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on Efficiency and Productivity |
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Issue of 2017‒09‒10
seventeen papers chosen by |
| By: | Raushan Bokusheva (OECD); Lukáš Čechura |
| Abstract: | This report measures and evaluates total factor productivity (TFP) of crop farms in the European Union (EU) in the period after the implementation of a series of important reforms of the EU Common Agricultural Policy (CAP). The analysis covers six EU Member states: the Czech Republic, France, Germany, Hungary, Poland and the United Kingdom. The data used in the analysis are based on the Farm Accountancy Data Network (FADN) data provided by the European Commission. To investigate sources of productivity growth, TFP is decomposed into three components – technical change, scale effect and technical efficiency. Technical change was found to be major source of productivity growth for most country samples for the two analysed periods. Technologies currently applied on crop farms were estimated to exhibit substantial economies of scale and therefore favour large-scale operations. However, economies of scale are not fully exploited which suggests the presence of some institutional constraints on farm growth. Large farms appear to be in a better position to exploit economies of scale; for West European countries covered in the report they were also found to exhibit larger persistent technical inefficiencies. Farm support payments were found to negatively influence crop farm productivity and efficiency of input use. More decoupled payments appear to be less distorting than other forms of support. A meta-level analysis of allocative efficiency shows that farms tend to be overcapitalised but to show relatively low allocative inefficiencies in their variable input use decisions. Substantial allocative inefficiencies appear also to exist in land and labour use. No significant economies of scope were found for the analysed crop production systems and levels of output aggregation. Farm flexibility was revealed to be determined mainly by the scale and convexity effects enabling cost efficient adjustments in the size of farm operations. |
| Keywords: | agriculture, economies of scope, European Union, farm flexibility, Total Factor Productivity |
| JEL: | D24 Q12 Q18 |
| Date: | 2017–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:oec:agraaa:106-en&r=eff |
| By: | Kristiaan Kerstens (CNRS-LEM and IESEG School of Management); Ignace Van de Woestyne (KU Leuven, Belgium) |
| Abstract: | This contribution focuses on testing the empirical impact of the convexity assumption in estimating costs using nonparametric specifications of technology and cost functions. Apart from reviewing the scant available evidence, the empirical results based on two publicly available data sets reveal the effect of the convexity axiom on cost function estimates: cost estimates based on convex technologies turn out to be on average between 21% and 38% lower than those computed on nonconvex technologies. These differences are statistically significant when comparing kernel densities and can be illustrated using sections of the cost function estimates along some output dimension. Finally, also the characterization of returns to scale and economies of scale using production and cost functions for individual units yields conflicting results for between 19% and 31% of individual observations. The theoretical known potential impact as well as these empirical results should make us reconsider convexity in empirical production analysis: clearly, convexity is not harmless |
| Keywords: | Economics; Technology; Cost analysis |
| JEL: | D24 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e201703&r=eff |
| By: | Giovanni Cesaroni (Department for local development, Prime Minister’s Office, Rome, Italy); Kristiaan Kerstens (CNRS-LEM and IESEG School of Management); Ignace Van de Woestyne (KU Leuven, Belgium) |
| Abstract: | Starting from the existing input- and output-oriented plant capacity measures, this contribution proposes new long-run input- and output-oriented plant capacity measures. While the former leave fixed inputs unchanged, the latter allow for changes in all input dimensions to gauge either a maximal plant capacity output or a minimal input combination at which non-zero production starts. We also establish a formal relation between the existing short-run and the new long-run plant capacity measures. Furthermore, for a standard nonparametric frontier technology, all linear programs as well as their variations are specified to compute all efficiency measures defining these short- and long-run plant capacity concepts. Furthermore, it is shown how the new long run plant capacity measures are identical to existing models of a variable returns to scale technology without inputs or without outputs (see Lovell and Pastor (1999)): thus, we offer an interesting production economic justification for these models. Finally, we numerically illustrate this basic relationship between these short-run and long-run technical concepts of capacity utilization |
| Keywords: | efficiency; plant capacity utilisation |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e201704&r=eff |
| By: | Mohamed Chaffai (University of SFAX, UREP and ERF); Patrick Plane |
| Abstract: | We explore to what extent the export status and technological choices are related to firm Total Factor Productivity (TFP). Egyptian industrial firms are investigated for the period 2003-2008. The dataset is stratified on five manufacturing industries. Technology being an unobserved phenomenon, a Latent Class Model (LCM) is used to identify its heterogeneity within and across sectors. Translog, Cobb-Douglas, and a mixture of these specifications are used for the estimation of LCMs. Over the five industries, two technology classes prove to be statistically significant. One class provides higher firm productivity levels and is potentially shared by both exporters and non-exporters. Whatever the technology class, except for Food Processing, exporters are found, on average, to have a higher productive performance than non-exporters. Taking into account the potential self-selection effect over the whole sample, Propensity Score Matching (PSM) suggests that the difference is not significant for Food Processing, but varies in the other sectors from 9% in Metal to 32% in Chemistry. When the sample is restricted to labor-intensive technology, which is the largest in terms of number of observations, the premium of export status is about 10%. |
| Date: | 2017–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1134&r=eff |
| By: | Harry X. WU; David T. LIANG |
| Abstract: | Applying the Jorgensonian aggregate production possibility frontier (APPF) model to the China Industrial Productivity (CIP) data set constructed in the principle of KLEMS, we scrutinize the role of information and communication technology (ICT) industries in China's post-reform growth from 1981 to 2012. In the absence of a direct measure of ICT assets, we group Chinese industries into ICT-specific groups following the criteria used in the U.S. case (Jorgenson et al. 2005a), and apply the APPF industry origin of productivity framework, incorporating Domar weights for industry aggregation, to the grouped CIP industry data. This allows us to decompose China's productivity growth into the contribution of the ICT-specific groups and the factor reallocation effect across the groups. Our preliminary results show that Chinese ICT-producing and ICT-using manufacturing industries appear to be the most important driver of China's productivity growth over the entire period in question. While sharing 29% of China's 9.38% annual value added growth, these industries contributed 149% to China's 0.83% annual aggregate total factor productivity (TFP) growth. This, together with a strong gain from the labor reallocation effect across industries, has enabled the economy to compensate for its heavy productivity losses by non-ICT services and the economy-wide misallocation of capital resources. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17111&r=eff |
| By: | Ogawa, Kazuo |
| Abstract: | In this study, an empirical analysis was conducted on the behavior of Japanese rice producers from the standpoint of efficiency in production by using the panel data from the Rice Production Cost Statistics by the Ministry of Agriculture, Forestry and Fisheries. The stochastic frontier production function, which comprises four production factors (land, labor, capital stock, and materials), was estimated and the inefficiency indices of production were calculated. Based on this information, the efficient and inefficient rice producers were identified, and the factor demand behavior and characteristics of the arable land utilization for rice production were compared. It was found that inefficient rice producers do not make any adjustments in employment in the short or long run, even if there is a change in the wages. In addition, it was observed that efficient rice producers who hold a large amount of the farms partitioned into small plots reduced the arable land utilization for rice production and increased productivity. However, it was noted that the certified farmers, who should be aiming at an expansion of the scale of operation and efficiency of agricultural operations, tend to reduce arable land utilization for rice cultivation and switch to other crops; moreover, the more efficient the certified farmers are, the larger the effects of such activities. |
| Keywords: | stochastic frontier production function, productivity, factor demand, land use, rice production adjustment |
| JEL: | Q12 Q15 Q18 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:hit:remfce:68&r=eff |
| By: | Ethan Ilzetzki (London School of Economics (LSE); Centre for Macroeconomics (CFM)); Saverio Simonelli (University of Naplpes Federico II; enter for Studies in Economics and Finance) |
| Abstract: | We measure output per worker in nearly 8,000 municipalities in the Italian electoral process using ballot counting times in the 2013 general election and two referenda in 2016. We document large productivity dispersion across provinces in this very uniform and low-skill task that involves nearly no technology and requires limited physical capital. Using a development accounting framework, this measure explains up to half of the firm-level productivity dispersion across Italian provinces and more than half the north-south productivity gap in Italy. We explore potential drivers of our measure of labor efficiency and find that its association with measures of work ethic and trust is particularly robust. |
| Keywords: | Labor productivity, Development accounting, Work ethic, Cultural economics |
| JEL: | O47 E24 J24 Z10 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1725&r=eff |
| By: | Philippe Aghion (CDF - Collège de France - CdF - Collège de France, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CIAR - Canadian Institute for Advanced Research - Université de Montréal, Department of Economics, Harvard University); Antoine Dechezleprêtre (Centre for Economic Performance - LSE - London School of Economics and Political Science, Grantham Research Institute on Climate Change and the Environment - LSE - London School of Economics and Political Science); David Hémous (Insead - INSEAD - INSEAD); Ralf Martin (Imperial College London, Grantham Research Institute on Climate Change and the Environment - LSE - London School of Economics and Political Science, Centre for Economic Performance - LSE - London School of Economics and Political Science); John Van Reenen (National Bureau of Economic Research - National Bureau of Economic Research, Centre for Economic Performance - LSE - London School of Economics and Political Science) |
| Abstract: | Can directed technical change be used to combat climate change? We construct new firm-level panel data on auto industry innovation distinguishing between “dirty” (internal combustion engine) and “clean” (e.g., electric, hybrid, and hydrogen) patents across 80 countries over several decades. We show that firms tend to innovate more in clean (and less in dirty) technologies when they face higher tax-inclusive fuel prices. Furthermore, there is path dependence in the type of innovation (clean/dirty) both from aggregate spillovers and from the firm’s own innovation history. We simulate the increases in carbon taxes needed to allow clean technologies to overtake dirty technologies. |
| Keywords: | Carbon Taxes |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-01496920&r=eff |
| By: | De Visscher, Stef; Eberhardt, Markus; Everaert, Gerdie |
| Abstract: | We develop a new way to estimate cross-country production functions which allows us to parametrize unobserved non-factor inputs (total factor productivity) as a global technology process combined with country-specific time-varying absorptive capacity. The advantage of our approach is that we do not need to adopt proxies for absorptive capacity such as investments in research and development (R&D) or human capital, or specify explicit channels through which global technology can transfer to individual countries, such as trade, FDI or migration: we provide an endogenously-created index for relative absorptive capacity which is easy to interpret and encompasses potential proxies and channels. Our implementation adopts an unobserved component model and uses a Bayesian Markov Chain Monte Carlo (MCMC) algorithm to obtain posterior estimates for all model parameters. This contribution to empirical methodology allows researchers to employ widely-available data for factor inputs (capital, labor) and GDP or value-added in order to arrive at policy-relevant insights for industrial and innovation policy. Applying our methodology to a panel of 31 advanced economies we chart the dynamic evolution of global TFP and country-specific absorptive capacity and then demonstrate the close relationship between our estimates and salient indicators of growth-enhancing economic policy. |
| Keywords: | absorptive capacity; common factor model; MCMC; time-varying parameters; total factor productivity; unobserved component model |
| JEL: | C21 C23 F43 O33 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12261&r=eff |
| By: | Fukao, Kyoji; Paul, Saumik |
| Abstract: | Extending the literature on productivity convergence to a multi-sector growth framework, we show that σ-convergence in regional productivity growth can be decomposed into σ-convergence in sectoral productivity growth and σ - convergence in structural transformation-led productivity growth. Empirical support is provided using novel historical datasets at the Japanese prefecture level from 1874 to 2008. In pre-war Japan (1874–1940), regional convergence was primarily driven by productivity growth in the secondary sector. The rapid productivity convergence within the secondary and tertiary sectors relative to that in the primary sector between 1890 and 1940 provided an important base for the large convergence effects of structural transformation in the post-war years through a larger sectoral productivity gap in the lagging regions compared to the leading regions. However, the pace of regional convergence gradually slowed down and since the early 1970s the σ -convergence of structural transformation has been offset by the σ-divergence of within-sector productivity growth and vice versa, thwarting the pace of convergence in aggregate productivity. |
| Keywords: | Structural transformation, Labor productivity, Regional convergence, Japan |
| JEL: | O40 O10 |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hituec:665&r=eff |
| By: | Cinzia Daraio (DIAG, Sapienza University of Rome, Italy); Kristiaan Kerstens (CNRS-LEM and IESEG School of Management); Thyago Nepomuceno (Universidade Federal de Pernambuco, Recife-PE, Brazil); Robin C. Sickles (Economics Department, Rice University, Houston, TX (USA)) |
| Abstract: | The software available to implement and carry out efficiency analysis is crucial for the diffusion of efficiency frontier techniques among applied researchers and policy makers. The implementation of up-to-date productivity and efficiency analysis is indeed important to advance our knowledge in many fields, ranging from the public and regulated sectors to the private ones. This contribution fills a gap in the existing literature and surveys the currently available options to estimate a variety of frontier methodologies using either general or dedicated programs. We present a conceptual mapping of the key terms associated to the surveyed software and outline directions for future research |
| Keywords: | frontier models, productivity, efficiency, review, software |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e201705&r=eff |
| By: | FUJII Daisuke; SAITO Yukiko; SENGA Tatsuro |
| Abstract: | Recent empirical evidence has revealed that firm age is one of the key determinants for firm growth, while other literature points out the importance of customer-supplier networks for firm growth. This paper investigates how the inter-firm transaction network evolves over the firm lifecycle and its relationship with firm growth using large-scale firm network data in Japan. Old firms are large in size and well connected compared to young firms. In particular, older firms are connected to other older firms exhibiting positive assortativity of age. Younger firms tend to add and drop links more frequently, and the stability of a transaction link increases with its duration of active relationships, implying gradual learning of link-specific productivity over time. Moreover, firm's sales growth is positively related with the expansion of transaction partners in various measures, conditional on firm age. This suggests that the observed relationship between firm age and firm growth may be due to the lifecycle pattern of building inter-firm networks. |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:17110&r=eff |
| By: | Mehmood, Mian Saqib; Sheraz, Iram; Mehmood, Asif; G. Mujtaba, Bahaudin |
| Abstract: | The objective of this study is to evaluate the factors that influence credit and operational risk in commercial banks. Financial data was collected from 11 commercial banks of Pakistan listed in Karachi Stock Exchange (KSE) over the period of 2009-2014. Different statistical tools and techniques are applied to find the cause and effect relationship for the underconsideration issue.The banking sector have faced the rivalry with other financial institutions to grab the attention of the customers and having a considerable competition with other banks. The result has shown that operational risk had significant but negative relation with NPL and operating efficiency but positive and highly significant relationship with bank size. Credit risk had significant and positive regression values with gearing ratio. NPL, operating efficiency and bank size had negative and insignificant relation with credit risk. There was no relationship between gearing ratio and operational risk. However the bottomline of this research suggests that banks play an important role in providing the finance for many of the businesses. Moreover these institutions need more managerial grip and vigilant attitude towards the risk management. |
| Keywords: | Operational Risk, Credit Risk, KSE, Commercial Banks, Pakistan |
| JEL: | F36 G0 M1 |
| Date: | 2017–06–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80491&r=eff |
| By: | Benoît Lalloué (EA MOS - EA Management des Organisations de Santé - EHESP - École des Hautes Études en Santé Publique [EHESP] - PRES Sorbonne Paris Cité, IGR - Institut Gustave Roussy); Shu Jiang (EA MOS - EA Management des Organisations de Santé - EHESP - École des Hautes Études en Santé Publique [EHESP] - PRES Sorbonne Paris Cité, IGR - Institut Gustave Roussy); Anne Girault (EA MOS - EA Management des Organisations de Santé - EHESP - École des Hautes Études en Santé Publique [EHESP] - PRES Sorbonne Paris Cité, EHESP - École des Hautes Études en Santé Publique [EHESP]); Marie Ferrua (IGR - Institut Gustave Roussy); Philippe Loirat (IGR - Institut Gustave Roussy, EA MOS - EA Management des Organisations de Santé - EHESP - École des Hautes Études en Santé Publique [EHESP] - PRES Sorbonne Paris Cité); Etienne Minvielle (EA MOS - EA Management des Organisations de Santé - EHESP - École des Hautes Études en Santé Publique [EHESP] - PRES Sorbonne Paris Cité, EHESP - École des Hautes Études en Santé Publique [EHESP], IGR - Institut Gustave Roussy) |
| Abstract: | Objective Most studies showed no or little effect of pay-for-performance (P4P) programs on different outcomes. In France, the P4P program IFAQ was generalized to all acute care hospitals in 2016. A pilot study was launched in 2012 to design, implement and assess this program. This article aims to assess the immediate impact of the 2012–14 pilot study. Design and setting From nine process quality indicators (QIs), an aggregated score was constructed as the weighted average, taking into account both achievement and improvement. Among 426 eligible volunteer hospitals, 222 were selected to participate. Eligibility depended on documentation of QIs and results of hospital accreditation. Hospitals with scores above the median received a financial reward based on their ranking and budget. Several characteristics known to have an influence on P4P results (patient age, socioeconomic status, hospital activity, casemix and location) were used to adjust the models. Intervention To assess the effect of the program, comparison between the 185 eligible selected hospitals and the 192 eligible not selected volunteers were done using the difference-in-differences method. Results Whereas all hospitals improved from 2012 to 2014, the difference-in-differences effect was positive but not significant both in the crude (2.89, P = 0.29) and adjusted models (4.07, P = 0.12). Conclusion These results could be explained by several reasons: low level of financial incentives, unattainable goals, too short study period. However, the lack of impact for the first year should not undermine the implementation of other P4P programs. Indeed, the pilot study helped to improve the final model used for generalization. |
| Keywords: | hospital,pay-for-performance, quality indicators, financial incentives, impact evaluation |
| Date: | 2017–08–30 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01579386&r=eff |
| By: | Efendic, Adnan; Pugh, Geoffrey T. |
| Abstract: | This empirical study is based on nationally representative cross-sectional survey data gathered to investigate the effect of ethnic diversity on individual and household economic performance in Bosnia and Herzegovina (BiH). The complexity of this relationship in the context of this post-conflict country is addressed and investigated by estimating models in which ethnic diversity affects personal and family incomes. The 1992-1995 conflict was ethnically characterized, and harmful for ethnic diversity. Yet, two decades later, we find positive economic consequences of ethnic diversity for individuals and households. After controlling for other influences, the authors estimate that both personal and family incomes are around 10% higher in ethnically diverse than in ethnically homogenous areas. A corollary is that policy makers in this post-conflict country, and in similar environments elsewhere, should take into consideration the economic costs of policies supporting ethnic homogeneity over diversity. |
| Keywords: | ethnic diversity,economic performance,Bosnia and Herzegovina |
| JEL: | D00 D10 D31 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201757&r=eff |
| By: | Margit Molnar |
| Abstract: | With persisting slower growth worldwide and in China, over-capacity in some heavy industry sectors, declining profitability, and intensifying competition from other, lower-cost emerging economies, corporate behaviour in China needs to change and focus more on efficiency and sustainability. This need is further intensified by mounting environmental pressures and China’s ambition for greener and more sustainable growth. A larger proportion of firms, including state-owned enterprises, should step up innovation efforts and improve corporate governance practices. To this end, supportive policies are needed, fostering an environment that is more conducive to innovation and entrepreneurship, and facilitating resource reallocation through the exit of unviable firms. At the same time, fraudulent corporate practices must be halted and State assets need to be better managed. Reforms are under way or envisaged that will help improve corporate performance and, more broadly, deliver more resilient and environmentally sustainable growth and continuing progress in living standards. This Working Paper relates to the 2017 OECD Economic Survey of China (www.oecd.org/eco/surveys/economic-surve y-china.htm). |
| Keywords: | bankruptcy, business environment, corporate debt, corporate governance, entrepreneurship, industrial policy, Innovation, intellectual property rights, overcapacity, research and development, state-owned entreprise reform, zombie firms |
| JEL: | G34 G38 L26 L52 O3 P31 |
| Date: | 2017–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1408-en&r=eff |
| By: | Jean Pierre Huiban (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique); Camille Mastromarco (Dipartimento di Scienze dell'Economia - Università del Salento); Antonio Musolesi (Department of Economics and Management - University of Ferrara); Michel Simioni (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - CIHEAM - Centre International des Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier) |
| Abstract: | This paper attempts to estimate the impact of pollution abatement investments on the production technology of firms by pursuing two new directions. First, we take advantage of recent econometric developments in productivity and efficiency analysis and compare the results obtained with two complementary approaches: parametric stochastic frontier analysis and conditional nonparametric frontier analysis. Second, we focus not only on the average effect but also on its heterogeneity across ?rms and over time and search for potential nonlinearities. We provide new results suggesting that such an effect is heterogeneous both within ?rms and over time and indicating that the effect of pollution abatement investments on the production process is not monotonic. These results have relevant implications both for modeling and for the purposes of advice on environmentally friendly policy. |
| Abstract: | Cet article estime l’impact des investissements anti-pollution sur la technologie en suivant deux nouvelles directions. Premièrement, il s’inspire de travaux économétriques récents en analyse de la productivité et de l’efficacité et compare les résultats obtenus en utilisant deux approches complémentaires : l’approche paramétrique des frontières stochastiques de production et celle non paramétrique de frontières de production. Deuxièmement, l’analyse ne se concentre plus sur le seul comportement moyen mais s’intéresse à l’hétérogénéité des effets des investissements anti-pollution entre les firmes dans le temps. Une attention particulière est ainsi donnée à la détection de non linéarités. Les résultats empiriques apportent un éclairage nouveau sur ces effets en montrant qu’ils sont hétérogènes à la fois entre les firmes et dans le temps et qu’ils ne sont pas monotones. De tels résultats ont une implication en termes non seulement de modélisation des effets des investissements anti-pollution sur la technologie mais aussi de recommandations pour la politique environnementale de réduction des émissions polluantes des firmes. |
| Keywords: | pollution abatement investments,technology,stochastic frontier analysis,conditional nonparametric frontier analysis,generalized product kernels,generalized local polynomial kernel regression,investissements antipollution,technologie,frontières stockastique de production,estimation non paramétrique des frontières de production,estimateurs de noyaux,industrie agroalimentaire,france |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-01512154&r=eff |