nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2018‒02‒12
fourteen papers chosen by

  1. The productivity puzzle and misallocation: an Italian perspective By Calligaris, Sara; Del Gatto, Massimo; Hassan, Fadi; Ottaviano, Gianmarco I. P.; Schivardi, Fabiano
  2. The Effect of Firm Ownership Structure on Performance: A case study of Eastern Europe and Central Asian Countries. By Bekena, Sisay Menji
  3. From Firm-level Imports to Aggregate Productivity: Evidence from Korean Manufacturing Firms Data By JaeBin Ahn; Moon Jung Choi
  4. Technological catching-up, sales dynamics and employment growth: evidence from China’s manufacturing firms By Dosi, Giovanni; Yu, Xiaodan
  5. Healthy business? Managerial education and management in healthcare By Bloom, Nicholas; Lemos, Renata; Sadun, Raffaella; Reenen, John Van
  6. Frontier knowledge and scientific production: evidence from the collapse of international science By Iaria, Alessandro; Schwarz, Carlo; Waldinger, Fabian
  7. Demand forces of technical change: evidence from the Chinese manufacturing industry By Andreas Beerli; Franziska J. Weiss; Fabrizio Zilibotti
  8. Regulating Mismeasured Pollution: Implications of Firm Heterogeneity for Environmental Policy By Eva Lyubich; Joseph S. Shapiro; Reed Walker
  9. Productivity Gains from Agglomeration and Migration in the People's Republic of China between 2002 and 2013 By Pierre-Philippe Combes; Sylvie Démurger; Shi Li
  10. Incentives in the Public Sector: Evidence from a Government Agency By Simon M. Burgess; Carol Propper; Marisa Ratto; Emma Tominey
  11. Innovation, Productivity Dispersion, and Productivity Growth By Lucia Foster; Cheryl Grim; John Haltiwanger; Zoltan Wolf
  12. Large-scale farms and smallholders: Evidence from Zambia By Lay, Jann; Nolte, Kerstin; Sipangule, Kacana
  13. Multigrading and Child Achievement. By Gian Paolo Barbetta; Giuseppe Sorrenti; Gilberto Turati
  14. The fall and rise of market power in Europe By John P. Weche; Achim Wambach

  1. By: Calligaris, Sara; Del Gatto, Massimo; Hassan, Fadi; Ottaviano, Gianmarco I. P.; Schivardi, Fabiano
    Abstract: Productivity has recently slowed down in many economies around the world. A crucial challenge in understanding what lies behind this “productivity puzzle” is the still short time span for which data can be analysed. An exception is Italy where productivity growth started to stagnate 25 years ago. Italy therefore offers an interesting case to investigate in search of broader lessons that may hold beyond local specific cities. We find that resource misallocation has played a sizeable role in slowing down Italian productivity growth. If misallocation had remained at its 1995 level, in 2013 Italy's aggregate productivity would have been 18% higher than its actual level. Misallocation has mainly risen within sectors than between them, increasing more in sectors where the world technological frontier has expanded faster. Relative specialization in those sectors explains the patterns of misallocation across geographical areas and firm size classes. The broader message is that an important part of the explanation of the productivity puzzle may lie in the rising difficulty of reallocating resources between firms in sectors where technology is changing faster rather than between sectors with different speeds of technological change
    Keywords: misallocation; TFP; productivity puzzle; Italy
    JEL: D24 O11 O47
    Date: 2017–12–01
  2. By: Bekena, Sisay Menji
    Abstract: This paper uses World Bank Enterprise Survey 2009 and 2013 panel data for Central Asia and Eastern Europe to estimate the casual effects of firm ownership structure on firm performance measured by the growth rates of sales, labor productivity and employment. The study uses treatment effect models to compute the average treatment effects. Estimation results using propensity score matching show that on average private firms have sales and employment growth rates that are 6 percentage points higher compared to public firms. The effect is statistically significant at conventional significance levels. Labor productivity growth is similar across public and private firms. The key conditional independence assumption necessary for the validity of the matching models is found to be valid and the computed casual effects are consistent across the different treatment effect models.
    Keywords: Firm ownership, Treatment Effects,
    JEL: D20
    Date: 2017
  3. By: JaeBin Ahn (Research Department, International Monetary Fund); Moon Jung Choi (Economic Research Institute, Bank of Korea)
    Abstract: Using the Korean manufacturing firm-level data, this paper confirms that three stylized facts on importing hold in Korea: the ratio of imported inputs in total inputs tends to be pro-cyclical; the use of imported inputs increases productivity; and larger firms are more likely to use imported inputs. As a result, we find that firm-level import decisions explain a non-trivial fraction of aggregate productivity fluctuations in Korea over the period between 2006 and 2012. Main findings of this paper suggest a possible link between the recent global productivity slowdown and the global trade slowdown.
    Keywords: Firm-level imports, Productivity pro-cyclicality, Aggregate TFP of manufacturing sector
    JEL: E3 F1 F4 O4
    Date: 2016–04–28
  4. By: Dosi, Giovanni; Yu, Xiaodan
    Abstract: This paper investigates the microeconomics of employment dynamics, using a Chinese manufacturing firm-level dataset over the period 1998-2007. It does so in the light of a scheme of “circular and cumulative causation”, whereby firms’ heterogeneous productivity gains and sales dynamics, and innovation activities ultimately shape the patterns of employment dynamics. Using firm’s productivity growth as a proxy for process innovation, our results show that the latter correlates negatively with firm-level employment growth. Conversely, relative productivity levels, as such a general proxy for the broad technological advantages/disadvantages of each firm, do show positive effect on employment growth in the long-run through replicator-type dynamics. Moreover, firm-level demand dynamics play a significant role in driving employment growth, which more than compensate the labour-saving effect due to technological progress. Finally, and somewhat puzzlingly, the direct effects of product innovation and patenting activities on employment growth appear to be negligible.
    Keywords: Employment Growth,Demand,Product Innovation,Process Innovation,Export,China catching-up
    JEL: D22 J01 O33
    Date: 2018
  5. By: Bloom, Nicholas; Lemos, Renata; Sadun, Raffaella; Reenen, John Van
    Abstract: We investigate the link between hospital performance and managerial education by collecting a large database of management practices and skills in hospitals across nine countries. We find that hospitals that are closer to universities offering both medical education and business education have higher management quality, more MBA trained managers and lower mortality rates. This is true compared to the distance to universities that offer only business or medical education (or neither). We argue that supplying joint MBA-healthcare courses may be a channel through which universities increase medical business skills and raise clinical performance
    Keywords: management; hospitals; mortality; education
    JEL: I1 M1
    Date: 2017–09–01
  6. By: Iaria, Alessandro; Schwarz, Carlo; Waldinger, Fabian
    Abstract: We show that WWI and the subsequent boycott against Central scientists severely interrupted international scientific cooperation. After 1914, citations to recent research from abroad decreased and paper titles became less similar (evaluated by Latent Semantic Analysis), suggesting a reduction in international knowledge flows. Reduced international scientific cooperation led to a decline in the production of basic science and its application in new technology. Specifically, we compare productivity changes for scientists who relied on frontier research from abroad, to changes for scientists who relied on frontier research from home. After 1914, scientists who relied on frontier research from abroad published fewer papers in top scientific journals, produced less Nobel Prize-nominated research, introduced fewer novel scientific words, and introduced fewer novel words that appeared in the text of subsequent patent grants. The productivity of scientists who relied on top 1% research declined twice as much as the productivity of scientists who relied on top 3% research. Furthermore, highly prolific scientists experienced the starkest absolute productivity declines. This suggests that access to the very best research is key for scientific and technological progress
    Keywords: frontier knowledge; scientific production; international knowledge flows; WW1
    JEL: I23 J44 N3 N30 N4 N40 O3 O31 O5
    Date: 2017–10–01
  7. By: Andreas Beerli; Franziska J. Weiss; Fabrizio Zilibotti
    Abstract: This paper investigates the effect of domestic market size on innovation activities across different durable good industries in the Chinese manufacturing sector. We address the endogeneity of market size by an IV strategy, based on a measure of potential market size, which is driven only by changes in the Chinese income distribution. This measure is exogenous to changes in prices and qualities of durable goods and is a valid instrument for expected future market size. Our results indicate that an increase in market size by one percent leads to an increase in firm-specific total factor productivity by 0.46 percent and an increase in labor productivity by 0:50 percent. These findings are robust to controlling for export behavior of firms and supply side drivers of R&D.
    Keywords: China, demand-induced innovation, directed technical change, durable goods, Economic growth, Engel curves, market size, middle class, non-homothetic preferences
    JEL: D31 L11 L68 O31 O33
    Date: 2018–01
  8. By: Eva Lyubich; Joseph S. Shapiro; Reed Walker
    Abstract: This paper provides the first estimates of within-industry heterogeneity in energy and CO2 productivity for the entire U.S. manufacturing sector. We measure energy and CO2 productivity as output per dollar energy input or per ton CO2 emitted. Three findings emerge. First, within narrowly defined industries, heterogeneity in energy and CO2 productivity across plants is enormous. Second, heterogeneity in energy and CO2 productivity exceeds heterogeneity in most other productivity measures, like labor or total factor productivity. Third, heterogeneity in energy and CO2 productivity has important implications for environmental policies targeting industries rather than plants, including technology standards and carbon border adjustments.
    JEL: F18 H23 Q56
    Date: 2018–01
  9. By: Pierre-Philippe Combes (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique, IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris); Sylvie Démurger (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Shi Li (School of Economics and Business Administration - Beijing Normal University)
    Keywords: agglomeration economies, migration, wage disparities, urban development, cities
    Date: 2017
  10. By: Simon M. Burgess (IZA - Institute for the study of labor - Institute for the Study of Labor - IZA); Carol Propper (Imperial College London - Space & Atmospheric Physics Group); Marisa Ratto (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine); Emma Tominey (IZA - Institute for the study of labor - Institute for the Study of Labor - IZA)
    Abstract: We study the impact of team-based performance pay in a major UK government agency, the public employment service. The scheme covered quantity and quality targets, measured with varying degrees of precision. We use unique data from the agency's performance management system and personnel records, linked to local labour market data. We show that on average the scheme had no significant effect but had a substantial positive effect in small teams, fitting an explanation combining free riding and peer monitoring. The impact was greater on better-measured quantity outcomes than quality outcomes. The scheme was very cost effective in small offices.
    Keywords: personnel economics,teams,Incentives,public sector,performance
    Date: 2017
  11. By: Lucia Foster; Cheryl Grim; John Haltiwanger; Zoltan Wolf
    Abstract: We examine whether underlying industry innovation dynamics are an important driver of the large dispersion in productivity across firms within narrowly defined sectors. Our hypothesis is that periods of rapid innovation are accompanied by high rates of entry, significant experimentation and, in turn, a high degree of productivity dispersion. Following this experimentation phase, successful innovators and adopters grow while unsuccessful innovators contract and exit yielding productivity growth. We examine the dynamic relationship between entry, productivity dispersion, and productivity growth using a new comprehensive firm-level dataset for the U.S. We find a surge of entry within an industry yields an immediate increase in productivity dispersion and a lagged increase in productivity growth. These patterns are more pronounced for the High Tech sector where we expect there to be more innovative activities. These patterns change over time suggesting other forces are at work during the post-2000 slowdown in aggregate productivity.
    Date: 2018–02
  12. By: Lay, Jann; Nolte, Kerstin; Sipangule, Kacana
    Abstract: In light of the surge in large-scale farms in developing countries, concerns have been raised that smallholders may be negatively affected. There is, however, very little evidence beyond case studies to support these claims. Drawing on nationally representative household data sets and an inventory of large-scale farms in Zambia, this study investigates the relationship between large-scale farms and smallholders. First, we analyse the geographical contexts of wards that host large-scale farms and show that large-scale farms are found in wards with good infrastructure and soil quality. Second, we adopt a difference-in-differences approach to estimate the impacts of large-scale farms on smallholders' area cultivated, maize yields, and access to fertiliser. We find that smallholders in wards with large-scale farms increase their area cultivated and maize yields, but have lower fertiliser usage. This hints at positive spillovers at the extensive and intensive margins but not at improved access to agricultural inputs. It is likely that these results are also driven by the emergence of medium-scale farms in these regions.
    Keywords: large-scale farms,yields,smallholders,spillovers,Zambia
    JEL: Q12 Q15 Q18
    Date: 2018
  13. By: Gian Paolo Barbetta (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Giuseppe Sorrenti; Gilberto Turati (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)
    Abstract: We exploit Italian law DPR 81/2009, which determines class composition, as an instrument to identify the causal e ect of grouping students of di erent grades into a single class (multigrading) on children cognitive achievement. This article focuses on 7-yearold students|those at the beginning of their formal education. Results suggest that attendance in multigrade classes versus single-grade classes increases students' performance on standardized tests by 15{20 percent of a standard deviation. The positive impact of multigrading only appears for children sharing their class with peers from higher grades and is relatively stronger for students from disadvantaged backgrounds.
    Keywords: Multigrade classes, child development, peer e ects, rural areas .
    JEL: I28 R53
    Date: 2018–01
  14. By: John P. Weche (Leuphana University Lueneburg, Germany; Monopolies Commission, Bonn, Germany); Achim Wambach (Monopolies Commission, Bonn, Germany; Centre for European Economic Research (ZEW), Mannheim, Germany)
    Abstract: This paper presents an analysis of the recent developments of average market power in Europe by using a broad firm-level database for EU member states. To indicate competitive pressure at the firm-level, markups are estimated following De Loecker (2011), and De Loecker and Warzynski (2012). The analysis reveals a sharp drop in markups during the crisis, followed by a post-crisis increase. The European average has not yet reached its pre-crisis level, which is in contrast to results for the US, where average markups have climbed to pre-crisis levels already in 2011. There is significant heterogeneity among European economies and the pre-crisis levels do have been exceeded in some countries.
    Keywords: Market Power, Markups, Europe, Crisis
    JEL: E2 D2 D4 L1
    Date: 2018–01

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