keywords: Broadband, Information and Communication Technologies, Regional Productivity JEL classification: O33, O47, R11
    Date: 2017–05
  11. By: Mateusz Pipieñ (Department of Econometrics and Operations Research, Cracow University of Economics); Sylwia Roszkowska (Department of Macroeconomics, Faculty of Economics and Sociology, University of Lodz)
    Abstract: For two groups of post-communist countries (CEE and CIS) we estimated the parameters of convergence equations on the basis of annual data. We depart from standard econometric theory, which involves panel regression techniques. We test cross-country heterogeneity of parameters within a system of Seemingly Unrelated Regression Equations (SURE). We show empirical evidence in favour of the variability of parameters describing the convergence effect and productivity growth rates across countries. Our approach seems a convincing alternative to the panel regression approach where random effects can be estimated, imposing an assumption about the constancy of structural parameters within the group of countries under analysis. We discuss the role of the global financial crisis in the heterogeneity of convergence processes and productivity at the country level. The aforementioned SURE model was estimated based on two datasets, one containing observations prior to the crisis and the second containing the whole sample
    Keywords: convergence; labour productivity; economic growth; SURE
    Date: 2017–04
  12. By: Lucia S. Foster; Cheryl A. Grim; John Haltiwanger; Zoltan Wolf
    Abstract: Researchers have been using a variety of methods to estimate productivity at the firm level. Absent data on prices and quantities, these methods yield what have become known as revenue productivity measures. How these measures are related to physical productivity depends on the assumptions about the environment in which establishments operate. It is perhaps less recognized that the differences across estimation methods have important consequences for interpretation. One such difference concerns revenue function estimates: while cost-share-based coefficients are, in principle, equivalent to factor elasticities, regression-based estimates equal factor elasticities only under strict assumptions about product markets. This implies that revenue residuals are conceptually different under these two broad approaches. Using plant-level manufacturing data for the U.S., we look at the empirical relevance of such distinctions in the context of key stylized facts of the productivity literature. First, we find non-trivial differences in estimated elasticities and returns to scale. The variation in elasticities affects numerical results on dispersion, yet all methods imply large productivity differences across establishments. More productive plants are shown to be more likely to grow and survive by all reviewed methods, although differences remain in the quantitative marginal effects of productivity. Reallocation is found to be comparable and productivity enhancing by all methods considered, but within-plant growth seems to be more sensitive. We find evidence that imputation and imposing homogeneous elasticities negatively affect within-industry dispersion. In addition, imputation results in some attenuation in growth and exit coe cients but does not invalidate qualitative conclusions.
    Date: 2017–01
  13. By: Martin Lukáèik (University of Economics in Bratislava, Dolnozemská cesta 1, Bratislava, Slovakia); Karol Szomolányi (University of Economics in Bratislava, Dolnozemská cesta 1, Bratislava, Slovakia); Adriana Lukáèiková (University of Economics in Bratislava, Dolnozemská cesta 1, Bratislava, Slovakia)
    Abstract: Research background: The value of the elasticity of the substitution has been a subject of the research around the world in last decades. It affects the qualitative and quantitative answers to a host of economic questions. Purpose of the article: We suggest the co-integration estimation form to estimate short-run elasticity of substitution. Using U.S. NIPA aggregate time series we estimate aggregate short-run elasticity of substitution. In comparison with estimations in economic literature, we confirm theoretical assumptions described in the research background. Methodology/methods: Different econometric estimation forms are used to estimate elasticity of the substitution coefficient. One possibility is a constant elasticity of substitution production function linearization. Others come from the first-order conditions of a representative firm expressing factor demand functions. Error correction models are natural and elegant way to estimate the forms with non-stationary data. However, the use of error correction models in the factor demand econometric forms is useless for estimating a long-run elasticity of substitution coefficient. The co-integration relationship is given by the theoretical assumption of the labour share constancy in the long-run or by other underlying processes. Though, we can use this co-integration relationship to correct error term in the short-run estimation form. To estimate the short-run elasticity of substitution, we use Stock and Watson’s estimation form. Stability, stationarity and serial correlation of residuals are tested by the relevant econometric tests. Findings: The value of aggregate short-run elasticity of substitution is closed to one. In comparison with other relevant theoretical and empirical papers, our results incline to the Cobb-Douglas aggregate production function in U.S. economy.
    Keywords: short-run and long-run elasticity of substitution, aggregate and sectoral estimations, vector error correction model, labour demand of the profit maximizing firm
    JEL: C13 E23 E24
    Date: 2017–05
  14. By: Schiff, Maurice; Wang, Yanling
    Abstract: This paper examines the impact of North-South trade, education, governance and North-South distance, on technology diffusion and total factor productivity (TFP) growth in the South, focusing on LAC and East Asia over the 32 years before the Great Recession (1976-2007). Findings are: i) TFP rises with education, trade, governance (ETG) and imports’ R&D content, and falls with distance to the North; ii) an increase of LAC’s ETG to East Asia’s levels raises TFP by 165%, fully accounting for its TFP gap with East Asia; iii) the impact of the education gap equals the sum of the governance and openness gaps; and iv) South America’s loss of TFP relative to Mexico associated with its greater distance to US-Canada (both Europe and Japan) is 9.3 (0) percent.
    Keywords: Trade,Governance,Education,Distance,Technology Diffusion,Productivity growth
    JEL: F22 J61
    Date: 2017
  15. By: Amsler, Christine; Prokhorov, Artem; Schmidt, Peter
    Abstract: This paper considers a stochastic frontier model that contains environmental variables that affect the level of inefficiency but not the frontier. The model contains statistical noise, potentially endogenous regressors, and technical inefficiency that follows the scaling property, in the sense that it is the product of a basic (half-normal) inefficiency term and a parametric function of the environmental variables. The environmental variables may be endogenous because they are correlated with the statistical noise or with the basic inefficiency term. Several previous papers have considered the case of inputs that are endogenous because they are correlated with statistical noise, and if they contain environmental variables these are exogenous. One recent paper allows the environmental variables to be correlated with statistical noise. Our paper is the first to allow both the inputs and the environmental variables to be endogenous in the sense that they are correlated either with statistical noise or with the basic inefficiency term. Correlation of inputs or environmental variables with the basic inefficiency term raises non-trivial conceptual issues about the meaning of exogeneity, and technical issues of estimation of the model.
    Keywords: environmental variables; stochastic frontier; endogeneity
    Date: 2017–04–09
  16. By: Rahma Daly (University of Evry Val d’Essonne (EPEE)); Marc-Arthur Diaye (University Paris 1 Pantheon-Sorbonne, Sorbonne Center for Economics)
    Abstract: This paper uses cross-sectional linked employer-employee data col- lected from the French Working Conditions Survey, to assess the po- tential positive or negative effect of performance appraisal interviews administered by firms on employees’ reported levels of psychosocial risk. A subjective measure of the psychosocial risks is used and in- dicates a perceived level of risk. In order to obtain a more objective evaluation, we compare the employees’ perceived level of psychosocial risk and the level of risk reported by firms. The results show that the reported levels of psychosocial risk decrease when employees receive performance evaluation reviews on a regular basis; reviews whose ef- fects vary depending on the type of psychosocial risk.
    Keywords: psychosocial risks, performance appraisal, aggregation methods, propensity score matching, endogenous switching regression
    JEL: C43 J28 M54
    Date: 2017
  17. By: Chen, Yang (Division of Economics, Xi'an Jiaotong-Liverpool University); He, Ming (Division of Economics, Xi'an Jiaotong-Liverpool University); Rudkin, Simon (SHU-UTS SILC Business School, University of Shanghai)
    Abstract: Economists talk of agglomeration bene ting rms but little work has sought to understand the impact various consequences of close location of rms has on productivity. Using unconditional quantile regression for the rst time in productivity we revisit the Chinese Industry Survey, from 1999 to 2007, to ask (a) how does spatial competition, local diversity, population density and regional specialisation impact across the productivity distribution, and (b) how have these effects changed through China's opening up to foreign direct investment. High productivity firms bene t more from specialist agglomerations, monopoly and can take larger advantage of market size compared to those which are less productive.
    Keywords: Unconditional Quantile Regression, Manufacturing Productivity, China, Agglomeration.
    Date: 2017–05–24

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