nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2018‒05‒21
eleven papers chosen by

  1. The microeconomic origins of the Spanish boom By Enrique Moral-Benito
  2. New Evidence on the Markup of Prices over Marginal Costs and the Role of Mega-Firms in the US Economy By Robert E. Hall
  3. Productivity Improvement and Economic Growth By Koji Nakamura; Sohei Kaihatsu; Tomoyuki Yagi
  4. Below the Aggregate: A Sectoral Account of the UK Productivity Puzzle By Rebecca Riley; Ana Rincon-Aznar; Lea Samek
  5. The Impact of Sickness Absenteeism on Productivity: New Evidence from Belgian Matched Panel Data By Elena Grinza; Francois Rycx
  6. Exploring Digital Time Measurement in the Public Sector: Labor Productivity and Service Quality in Home Care By Jordahl, Henrik; Persson, Lovisa
  7. Reallocation and productivity during the Great Recession:evidence from French manufacturing firms By Giacomo Domini; Daniele Moschella
  8. Sorting and agglomeration economies in French economics departments By Clément Bosquet; Pierre-Philippe Combes
  9. Important factors in a nations international competitiveness ranking By Mashabela, Juliet; Raputsoane, Leroi
  10. In vino feracitas! Efficiency of wineries in and out of Sardinia’s wine routes By Maria Giovanna Brandano; Claudio Detotto; Marco Vannini
  11. Gender Gaps in Performance: Evidence from Young Lawyers By Ghazala Azmat; Rosa Ferrer

  1. By: Enrique Moral-Benito (Banco de España)
    Abstract: The Spanish growth experience over the 1995-2007 period was characterized by the remarkable surge in employment and investment as well as the dismal evolution of productivity. These macroeconomic fluctuations were coupled with an unprecedented credit boom fueled by a housing bubble. This article reviews a line of research that investigates the connection between these developments using micro-level data on Spanish firms and banks. The evidence suggests that the abundant availability of credit, partially induced by the real estate bubble, and its propagation through the Spanish production network explain a sizable part of the massive accumulation of labor and capital. Also, the deterioration in the allocation of resources across firms is the main responsible of the fall in aggregate productivity. The allocation of credit across firms and municipalities, the softening of banks lending standards, and the low productivity of Spanish firms can partly explain this deterioration.
    Keywords: Spain, firm level data, TFP, misallocation, input-output linkages
    JEL: D24 O11 O47 E44 G21 L25
    Date: 2018–05
  2. By: Robert E. Hall
    Abstract: The markup of price over marginal cost reveals market power. The distinction between marginal and average cost is key. Average cost is easy to measure, but the price/average cost ratio understates the price/marginal cost ratio when fixed costs are present. In particular, in free-entry equilibrium, where revenue equals cost, the price/average cost ratio is always one, while the price/marginal cost ratio may be above one. The idea here is to calculate marginal cost as the ratio of the adjusted expenditure on inputs to the adjusted change in output. The first adjustment is to remove the change in expenditure that arises from the changes in input costs. The second adjustment is to remove the change in output attributed to productivity growth. Application to KLEMS productivity data finds a typical markup ratio of 1.3. Markup ratios grew between 1988 and 2015. For mega-firms, the paper uses employment at firms with 10,000+ workers. Substantial heterogeneity occurs across sectors and in growth rates. There is no evidence that mega-firm-intensive sectors have higher price/marginal cost markups, but some evidence that markups grew in sectors with rising mega-firm intensity.
    JEL: D24 L1
    Date: 2018–05
  3. By: Koji Nakamura (Bank of Japan); Sohei Kaihatsu (Bank of Japan); Tomoyuki Yagi (Bank of Japan)
    Abstract: This paper summarizes recent discussion on labor productivity which is the source of medium- to long-term economic growth and observes the characteristics of recent productivity developments using relevant statistical data. Furthermore, the paper examines the background of recent Japan's low labor productivity growth and analyzes issues regarding Japan's sustainable growth.Labor productivity in major advanced countries has been experiencing a slowdown in recent years. This is mainly affected by the slowdown of Total Factor Productivity (TFP). In Japan, there are two reasons behind the slowdown: first, technology and ideas accumulated by research and development (R&D) and management resources such as capital and labor are not utilized efficiently; and second, these resources are not efficiently reallocated among corporations.In order to improve Japan's productivity in the medium to long-term, it is desirable to encourage the flexible reallocation of management resources such as capital and labor by changing working process at the corporate level in accordance with changes in the socio-economic environment and the advent of new technologies, as well as by improving efficiency in the labor and capital markets.
    Keywords: Productivity; Potential growth; Intangible assets; Resource reallocation
    JEL: E20 O30 O47
    Date: 2018–05–10
  4. By: Rebecca Riley; Ana Rincon-Aznar; Lea Samek
    Abstract: We analyse new industry-level data to re-examine the UK productivity puzzle. We carry out an accounting exercise that allows us to distinguish general macroeconomic patterns from sector trends and idiosyncrasies, providing a roadmap for anyone interested in explaining the puzzle. We focus on the UK market sector. Average annual labour productivity growth was 2.5 percentage points lower during the period 2011-2015 than in the decade before the financial crisis that began in 2007. We find that several years on from the financial crisis stagnation remains widespread across detailed industry divisions, pointing to economy-wide explanations for the puzzle. With some exceptions, labour productivity growth lost most momentum in those industries that experienced strong growth before the crisis. Three fifths of the gap is accounted for by a few industries that together account for less than one fifth of market sector value added. In terms of why we observe continued stagnation, we find that capital shallowing has become increasingly important in explaining the labour productivity growth gap in service sectors, as the buoyancy of the UK labour market has not been sufficiently matched by investment, although our figures suggest that the majority of the productivity gap is accounted for by a TFP gap. The collapse in labour productivity growth has been more pronounced in the UK than elsewhere, but the broad sector patterns of productivity stagnation are in many respects similar across other advanced economies, emphasising the importance of global explanations for the puzzle. UK industries that saw the biggest reductions in productivity growth tended to be internationally competitive and more dependent on global demand than other industries. They were also industries where productivity is difficult to measure.
    Keywords: productivity, competitiveness, sector studies
    JEL: E22 E23 L60 L70 L80 L90 O47
    Date: 2018–05
  5. By: Elena Grinza (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy); Francois Rycx (Université Libre de Bruxelles, Belgium)
    Abstract: We investigate the impact of sickness absenteeism on productivity by using rich longitudinal matched employer-employee data on Belgian private firms. We deal with endogeneity, which arises from unobserved firm heterogeneity and reverse causality, by applying a modified version of the Ackerberg et al's (2015) control function method, which explicitly removes firm fixed effects. Our main finding is that, in general, sickness absenteeism substantially dampens firm productivity. An increase of 1 percentage point in the rate of sickness absenteeism entails a productivity loss of 0.24%. Yet, we find that the impact is much diversified depending on the categories of workers who are absent and across different types of firms. Our results show that sickness absenteeism is detrimental mainly when absent workers are high-tenure or blue-collar workers. Moreover, they show that sickness absenteeism is harmful mostly to industrial firms, high capital-intensive companies, and small- and medium-sized enterprises. This overall picture is coherent with the idea that sickness absenteeism is problematic when absent workers embed high levels of firm/task-specific (tacit) knowledge, when the work of absent employees is highly interconnected with the work of other employees (e.g., along the assembly line), and when firms face more limitations in substituting temporarily absent workers.
    Keywords: Sickness absenteeism, firm productivity, semiparametric methods for estimating production functions, longitudinal matched employer-employee data.
    JEL: D24 M59 I15
    Date: 2018–05
  6. By: Jordahl, Henrik (Research Institute of Industrial Economics (IFN)); Persson, Lovisa (Research Institute of Industrial Economics (IFN))
    Abstract: We measure labor productivity in home care using new data from the recent introduction of digital time measurement in Swedish municipalities. By measuring worker utilization (delivered hours as a share of worked hours) we avoid several problems that have plagued previous studies of public sector productivity. The time use measure exposes substantial variation in productivity between home care units, suggesting room for improvement. More productive units deliver a larger share of the hours approved by care managers and have equally satisfied users.
    Keywords: Public sector productivity; Digitalization; Time use; Choice reforms
    JEL: H42 H44 L33
    Date: 2018–05–03
  7. By: Giacomo Domini; Daniele Moschella
    Abstract: According to the `cleansing hypothesis', recessions are periods in which productivity-enhancing reallocation intensifies, shifting resources away from less efficient to more efficient firms at a greater pace. Does the Great Recession of 2008-2010 fit this view? We address this question, studying the case of the French manufacturing sector. Based on a panel of firms, built by matching data from several sources, we investigate the contribution of productivity to firm growth and survival over the period 2002-2013. Our results show that, during the recent global crisis, more productive firms decreased their advantage with respect to less productive firms, in terms of both employment growth and probability to survive, in disagreement with the cleansing hypothesis.
    Keywords: firm productivity, selection, employment growth, global crisis
    Date: 2018–05–15
  8. By: Clément Bosquet (Spatial Economic Research Center); Pierre-Philippe Combes (Département d'économie)
    Abstract: Are agglomeration and peer effects at stake in academic research? To tackle this question, we study how departments’ characteristics affect the quantity and quality of academics’ publications in economics in France, controlling for individual time-varying characteristics and individual fixed effects. Department characteristics have an explanatory power at least equal to a quarter of that of individual characteristics and possibly as high as theirs. The quantity and quality of an academic’s publications in a field increase with the presence of other academics specialised in that field and with the share of the department’s publications output in that field. In contrast, department size, proximity to other large departments, homogeneity in terms of publication performance, presence of colleagues with connections abroad, and composition in terms of positions and age matter for some publication measures but only if not controlling for individual fixed effects.
    Keywords: Research productivity; Local externalities; Skill sorting; Peer effects; Knowledge spillovers; Co-author networks; Economics of science
    JEL: R23 J24 I23
    Date: 2017–09
  9. By: Mashabela, Juliet; Raputsoane, Leroi
    Abstract: This paper analyses the importance of competitiveness factors in international competitiveness ranking of South Africa. In particular, the paper investigates the odds in favour of an improved, as opposed to a deteriorated, Overall international competitiveness ranking due to a change in selected competitiveness factors. The results show that the autonomous improvement in Overall international competitiveness ranking is statistically insignificant while the effect of a change in Government efficiency also has a statistically insignificant effect on the odds in favour of an improved Overall international competitiveness ranking. The results further show that a change in Economic performance, Business efficiency and Infrastructure increase the odds in favour of an improved Overall international competitiveness ranking. Finally, a change in Infrastructure has the biggest odds in favour of an improvement in Overall international competitiveness ranking compared to a change in Economic performance and Business efficiency.
    Keywords: Competitiveness factors, International competitiveness ranking
    JEL: C12 E02 F23 I31
    Date: 2018–05–02
  10. By: Maria Giovanna Brandano (University of Sassari); Claudio Detotto (Laboratoire Lieux, Identités, eSpaces et Activités (LISA)); Marco Vannini (University of Sassari (Italy) & CRENoS (Italy))
    Abstract: The interest of travellers in wine tourism has been steadily increasing since the 1990s. Consequently, many regions around the world have adopted a variety of policies intended to promote eno-gastronomic tourism. In Sardinia (Italy) this form of tourism has shown a significant upward trend, and today provides a valuable opportunity to rural and often vulnerable inland communities to boost and diversify their economic structure. To encourage this type of tourism, in 2009 the Regional government identified some historic territories of the island and implemented the “wine routes programme†(WRP). These territories were selected according to their importance for growing local grape varieties and showcasing vineyards and winery establishments. The mandate of the routes was to create value around the local viticulture traditions, by sustaining the production of quality wines and by guiding visitors to the discovery of local produce, heritage landmarks and various expressions of the country's popular culture. Since winemakers play a pivotal role, the impact of the WRP on the performance of wineries is of paramount importance to achieve the final goal. To assess the impact of the WRP on the performance of local producers we carry out a controlled before-and-after study, taking the wineries within the wine routes areas as the treated units and the rest of the population as the untreated or control group. The performance of wineries is captured by the scores of a data envelopment analysis (DEA) over the time span 2004–2012. Findings reveal that the WRP increased the technical efficiency of wineries.
    Date: 2018–05
  11. By: Ghazala Azmat; Rosa Ferrer (Universitat Pompeu Fabra [Barcelona])
    Abstract: This paper documents the gender gap in performance among high-skilled professionals in the United States. On the basis of widely used performance measures in law firms, we find that male lawyers bill 10 percent more hours and bring in more than twice as much new client revenue as female lawyers. The differential impact across genders in the presence of young children and differences in aspirations to become a law firm partner account for a large share of the difference in performance. We show that accounting for performance has important consequences for gender gaps in lawyers’ earnings and subsequent promotion.
    Keywords: Performance measures; Gender gaps; High-skilled professionals
    JEL: M52 J16 K40 J44
    Date: 2017–10

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