nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒06‒11
sixteen papers chosen by

  1. An environmental Luenberger-Hicks-Moorsteen. Total Factor Productivityindicator for OECD Countries By Tomas Balezentis; Zhiyang Shen
  2. Estimating the link between farm productivity and innovation in the Netherlands By Johannes Sauer
  3. Does neighbour’s grass matter? Exploring spatial dependent heterogeneity in technical efficiency of Italian hospitals By Cavalieri, M.; Di Caro, P.; Guccio, C.; Lisi, D.;
  4. Estimating technological spillover effects in presence of knowledge heterogeneous foreign subsidiaries: Evidence from Colombia By Nadia Albis; Isabel Álvarez
  5. Technology Adoption, Capital Deepening, and International Productivity Differences By Chaoran Chen
  6. Efficiency of investment in compulsory education: empirical analyses in Europe By Tommaso Agasisti; Ralph Hippe; Giuseppe Munda
  7. Efficiency of investment in compulsory education: An Overview of Methodological Approaches By Tommaso Agasisti; Giuseppe Munda
  8. Alternative User Costs, Productivity and Inequality in US Business Sectors By W. Erwin Diewert; Kevin J. Fox
  9. The Debate about the Sources of Growth in East Asia after a Quarter of a Century: much ado about nothing By Felipe, Jesus; McCombie, John
  10. Productivity of the English NHS: 2014/15 Update By Chris Bojke; Adriana Castelli; Katja Grasic; Daniel Howdon; Andrew Street
  11. Cost Efficiency and Cost-Benefits Relationship Analysis in the Romanian Education System By Liliana Paschia
  12. Sectoral collective bargaining, productivity and competitiveness in South Africa's clothing value chain manufacturers between a rock and a hard place By Godfrey, Shane,; Elsley, Trenton.; Taal, Michelle.
  13. Demand-driven Technical Change and Productivity Growth: Theory and Evidence from the US Energy Policy Act By Giammario Impullitti; Richard Kneller; Danny McGowan
  14. The Cost-Effectiveness of High-Risk Lung Cancer Screening and Drivers of Program Efficiency By Sonya Cressman; Stuart J. Peacock; Martin C. Tammemägi; William K. Evans; Natasha B. Leighl; John R. Goffin; Alain Tremblay; Geoffrey Liu; Daria Manos; Paul MacEachern; Rick Bhatia; Serge Puksa; Garth Nicholas; Annette McWilliams; John R. Mayo; John Yee; John C. English; Reka Pataky; Emily McPherson; Sukhinder Atkar-Khattra; Michael R. Johnston; Heidi Schmidt; Frances A. Shepherd; Kam Soghrati; Kayvan Amjadi; Paul Burrowes; Christian Couture; Harmanjatinder S. Sekhon; Kazuhiro Yasufuku; Glenwood Goss; Diana N. Ionescu; David M. Hwang; Simon Martel; Don D. Sin; Wan C. Tan; Stefan Urbanski; Zhaolin Xu; Ming-Sound Tsao; Stephen Lam
  15. Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China By Yang, Yang
  16. Regulation, institutions and productivity: New macroeconomic evidence from OECD countries By Balázs Égert

  1. By: Tomas Balezentis (Lithuanian Institute of Agrarian Economics, Lithuania Author-Name: Kristiaan Kerstens; CNRS-LEM 9221 and IESEG School of Management); Zhiyang Shen (IESEG School of Management (LEM 9221-CNRS))
    Abstract: In this paper, we propose a novel environmental Luenberger-Hicks-Moorsteen (LHM) Total Factor Productivity indicator and its decomposition that incorporates a negative externality into the measurement of economic performance. Special cases of a generalized environmental directional distance function are involved in the definition of this LHM indicator and the proposed decomposition. We suggest applying the weak disposability non-parametric environmental technology to implement the proposed decomposition. This LHM indicator decomposes into the three terms representing technical change, technical inefficiency change, and scale inefficiency change. The changes in the environmental TFP for OECD countries are then estimated by applying the data set covering the years from 1990 to 2014. We then show the differences of the proposed framework for the decomposition of the LHM indicator if opposed to some existing ones. The results suggest the proposed approach diverges from the traditional strong disposability non-parametric approach in terms of the cumulative environmental TFP.
    Keywords: Total Factor Productivity; Environmental TFP; Luenberger-Hicks-Moorsteen indicator; Weak disposability
    Date: 2017–05
  2. By: Johannes Sauer (Technical University of Munich)
    Abstract: This report investigates the link between farm innovation and economic performance. The study uses a unique survey dataset maintained by Wageningen Economic Research in the Netherlands. A structural multi-stage model of firm-level innovation is applied. The model contains four steps: first, the decision of the farmer to innovate at all; second the innovation intensity, measured by expenditures on innovation activities; third the output of the innovation process, which is measured by realized product, process, organisational or marketing-related innovation; fourth, productivity changes as a result of innovation. The analysis is performed for two types of farms – dairy and crop farms – and covers the period from 2004 to 2014. A number of factors are found to be decisive for the magnitude and success of farm innovations in the Netherlands. Among them regulations and standards, the level of co-operation with knowledge producing institutions, own product and process-related development activities, farm size, the age of the farm operator as well as confidence in business and sector developments. Based on these and other results, the report derives implications for policies aimed at promoting farm innovation and productivity and sustainability in the agricultural sector.
    Keywords: agriculture, Dutch farms, Innovation, productivity
    JEL: O31 Q12 Q16
    Date: 2017–06–07
  3. By: Cavalieri, M.; Di Caro, P.; Guccio, C.; Lisi, D.;
    Abstract: With respect to the other dimensions of hospital behaviour, studying the presence of interaction effects on efficiency involves the issue of which approach is most appropriate to incorporate the spatial dependence in the empirical efficiency model. Using a large sample of Italian hospitals, this paper explores the presence of spatial dependence in technical efficiency. To this purpose, we employ a Spatial Stochastic Frontier Analysis (SSFA) that allows us to robustly estimate the efficiency of each hospital while considering the presence of spatial dependence. Furthermore, we employ both standard spatial contiguity matrix and spatial matrixes exploring the idea of institutional contiguity. Overall, the results suggest an insignificant role for spatial dependence in the efficiency of Italian hospitals, regardless of the specific form of spatial dependence implicit in the weights matrix.
    Keywords: technical efficiency; hospitals; spatial dependence; SSFA;
    JEL: C21 I11 D61
    Date: 2017–06
  4. By: Nadia Albis (Instituto Complutense de Estudios Internacionales (ICEI) and Observatorio Colombiano de Ciencia y Tecnología.); Isabel Álvarez (Instituto Complutense de Estudios Internacionales (ICEI). Universidad Complutense de Madrid.)
    Abstract: This paper analyses the effects of heterogeneous foreign subsidiaries in the generation of knowledge spillovers beneficial for domestic owned firms. The empirical analysis uses firm-level panel data for manufacturing firms in Colombia for the period 2003-2012. We identify two different types of subsidiaries according to their technological responsibilities and mandates, to empirically test the existence of differential effects on domestic firms’ productivity. Our results confirm that only those subsidiaries oriented to creative technological activities exert significant and positive effects, while those subsidiaries oriented to exploitative technological activities do not generate knowledge spillover effects. These findings contribute to arguments in the existing literature supporting the distinctive role and relevance of heterogeneous foreign subsidiaries in developing host contexts.
    Keywords: Technological spillovers; Multinational; Subsidiaries; Firms; Heterogeneity.
    Date: 2017
  5. By: Chaoran Chen
    Abstract: Cross-country differences in capital intensity are larger in agriculture than in the non-agricultural sector. I build a two-sector model featuring technology adoption in agriculture. As the economy develops, farmers gradually adopt modern capital-intensive technologies to replace traditional labor-intensive technologies, as is observed in the U.S. historical data. Using this model, I find that technology adoption is key to explaining lower agricultural capital intensity and labor productivity in poor countries. By allowing for technology adoption, my model can explain 1.56-fold more in rich-poor agricultural productivity differences. I further show that land misallocation impedes technology adoption and magnifies productivity differences.
    Keywords: Agricultural Productivity, Technology Adoption, Capital Intensity, Misallocation.
    JEL: E13 O41 Q12 Q16
    Date: 2017–06–05
  6. By: Tommaso Agasisti (Politecnico di Milano School of Management Department of Management, Economics and Industrial Engineering); Ralph Hippe (European Commission - JRC); Giuseppe Munda (European Commission - JRC)
    Abstract: The current economic crisis has put ever more to the forefront the need to achieve educational goals in the most efficient way. Therefore, this report provides an empirical analysis of the efficiency in education in the EU. Efficiency is measured first by using two different but related traditional frontier approaches (Data Envelopment Analysis and Free Disposal Hull) and then the robustness of our findings is checked by means of multi-criteria evaluation. The analysis is based on a number of standard variables from the literature. The results show, among others, that not the amount, but the specific use of resources is what matters; and that the efficiency of an educational system could also contribute to long-term benefits in terms of adults’ skills and competences.
    Keywords: Compulsory Education; Human Capital, Efficiency Analysis; Data Envelopment Analysis; Multiple-Criteria Evaluation
    JEL: C14 C61 H52 I21
    Date: 2017–04
  7. By: Tommaso Agasisti (Politecnico di Milano School of Management Department of Management, Economics and Industrial Engineering); Giuseppe Munda (European Commission - JRC)
    Abstract: The policy discourses often refer to the term “efficiency†for indicating the necessity of reducing resources devoted to interventions and whole sub-sectors, while keeping the output produced constant. In this technical report, we review the theoretical and empirical foundations of efficiency analysis as applicable to the educational policy. After introducing some key concepts and definitions (technical, allocative, spending and scale efficiency), the report illustrates which variables of inputs, outputs and contextual factors are used in applied studies that assess efficiency in compulsory education. Then, an explanation of methods for conducting efficiency studies is proposed; in particular frontier methods such as non-parametric approaches (as Data Envelopment Analysis) and parametric models (as Stochastic Frontier Analysis) and multi-criteria approaches (such as Multi-Objective Optimisation and Discrete Methods) are reviewed. The main objective of this report is to present to the interested reader the main technical tools which can be applied for carrying out real-world efficiency analyses. A tween report presents an application of efficiency analysis for European compulsory education, at country level.
    Keywords: Compulsory Education; Human Capital, Efficiency Analysis; Data Envelopment Analysis; Multiple-Criteria Evaluation
    JEL: C14 C61 H52 I21
    Date: 2017–05
  8. By: W. Erwin Diewert (Vancouver School of Economics, University of British Columbia, and School of Economics, UNSW); Kevin J. Fox (School of Economics and CAER, UNSW)
    Abstract: Using the new Bureau of Economic Analysis (BEA) Integrated Macroeconomic Accounts as well as other BEA data, we construct productivity accounts for two key sectors of the US economy: the Corporate Nonfinancial Sector (Sector 1) and the Noncorporate Nonfinancial Sector (Sector 2). Calculating user costs of capital based on, alternatively, ex post and predicted asset price inflation rates, we provide alternative estimates for capital services and Total Factor Productivity growth for the two sectors. Rates of return on assets employed are also reported for both sectors. In addition, we compare rates of return on assets employed and TFP growth rates when the land and inventory components are withdrawn from the asset base. Finally, implications for labour and capital shares from using alternative income concepts are explored.
    Keywords: User cost of capital, Total Factor Productivity, rate of return on assets, Integrated Macroeconomic Accounts, Bureau of Economic Analysis, ex post and ex ante asset inflation rates, US Nonfinancial Sector, Austrian model of production, balancing rates of return, inequality.
    JEL: B25 C43 C82 D24 E22 E43
    Date: 2017–05
  9. By: Felipe, Jesus (Asian Development Bank); McCombie, John (University of Cambridge)
    Abstract: This paper reviews what the profession has learned during the last 25 years about East Asia’s growth using growth accounting exercises and estimations of production functions. The publication of Alwyn Young’s (1992, 1994, 1995) and Jong-Il Kim and Lawrence Lau’s (1994) studies, and Paul Krugman’s (1994) popularization of the “zero total factor productivity growth” thesis, led to a very important debate within the profession. The paper demystifies this literature by pointing out a major methodological problem inherent in these approaches. This is that the variables used, namely, output, employment, the stock of capital, and the factor shares, are related definitionally through an accounting identity in value terms. As a consequence, results that are believed to reflect a true technological or production relationship are no more than the outcome of manipulating this identity. We show that total factor productivity calculated with value data is not a measure of productivity. We conclude that the debate about the sources of growth in East Asia was much ado about nothing.
    Keywords: accounting identity; dual TFP; East Asia; growth accounting; primal TFP; technical progress
    JEL: O10 O47 O53
    Date: 2017–05–18
  10. By: Chris Bojke (Centre for Health Economics, University of York, UK); Adriana Castelli (Centre for Health Economics, University of York, UK); Katja Grasic (Centre for Health Economics, University of York, UK); Daniel Howdon (Centre for Health Economics, University of York, UK); Andrew Street (Centre for Health Economics, University of York, UK)
    Abstract: This report updates the Centre for Health Economics’ time-series of National Health Service (NHS) productivity growth. The full productivity series runs from 1998/99, but this report updates the series to account for growth between 2013/14 and 2014/15, as well as looking at 10 year growth trends since 2004/05.
    Date: 2017–04
  11. By: Liliana Paschia (Hyperion University Bucharest, Romania)
    Abstract: For reaching a certain level of performance, it is not absolutely necessary to have additional amounts of money, but an amount distribution in a more efficient manner between school units, or their reorganization. One of the important ways to reduce the base cost and in the same time to reach a high level of preparation for students is efficiency growth. In other words, the best way to grow student performance in lack of cost growth is to grow the productivity through management methods specific to teaching activities.
    Keywords: cost, cost efficiency analysis, cost-benefits analysis, overall cost, direct costs, indirect costs, education system
    JEL: I22 I26 M40
    Date: 2017–01
  12. By: Godfrey, Shane,; Elsley, Trenton.; Taal, Michelle.
    Keywords: clothing industry, wage determination, productivity, value chains, collective bargaining, South Africa
    Date: 2017
  13. By: Giammario Impullitti; Richard Kneller; Danny McGowan
    Abstract: We study how demand shocks affect productivity by provoking technical change. Our model shows that increasing demand leads to technical change and productivity improvements through a direct market size effect and an indirect competition effect. We test the predictions using a natural experiment in the US corn industry where changes to national energy policy created exogenous increases in demand. Estimates show that the increase in demand caused technical change as corn producers adopted new technologies which in turn raised productivity by 5.7% per annum in the five years after the policy change. Although both channels are found to motivate technical change, the economic magnitude of the direct effect substantially outweighs the indirect effect.
    Keywords: demand, market size, technical change, productivity
    Date: 2017
  14. By: Sonya Cressman; Stuart J. Peacock; Martin C. Tammemägi; William K. Evans; Natasha B. Leighl; John R. Goffin; Alain Tremblay; Geoffrey Liu; Daria Manos; Paul MacEachern; Rick Bhatia; Serge Puksa; Garth Nicholas; Annette McWilliams; John R. Mayo; John Yee; John C. English; Reka Pataky; Emily McPherson; Sukhinder Atkar-Khattra; Michael R. Johnston; Heidi Schmidt; Frances A. Shepherd; Kam Soghrati; Kayvan Amjadi; Paul Burrowes; Christian Couture; Harmanjatinder S. Sekhon; Kazuhiro Yasufuku; Glenwood Goss; Diana N. Ionescu; David M. Hwang; Simon Martel; Don D. Sin; Wan C. Tan; Stefan Urbanski; Zhaolin Xu; Ming-Sound Tsao; Stephen Lam
    Abstract: Lung cancer risk prediction models have the potential to make programs more affordable; however, the economic evidence is limited.
    Keywords: Cost-effectiveness , Lung cancer screening , Economics , Screening operations
    JEL: I
  15. By: Yang, Yang (Anderson School of Management, University of California, Los Angeles)
    Abstract: This paper examines the impact of highway expansion on aggregate productivity growth and sectoral reallocation between cities in China. To do so, I construct a unique dataset of bilateral transportation costs between Chinese cities, digitized highway network maps, and firm-level census. I first derive and estimate a market access measure for cities in China from 1995 to 2005. I then examine the channels through which the highway infrastructure affected economic outcomes. The results suggest that highways promoted aggregate productivity growth by facilitating the entry of new firms and reallocation among existing firms. I estimate the aggregate economic impact of China's national highway system and find that eliminating all highways in China would decrease aggregate productivity by 3.2%. There is also evidence that the national highway system led to a sectoral reallocation between cities in China.
    Keywords: Transport infrastructure, trade, highway, productivity, China
    JEL: F10 H54 O18 O40 R10
    Date: 2017–05–26
  16. By: Balázs Égert
    Abstract: Empirical research on the drivers of multi-factor productivity (MFP) is abundant at the firm- and industry level but surprisingly little research has been conducted on the determinants of MFP at the macroeconomic level. In this paper, we seek to understand the drivers of country-level MFP with a special emphasis on product and labour market policies and the quality of institutions. For a panel of OECD countries, we find that anticompetitive product market regulations are associated with lower MFP levels and that higher innovation intensity and greater openness go in tandem with higher MFP. We also find that the impact of product market regulations on MFP may depend on the level of labour market regulations. Better institutions, a more business friendly environment and lower barriers to trade and investment amplify the positive impact of R&D spending on MFP. Finally, we also show that cross-country MFP variations can be explained to a considerable extent by cross-country variation in labour market regulations, barriers to trade and investment and institutions (including corruption).
    Keywords: human capital, measurement, multi-factor productivity, OECD
    JEL: C2 J2 O4
    Date: 2017–06–08

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