nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒11‒26
twelve papers chosen by

  1. Effects of corporate sector restructuring on productivity growth and the role of foreign owned enterprises in China By Chan-Guk Huh
  2. Service Quality in Electricity Distribution in Brazil: A Malmquist Approach By Alexandre Marinho; Marcelo Resende
  3. Union Density, Productivity and Wages By Barth, Erling; Bryson, Alex; Dale-Olsen, Harald
  4. The Cobb-Douglas function as a flexible function. Analysing the substitution between capital, labor and energy. By Frédéric Reynès
  5. The sources of growth in a technologically progressive economy: the United States, 1899-1941 By Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter
  6. Structural change and economic growth in the British economy before the Industrial Revolution, 1500-1800 By Wallis, Patrick; Colson, Justin; Chilosi, David
  7. New road infrastructure: the effects on firms By Gibbons, Stephen; Lyytikainen, Teemu; Overman, Henry G.; Sanchis-Guarner, Rosa
  8. Misallocation in the Presence of Multiple Production Technologies By Jack Rossbach; Jose Asturias
  9. The effects of skill-biased technical change on productivity flattening and hours worked By Hutter, Christian; Weber, Enzo
  10. Productivity and Health: Alternative Productivity Estimates Using Physical Activity By Akogun, Oladele; Dillon, Andrew; Friedman, Jed; Prasann, Ashesh; Serneels, Pieter
  11. Knowledge Exchange and Productivity Spill-overs in Bangladeshi Garment Factories By Andreas Menzel
  12. The great divergence(s) By Berlingieri, Giuseppe; Blanchenay, Patrick; Criscuolo, Chiara

  1. By: Chan-Guk Huh (Chungnam National University, International Trade Department)
    Abstract: This study analyzes productivity enhancing effects of privatizations as well as corporate sector restructuring involving foreign owned enterprises (FOE) in China using firm level data from 1998 to 2007 period. First, we examine key characteristics of firm level total factor productivities (TFPs) using a non-parametric multi-factor productivity approach and, then we decompose TFP growth by ownership categories using the dynamic Olley-Pakes method, paying special attention to the role of FOEs in this area. Second, this study measures spillover effects of FOEs on TFP of overall industries and finds that the FOE sector not to have had the backward spillover effects, which operate through sourcing of intermediate parts from local firms. However, this result is reversed when we re-examine the relationship using a truncated FOE group, which consists of firms that have been converted into FOEs from being local Chinese firms through foreign direct investments. This suggests that the lack of knowledge of local supply chain networks by original FOEs might have contributed to the earlier finding of an absence of the backward spillover effect of FOEs on local firms. In addition, this study finds shuffling of firms between the two categories of FOEs of HMT and FDI to have had measurable TFP enhancing effects.
    Keywords: Total Factor Productivity, FDI, China, privatization
    JEL: F21 F23
    Date: 2017–10
  2. By: Alexandre Marinho; Marcelo Resende
    Abstract: The paper undertakes a dynamic analysis for service quality in the electricity distribution in Brazil between 2010 and 2014 based on Malmquist indexes constructed upon Data Envelopment Analysis (DEA) distance functions. The motivation for the less usual consideration of efficiency frontiers for service-quality builds on previous static applications in the context of telecommunications as given by Façanha and Resende (2004), Resende and Façanha (2005) and Resende and Tupper (2009). The analysis treats undesirable technical indicators as inputs and desirable consumer satisfaction indicators as outputs. The bootstrap- corrected Malmquist indexes indicated that service quality is an important concern as the evidence respectively indicates quality deterioration in 38.1 %, quality stagnation in 40.5 % and quality improvement only in 21.4 % of the cases. When one decomposes the Malmquist index, the evidence does not suggest relevant frontier shifts and indicates a dominant role for the catch-up effect.
    Keywords: service quality, consumer satisfaction, electricity distribution, Brazil
    Date: 2016
  3. By: Barth, Erling (Institute for Social Research, Oslo); Bryson, Alex (University College London); Dale-Olsen, Harald (Institute for Social Research, Oslo)
    Abstract: We exploit tax-induced exogenous variance in the price of union membership to identify the effects of changes in firm union density on firm productivity and wages in the population of Norwegian firms over the period 2001 to 2012. Increases in union density lead to substantial increases in firm productivity and wages having accounted for the potential endogeneity of unionization. The wage effect is larger in more productive firms, consistent with rent-sharing models.
    Keywords: trade unions, union density, productivity, wages
    JEL: J01 J08 J50 J51
    Date: 2017–10
  4. By: Frédéric Reynès (OFCE Sciences Po)
    Abstract: By defining the Variable Output Elasticities Cobb-Douglas function, this article shows that a large class of production functions can be written as Cobb-Douglas function with non-constant output elasticity. Compared to standard flexiblefunctions such as the Translog function, this framework has several advantages. [1] It does not requires the use of a second order approximation. [2] This greatly facilitates the deduction of linear input demands function without the need of involving the duality theorem. [3] It allows for a generalization of the CES function to the case where the elasticity of substitution between each pair of inputs is not necessarily the same. [4] This provides a more general and more flexible framework compared to the traditional nested CES approach while facilitating the analyze of the substitution properties of nested CES functions. The case of substitutions between energy, capital and labor is provided.
    Keywords: flexible production functions, Cobb-Douglas function, substitution capital-labor-energy
    JEL: D24 E23
    Date: 2017–04–20
  5. By: Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter
    Abstract: We develop new aggregate and sectoral Total Factor Productivity (TFP) estimates for the United States between 1899 and 1941 through better coverage of sectors and better-measured labor quality, and find TFPgrowth was lower than previously thought, broadly based across sectors, and strongly variant intertemporally. We then test and reject three prominent claims. First, the 1930s did not have the highest TFP-growth of the twentieth century. Second, TFP-growth was not predominantly caused by four ‘great inventions’. Third, TFPgrowth was not driven indirectly by spillovers from great inventions such as electricity. Instead, the creativedestruction-friendly American innovation system was the main productivity driver
    Keywords: productivity growth; total factor productivity; great inventions; spillovers; United States — history
    JEL: O51 N0
    Date: 2017–10
  6. By: Wallis, Patrick; Colson, Justin; Chilosi, David
    Abstract: Structural transformation is a key indicator of economic development. We present the first time series of male labour sectoral shares for England and Wales before 1800, using a large sample of probate and apprenticeship data to produce national and county-level estimates. England experienced a rapid decline in the share of workers in agriculture between the early seventeenth and the beginning of the eighteenth centuries, associated with rising agricultural and especially industrial productivity; Wales saw few changes. Our results show that England experienced unusually early structural change and highlight the mid-seventeenth century as a turning point.
    JEL: N0 F3 G3
    Date: 2017–09–28
  7. By: Gibbons, Stephen; Lyytikainen, Teemu; Overman, Henry G.; Sanchis-Guarner, Rosa
    Abstract: This paper estimates the impact of new road infrastructure on employment and labour productivity using plant level longitudinal data for Britain. Exposure to transport improvements is measured through changes in accessibility, calculated at a detailed geographical scale from changes in minimum journey times along the road network. These changes are induced by the construction of new road link schemes. We deal with the potential endogeneity of scheme location by identifying the effects of changes in accessibility from variation across small-scale geographical areas close to the scheme. We find substantial positive effects on area level employment and number of plants. In contrast, for existing firms we find negative effects on employment coupled with increases in output per worker and wages. A plausible interpretation is that new transport infrastructure attracts transport intensive firms to an area, but with some cost to employment in existing businesses.
    Keywords: productivity; employment; accessibility; transport
    JEL: R14 J01
    Date: 2017–05
  8. By: Jack Rossbach (Georgetown University Qatar); Jose Asturias (Georgetown University)
    Abstract: While firms may employ different production technologies for producing the same or similar goods, the production technology used by each firm is typically not available in the data or otherwise known. Due to this limitation, researchers are often forced to assume all firms within an industry share a single production function. We develop a methodology based on cluster analysis that requires only firm level data on revenues and factor input expenditures, and allows us to identify when multiple production technologies are present in an industry and to identify the production technologies that each firm employs. We apply our methodology to Chilean plant level data and find strong evidence of multiple production technologies in most industries. We then evaluate the quantitative impact of this finding as it relates to the misallocation literature. While most studies of misallocation attribute all variation in factor input expenditure shares across firms within an industry to misallocation, we are able to use our framework to separate variation arising due to misallocation from variation resulting from differences in production technologies across firms. After accounting for the presence of multiple production technologies, we find that the estimated gains in manufacturing TFP and output from eliminating misallocation decrease by approximately 60 percent.
    Date: 2017
  9. By: Hutter, Christian (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Weber, Enzo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "In a structural macroeconometric analysis based on comprehensive micro data, we examine the role of skill-biased technical change for the flattening of productivity growth and effects on hours worked. The results show that more than 60 percent of the slowdown in productivity growth in Germany since the early 2000s can be explained by the SBTC development. Furthermore, skill-biased technology shocks reduce hours worked, while skill-neutral technology shocks have a positive effect in the long run." (Author's abstract, IAB-Doku) ((en))
    JEL: C32 E24 J24
    Date: 2017–11–16
  10. By: Akogun, Oladele (Modibbo Adama University of Technology); Dillon, Andrew (Michigan State University); Friedman, Jed (World Bank); Prasann, Ashesh (World Bank); Serneels, Pieter (University of East Anglia)
    Abstract: This paper investigates an alternative proxy for individual worker productivity in physical work settings: a direct measure of physical activity using an accelerometer. First, the paper compares worker labor outcomes, such as labor supply and daily productivity obtained from firm personnel data, with physical activity; they are strongly related. Second, the paper investigates the effect of a health intervention on physical activity, using a temporally randomized offer of malaria testing and treatment. Workers who are offered this program reallocate time from lower intensity activities in favor of higher intensity activities when they work.
    Keywords: labor productivity, productivity measurement, malaria, field experiment
    JEL: I12 J22 J24 O12
    Date: 2017–10
  11. By: Andreas Menzel
    Abstract: Productivity spill-overs within firms have commonly been used as a proxy measure for organizational learning. Using novel data from more than 200 production lines in three garment factories in Bangladesh, this paper extends the evidence on such productivity spill-over in two directions. First, I find that spatial distance within firms matters greatly for the strengths of productivity spill-overs, while product complexity matters little. This has important implications for firms in rapidly developing countries such as Bangladesh, as spill-over strength seems less affected when firms upgrade to more complex products, but seems more affected if firms grow larger. Second, I provide evidence from a randomized communication intervention in the three factories to determine the extent to which productivity spill-overs are indeed a measure of knowledge exchange within firms, and not of other types of peer effects, such as competition. In the intervention, randomly selected line supervisors were instructed by their superiors to share production knowledge when their lines were allocated the same garment for production. The intervention increased the strength of the productivity spill-overs between the targeted production lines. It thus supports the view that productivity spill-overs can be used as a measure of knowledge exchange within firms.
    Keywords: learning; productivity; firms
    JEL: D2 L2 M5 O3
    Date: 2017–11
  12. By: Berlingieri, Giuseppe; Blanchenay, Patrick; Criscuolo, Chiara
    Abstract: This report provides new evidence on the increasing dispersion in wages and productivity using novel micro-aggregated firm-level data from 16 countries. First, the report documents an increase in wage and productivity dispersions, for both manufacturing and market services (excluding the financial sector). Second, it shows that these trends are driven by differences within rather than across sectors, and that the increase in dispersion is mainly driven by the bottom of the distribution, while divergence at the top occurs only in the service sector, and only after 2005. Third, it suggests that between-firm wage dispersion is linked to increasing differences between high and low productivity firms. Fourth, it suggests that both globalisation and digitalisation imply higher wage divergence, but strengthen the link between productivity and wage dispersion. Finally, it offers preliminary analysis of the impact of minimum wage, employment protection legislation, trade union density, and coordination in wage setting on wage dispersion and its link to productivity dispersion.
    Keywords: dispersion; productivity; sorting; wages
    JEL: R14 J01
    Date: 2017–06

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