nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒07‒30
eleven papers chosen by

  1. Growth Performance and Resource Use Efficiency of Maize in Bihar: An Economic Perspectives By Ahmad, Nasim; Sinha, D.K.; Singh, K.M.; Mishra, R.R.
  2. Productivity Change Analysis of Polish Dairy Farms After Poland’s Accession to the EU – An Output Growth Decomposition Approach By Makieła, Kamil; Marzec, Jerzy; Pisulewski, Andrzej
  3. An Alternative Look at Measurement of University Performance in STEM education: A Data Envelopment Analysis Project By Sukanya Kemp; Irina Chernikova
  4. Cost efficiency and economies of diversification of biogas-fuelled cogeneration plants in Austria: a nonparametric approach By Eder, Andreas
  5. Multi-Product Firms, Import Competition, and the Evolution of Firm-product Technical Efficiencies By Valerie Smeets; Frederic Warzynski; Amil Petrin; Emmanuel Dhyne
  6. Stochastic Frontiers and Technical Efficiency of Local Public Expenditure in Mexico By Alejandro U. Becerra Ornelas; Héctor M. Núñez
  7. Do Mincerian Wage Equations Inform How Schooling Influences Productivity? By Christian Groth; Jakub Growiec
  8. The Relationship between Economic Growth and Democracy: Alternative Representations of Technological Change By Heshmati, Almas; Kim, Nam-Seok
  9. Rethinking Measurement of Pay Disparity and its Relation to Firm Performance By Ethan Rouen
  10. Capital accumulation and productivity gains in Morocco By Taoufik ABBAD
  11. Firm Heterogeneity, Technological Adoption, and Urbanization: Theory and Measurement By Alex Chernoff

  1. By: Ahmad, Nasim; Sinha, D.K.; Singh, K.M.; Mishra, R.R.
    Abstract: The present investigation was undertaken to evaluate the growth in area, production and productivity and resource use efficiency of maize in various agro-climatic zones of Bihar. The growth pattern in production and productivity were also observed to be positive and statistically significant. The trends in area, production and productivity were also observed positive for both the growth models, linear and compound.The resource use efficiency was evaluated zone-wise and for state as whole levels using Data Envelopment Analysis (DEA) technique for the block period 2008-09 to 2010-11. Technical efficiencies at state level in maize production were found to be 64% for kharif maize and 71% in rabi maize. Allocative mean efficiencies for kharif and rabi maize were calculated 68% and 65%, indicating that farmers could reduce costs by 32% and 35% by using optimum proportions of inputs considering it’s prices while selecting it’s quantities. Farmers of zone-II of Bihar are well known for large scale production of rabi maize, but still there exist technical inefficiency by 24% and AE by 9%. The value of cost efficiency (CE) emphasizes the reduction of cost by 30% to produce exiting level of output at least cost. The farmers of zone-III are more technically sound as compared to zone-I, zone-II and thus, even at state level too, the TE was observed 88% and 87% for kharif and rabi maize, respectively but AE is very less as compared to other zones i.e. 52% for rabi maize
    Keywords: Maize, Resource Use Efficiency, Compound Growth Rate, Cost Efficiency, Technical Efficiency, Bihar
    JEL: O13 Q10 Q12 Q13 Q15
    Date: 2017
  2. By: Makieła, Kamil; Marzec, Jerzy; Pisulewski, Andrzej
    Abstract: The aim of this study is to assess changes in productivity of Polish dairy farms after Poland’s accession to the EU. In order to do so a new decomposition of output growth is proposed in a stochastic frontier framework. We show how changes in economies of scale can be isolated, which leads to redefined components of output growth and a better measure of productivity growth. The productivity component is now disaggregated to its three generic sources: total scale change, real technical change and efficiency change. The analysis of 1,191 Polish dairy farms between 2004-2011 has revealed that production growth (3.91%) is mostly due to inputs accumulation (3.4%) rather than productivity growth (0.51%.) Further decomposition indicates that productivity component is driven by real technical growth (1%) and changes in scale elasticity, which have had a negative effect on productivity (-0.81%). Technical efficiency growth (0.36%) played a rather minor role.
    Keywords: productivity analysis, Polish dairy farms, output growth decomposition, stochastic frontier analysis, FADN
    JEL: C01 C11 D24 Q12
    Date: 2016–10
  3. By: Sukanya Kemp (University of Akron); Irina Chernikova (University of Akron)
    Abstract: How is success measured in the field of STEM education in US universities? Such a question can be difficult to answer because of the lack of uniformity among the relevant variables. Given the wide diversity in success indicators, and the fact that universities choose to pursue different aspects of educational outcomes, it is often difficult to compare performances and definitively point to one school as 'better' than another. In an attempt to measure university efficiency in the areas of engineering, natural, physical and health sciences, the authors use the non-stochastic frontier model of Data Envelopment Analysis (DEA), which is commonly used in Operations Research literature, to evaluate the efficiency of producers. In this initial research, the authors isolated the large public universities of Ohio as the subject of the analysis. They found that with the input-output structure defined by the data, certain universities clearly stood out as efficient compared to others in the dissemination of STEM education. A logistic regression isolated the inputs and outputs that had the strongest effects on the efficiency scores.
    Keywords: STEM education, University Performance, Data Envelopment Analysis, Efficiency
    JEL: A00 C67
    Date: 2017–07
  4. By: Eder, Andreas
    Abstract: This paper investigates the existence and the degree of economies of diversification for small-scaled, renewable-fuelled cogeneration systems using 2014 cross-sectional data from 67 Austrian biogas plants. In addition, cost efficiency of those biogas plants is estimated with a non-parametric linear programming technique, known as Data Envelopment Analysis. This is the first study applying the methodology proposed by Chavas and Kim (2010). Economies of diversification are decomposed into three additive parts: a part measuring complementarity among outputs; a part reflecting economies of scale; a part reflecting convexity. Furthermore, this paper extends the decomposition introduced by Chavas and Kim (2010) in such a way that the contribution of each input to economies of diversification and its components can be investigated. The results indicate substantial cost savings from diversification. For very-small scaled plants ( 250 kWel) positive complementarity and convexity effects are the main source of economies of diversification and outweigh the negative effect from scale diseconomies. In addition to substantial fuel/feedstock cost reductions, significant costs saving effects from the jointness in labour and other inputs positively contribute to the complementarity effect. While on average capital and labour costs positively contribute to economies of scale, feedstock costs work in the direction of diseconomies of scale.
    Keywords: Data Envelopment Analysis, Economies Scale, Economies of Scope, Renewable Energy Sources, Energy Efficiency
    JEL: C61 D22 D24 Q16 Q42
    Date: 2017–07
  5. By: Valerie Smeets (Aarhus University); Frederic Warzynski (Aarhus University); Amil Petrin (University of Minnesota); Emmanuel Dhyne (National Bank of Belgium)
    Abstract: We study how increased import competition affects the evolution of firm-product technical efficiency in Belgium. We observe quarterly data on outputs (quantities sold by very detailed product categories) and inputs (labor, capital, and intermediate inputs) at the firm-level from 1995 to 2007, a period marked by stark declines in Chinese tariffs. Using Diewert (1973) and Lau (1976) we show how to estimate firm-product quarterly technical efficiency shocks allowing for interactions among the production processes for multi-product firms, without allocating firm-level inputs across the different outputs. Instrumenting import share - while not important for the signs of the coefficients - is very important for the magnitudes as the effect of competition increases tenfold when one moves from OLS to IV. We find import competition is strongly positively related to firm-product level productivity with a increase of 10% in the import share leading to a 10% gain in technical efficiency. Firms appear to be less technically efficient at producing goods the further they get from their core competence. Moreover, they respond to competition by focusing more on their core products.
    Date: 2017
  6. By: Alejandro U. Becerra Ornelas (Division of Economics, CIDE); Héctor M. Núñez (Division of Economics, CIDE)
    Abstract: This work analyses the effect of the institutional design of public spending on the technical efficiency. The model controls the technical efficiency with two institutional variables for earmarked and autonomous revenues and assess them using two stochastic frontier models. The main findings show that the expenditure of municipalities, regardless of its type, reduces to the technical efficiency of local production. These results support the Brennan-Buchanan collusion hypothesis that descentralization generates an increment in government spending, but it is not translated into better population welfare.
    Keywords: stochastic frontier, technical efficiency, earmarked and autonomous revenues, local economies
    Date: 2017–02
  7. By: Christian Groth; Jakub Growiec
    Abstract: We study the links between the Mincerian wage equation (the cross-sectional 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: 2017–07–17
  8. By: Heshmati, Almas (Jönköping University, Sogang University); Kim, Nam-Seok (Sogang University)
    Abstract: This study investigates the relationship between economic growth and democracy by estimating a nation's production function specified as static and dynamic models using panel data. In estimating the production function, it applies a single time trend, multiple time trends and the general index formulations to the translog production function to capture time effects representing technological changes of unknown forms. In addition to the unknown forms, implementing the technology shifters model enabled this study to find possible known channels between economic growth and democracy. Empirical results based on a panel data of 144 countries observed for 1980–2014 show that democracy had a robust positive impact on economic growth. Credit guarantee is one of the most significant positive links between economic growth and democracy. The marginal effects of credit guarantee and foreign direct investment inflows are stronger in democratic countries than they are in non-democratic ones. In order to check the robustness of these results, a dynamic model constructed with a flexible adjustment speed and a target level of GDP is also tested. The results of this dynamic model also support the positive impacts of democracy on economic growth.
    Keywords: economic growth, democracy, production function, single time trend, multiple time trends, general index, technology shifters, flexible adjustment speed, target level of GDP
    JEL: D24 O43 O47 P16
    Date: 2017–07
  9. By: Ethan Rouen (Harvard Business School, Accounting and Management Unit)
    Abstract: I develop measures of firm-level pay disparity and examine their relation to firm accounting performance. Using comprehensive compensation data for a large sample of firms, I find no statistically significant relation between the ratio of CEO-to-mean employee compensation and performance. I next create empirical models that allow me to separate the components of CEO and employee compensation explained by economic factors from those that are not, and use these models to estimate explained and unexplained pay disparity. After validating my estimate of unexplained pay disparity as a proxy for pay fairness, I find robust evidence of a negative (positive) relation between unexplained (explained) pay disparity and future firm performance. Additional tests show that the negative relation between unexplained disparity and firm performance is driven by firms where both the CEO is overpaid and employees are underpaid, and is more pronounced for firms with weak corporate governance and high employee turnover.
    Keywords: pay disparity, pay ratio, CEO pay ratio, income inequality
    Date: 2017–07
  10. By: Taoufik ABBAD
    Abstract: The continuous and reinforced process of accumulating physical capital, in which Morocco has embarked since the early 2000s, has helped to preserve the stability of the fundamental equilibrium and cushion the economy from various external and exogenous shocks. However, these accumulation efforts have not led to a significant increase in productivity gains or to an accelerated transformation of the productive base. This Policy Brief aims to describe the underpinnings of the capital accumulation process in Morocco and highlight the chronic inhibitors that constrain the Moroccan economy to the impacts of low productivity.
    Date: 2017–07
  11. By: Alex Chernoff
    Abstract: This paper develops a model of firm heterogeneity, technological adoption, and urbanization. In the model, welfare is measured by household real income, and urbanization is measured by population density. I use the model to derive statistics that measure the effect of a new technology on productivity, welfare, and urbanization. The empirical application of the paper estimates these effects using nineteenth-century firmlevel data on mechanical steam power in the Canadian manufacturing sector, and townshiplevel population data. The results indicate that the introduction of steam power increased productivity by 22.8 percent, and welfare by 6.0 percent. By comparing the model predicted change in urbanization to observed population density growth, I find that the introduction of mechanical steam power accounts for approximately 6.2 percent of the observed variation in urbanization during this period.
    Keywords: Economic models; Productivity; Regional economic developments
    JEL: O14 R13 N61
    Date: 2017

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