nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2018‒03‒05
sixteen papers chosen by

  1. An Expanded Decomposition of the Luenberger Productivity Indicator with an Application to the Chinese Healthcare Sector By Jean-Philippe Boussemart; Gary D. Ferrier; Hervé Leleu; Zhiyang Shen
  2. Decomposing banking performance into economic and risk management efficiencies By Jean-Philippe Boussemart; Hervé Leleu; Zhiyang Shen; Michael Vardanyan; Ning Zhu
  3. Effect of Employee Stock Ownership Plans (ESOPs) on the performance of Small business in Karachi By Riaz, Fayyaz; Abdul Razzaq, Fiza; Waqar, Ahsan
  4. How to Measure a Performance of a Collaborative Research Centre By Alona Zharova; Janine Tellinger-Rice; Wolfgang Karl Härdle;
  5. Changing Business Dynamism and Productivity : Shocks vs. Responsiveness By Ryan Decker; John Haltiwanger; Ron S. Jarmin; Javier Miranda
  6. Revisiting the old debate: on the relationship between size and productivity in Tanzania By Basile Boulay
  7. Bank ownership and profit efficiency of Russian banks By Belousova, Veronika; Karminsky, Alexander; Kozyr, Ilya
  8. Convex and Nonconvex Input-Oriented Technical and Economic Capacity Measures:Technical and Economic Capacity Measures: An Empirical Comparison By Kristiaan Kerstens; Jafar Sadeghi; Ignace Van de Woestyne
  9. Robust Tests for Deterministic Seasonality and Seasonal Mean Shifts By Astill, Sam; Taylor, AM Robert
  10. Biased Technological Change and Employment Reallocation By Zsófia L. Bárány; Christian Siegel
  11. Incentive regulation: Evidence from German electricity networks By Hellwig, Michael; Schober, Dominik; Cabral, Luís M. B.
  12. Technology Polarization By Koki Oikawa; Minoru Kitahara
  13. Unraveling the economic performance of the CEEC countries. The role of exports and global value chains By Jan Hagemejer; Jakub Muck
  14. Agglomeration Economies in the Presence of an Informal Sector The Colombian Case By García, Gustavo A.
  15. Inter-Firm Networks and Firm Performance: The Case of Italy By Chiara Burlina
  16. Openness and Productitvity of the Swiss Economy By Föllmi, Reto; Fuest, Angela; an de Meulen, Philipp; Micheli, Martin; Schmidt, Thorsten; Zwick, Lisa

  1. By: Jean-Philippe Boussemart (University of Lille 3 and IÉSEG School of Management (LEM 9221-CNRS)); Gary D. Ferrier (University of Arkansas); Hervé Leleu (CNRS-LEM 9221 and IÉSEG School of Management); Zhiyang Shen (Eximbank, Anhui University of Finance and Economics)
    Abstract: Productivity growth is an important determinant of the economic well-being of producers, consumers, and society overall. Given its importance, economists have long measured productivity growth, often decomposing the overall measure into constituent pieces to isolate and better understand the sources of productivity change. Typically, productivity change is analyzed at a single level of analysis—e.g., a firm or a country. The objective of this research is to combine productivity analysis at the “firm-level” and the “industry-level” so that a novel, fuller decomposition of the sources of productivity change can be undertaken. Specifically, our decomposition allows us to capture changes in productivity due to the reallocation of inputs or outputs across productive units. In practice, such reallocation might take place across plants operated by the same firm, across regions within a country, or via mergers and acquisitions. By shedding light on more dimensions of productivity growth, this expanded decomposition may facilitate policy development and other efforts to improve productivity. The expanded decomposition begins with a standard decomposition of the aggregate Luenberger productivity indicator into its technical progress and efficiency change components. The efficiency change component is then further decomposed into technical, mix, and scale efficiency effects. The decomposition yielding the mix and scale efficiency changes uses both aggregated and disaggregated data, which allows for productivity effects of reallocations of inputs and outputs across members of a group to be measured. The new decomposition of the aggregate Luenberger productivity indicator is illustrated using data at both the provincial and regional levels for China’s healthcare sector over the period 2009-2014. Given the rapid growth in the Chinese healthcare sector in recent years and the various healthcare reforms initiated by the government, a deeper understanding of productivity in this traditionally low-productivity sector is warranted. Our results indicate that the growth of the aggregate Luenberger productivity indicator varied across both time and regions; the annual average growth rates were 0.73%, 0.53%, and 0.18% for China’s Central, Eastern, and Western regions, respectively. We find that China’s regional productivity growth in healthcare was primarily driven by technological progress; the contributions of the efficiency related elements of productivity change were smaller and more varied across regions.
    Keywords: Luenberger Productivity Indicator; Chinese Healthcare; Structural Efficiency; Scale Efficiency; Mix Efficiency
    Date: 2017–11
  2. By: Jean-Philippe Boussemart (University of Lille 3 and IÉSEG School of Management (LEM 9221-CNRS)); Hervé Leleu (CNRS-LEM 9221 and IÉSEG School of Management); Zhiyang Shen (Eximbank, Anhui University of Finance and Economics); Michael Vardanyan (IÉSEG School of Management (LEM-CNRS - UMR 9221)); Ning Zhu (South China University of Technology, School of Economics and Commerce)
    Abstract: This paper proposes a novel non-parametric approach of a banking production technology that decomposes performance into economic and risk management efficiencies. The basis of our approach is to separate the production technology into two sub-technologies. The former is the production of non-interest income and loans from a set of traditional inputs. The latter is attached to the production of interest income from loans where an explicit distinction between good and non-performing loans is introduced. Economic efficiency comes from the production of good outputs, namely interest and non-interest income, while risk-management efficiency is related to the minimization of the non-performing loans that can be considered as an unintended or bad output. The model is applied to Chinese financial data covering 30 banks from 2005 to 2012 and different scenarios are considered. The results indicate that income could be increased by an average rate of 16% while non-performing loans could be decreased by an average rate of 33%. According to our results, banking managers could strike a balance between economic performance and risk-management and make more appropriate decisions in line with their preferences.
    Keywords: Data Envelopment Analysis; Risk management; Economic efficiency; Banking performance; Non-performing loans
    Date: 2017–10
  3. By: Riaz, Fayyaz; Abdul Razzaq, Fiza; Waqar, Ahsan
    Abstract: This paper examines the impact of employee stock ownership plans on the overall performance of the organizations. From the five decades literature, the conceptual underpinning formed includes variables of interest namely; employees' motivation, job commitment, employees' turnover, and productivity/profitability of the firms. The paper follows positivist philosophy with deductive approach to gain numerical significance. Total 280 respondents targeted using combination of probability (random) sampling and non-probability (convenience and snowball) sampling techniques. The statistical tests, which are used to test the hypotheses, are regression and correlation. Results showed that they exists statistically significant correlation between ESOPs and overall performance of the organization. Interestingly, the nature of relationship is positive but the strength is moderate to weaker. Employees' turnover has moderate positive significant correlation (r=. 541, p
    Keywords: Employees Stock Ownership plans, commitment, employee turnover, profitability, motivation
    JEL: C1 C12 D24 M00 M2 M21 M59
    Date: 2017–08–10
  4. By: Alona Zharova; Janine Tellinger-Rice; Wolfgang Karl Härdle;
    Abstract: New Public Management helps universities and research institutions to perform in a highly competitive research environment. Evaluating publicly financed research results improves transparency, helps in reflection and self-assessment, and provides information for strategic decision making. In this paper we provide empirical evidence using data from a Collaborative Research Centre (CRC) on financial inputs and research output from 2005 to 2016. After selecting performance indicators suitable for a CRC, we describe main properties of the data using visualization techniques. To study the relationship between the dimensions of research performance, we use a time fixed effects panel data model and fixed effects Poisson model. With the help of year dummy variables, we show how the pattern of research productivity changed over time after controlling for staff and travel costs. The joint depiction of the time fixed effects and the research project’s life cycle allows a better understanding of the development of the number of discussion papers over time.
    Keywords: Research Performance, Time Fixed Effects Panel Data Model, Fixed Effects Poisson Model, Network, Collaborative Research Centre
    JEL: C00
    Date: 2018–03
  5. By: Ryan Decker; John Haltiwanger; Ron S. Jarmin; Javier Miranda
    Abstract: The pace of job reallocation has declined in all U.S. sectors since 2000. In standard models, aggregate job reallocation depends on (a) the dispersion of idiosyncratic productivity shocks faced by businesses and (b) the marginal responsiveness of businesses to those shocks. Using several novel empirical facts from business microdata, we infer that the pervasive post-2000 decline in reallocation reflects weaker responsiveness in a manner consistent with rising adjustment frictions and not lower dispersion of shocks. The within-industry dispersion of TFP and output per worker has risen, while the marginal responsiveness of employment growth to business-level productivity has weakened. The responsiveness in the post-2000 period for young firms in the high-tech sector is only about half (in manufacturing) to two thirds (economy wide) of the peak in the 1990s. Counterfactuals show that weakening productivity responsiveness since 2000 accounts for a significant drag on a ggregate productivity.
    Keywords: Dynamism ; Entrepreneurship ; Job reallocation ; Labor supply and demand ; Productivity
    JEL: J23 D22 O47 E24 D24 L26 M13
    Date: 2018–02–02
  6. By: Basile Boulay
    Abstract: The debate on the existence of an inverse relationship between farm size and productivity is probably one of the oldest debates in the development economics literature. While publication of more detailed agricultural data has pushed for an empirical revival of the topic, the concept of size is still problematic in these studies, as well as the limited attention given to existing varieties of farming practices. Using agricultural data on Tanzania, we introduce a crop/plot level of analysis which allows us to enquire whether an inverse relationship exists for crops grown on a given plots. In a context where intercropping is widespread, this level of analysis looks more appealing than the more traditional plot or farm levels. We control for the existing hypotheses in the literature that could explain the existence of the relationship. Further, we propose to control for a new set of hypotheses which have not received enough attention in the existing literature. Our results show that the inverse relationship is strikingly robust at this new level of analysis: yields are on average higher on smaller cultivated areas in all specifications and for all crops.
    Keywords: inverse relationship; agriculture; Tanzania
    Date: 2018
  7. By: Belousova, Veronika; Karminsky, Alexander; Kozyr, Ilya
    Abstract: The paper examines how the type of ownership affects the profit efficiency of Russian banks. Using bank-quarter data for selected banks in the period 2004–2015, we combine stochastic frontier anal-ysis (SFA) methodology with an intermediary approach to assess profit efficiency. Our key findings show that foreign-owned banks are the most efficient, followed by state-owned banks and private domestic banks. We also find that the profit efficiency of foreign-owned banks was higher than that of other banks during the economically stable periods of 2004Q1 to 2008Q2 and 2014Q1 to 2015Q3, and that state-owned banks were more efficient than others in the period of financial turmoil from 2008Q3 to 2013Q4 due to state support. These results are robust when we consider these banks in terms of branch network diversity, risk preferences, and specialization.
    JEL: G21 P34 P5
    Date: 2018–02–22
  8. By: Kristiaan Kerstens (CNRS-LEM and IESEG School of Management); Jafar Sadeghi (CNRS (LEM-UMR 9221) and IÉSEG School of Management); Ignace Van de Woestyne (KU Leuven, Belgium)
    Abstract: This contribution has two main objectives. First, it aims to compare empirically input- oriented technical and economic capacity notions. Second, it aims to compare these technical and economic capacity notions on both convex and nonconvex technologies. After defining these input-oriented technical and economic capacity notions, this contribution focuses on empirically comparing these different capacity utilization notions using a secondary data set. Anticipating two key empirical conclusions, we find that all these different capacity notions follow different distributions, and also that these distributions almost always differ under convex and nonconvex technologies.
    Keywords: Data Envelopment Analysis; Technology; Cost function; Capacity utilization
    JEL: D24
    Date: 2017–11
  9. By: Astill, Sam; Taylor, AM Robert
    Abstract: We develop tests for the presence of deterministic seasonal behaviour and seasonal mean shifts in a seasonally observed univariate time series. These tests are designed to be asymptotically robust to the order of integration of the series at both the zero and seasonal frequencies. Motivated by the approach of Hylleberg, Engle, Granger and Yoo [1990, Journal of Econometrics vol. 44, pp. 215-238], we base our approach on linear filters of the data which remove any potential unit roots at the frequencies not associated with the deterministic component(s) under test. Test statistics are constructed using the filtered data such that they have well defined limiting null distributions regardless of whether the data are either integrated or stationary at the frequency associated with the deterministic component(s) under test. In the same manner as Vogelsang [1998, Econometrica vol. 66, pp. 123-148], Bunzel and Vogelsang [2005, Journal of Business and Economic Statistics vol. 23, pp. 381-394] and Sayginsoy and Vogelsang [2011, Econometric Theory vol. 27, pp. 992-1025], we scale these statistics by a function of an auxiliary seasonal unit root statistic. This allows us to construct tests which are asymptotically robust to the order of integration of the data at both the zero and seasonal frequencies. Monte Carlo evidence suggests that our proposed tests have good finite sample size and power properties. An empirical application to U.K. GDP indicates the presence of seasonal mean shifts in the data.
    Keywords: Seasonality, Seasonal Level Breaks, Seasonal Unit Roots, Robust Tests
    Date: 2018–01
  10. By: Zsófia L. Bárány; Christian Siegel
    Abstract: To study the drivers of the employment reallocation across sectors and occupations between 1960 and 2010 in the US we propose a model where technology evolves at the sector-occupation cell level. This framework allows us to quantify the bias of technology across sectors and across occupations. We implement a novel method to extract changes in sector-occupation cell productivities from the data. Using a factor model we find that occupation and sector factors jointly explain 74-87 percent of cell productivity changes, with the occupation component being by far the most important. While in our general equilibrium model both factors imply similar reallocations of labor across sectors and occupations, quantitatively the bias in technological change across occupations is much more important than the bias across sectors.
    Keywords: biased technological change; structural change; employment polarization
    JEL: O41 O33 J24
    Date: 2018–02
  11. By: Hellwig, Michael; Schober, Dominik; Cabral, Luís M. B.
    Abstract: We propose a difference-in-differences (DiD) approach to estimate the impact of incentives on cost reduction. We show theoretically, and estimate empirically, that German electricity distribution system operators (DSOs) incur higher costs when subject to a lower-powered regulation mechanism. The difference is particularly significant (about 7%) for firms in the upper quartile of the efficiency distribution, a pattern which is consistent with the pooling of types under the threat of ratcheting.
    Keywords: regulation,ratchet effect,electricity utilities,difference-in-differences,efficiency analysis
    JEL: K23 L51 L94 L98 D24 D82
    Date: 2018
  12. By: Koki Oikawa; Minoru Kitahara
    Abstract: We construct a new method to describe firm distributions within technology fields and investigate the relationship between those distributions and aggregate innovation. To locate firms on a technology space, we apply multidimensional scaling for the inter-firm technological dissimilarity matrices that are computed from patent citation overlaps among firms using the NBER US patent dataset. Our estimated firm distributions show increasing trends in technological distance and polarization on average, where we follow Duclos, Esteban and Ray (2004) to measure polarization. We construct a model of inter-group competition in which polarization stimulates aggregate R&D. The model fits data before 1990 but the impact of polarization is reversed after that. We attribute the structural change to the major patent reform in the United States in 1980s.
  13. By: Jan Hagemejer; Jakub Muck
    Abstract: In this study we assess the importance of exports and global value chains (GVC) participation for economic growth. Using novel methods and an extensive dataset, we decompose GDP growth in the Central and Eastern European (CEEC) countries to show that in a large part of the period of transition and integration with the EU, exports have played a predominant role in shaping economic growth. We also show that exports have been the major factor driving the convergence of the CEEC countries with their advanced counterparts. We employ panel methods to analyze the determinants of growth of exported value added and show that the major growth drivers in the analyzed period of 1995-2014 are GVC participation, imports of technology and capital deepening.
    Keywords: economic growth, international trade, GVC, heterogeneous panels, common correlated effects estimation, CEEC
    JEL: C23 F21 O33
    Date: 2018–02
  14. By: García, Gustavo A.
    Abstract: This paper analyzes the relationship between agglomeration economies and productivity in the context of a developing country while taking into account the marked presence of an informal sector. Using data from Colombia, we investigate the effect of agglomeration economies on formal and informal productivity. We examine whether the informal sector achieves benefits from agglomeration economies as well as whether there are differences between the formal and informal sectors in terms of agglomeration returns. We find that agglomeration economies, measured by the density of local employment, have a significantly positive effect on productivity in the informal sector, while there is little effect in the formal sector. We estimate an elasticity of wages with respect to employment density of approximately 2% for the informal sector, which implies that informal workers in denser areas will earn approximately 11% more than those in less dense areas.
    Keywords: Agglomeration economies, informal sector, Colombia
    JEL: R12 J31 R23
    Date: 2018–01–26
  15. By: Chiara Burlina
    Abstract: This study investigates a particular type of network, the inter-firm network (IFN), and its impact on performances of Italian firms between 2010-2015. After revising the literature on alliances and networks for what concerns the geographical and industrial dimension, I focus my attention on networks’ performance and innovation propensity. The empirical analysis, based on a sample of about 4,000 firms, is divided in two parts: firstly, applying a “differencein- difference” technique, is tested the impact of being in an IFN; secondly, focusing on year 2013, are measured the different effects of IFN characteristics. Results demonstrate that belonging to an IFN has a positive impact on firms’ growth. Moreover, industry heterogeneity of members and internationalisation scope (rather than innovation) turn out to be the main factors increasing firm’s profitability and economic growth.
    Keywords: Inter-firm network, Alliances, Performance, Difference-in-Difference, Innovation.
    JEL: C3 L25 P25 R12
    Date: 2018–01
  16. By: Föllmi, Reto; Fuest, Angela; an de Meulen, Philipp; Micheli, Martin; Schmidt, Thorsten; Zwick, Lisa
    Abstract: This paper analyzes the connection between openness and economic performance in Switzerland. Considering different dimensions of openness, we show that the Swiss economy classifies as relatively open. Nevertheless, there still is potential to further increase international integration, particularly through deregulation in the services sector. We also show that for some branches in the Swiss manufacturing sector, increases in international trade are associated with higher productivity in the long run. With regard to financial openness, we show that in the aftermath of the financial crisis, Switzerland mainly suffered from capital retrenchment. Foreign capital inflows were of minor importance. Short-run costs due to the high volatility of capital flows might therefore be lower than widely perceived.
    Keywords: Productivity, Openness, Trade Barriers
    JEL: O40 F10 F30
    Date: 2018–03

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