nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2018‒04‒23
ten papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Firm Financing Choices and Productivity in Sub Saharan Africa: Evidence from Firm Level Data By Naomi Mathenge; Eftychia Nikolaidou
  2. Determinants of Commercial Banks' Profitability in Malaysia By Trofimov, Ivan D.; Md. Aris, Nazaria; Ying Ying, Jovena Kho
  3. Influence of the Physical Work Environment on Work Engagement and Performance By Kay Meulensteen; Pascale Le Blanc; Astrid Kemperman
  4. The UK (and Western) productivity puzzle: does Arthur Lewis hold the key? By Oulton, Nicholas
  5. Public sector efficiency in Europe: Long-run trends, recent developments and determinants By Christl, Michael; Köppl-Turyna, Monika; Kucsera, Dénes
  6. Institutions and Performance of Regulated Firms: Evidence from Electric Utilities in the Indian States By Jamasb, Tooraj; Llorca, Manuel; Khetrapal, Pavan; Thakur, Tripta
  7. Estimating the Effects of a Large For-Profit Charter School Operator By Susan Dynarski; Daniel Hubbard; Brian Jacob; Silvia Robles
  9. Rent Creation and Sharing: New Measures and Impactson TFP By Gilbert Cette; Jimmy Lopez; Jacques Mairesse
  10. The Reallocation Myth By Chang-Tai Hsieh; Peter J. Klenow

  1. By: Naomi Mathenge (School of Economics, University of Cape Town); Eftychia Nikolaidou (School of Economics, University of Cape Town)
    Abstract: This study examines the effect of firm financing choices on firm performance. Firm performance is measured by firm productivity, specifically, the Total Factor Productivity (TFP) of a firm. The study uses firm level data from the World Bank Enterprise Survey (WBES) to investigate the effect of different financing options on the productivity of SSA firms. Using data for the period 2005 - 2013 from 26 countries, the study employs a linear Cobb-Douglas production function to estimate total factor productivity (TFP.) It then uses both parametric and non-parametric methods to analyse the effect of financing options on TFP. The results indicate that firms that rely on bank debt rather than other forms of financing (e.g. internal finance, informal finance, private and public equity) are, on average, more productive. This can be partly attributed to the monitoring activities of banks and the threat of bankruptcy faced by firms.
    Date: 2018
  2. By: Trofimov, Ivan D.; Md. Aris, Nazaria; Ying Ying, Jovena Kho
    Abstract: This study aims to examine the relationship between non-performing loans (NPLs) and commercial banks' performance in Malaysia, alongside other factors. It considers the effect of NPLs, cost efficiency and bank size on commercial banks' profitability by using panel data regression (Pooled OLS model), covering the period of 2010-2015. The findings of the study show that NPLs and cost efficiency have a significant negative relationship with commercial banks' performances in Malaysia. On the other hand, bank size is found to have a significant positive relation with commercial banks' performances in Malaysia. Several policy and strategic implications are outlined: the continuing need to manage credit risk, reduction of non-core lending activities, improvement of systems transparency, cost control, and more lenient competition and anti-trust policies.
    Keywords: Profitability, non-performing loans, banks
    JEL: C23 G21 G28
    Date: 2018–03–16
  3. By: Kay Meulensteen; Pascale Le Blanc; Astrid Kemperman
    Abstract: In recent years, companies have made effort to adjust their offices to be more flexible and to support the activities and needs of their employees. The aim of these concepts is to increase employee satisfaction, leading to higher productivity, and at the same time save expenses due to flexible use of the workspace. In the literature there is no consensus on which aspects of the office work environment are most likely to stimulate an optimal productivity apart from the fact that the behavioral environment cannot be seen separately from the physical environment.Moreover, there is hardly any literature on workplace nudging, meaning an adjustment of the physical work environment aimed at steering behavior of people in a certain desired direction. Many buildings of governmental institutions in The Netherlands use this strategy and have created a so called hub, a centrally located flexible workspace in which employees can work and have meetings with coworkers or customers. The aim of this study is to measure and predict the relationships between workspace characteristics and work engagement and performance of employees in hubs in governmental office buildings.A conceptual model was developed based on literature research. To test this model data was collected using a survey among 236 employees at hubs in 4 different governmental institutions in 2016. Questions were asked about the visit and activities performed in the hub, assessment of the characteristics, satisfaction with work related needs, work engagement, performance and socio-demographics.A path model was estimated including all proposed direct and indirect relationships simultaneously. A model generating approach was used to construct the final model, for which the goodness-of-fit was adequate and all parameter estimates for the relationships in the model statistically significant.The model estimated confirms the theoretical model, however, some more detailed relationships are found. All variables from the physical environment have an effect on the behavioral environment. The behavioral environment directly influences work related need satisfaction and indirectly work engagement. The more employees have their work related needs satisfied, the higher their work engagement is. At the same time, there is a positive effect between work engagement and performance. The results can be used to inform real estate and facility managers on how to improve the work place nudges in governmental buildings.
    Keywords: office work environment; path model; work engagement; work performance; workplace nudging
    JEL: R3
    Date: 2017–07–01
  4. By: Oulton, Nicholas
    Abstract: I propose a new explanation for the UK productivity puzzle. I graft the Lewis (1954) model onto a standard Solow growth model. What I call the neo-Lewis model is identical to the Solow model in good times. But in bad times foreign demand for a country’s exports is constrained below potential supply. This makes labour productivity growth depend negatively on the growth of labour input. I also argue that the neo-Lewis model can explain the fall in TFP growth, in the UK and elsewhere, after 2007. The predictions of the neoLewis model are tested on data for 23 advanced countries and also on a larger sample of 52 countries and find support.
    Keywords: Productivity; slowdown; TFP; capital; Lewis; immigration
    JEL: E24 F43 J24 O41 O47
    Date: 2018–03–25
  5. By: Christl, Michael; Köppl-Turyna, Monika; Kucsera, Dénes
    Abstract: This paper investigates the efficiency of the public sector in a sense of public performance and expenditures. For 23 European countries and for the period between 1995 and 2015 we construct a measure of public sector performance that consist of nine distinct indices for each area of public policy, such as administration, health education, economic performance, security and infrastructure. We use several efficiency techniques (FDH, order-m) and investigate input- and output-oriented efficiency of the public sector. We find that countries with small public sectors tend to be more efficient no matter which efficiency techniques we use. Because of the relatively long time span of our data, our study contributes to the literature by analyzing the effect of the financial crisis on the efficiency of the public sector in European countries. We show that after the crisis, the public sector efficiency increased especially in countries with small public sectors, while it stayed constant or worsened in countries with big public sectors. Finally, we analyze in more depth the impact of fiscal decentralization and fiscal rules on the public sector efficiency. We conclude that while decentralization is fostering efficiency, fiscal rules do not have any effect. Moreover, fiscal rules combined with decentralization may harm efficiency, consistently with the ratchet effect.
    Keywords: public sector,efficiency,order-m,input-oriented efficiency,output-oriented efficiency,decentralization,fiscal rules
    JEL: C14 H50 H72
    Date: 2018
  6. By: Jamasb, Tooraj; Llorca, Manuel; Khetrapal, Pavan; Thakur, Tripta
    Abstract: It is commonly accepted that institutions influence economic development of countries. But, can we also trace the effect of institutional endowment to specific sectors and regions of a country? There is a significant gap in knowledge and evidence of this issue in the literature. This paper examines this effect in the Indian electricity distribution sector and explores the influence of state-level institutional quality and economic factors on the performance of network utilities in India. Since the 1990s, India has adopted reform steps to improve the efficiency of its electricity sector. However, there remain performance differences among the utilities. We examine the performance of 52 electricity distribution utilities in 24 Indian states for the period from 2006-07 to 2011-12. The findings confirm that the quality of institutions and state-wide economic development affect the performance of the electricity distribution utilities in different states. Additionally, we simulate the cost savings from utilities’ performance improvements linked with institutional enhancements. The results indicate the need to strengthen the institutions, for example through regulatory agencies reform to improve the performance of the sector.
    Date: 2018
  7. By: Susan Dynarski; Daniel Hubbard; Brian Jacob; Silvia Robles
    Abstract: In this paper, we leverage randomized admissions lotteries to estimate the impact of attending a National Heritage Academy (NHA) charter school. NHA is the fourth largest forprofit charter operator in the country, enrolling more than 56,000 students in 86 schools across 9 states. Unlike several of the other large for-profit companies that operate virtual charters, NHA only has standard bricks-and-mortar schools. Our estimates indicate that attending a NHA charter school for one additional year is associated with a 0.04 standard deviation increase in math achievement. Effects on other outcomes are smaller and not statistically significant. In contrast to most prior charter school research which find the largest benefits for low-income, underrepresented minorities in urban areas, the benefits of attending an NHA charter network are concentrated among non-poor students attending charter schools outside urban areas. Using data from a survey of school administrators in traditional public and charter schools, we document several aspects of school organization, culture and instructional practice that might explain these positive effects.
    JEL: I0 I21 J0
    Date: 2018–03
  8. By: Ricardo Martínez (Universidad de Granada.); Antonio Villar (Universidad Pablo de Olavide e IVIE.)
    Abstract: We propose in this paper a general framework for evaluation problems in which the outcome range of the variable can be partitioned into a series of levels that may have different meaning or importance, as they may represent qualitatively different results. Measures of poverty, excellence, inclusion or overall performance indicators are particular cases of this type of problems. We focus on the case of additive functions, to facilitate the discussion. This framework is applied to the analysis of educational poverty, excellence and overall performance of 15-year old students, according to the PISA 2015 data for all 68 participating countries and large economies. The analysis provides insights on the differences between countries that are not captured by the average test scores.
    Keywords: social evaluation, multilevel indicators, education, poverty, excellence, PISA.
    JEL: H7 I2 I3 J1
    Date: 2018–04
  9. By: Gilbert Cette; Jimmy Lopez; Jacques Mairesse
    Abstract: This analysis proposes new measures of rent creation or (notional) mark-up and workers’ share of rents on cross-country-industry panel data. While the usual measures of mark-up rate implicitly assume perfect labor markets, our approach relaxes this assumption, and takes into account that part of firms’ rent created in an industry is shared with workers to an extent which can vary with their skills. Our results are based on a cross-country-industry panel covering 14 OECD countries and 19 industries over the 1985-2005 period. In a first part of our analysis we draw on OECD indicators of product and labor market (anticompetitive) regulations to test how they are related to our new measures of mark-up and rent-sharing. We find that anti-competitive Non-Manufacturing Regulations (NMR) affect mark-up rates positively, and hence firms’ rent creation and workers’ share of rent, whereas Employment Protection Legislation (EPL) has no impact on rent creation, but boosts workers’ wages per hour. However, we observe that these wage increases are offset by a negative impact from EPL on hours worked per output unit, leading to a non-significant impact of EPL on workers’ share of rents. The effects of EPL for low-skilled workers appear to be more pronounced than those for medium-skilled workers, both being much greater than for highly-skilled workers. In the second part of our analysis, we estimate the impacts of our new measures on Total Factor Productivity (TFP) in the framework of a straightforward regression model. We use the OECD regulations indicators as relevant instrument to take care of endogeneity and to make sure that the resulting estimates assess the proper regulation impacts of rent creation and sharing without being biased by other confounding effects. We find that less competition in the product and labor markets as assessed by our measures of mark-up and workers’ share of rents have both substantial negative impacts on TFP.
    JEL: C23 E22 E24 E30 L50 O43 O47
    Date: 2018–03
  10. By: Chang-Tai Hsieh; Peter J. Klenow
    Abstract: There is a widely held view that much of growth in the U.S. can be attributed to reallocation from low to high productivity firms, including from exiting firms to entrants. Declining dynamism — falling rates of reallocation and entry/exit in the U.S. — have therefore been tied to the lackluster growth since 2005. We challenge this view. Gaps in the return to resources do not appear to have narrowed, suggesting that allocative efficiency has not improved in the U.S. in recent decades. Reallocation can also matter if it is a byproduct of innovation. However, we present evidence that most innovation comes from existing firms improving their own products rather than from entrants or fast-growing firms displacing incumbent firms. Length: 26 pages
    Date: 2018–04

This nep-eff issue is ©2018 by Angelo Zago. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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