nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2018‒01‒01
twenty papers chosen by

  1. Productivity, efficiency and technical change in world agriculture: a färe-primont index approach By Néstor A. Le Clech; Carmen Fillat Castejón
  2. Effect of subsidies on technical efficiency excluding or including environmental outputs: An illustration with a sample of farms in the European Union By Laure Latruffe; K Hervé Dakpo; Yann Desjeux; Giffona Justinia Hanitravelo
  3. Labor Market Regulations and Growth By Oleg Badunenko;
  4. Robust estimation of cost efficiency in non-parametric frontier models By Galina Besstremyannaya; Jaak Simm; Sergei Golovan
  5. Between spilling over and boiling down: network-mediated spillovers, absorptive capacity and productivity in European regions By Nicola Cortinovis; Frank van Oort
  6. Against All Odds: The Contribution of the Healthcare Sector to Productivity. Evidence from Italy and UK from 2004 to 2011 By Vincenzo Atella; Federico Belotti; Chris Bojke; Adriana Castelli; Katja Grašic; Joanna Kopinska; Andrea Piano Mortari; Andrew Street
  7. Assessing the relationship between total factor productivity and foreign direct investment in an economy with a skills shortage: the case of South Africa By Bonga-Bonga, Lumengo; Phume, Maphelane
  9. Innovation and Productivity in the service sector of emerging and developing countries By Regis, Paulo José; Desmarchelier, Benoît
  10. Impact of macro-structural reforms on the productivity growth of regions: distance to the frontier matters By Sabine D’Costa; Enrique Garcilazo; Joaquim Oliveira Martins
  11. When Losses Turn Into Loans: The Cost of Undercapitalized Banks By Laura Blattner; Luisa Farinha; Francisca Rebelo
  12. Making the business environment more supportive of productivity in Belgium By Peter Walkenhorst; Lilas Demmou; Manav Frohde
  13. Why is Education Performance so Different Across Latvian Schools? By Olegs Krasnopjorovs
  14. Does Import Competition Induce R&D Reallocation? Evidence from the U.S. By Rui Xu; Kaiji Gong
  15. Human Capital, Firm Capabilities, and Innovation By Ajay Bhaskarbhatla; Deepak Hegde; Thomas (T.L.P.R.) Peeters
  16. Technological change, energy, environment and economic growth in Japan By Galina Besstremyannaya; Richard Dasher; Sergei Golovan
  17. Raising and mobilising skills to boost productivity and inclusiveness in Belgium By Vincent Vandenberghe; Lilas Demmou; Manav Frohde
  18. Job matching on connected regional and occupational labor markets By Fedorets, Alexandra; Stops, Michael; Lottmann, Franziska
  19. Gibrat's Law and Quantile Regressions: an Application to Firm Growth By Distante, Roberta; Petrella, Ivan; Santoro, Emiliano
  20. Estimating the production function for human capital: results from a randomized controlled trial in Colombia By Orazio Attanasio; Sarah Cattan; Emla Fitzsimons; Costas Meghir; Marta Rubio Codina

  1. By: Néstor A. Le Clech (Quilmes National University); Carmen Fillat Castejón (University of Zaragoza)
    Abstract: This paper makes a comparative analysis of the total factor productivity (TFP) estimations on the agricultural sector between the traditional Malmquist index and the new Färe-Primont index (FPI) proposed by O´Donnell. Moreover, the study makes some direct comparisons with previous traditional literature. In addition, it makes use of an improved measure of the capital stock, which showed important effects on the estimates of the agricultural productivity. The new FPI yields some lower growth of agricultural productivity and the use of the improved measure of the capital stock shows a very important effect on TFP gains.
    Keywords: Total Factor Productivity; Färe-Primont index; Malmquist index; agricultural productivity; technological and efficiency change
    JEL: C18 O47 Q11
    Date: 2017–09
  2. By: Laure Latruffe; K Hervé Dakpo; Yann Desjeux; Giffona Justinia Hanitravelo
    Abstract: With a sample of farms in the European Union (EU) and Farm Accountancy Data Network (FADN) data completed by additional data, we illustrate how the effect of farm subsidies on technical efficiency changes when environmental (good or bad) outputs are incorporated in the calculation of technical efficiency. Results indicate that the effect of the Common Agricultural Policy (CAP) operational subsidies on farm technical efficiency changes when environmental outputs (in this study: greenhouse gas emissions, nitrogen balance and ecological focus areas) are taken into account in the efficiency calculation: some effects change significance, and more importantly, some effects change sign.
    Keywords: technical efficiency, subsidies, Common Agricultural Policy, environmental outputs, farms, European Union
    JEL: Q12 Q18 C6
    Date: 2017
  3. By: Oleg Badunenko (Portsmouth Business School);
    Abstract: This chapter builds a model in which labor market regulations influence labor productivity growth through labor market. The proposed model decomposes labor productivity growth into components attributable to (i) change in efficiency, (ii) technological change, (iii) physical capital deepening, (iv) human capital accumulation, and (v) labor market regulations change. The empirical analysis using data from the Penn World Tables and Economic Freedom of the World Data is performed for 1970-1995 and 1995-2014. The findings can be summarized as follows. First, physical capital deepening is the major driving force behind productivity growth over the entire period. Labor market regulations change contributing next to nothing during 1970-1995, becomes second most important force of economic growth after 1995. Second, relatively rich nations benefit more from labor market regulations change than relatively poor nations. Finally, the contribution of labor market regulations change to growth is stronger for countries with less liberalized labor markets.
    Keywords: Data Envelopment Analysis, Efficiency, Economic Freedom of the World Data, Economic Growth, Income Distribution, Labor Market, Labor Market Regulations, Penn World Tables, Physical capital, Productivity
    JEL: D24 C14 O47 J21
    Date: 2017–12–19
  4. By: Galina Besstremyannaya (CEFIR at New Economic School); Jaak Simm (University of Leuven); Sergei Golovan (New Economic School)
    Abstract: The paper proposes a bootstrap methodology for robust estimation of cost efficiency in data envelopment analysis. Our algorithm re-samples "naive" input-oriented efficiency scores, rescales original inputs to bring them to the frontier, and then re-estimates cost efficiency scores for the rescaled inputs. We consider the cases with absence and presence of environmental variables. Simulation analyses with multi-input multi-output production function demonstrate consistency of the new algorithm in terms of the coverage of the confidence intervals for true cost efficiency. Finally, we offer real data estimates for Japanese banking industry. Using the nationwide sample of Japanese banks in 2009, we show that the bias of cost efficiency scores may be linked to the bank charter and the presence of the environmental variables in the model. A package `rDEA', developed in the R language, is available from the GitHub and CRAN repository.
    Keywords: data envelopment analysis, cost efficiency, bias, bootstrap, banking
    JEL: C44 C61 G21
    Date: 2017–12
  5. By: Nicola Cortinovis (Erasmus University Rotterdam); Frank van Oort (ESE EUR, IHS EUR, Utrecht University)
    Abstract: Productivity across European regions is related to three types of networks that mediate R&D-related knowledge spillovers: trade, co-patenting and geographical proximity. Both our panel and instrumental variable estimations for European regions suggest that network relations are crucial sources of R&D spillovers, but with potentially different features. While co-patenting relations appear to affect local productivity directly, regions that link up to innovative leader regions via imports gain in productivity only when they have relatively high levels of human capital and absorptive capacity. From a policy perspective, this may frustrate recent European policy initiatives, such as Smart Specialization, that are designed to benefit all regions in Europe.
    Keywords: productivity; economic networks; regions; Europe; trade; knowledge
    JEL: R11 R12 O33 O47
    Date: 2017–12–15
  6. By: Vincenzo Atella (DEF & CEIS, University of Rome "Tor Vergata"); Federico Belotti (DEF & CEIS, University of Rome "Tor Vergata"); Chris Bojke (Centre for Health Economics, University of York); Adriana Castelli (Centre for Health Economics, University of York); Katja Grašic (Centre for Health Economics, University of York); Joanna Kopinska (CEIS, University of Rome "Tor Vergata"); Andrea Piano Mortari (CEIS, University of Rome "Tor Vergata"); Andrew Street (University of York & London School of Economics)
    Abstract: We assess the productivity growth of the English and Italian healthcare systems over the period from 2004 to 2011. The English (NHS) and the Italian (SSN) healthcare systems share many similar features, facilitating comparison: basic founding principles, financing, organization, management, and size. We measure productivity growth as the rate of change in outputs over the rate of change in inputs. We find that the overall NHS productivity growth index increased by 10% over the whole period, at an average of 1.39% per year, while SSN productivity increased overall by 5%, at an average of 0.73% per year. Differential growth reflects different policy objectives. In England, the NHS focused on increasing activity, reducing waiting times and improving quality. Italy focused more on cost containment and rationalized provision, in the hope that this would reduce unjustified and inappropriate provision of services.
    Keywords: Health system productivity,output growth,input growth
    JEL: C43 D24 I11 I18
    Date: 2017–12–12
  7. By: Bonga-Bonga, Lumengo; Phume, Maphelane
    Abstract: This paper assesses the relationship between total factor productivity (TFP) and foreign direct investment (FDI) in a country with skills shortage. South Africa is used as a case study. Literature is inconclusive on how FDI should affect TFP. This paper shows that it is important to account for the interactivity between FDI and human capital when assessing the effects of FDI on TFP. Moreover, the empirical results show that, contrary to countries with abundance of skills, in countries with skills shortage, it is in fact the change in stock of human capital - or human capital accumulation – that matters in determining the effects of FDI on TFP.
    Keywords: Total factor productivity, foreign direct investment, human capital, skills shortage
    JEL: C10 O3 O4
    Date: 2017–12–13
  8. By: Valeria Costantini; Francesco Crespi; Elena Paglialunga
    Abstract: This paper investigates the effects of private and public actions for energy efficiency on EU employment dynamics, relying on an econometric analysis on a sector-based panel dataset for 15 EU countries (1995-2009). Results show that after accounting for the sectoral output growth, investment and innovation activities, sectoral energy efficiency gains display a negative effect on employment growth, especially in energy intensive industries. Conversely, public actions towards energy efficiency may produce positive effects on employment dynamics. Indeed, the higher incidence of taxation on energy costs, the energy efficiency gains realized in the public sector industries and the implementation of a comprehensive policy mix at the country level, are factors positively influencing employment growth. This evidence highlights the complexity of the nexus between energy efficiency and employment dynamics, suggesting that superior employment performances can be achieved when complementarity effects between productivity enhancing activities and energy efficiency actions are realized.
    Keywords: Energy Efficiency, Public Policies, Employment, Manufacturing Sectors, Eco- Innovation, European Union
    JEL: C23 L60 O33 Q52
    Date: 2017–12
  9. By: Regis, Paulo José (Division of Economics, Xi'an Jiaotong-Liverpool University); Desmarchelier, Benoît (Lille 1 University)
    Abstract: This paper conducts a large cross-country study of innovation decisions and its effect on the productivity of the firms in the service sectors in developing countries. A structural model relating innovation and productivity is fitted with data from 97 emerging and developing countries. We find that R&D generates gains in labor productivity as well as in terms of an aggregate measure of capital and total factor productivity. However, the introduction of new products does not seem to have relevant impact on productivity measures. From a policy perspective, we find that tax burden and difficulties to access credit are significant obstacles to innovation in services. Considering the positive relationship between service innovation and productivity, these obstacles should be on top of policy agenda in the countries under study. Finally, competition from the international market and from the informal sector are both fostering innovation in services.
    Keywords: innovation, productivity, services sector, developing countries
    JEL: L80 O31 O33 C34 O14
    Date: 2018–01–01
  10. By: Sabine D’Costa; Enrique Garcilazo; Joaquim Oliveira Martins
    Abstract: Using a panel of 265 regions from 24 OECD countries from 1997 to 2007, we explore the impact of nation-wide macroeconomic and structural policies on the productivity growth of subnational regions. We find that average relationships between nation-wide policies and the growth of regions can hide strong differentiated effects according to the distance to the frontier: relaxing employment protection legislation on temporary contracts, lowering barriers to trade and investment as well as increasing trade openness enhances productivity growth in lagging regions, whereas reducing barriers to entrepreneurship or higher levels of government debt has a positive effect on regions that are closer to the productivity frontier.
    Keywords: structural reforms; regional growth; lagging regions
    JEL: R11 R58 O18
    Date: 2017–12
  11. By: Laura Blattner; Luisa Farinha; Francisca Rebelo
    Abstract: We provide evidence that a weak banking sector has contributed to low productivity growth in the aftermath of the European sovereign debt crisis. An unexpected increase in capital requirements for a subset of Portuguese banks in 2011 provides a natural experiment to study the effects of reduced bank capital adequacy on productivity. Using detailed administrative data from the Bank of Portugal, we show that affected banks respond not only by cutting back on lending but also by increasing their underreporting of loan losses, which inflates reported capital, and by reallocating credit to firms in financial distress with prior underreported losses. To establish these results, we develop a method to detect the underreporting of losses using detailed loan-level data. We argue that this credit reallocation is consistent with distorted lending incentives arising either from the attempt to avoid the recognition of underreported losses, or from gambling on risky firms in response to an expected government bailout. We then show that the credit reallocation affects firm-level investment and employment. Finally, we translate the firm-level changes into aggregate productivity. This partial equilibrium exercise suggests that the credit reallocation driven by the regulatory intervention accounts for 20% of the decline in productivity in Portugal in 2012.
    JEL: G21 G38 E51 D24 O47
    Date: 2017–12–04
  12. By: Peter Walkenhorst; Lilas Demmou; Manav Frohde
    Abstract: Un environnement économique favorable est crucial pour stimuler la productivité en Belgique et l’inclusivité, et est le principal moteur de la prospérité économique à long terme. Ce document analyse l’impact de l’environnement économique sur la performance de productivité. La gestion des innovations, la diffusion technologique, l’investissement des secteurs privé et public ainsi que les politiques de concurrence et de régulation ont tous un impact sur la croissance de la productivité. Les défis clefs pour la Belgique incluent la modulation des exonérations fiscales en vigueur en faveur des activités de recherche-développement afin d’améliorer leur utilisation et leur efficacité ; la réduction des charges administratives sur les entreprises, l’amélioration de l’accès à la finance pour les jeunes entreprises innovantes et la stimulation de la culture entrepreneuriale en matière de jeunes pousses.
    Keywords: Belgique, culture d’entreprise, diffusion technologique, dynamisme des firms, infrastructures, innovation, productivité, régulation du secteur des services
    JEL: L5 O31 O32 O43 R4
    Date: 2017–12–15
  13. By: Olegs Krasnopjorovs (Bank of Latvia)
    Abstract: This paper aims at identifying the school characteristics consistently associated with better performance of pupils on state exams. First, we find that exam scores are positively related to school size (the number of pupils in the respective school) and teacher salaries, but negatively – with teacher age. Meanwhile, quantitative inputs like the number of teachers and computers per pupil are not robust determinants of education performance. Second, we show that pupils in urban and rural schools would perform similarly if characteristics of these schools were the same. The Oaxaca–Ransom decomposition fully explains the urban-rural exam score gap by a greater number of pupils and higher teacher salaries in urban schools as well as by different pupil structure; in turn, pupils' ethnic origin plays in favour of rural schools. Finally, Stochastic Frontier Analysis models show that school size is a robust efficiency determinant, while school location in the Riga region or in another big city is not. The bottom line is that structural reforms involving school mergers and a rise in teacher salaries might bring non-negligible dividends in terms of education quality.
    Keywords: education performance, school size, rural schools, Oaxaca–Ransom decomposition, Stochastic Frontier Analysis
    JEL: I21 C1
    Date: 2017–11–03
  14. By: Rui Xu; Kaiji Gong
    Abstract: We analyze the impact of rising import competition from China on U.S. innovative activities. Using Compustat data, we find that import competition induces R&D expenditures to be reallocated towards more productive and more profitable firms within each industry. Such reallocation effect has the potential to offset the average drop in firm-level R&D identified in the previous literature. Indeed, our quantitative analysis shows no adverse impact of import competition on aggregate R&D expenditures. Taking the analysis beyond manufacturing, we find that import competition has led to reallocation of researchers towards booming service industries, including business and repairs, personal services, and financial services.
    Keywords: Western Hemisphere;Asia and Pacific;United States;Chinese Import Competition, R&D Expenditures, Reallocation, R&D Expenditures, Country and Industry Studies of Trade, Trade and Labor Market Interactions
    Date: 2017–11–16
  15. By: Ajay Bhaskarbhatla (Erasmus School of Economics, ERIM); Deepak Hegde (New York University); Thomas (T.L.P.R.) Peeters (Erasmus School of Economics, ERIM; Tinbergen Institute, The Netherlands)
    Abstract: Are differences in inventor productivity due to differences in inventors’ skills or differences in the capabilities of the firms they work for? We analyze a 37-year panel that tracks the patenting of U.S. inventors and find strong evidence for serial correlation in inventors’ productivity. We apply an econometric technique developed by Abowd, Kramarz, and Margolis (1999) to decompose the contributions of inventors’ human capital and firm capabilities for productivity. Our estimates suggest human capital is 4-5 times more important than firm capabilities for explaining the variance in inventor productivity. High human capital inventors work for firms that have (i) other high human capital inventors, (ii) superior financial performance, and (iii) weak firm-specific invention capabilities. On the margins, managers should emphasize selecting talent rather than training workers to enhance innovation performance.
    Keywords: Human Capital; Capabilities; Innovation; Matching; Competitive Advantage
    JEL: O30 O31 O32 J24
    Date: 2017–12–08
  16. By: Galina Besstremyannaya (CEFIR at New Economic School); Richard Dasher (Stanford University); Sergei Golovan (New Economic School)
    Abstract: A considerable amount of research has shown that that carbon tax combined with research subsidy may be regarded as an optimal policy in view of diffusing low carbon technologies for the benefit of the society. The paper exploits the macro economic approach of the endogenous growth models with technological change for a comparative assessment of these policy measures on the economic growth in the US and Japan in the medium and the long run. The results of our micro estimates reveal several important differences across the Japanese and US energy firms: lower elasticity of innovation production function in R&D expenditure, lower probability of a radical innovation, and larger advances of dirty technologies in Japan. This may explain our quantitative findings of stronger reliance on carbon tax than on research subsidies in Japan relative to the US.
    Keywords: endogenous growth, technological change, innovation, carbon tax, energy
    JEL: O11 O13 O47 Q43 Q49
    Date: 2017–12
  17. By: Vincent Vandenberghe; Lilas Demmou; Manav Frohde
    Abstract: A highly educated and skilled workforce has been an important driver of productivity performance and prosperity in Belgium. This paper examines skills policies that could help improve productivity and inclusiveness. An increased focus on lifelong learning, improved and more flexible working conditions for older workers, and a more efficient allocation of students and skills would benefit productivity growth. Improving inclusiveness requires increasing access and participation in tertiary education, especially for students with disadvantaged backgrounds. Digitalisation holds the promise of large gains in labour productivity, but is disrupting the nature of employment relationships. It calls for measures that encourage information and communication technology (ICT) upskilling and for adapting tax and benefit systems to the rise of on-demand jobs linked to the use of e-platforms.
    Keywords: Belgium, digitalisation, equity in education, human capital, integration policies, labour market participation of seniors, lifelong learning, on-demand jobs, tertiary education
    JEL: I2 J24 J26 J40
    Date: 2017–12–15
  18. By: Fedorets, Alexandra; Stops, Michael (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Lottmann, Franziska
    Abstract: "Job mobility equilibrates disparities on local labor markets and influences the efficiency of the job matching process. In this paper, we describe a job matching model that allows for simultaneous regional and occupational mobility, predicting corresponding spillover effects on the number of matches. We estimate these spillover effects based on novel administrative German data on the number of matches, unemployed, and vacancies of local labor markets, which we define as distinct occupations in distinct regions. We specify a matching function for these local labor markets with regional spillovers, occupational spillovers, as well as combined regional and occupational spillovers of unemployed and vacancies. To construct these spillover terms, we use information on the proximity between regions and on similarities between occupations in terms of qualification requirements and tasks. We find that regional spillover effects for both vacancies and the unemployed are positive, occupational spillover effects for vacancies are positive and occupational spillover effects for the unemployed are negative. The combined regional and occupational spillover effects for both vacancies and the unemployed are positive. We conclude that neglecting regional, occupational, and combined spillovers leads to biased estimates of job matching efficiency in local labor markets." (Author's abstract, IAB-Doku) ((en))
    JEL: C21 C23 J44 J64
    Date: 2017–12–18
  19. By: Distante, Roberta (University of Copenhagen); Petrella, Ivan (Warwick Business School and CEPR); Santoro, Emiliano (University of Copenhagen)
    Abstract: The nexus between firm growth, size and age in U.S. manufacturing is examined through the lens of quantile regression models. This methodology allows us to overcome serious shortcomings entailed by linear regression models employed by much of the existing literature, unveiling a number of important properties. Size pushes both low and high performing firms towards the median rate of growth, while age is never advantageous, and more so as firms are relatively small and grow faster. These findings support theoretical generalizations of Gibrat's law that allow size to affect the variance of the growth process, but not its mean.
    Keywords: firm growth ; size ; age ; conditional quantiles JEL Classification Numbers: D22 ; L11 ; C21 ;
    Date: 2017
  20. By: Orazio Attanasio (Institute for Fiscal Studies and University College London); Sarah Cattan (Institute for Fiscal Studies); Emla Fitzsimons (Institute for Fiscal Studies and Institute of Education, University of London); Costas Meghir (Institute for Fiscal Studies and Yale University); Marta Rubio Codina (Institute for Fiscal Studies and Institute for Fiscal Studies)
    Abstract: We examine the channels through which a randomized early childhood intervention in Colombia led to signi cant gains in cognitive and socio-emotional skills among a sample of disadvantaged children aged 12 to 24 months at baseline. We estimate the determinants of material and time investments in these children and evaluate the impact of the treatment on such investments. We then estimate the production functions for cognitive and socio-emotional skills. The e ffects of the program can be explained by increases in parental investments, which have strong e ffects on outcomes and are complementary to both maternal skills and child's baseline skills.
    Date: 2017–04–27

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