nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒07‒23
fourteen papers chosen by

  1. Opening and linking up: Firms, global value chains and productivity in Latin America By Montalbano, Pierluigi; Nenci, Silvia; Pietrobelli, Carlo
  2. Where Women Make The Difference. The Effects of Corporate Board Gender Quotas on Firms’ Performance across Europe By Simona, Comi; Mara, Grasseni; Federica, Origo; Laura, Pagani;
  3. Demand-driven technical change and productivity growth: Evidence from the US Energy Policy Act By Giammario Impullitti; Richard Kneller; Danny McGowan
  4. Innovation policy & labour productivity growth: Education, research & development, government effectiveness and business policy By Al Raee, Mueid; Ritzen, Jo; Crombrugghe, Denis de
  5. Development models, agricultural policies, and agricultural growth: Peru, 1950-2010 By Jackeline Velazco; Vicente Pinilla
  6. Vintage effects in human capital: Europe versus the United States By Robert Inklaar; Marianna Papakonstantinou
  7. Political Influence, Firm Performance and Survival By Vladimir Sokolov; Laura Solanko
  8. Do MincerianWage Equations Inform How Schooling Influences Productivity? By Christian Groth; Jakub Growiec
  9. Dissemination of Two Faces of Knowledge: Do Liberal-Democracy and Income-Level Matter? By Samira Hasanzadeh
  10. Mission Power and Firm Financial Performance By Diego F. Téllez; Jesús M. Godoy
  11. Skills mismatch, productivity and policies: Evidence from the second wave of PIAAC By Muge Adalet McGowan; Dan Andrews
  12. Bank profitability and risk-taking under low interest rates By Jacob Bikker; Tobias Vervliet
  13. Can potential mismeasurement of the digital economy explain the post-crisis slowdown in GDP and productivity growth? By Nadim Ahmad; Jennifer Ribarsky; Marshall Reinsdorf
  14. Transparency, quality of institutions and performance in the Italian Municipalities By Emma Galli; Ilde Rizzo; Carla Scaglioni

  1. By: Montalbano, Pierluigi (University of Roma Tre, University of Sussex); Nenci, Silvia (University of Roma Tre); Pietrobelli, Carlo (, and UNU-MERIT, Maastricht University)
    Abstract: This work explores the relationship between exports, Global Value Chains' (GVCs) participation and position, and firms' productivity. To this aim, we combine the most recent World Bank Enterprise Survey in Latin American and Caribbean (LAC) countries with the OECD-WTO trade in value added data. To explore the above relationship we adopt an extended version of the standard Cobb-Douglas output function including indicators of export performance and GVCs. We control for heterogeneity among firms (by country, region, and industry), sample selection, firms' characteristics and reverse causality. Our empirical outcomes confirm the presence of a positive relationship between participation in international activities and firm performance. They also show that both participation in GVCs and position within GVCs matter. These findings have strong policy implications and may help policymakers in choosing the best policy options to enhance the link between GVCs integration and firms' productivity.
    Keywords: Firm productivity, Exports, Trade in Value added, Global Value Chains, GCVs, learning by supplying
    JEL: F14 F61 D24 L22 O54
    Date: 2017–07–05
  2. By: Simona, Comi; Mara, Grasseni; Federica, Origo; Laura, Pagani;
    Abstract: We study the effect of corporate board gender quotas on firm performance in Belgium, France, Italy and Spain. The empirical analysis is based on accounting panel data from Bureau Van Dijk’s Amadeus. Our identification strategy relies on both double and triple difference estimators with ex-ante matching. We find that gender quotas had either a negative or an insignificant effect on firm performance in the countries considered with the exception of Italy, where we find a positive impact on productivity. We then focus on Italy and offer possible explanations for the positive effect of gender quotas using detailed information on board members’ characteristics.
    Keywords: Gender quotas, corporate governance, firm performance, productivity
    JEL: G30 G38 J3
    Date: 2017–07–12
  3. 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. JEL Codes: D22, D24, L16, Q11.
    Date: 2017
  4. By: Al Raee, Mueid (UNU-MERIT, and Maastricht University); Ritzen, Jo (UNU-MERIT, and Maastricht University); Crombrugghe, Denis de (School of Business and Economics, Maastricht University)
    Abstract: This paper examines the relationship between labour productivity growth in non-traditional sectors and "innovation policy" for a cross-section of countries. Innovation policy is characterised by investments in tertiary education and research and development as a percentage of Gross Domestic Product (GDP), the freedom in the business environment, as well as overall government effectiveness. Our results confirm the economic convergence between richer and poorer countries. We could show a significant positive effect of the interaction between government effectiveness and government expenditures in tertiary education as a percent of GDP on labour productivity growth in non-traditional sectors. Also, for developing countries, a positive and significant relationship between the growth variable and effective research and development expenditures was observed. We could not uncover a relationship between other innovation policies and labour productivity growth. Non-traditional sector labour productivity growth in the oil-rich Arabian Gulf countries was observed to be consistently slower than Western countries. Higher oil prices appear to crowd out innovation in oil-rich countries while stimulating innovation in oil-importing countries.
    Keywords: Innovation policy, labour productivity growth, technological change, government effectiveness, developing countries, Arabian Gulf countries.
    JEL: O38 O43 O47
    Date: 2017–04–04
  5. By: Jackeline Velazco; Vicente Pinilla
    Abstract: Throughout its history, Peru, as a small open economy, has undergone cycles of crisis and recovery, usually linked to fluctuations in the international market. The Peruvian economy has always been an exporter of primary products and an importer of manufactured goods This paper has a two-fold aim: to identify the salient characteristics of the development models and policies affecting Peruvian agriculture since the mid-twentieth century, and to identify what effect they have had on agricultural production and productivity based on an estimation of total-factor productivity (TFP) for the 1950-2010 period.Development strategy models have ranged from the diversification of primary exports, to import-substitution industrialisation, and the promotion of non-traditional exports, which is the current model. These strategies have determined the outcome for agriculture.
    Keywords: Peruvian economic history, Peruvian agriculture, development models, Latin American economic history, agricultural growth
    JEL: N56 O47 Q54 Q10
    Date: 2017–07
  6. By: Robert Inklaar; Marianna Papakonstantinou
    Abstract: The standard assumption in growth accounting is that an hour worked by a worker of given type delivers a constant quantity of labor services over time. This assumption may be violated due to vintage effects, which were shown to be important in the United States since the early 1980s, leading to an underestimation of the growth of labor input (Bowlus and Robinson, 2012). We apply their method for identifying vintage effects to a comparison between the United States and six European countries. We find that vintage effects led to increases of labor services per hour worked by high-skilled workers in the United States and United Kingdom and decreases in Continental European countries between 1995 and 2005. Rather than productivity growth advantage of the US and UK, the primary difference with Continental European countries was human capital vintage effects instead.
    Date: 2017–05
  7. By: Vladimir Sokolov (National Research University Higher School of Economics); Laura Solanko (Bank of Finland)
    Abstract: We examine how regional-level political influence affects firm financial performance and survival. Combining representative survey data on mid-sized manufacturing firms in Russia with official registry data, we find that politically influential firms exhibit higher profitability and retain larger financial investments than non-influential firms. Most importantly, our empirical analysis suggests that the benefits of influence may be transient. Influential firms experienced significantly lower growth during our sample period than non-influential firms. Moreover, influential firms had a significantly higher probability of being liquidated than non-influential firms and the likelihood of the subsequent plant utilization by a new firm was higher for the politically influential liquidated firms.
    Keywords: political influence, firm performance, firm liquidation, government quality
    JEL: D22 D72 G33 G38
    Date: 2017
  8. By: Christian Groth (Department of Economics, University of Copenhagen); Jakub Growiec (SGH Warsaw School of Economics)
    Abstract: We study the links between the Mincerian wage equation (the crosssectional relationship between wages and years of schooling) and the human capital production function (the causal effect of schooling on labor productivity). Based on a stylized Mincerian general equilibrium model with imperfect substitutability across skill types and ex ante identical workers, we demonstrate that the mechanism of compensating wage differentials renders the Mincerian wage equation uninformative for the human capital production function. Proper identification of the human capital production function should take into account the equilibrium allocation of individuals across skill types.
    Keywords: Mincerian wage equation, human capital production function, skill distribution, compensating wage differentials, golden rule of skill formation
    JEL: E24 I26 J24
    Date: 2017–07–10
  9. By: Samira Hasanzadeh
    Abstract: Many researchers have examined the functional relationship between the level of realized total factor productivity (TFP) and innovation, and the positive effect new ideas have on productivity. But, how do diverse ideas drive productivity? And do the home country’s levels of income, civil liberties and political rights influence the spillover effects of innovation? In this research, I answer these questions by using a new dataset on scientific publication. I separate innovations into technical and managerial, and then explore their effects on the economy, using pooled mean group estimations in a dynamic heterogeneous panel setting of 60 countries for the period 1996 to 2014. The findings show that, for high-income countries, domestic innovations in management are a significant source of change in productivity. In contrast, the estimated results do not support the role of the domestic development of management innovation in middle-income countries. However, in the long run, international spillovers of management ideas positively affect the productivity of these latter countries. Regardless of which metric is utilized in the analysis, national spillovers of management ideas increase the productivity of countries with the most-liberal democratic regimes. However, in democratic countries where the regime is only partially liberal, domestic management innovations have a depressing effect on productivity. This last result differs over the long run, as international spillovers of management ideas contribute to higher productivity in less-democratic countries. The results show that, in high-income countries, the elasticity of TFP in respect to management innovation is almost twice as large as it is for technical ideas. The results also indicate that increasing the number of researchers does not enhance the development of management innovation.
    Keywords: Knowledge Dessimination, Managerial Ideas, Technical Ideas, Semi-endogenous Growth Model
    JEL: O30 O40 O50
    Date: 2017–07–19
  10. By: Diego F. Téllez; Jesús M. Godoy
    Abstract: We estimate the effect from mission statement on firm financial performance in a sample of Colombian companies. The mission power, a latent variable defined by using tools from word content analysis, is included in a structural equation model to compute its impact across two channels: the profit margin and the assets turnover. Our estimates show that the no-significant impact of mission statement, which is documented in the literature, may be caused by the opposite effect that sales amount induces on both channels. We disentangle both effects and show that the assets turnover dominates which suggest that the mission statement compels good assets management practices.
    Keywords: mission statement, financial performance, word content analysis, structural equation model
    Date: 2017–02–23
  11. By: Muge Adalet McGowan (OECD); Dan Andrews (OECD)
    Abstract: This paper extends earlier OECD work exploring the link between skills mismatch, productivity and policies to include the countries in the second wave of OECD Survey of Adult Skills, with a special focus on New Zealand. We find that the percentage of workers who are mismatched in terms of skills is 28% in New Zealand, slightly over the OECD average of 25%. The share of over-skilling is at the OECD average of 18%, while the share of under-skilling - at around 10% - is also above the OECD average of 7%. The results suggest that improving the allocation of skills to OECD best practice could be associated with an increase in productivity of around 7% in New Zealand.
    Keywords: education, framework policies, human capital, labour mobility, productivity, reallocation, skill mismatch
    JEL: I20 J20 J24 J61 O40
    Date: 2017–07–21
  12. By: Jacob Bikker; Tobias Vervliet
    Abstract: The aim of this paper is to investigate the impact of the unusually low interest rate environment on the soundness of the US banking sector in terms of profitability and risk-taking. Using both dynamic and static modeling approaches and various estimation techniques, we find that the low interest rate environment indeed impairs bank performance and compresses net interest margins. Nonetheless, banks have been able to maintain their overall level of profits, due to lower provisioning, which in turn may endanger financial stability. Banks did not compensate for their lower interest income by expanding operations to include trading activities with a higher risk exposure.
    Keywords: profitability; risk-taking; low interest rate environment; (dynamic) panel data models
    JEL: G21
    Date: 2017–07
  13. By: Nadim Ahmad; Jennifer Ribarsky; Marshall Reinsdorf
    Abstract: The digital economy has created some new measurement challenges for macroeconomic statistics and may have exacerbated some older ones, raising some concerns about the scope and estimation of GDP. Against a backdrop of slowing rates of measured productivity growth, this has raised questions about the conceptual basis of GDP and output, and whether current compilation methods are adequate to capture them (known as the mismeasurement hypothesis). In response to these concerns the international statistics community has reinforced efforts to investigate these concerns, chiefly under the vehicle of OECD-IMF collaboration and a newly formed Advisory Expert Group working under the auspices of the OECD’s Committee for Statistics and Statistical Policy. This paper is intended to provide momentum to these on-going efforts and to address immediate concerns about the potential scale of GDP mismeasurement in key areas where mismeasurement is often suspected. Notwithstanding the need for further work in some areas, notably with regards to cross-border transactions as well as potential mismeasurement in other macro-economic statistics, such as the consumer prices index, this paper concludes that even if mismeasurement is occurring, its scale is not sufficient to explain the widespread slowdown in measured GDP growth or multi-factor productivity growth. Nevertheless it’s important to note that this is a backward looking exercise. Even though the distortionary impact of any potential mismeasurement is currently thought to be small the growing size of digitised transactions could point to larger impacts in the future.
    Keywords: digitalisation, GDP, mismeasurement, prices, Productivity
    JEL: E1 E22 E24 E30
    Date: 2017–07–21
  14. By: Emma Galli; Ilde Rizzo; Carla Scaglioni
    Abstract: In this paper, we aim at evaluating from an economic perspective the recent Italian legislation on transparency to investigate whether the potentialities of transparency as a tool to improve performance and integrity are fully exploited. We first construct a synthetic indicator (CTI) consisting of two sub-indicators, CTI Integrity and CTI Performance, which are able to describe in numerical terms the overall degree of transparency of Italian public administrations as well as the two different aspects of the public activity’s transparency. Then, using as a sample of Italian municipalities, we address the question whether there is a relation between the fulfillment of transparency obligations and both the institutional quality and the performance of the public administration activity. Our preliminary results suggest that our transparency indicators show a satisfactory correlation with widely used measures of the quality of institutions as well as with the official data on municipalities public spending performance. Key Words: Transparency, quality of institutions, local governments, accountability, performance.
    JEL: K2 K4 H3 H7
    Date: 2017–06

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