nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2018‒08‒13
sixteen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Competition and Firm Productivity: Evidence from Portugal By Pedro Carvalho
  2. Exploring Determinants of Productivity in Pakistani Manufacturing Firms By Jamal, Haroon
  3. The productivity of family and hired labour in EU arable farming By Kloss, Mathias; Petrick, Martin
  4. Fast and Efficient Computation of Directional Distance Estimators By Cinzia Daraio; Léopold Simar; Paul W. Wilson
  5. Corporate material flow management in Thailand: The way to material flow cost accounting By Yagi, Michiyuki; Kokubu, Katsuhiko
  6. Decomposing differences in productivity distributions By Schneider, Patrick
  7. Regional Alignment and Productivity Growth By Ludovic Dibiaggio; Benjamin Montmartin; Lionel Nesta
  8. Reallocation of Tangible Assets and Productivity By UESUGI Iichiro; HOSONO Kaoru; MIYAKAWA Daisuke; ONO Arito; UCHIDA Hirofumi
  9. Public R&D Support and Firms' Performance - A Panel Data Study By Øivind Anti Nilsen; Arvid Raknerud; Diana-Cristina Iancu
  10. Increasing returns to scale without sorting or agglomeration economies By Andres Gomez-Lievano; Vladislav Vysotsky; Jose Lobo
  11. Digital technology diffusion: A matter of capabilities, incentives or both? By Dan Andrews; Giuseppe Nicoletti; Christina Timiliotis
  12. Persistent and transient inefficiency: Explaining the low efficiency of Chinese big banks By Fungáčová, Zuzana; Klein, Paul-Olivier; Weill, Laurent
  13. Is there green growth in OECD countries? By Pasche, Markus
  14. Who are the beneficiaries of the structural funds and the cohesion fund and how does the cohesion policy impact firm-level performance? By Julia Bachtrögler; Christoph Hammer
  15. Inference for Nonparametric Productivity Networks: A Pseudo-likelihood Approach By Moriah B. Bostian; Cinzia Daraio; Rolf Fare; Shawna Grosskopf; Maria Grazia Izzo; Luca Leuzzi; Giancarlo Ruocco; William L. Weber
  16. The Supply of Skill and Endogenous Technical Change: Evidence From a College Expansion Reform By Carneiro, Pedro; Liu, Kai; Salvanes, Kjell G

  1. By: Pedro Carvalho
    Abstract: This paper presents empirical evidence on the impact of competition on firm productivity for the Portuguese economy. To that effect, firm-level panel data comprising information between 2010 and 2015 gathered from the Integrated Business Accounts System (Portuguese acronym: SCIE) is used. The database enables the construction of economic and financial indicators, which allow for isolating the impact of competition on firm-level productivity. We find a positive relationship between competition and both total factor productivity and labor productivity. This relationship is found to be robust to different specifications and in accordance with the results in the literature obtained for other countries.
    Keywords: Competition, Productivity, Portugal
    JEL: D40 D24 O47
    Date: 2018–07
  2. By: Jamal, Haroon
    Abstract: This study examines the determinants of productivity among manufacturing firms in Pakistan using firm level data gathered in the World Bank Enterprise Survey of 2007. The research econometrically investigates the impact of various structural, organizational and technological characteristics of firms on the level of Total Factor Productivity (TFP). Findings of The study suggest thatfactors which enhance the firms’ performance and level of productivity include; foreign ownership, use of information and communication technology, schooling of production workers, presence of labor welfare programs, access to international market and use of innovative production process. In contrast, unionization of workforce and power outages are negatively associated with TFP
    Keywords: Manufacturing firms; TFP; Pakistan
    JEL: D24 L60
    Date: 2018–07
  3. By: Kloss, Mathias; Petrick, Martin
    Abstract: This paper investigates the impact of labour force composition on productivity in EU arable farming. We test for heterogeneous effects of family and hired labour for a set of five EU member states. To this end, we estimate augmented production functions using FADN data for the years 2001-2008. The results reject the notion that hired labour is generally less productive than family workers. In fact, farms with a higher share of hired workers are more productive than pure family farms in countries traditionally characterised by family labour, namely France and West Germany. Here, an increase in reliance on hired labour or the shift of family labour to more productive tasks could raise productivity. This finding calls into question a main pillar of the received family farm theory. In about half the countries, there are no statistically different effects of both types of labour. For the United Kingdom, we find the classical case with family farms being more productive than those relying on hired labour. As a side result, we find little evidence of non-constant technical returns to scale.
    Keywords: Labour productivity,Production function estimation,European Union,FADN
    JEL: Q12 J24 J43 D13 D23
    Date: 2018
  4. By: Cinzia Daraio (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Léopold Simar (Institut de Statistique, Biostatistique et de Sciences Actuarielles, Universite´ Catholique de Louvain, Louvain-la-Neuve, Belgium); Paul W. Wilson (Department of Economics and School of Computing, Division of Computer Science, Clemson University,Clemson, South Carolina, USA)
    Abstract: Directional distances provide useful, flexible measures of technical efficiency of production units relative to the efficient frontier of the attainable set in input-output space. In addition, the additive nature of directional distances permits negative input for outputs quantities. The choice of the direction allows analysis of different strategies for the units attempting to reach the efficient frontier. Simar et al. (2012) and Simar and Vanhems (2012) develop asymptotic properties of full-envelopment, FDH and DEA estimators of directional distances as well as robust order-m and order- a directional distance estimators. Extensions of these estimators to measures conditioned on environmental variables Z are also available (e.g., see Daraio and Simar, 2014). The resulting estimators have been shown to share the properties of their corresponding radial measures. However, to date the algorithms proposed for computing the directional distance estimates suffer from various numerical drawbacks (Daraio and Simar, 2014). In particular, for the order-m versions (conditional and unconditional) only approximations, based on Monte-Carlo methods, have been suggested, involving additional computational burden. In this paper we propose a new fast and efficient method to compute exact values of the directional distance estimates for all the cases (full and partial frontier cases, unconditional or conditional to external factors), that overcome all previous difficulties. This new method is illustrated on simulated and real data sets.Matlab code for computation is provided in an appendix.
    Keywords: directional distances ; conditional efficiency ; robust frontiers ; environmental factors ; nonparametric methods
    Date: 2018
  5. By: Yagi, Michiyuki; Kokubu, Katsuhiko
    Abstract: In recent years, material flow cost accounting (MFCA) has gradually been recognized in Asia by the standardization of ISO 14051 and 14052 and by the project of dissemination undertaken by the Asian Productivity Organization (APO). However, MFCA is still not used across the board. This study analyzes the characteristics of material flow (MF) management to facilitate the expanded use of MFCA. The research framework of this study investigates the degree of MF management and the sequential relationships among financial factors, MF management, and waste performance, based on a questionnaire survey of non-financial listed companies in Thailand. Fifty-eight percent of the respondent firms answer that they are managing MF information (self-rating). Meanwhile, 50%, 49%, 29%, and 24% of the firms actually disclose the amounts of total waste, hazardous waste, raw materials consumed, and recycled waste, respectively. The results of this study show that respondent firms with MF management (self-rating) are more likely to manage/disclose total waste, hazardous waste, and raw materials consumed than those without it. In terms of financial factors, cost ratio and profitability are likely to affect firm decisions regarding whether to manage the MF. Additionally, MF management is likely to decrease the hazardous waste ratio. The series of results shows that firms in Thailand are more likely to be concerned about hazardous waste management than resource efficiency. Therefore, hazardous waste should probably be thoroughly managed, as a preliminary step in the promotion of MFCA.
    Keywords: Material flow management; Thailand; Waste performance; Material flow cost accounting; Data envelopment analysis
    JEL: M11 Q53 Q56
    Date: 2018
  6. By: Schneider, Patrick (Bank of England)
    Abstract: I analyse the post-crisis slowdown in UK productivity growth using a novel decomposition framework, applied to firm-level data. The framework tracks flexibly defined distributions over time, and links changes in the shape of these distributions to aggregate movements. It encompasses many existing methods, which typically track firms over time, and also provides opportunities for various new types of analysis, particularly where firms are not repeatedly observed in survey data. In my application, I show that the slowdown in productivity growth is driven entirely by post-crisis reallocations of workers to firms with less-productive characteristics, rather than changes in the productivity associated with these characteristics (which have actually supported growth since the crisis). I further show that the puzzle is located in the top tail of the distribution, as is the negative contribution from these allocation effects.
    Keywords: Labour productivity; productivity decomposition; productivity distribution; UK productivity puzzle
    JEL: C14 C21 L11 O47
    Date: 2018–07–20
  7. By: Ludovic Dibiaggio (SKEMA Business School; Université Côte d’Azur; GREDEG CNRS); Benjamin Montmartin (SKEMA Business School; Université Côte d’Azur; OFCE Sciences.Po; GREDEG CNRS); Lionel Nesta (Université Côte d’Azur; GREDEG CNRS; OFCE Sciences.Po)
    Abstract: Recent studies highlight an increasing within-country divergence in regional performance. This paper develops the concept of regional alignment to suggest that synergistic relations among the scientific expertise, technological specialization and industry composition of regions affect regional productivity growth. In this paper, we test an extended conditional beta-convergence model using data on 94 French departments (NUTS3) for the period 2001-2011. Our results indicate that a conditional beta-convergence is associated with a sigma-divergence process in the total factor productivity (TFP) growth of French regions. This process is strongly affected by the level of regional alignment. Indeed, we find evidence that regional alignment both directly and indirectly influences regional productivity growth. The indirect effect of regional alignment materializes through its leverage on R&D investment, which is one of the most important drivers of productivity growth. Moreover, using a heterogeneous coefficients model, we show that the positive effect of regional alignment on TFP growth increases with the industrial and technological diversity of regions, which suggests that regional alignment increases the value of Jacobs externalities more than Marshall-Arrow-Romer (MAR) externalities.
    Keywords: Regional Alignment, beta-convergence, productivity growth, multi-regional model
    JEL: R11
    Date: 2018–07
  8. By: UESUGI Iichiro; HOSONO Kaoru; MIYAKAWA Daisuke; ONO Arito; UCHIDA Hirofumi
    Abstract: We study the reallocation of land and other tangible assets across firms and examine its relationship with productivity. Focusing on Japanese firms during the period 1980-2014, which includes massive asset price fluctuations, we find the following. First, there exists no obvious cyclicality in the extent of land and other tangible asset reallocation. Instead, the reallocation of land has been sluggish for more than 20 years since the burst of the asset price bubble. Second, reallocation of land and non-land tangible assets is efficiency-reducing rather than efficiency-enhancing in that firms with high total factor productivity (TFP) reduced their holdings of these assets more than low TFP firms. Third, the relationship between reallocation and productivity has changed over time. Even though the reallocation of land was efficiency-enhancing around the end of the 1980s, it turned efficiency-reducing afterward.
    Date: 2018–07
  9. By: Øivind Anti Nilsen; Arvid Raknerud; Diana-Cristina Iancu
    Abstract: We analyse all the major sources of direct and indirect R&D subsidies in Norway in the period 2002-2013 and compare their effects on individual firms’ performance. Firms that received support are matched with a control group of firms that did not receive support using a combination of stratification and propensity score matching. Changes in performance indicators before and after support in the treatment group are compared with contemporaneous changes in the control group. We find that the average effects of R&D support among those who obtained grants and/or subsidies are positive and significant in terms of performance indicators related to economic growth: value added, sales revenue and number of employees. The estimated effects are larger for start-up firms than incumbent firms when the effects are measured as relative effects (in percentage points), but smaller when these effects are translated into level effects. Finally, we do not find positive effects on return to total assets or productivity for firms who received support compared with the control group.
    Keywords: public policy, firm performance, treatment effects, stratification, propensity score matching, productivity
    JEL: C33 C52 D24 O38
    Date: 2018
  10. By: Andres Gomez-Lievano; Vladislav Vysotsky; Jose Lobo
    Abstract: We show that the phenomenon of Increasing Returns to Scale (IRS) can artificially emerge in the absence of any type of sorting or agglomeration effects, in a systematic, predictable and measurable way. This is in contradiction to the convention where the null hypothesis is the absence of IRS. We show the null hypothesis should instead be the presence of IRS when the variance of log-productivity is of the same order of magnitude than the log-size of the smallest observation in the sample. Our analytical results are validated through simulations and through their application to real data of wages across municipalities in Colombia. This effect can obscure the real size productivity premium, and we provide a methodology to statistically test it.
    Date: 2018–07
  11. By: Dan Andrews; Giuseppe Nicoletti; Christina Timiliotis
    Abstract: Insufficient diffusion of new technologies has been quoted as one possible reason for weak productivity performance over the past two decades (Andrews et al., 2016). This paper uses a novel data set of digital technology usage covering 25 industries in 25 European countries over the 2010-16 period to explore the drivers of digital adoption across two broad sets of digital technologies by firms, cloud computing and back or front office integration. The focus is on structural and policy factors affecting firms’ capabilities and incentives to adopt -- including the availability of enabling infrastructures (such as high-speed broadband internet), managerial quality and workers skills, and product, labour and financial market settings. We identify the effects of structural and policy factors based on the difference-in-difference approach pioneered by Rajan and Zingales (1998) and show that a number of these factors are statistically and economically significant for technology adoption. Specifically, we find strong support for the hypothesis that low managerial quality, lack of ICT skills and poor matching of workers to jobs curb digital technology adoption and hence the rate of diffusion. Similarly our evidence suggests that policies affecting market incentives are important for adoption, especially those relevant for market access, competition and efficient reallocation of labour and capital. Finally, we show that there are important complementarities between the two sets of factors, with market incentives reinforcing the positive effects of enhancements in firm capabilities on adoption of digital technologies
    Keywords: diffusion, digital skills, Digital technologies, productivity
    JEL: D24 J24 O32 O33
    Date: 2018–07–30
  12. By: Fungáčová, Zuzana; Klein, Paul-Olivier; Weill, Laurent
    Abstract: Considering the evidence that China’s five largest state-owned banks (the Big Five) suffer from low cost efficiency, this paper decomposes overall efficiency of Chinese banks into: persistent efficiency and transient efficiency components. Low persistent efficiency reflects structural problems, while low transient efficiency is associated with short-term problems. Using the model of Kumbhakar, Lien and Hardaker (2014) based on the stochastic frontier approach, we measure persistent efficiency and transient efficiency for a large sample of 166 Chinese banks over the period 2008–2015. In line with existing evidence, we find a lower average cost efficiency of Big Five banks compared to other Chinese banks. It is almost entirely due to low persistent cost efficiency. Big Five transient efficiency is similar to other Chinese banks. Our findings support the view that major structural reforms are needed to enhance the efficiency of China’s Big Five banks.
    JEL: C23 D24 G21
    Date: 2018–07–20
  13. By: Pasche, Markus
    Abstract: Taking the Ecological Footprint (EF) as a broad measure of environmental impact of economic activity, there is substantial progress in decoupling economic output from environmental impact. However, this progress has been too slow to compensate the negative environmental impact of economic growth. But since mid of 2000s the EF declines in the OECD countries, and the global EF increase is driven by emerging countries, i.e. China. However, the decline could be mainly explained by a GDP growth slowdown. To achieve a significant reduction (comparable to the goals of the Paris Agreement) a further slowdown could be necessary. Moreover, the paper investigates the role of globalization because the greening of production in OECD countries could be due to a shift of dirty industries to non-OECD countries. Thus OECD countries are net importers of the EF embodied in traded goods. However, the amount of net EF imports is too small and not correlated with the eco-productivity of production. As ecological productivity is strongly correlated with enforced environmental policy, globalization could be used as a vehicle to promote eco-productivity also in non-OECD countries.
    Keywords: Environmental Footprint, Carbon Footprint, green growth, degrowth, eco-productivity, globalization, environmental policy
    JEL: F18 Q53 Q56 Q58
    Date: 2018–07–03
  14. By: Julia Bachtrögler; Christoph Hammer
    Abstract: This paper exploits a new database that is unique in its scale and scope containing detailed information on over two million projects carried out by one million firms that benefited from the European Regional Development Fund, the European Social Fund and the Cohesion Fund in 25 EU member countries during the multi-annual financial framework 2007-2013. This database is used to get a better understanding of the characteristics of the beneficiaries of European funds and to assess the impact of the European funds on the beneficiaries’ performance in terms of employment growth, growth in fixed assets, and total factor productivity. While the data reveals substantial heterogeneity of beneficiaries and projects across and within countries, in terms of the number of projects, their total values, the average firm size and other aspects, some patterns are identified. The majority of co-funding goes to manufacturing firms as well as public institutions. The Cohesion Fund co-finances larger projects, carried out by larger, more capital-intensive firms that typically conduct large-scale infrastructure projects. In contrast, the European Social Fund co-finances smaller projects related to human capital and initiatives on the labour market. In terms of volume, the European Regional and Development Fund has the largest budget in total and co-finances a large variety of projects. Using propensity score matching techniques, we find mixed effects of structural and cohesion funds on the performance of a sample of manufacturing firms in six European countries. On average, firms that receive financial assistance hire more workers and increase their capital stock more. However, there is little evidence of additional positive total factor productivity effects for the beneficiaries.
    Keywords: Cohesion Policy, European Union, Firm-level data, Propensity Score Matching, Treatment Effects
    JEL: C21 D22 E61 R11 R58
    Date: 2018–08–03
  15. By: Moriah B. Bostian (Department of Economics, Lewis & Clark College, Portland, OR USA); Cinzia Daraio (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Rolf Fare (Department of Applied Economics, Oregon State University, Corvallis, OR USA); Shawna Grosskopf (Department of Economics, Oregon State University, Corvallis, OR USA); Maria Grazia Izzo (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy ; Center for Life Nano Science, Fondazione Istituto Italiano di Tecnologia (IIT), Rome, Italy); Luca Leuzzi (CNR-NANOTEC, Institute of Nanotechnology, Soft and Living Matter Lab, Rome, Italy ; Department of Physics, Sapienza University of Rome, Italy); Giancarlo Ruocco (Center for Life Nano Science, Fondazione Istituto Italiano di Tecnologia (IIT), Rome, Italy ; Department of Physics, Sapienza University of Rome, Italy); William L. Weber (Department of Economics and Finance, Southeast Missouri State University, Cape Girardeau, MO USA)
    Abstract: Networks are general models that represent the relationships within or between systems widely studied in statistical mechanics. Nonparametric productivity networks (Network-DEA) typically analyzes the networks in a descriptive rather than statistical framework. We fill this gap by developing a general framework-involving information science, machine learning and statistical inference from the physics of complex systems- for modeling the production process based on the axiomatics of Network-DEA connected to Georgescu-Roegen funds and flows model. The proposed statistical approach allows us to infer the network topology in a Bayesian framework. An application to assess knowledge productivity at a world-country level is provided.
    Keywords: Network DEA ; Bayesian statistics ; Generalized multicomponent Ising Model ; Georgescu Roegen
    Date: 2018
  16. By: Carneiro, Pedro; Liu, Kai; Salvanes, Kjell G
    Abstract: We examine the labor market consequences of an exogenous increase in the supply of skilled labor in several cities in Norway, resulting from the construction of new colleges in the 1970s. We find that skilled wages increased as a response, suggesting that along with an increase in the supply there was also an increase in demand for skill. We also show that college openings led to an increase in the productivity of skilled labor and investments in R&D. Our findings are consistent with models of endogenous technical change where an abundance of skilled workers may encourage firms to adopt skill-complementary technologies, leading to an upward-sloping long-run demand for skill.
    Keywords: College Reform; endogenous technical change; Supply of Skills
    Date: 2018–07

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