|
on Efficiency and Productivity |
|
Issue of 2018‒08‒27
24 papers chosen by |
| By: | João Oliveira |
| Abstract: | The inefficiency of the European banking system has been pointed out as a major vulnerability from a financial stability point-of-view. This paper contributes to the assessment of this vulnerability by considering several important features of financial intermediation such as factor prices, economies of scope and scale. We use a stochastic frontier analysis method to characterize the production function of financial intermediation in Europe and quantify inefficiency. We find that: (i) in 2013 the median European bank operated with costs 25 to 100% above the efficient level; (ii) there is ambiguous evidence on productivity growth, although inefficiency of financial intermediation has been increasing over time, possibly driven by the least efficient banks; (iii) increasing returns to scale are limited to smaller banks, although scope savings are found to be robust across all models for the average bank and (iv) that there exists a positive association between inefficiency-cost and implicit credit spreads, which are an indicator of credit market restrictions. |
| JEL: | D24 G21 L13 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ptu:wpaper:w201712&r=eff |
| By: | Grashuis, Jasper |
| Keywords: | Financial Economics, Production Economics |
| Date: | 2016–11–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ncer16:265448&r=eff |
| By: | Rafał Kierzenkowski; Gabriel Machlica; Gabor Fulop |
| Abstract: | Since the start of the Great Recession, labour productivity growth has been weak in the United Kingdom, weaker than in many other OECD countries. The productivity shortfall, defined as the gap between actual productivity and the level implied by its pre-crisis trend growth rate, was nearly 20% for output per hour at the end of 2016. This study assesses the UK productivity puzzle and discusses its possible determinants at the sectoral level. Most of the UK productivity underperformance is structural rather than cyclical. Half of the productivity shortfall is explained by non-financial services (with information and communication being the largest contributor), a fourth by financial services, and another fourth by manufacturing, other production and construction. All but non-financial services and the construction sectors contribute disproportionately to the productivity shortfall compared to their shares in overall output and hours worked of the UK economy. In non-financial services, large increases in self-employed with no employees, reduced matching of skills to jobs and a lower capital-output ratio may have been a drag on productivity. Stagnant productivity in the financial sector is mainly linked to reduced risk-taking and leverage, as reflected by declining total factor productivity following its steep increases in the run-up to the crisis. Greater substitution of labour for capital and weak corporate restructuring have both held back productivity improvements in the manufacturing sector. Some causes of the productivity puzzle pre-date the crisis, including low tangible investment, too rapid expansion of financial services, weak innovation in the manufacturing sector, and a secular decline of oil and gas industries.This Working Paper relates to the 2018 OECD Economic Survey of the United-Kingdom (www.oecd.org/eco/surveys/economic-surve y-united-kingdom.htm). |
| Keywords: | capital, employment, growth, hours, investment, output, productivity, sectors, United Kingdom |
| JEL: | D24 L6 L7 L8 |
| Date: | 2018–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1496-en&r=eff |
| By: | Campus, Daniela |
| Abstract: | This paper contributes to the empirical evidence on the gender differences in agricultural productivity. Using detailed household and individual data from the Uganda LSMS-ISA (2009-10; 2010-11) we estimate the value of productivity of crops grown per acre of harvested land at the household level, based on the gender of the land manager. Results from the Tobit model with fixed effects confirm the findings of the existing literature: controlling also for socio-economic variables and plot characteristics (soil quality, topography, distance from the homestead), as well as for the use of inputs (both labour and other inputs than labour) female managed plots are less productive than plots managed by men. Better individual agricultural data disaggregated by gender may allow to better identify the reasons of such productivity gap. |
| Keywords: | Food Security and Poverty, Productivity Analysis |
| Date: | 2017–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aiea17:261259&r=eff |
| By: | Chamberlin, Jordan; Jayne, T. S. |
| Abstract: | This study attempts to evaluate the impact of farmland concentration on rural productivity growth within smallholder households in Tanzania. Conceptually, farmland concentration occurs when relatively few farms have relatively large shares of the arable land resources in a given area. If large farms bring benefits that spillover to surrounding smallholders, then we would expect positive impacts of greater land concentration on growth. If, on the other hand, a small set of large farms dominates production, then growth multipliers may be lower than for areas with more egalitarian land distributions. |
| Keywords: | Agricultural and Food Policy, Food Security and Poverty, International Development |
| Date: | 2017–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:midiwp:264402&r=eff |
| By: | Pierre-Philippe Combes (Université de Lyon, ECON - Département d'économie - Sciences Po); Gilles Duranton (Department of Economics, Harvard University); Laurent Gobillon (PSE - Paris School of Economics, CEPR - Center for Economic Policy Research - CEPR, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | We propose a new nonparametric approach to estimate the production function for housing. Our estimation treats output as a latent variable and relies on the firstorder condition for profit maximisation with respect to nonland inputs by competitive house builders. For parcels of a given size, we compute housing by summing across the marginal products of nonland inputs. Differences in nonland inputs are caused by differences in land prices that reflect differences in the demand for housing across locations. We implement our methodology on newlybuilt singlefamily homes in France. We find that the production function for housing is reasonably well, though not perfectly, approximated by a CobbDouglas function and close to constant returns. After correcting for differences in user costs between land and nonland inputs and taking care of some estimation concerns, we estimate an elasticity of housing production with respect to nonland inputs of about 0.80. |
| Keywords: | housing,production function |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01400852&r=eff |
| By: | Nilsen, Øivind Anti (Norwegian School of Economics); Raknerud, Arvid (Statistics Norway); Lancu, Diana-Cristina (Statistics Norway) |
| 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: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11651&r=eff |
| By: | Doucouliagos, Chris (Deakin University); Laroche, Patrice (University of Lorraine); Kruse, Douglas L. (Rutgers University); Stanley, T. D. (Deakin University) |
| Abstract: | In this article we re-examine the relationship between group-based profit sharing and productivity. Our meta-regression analysis of 313 estimates from 56 studies controls for publication selection and misspecification biases and investigates the impact of firm level unionisation and national differences in values and culture. Profit sharing is positively related to productivity on average, with a stronger relationship where there is higher unionisation and in countries where honesty is less highly valued and there are higher levels of individualism. The latter two results suggest profit sharing works best in settings where cooperation does not naturally occur. The positive effect of profit sharing on productivity is larger in cooperative firms and in transition economies. |
| Keywords: | profit sharing, productivity, meta-regression analysis, unions, tax evasion, individualism |
| JEL: | J33 J51 J54 M52 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11617&r=eff |
| By: | Andrea De Meo (University of Rome "Tor Vergata"); Lorenzo Ferrari (University of Rome "Tor Vergata") |
| Abstract: | We study how political party turnover at the municipal level affects the economic performance of Italian Local Public Enterprises. To this end, we match data on municipal elections in Italy to the budget data of firms whose shares are owned by Italian municipalities. As political turnover and performance are likely to be jointly endogenous, we exploit the quasi-experimental nature of close electoral races to estimate the causal treatment effect. We find evidence that municipal party turnover disrupts investment and slows down productivity growth. At the same time, the probability of observing financial distress is larger. No significant effect can be established, on the other hand, in terms of profitability and employment growth. We link the effect of municipal party turnover to three mechanisms: first, the nature of close electoral races alters the incumbent party’s incentives to invest; second, turnover makes the appointment of new, less-experienced, board directors more likely; third, the new political leadership directly reduces the amount of resources transferred in order to signal its commitment to curb wasteful municipal expenditure. We finally set up a survival analysis, whose results show that municipal party turnover is associated to an increase in the likelihood to observe bankruptcy. |
| JEL: | D72 D73 H72 H76 L32 |
| Date: | 2018–08–08 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:438&r=eff |
| By: | Toshihiko Mukoyama (Department of Economics, Georgetown University); Sophie Osotimehin (Department of Economics, University of Virginia) |
| Abstract: | We study how factors that hinder the reallocation of inputs across firms influence aggregate productivity growth. We extend Hopenhayn and Rogerson's (1993) general equilibrium firm dynamics model to allow for endogenous innovation. We calibrate the model using US data, and then evaluate the effects of firing taxes on reallocation, innovation, and aggregate productivity growth. In our baseline specification, we find that firing taxes reduce overall innovation and productivity growth. We also show that firing taxes can have opposite effects on the entrants' innovation and the incumbents' innovation, and thus the overall outcome depends on the relative strengths of these forces. |
| Keywords: | Innovation, R&D, Reallocation, Firing costs |
| JEL: | E24 J24 J62 O31 O47 |
| Date: | 2018–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:geo:guwopa:gueconwpa~18-18-02&r=eff |
| By: | Thomas von Brasch; Arvid Raknerud; Diana-Cristina Iancu |
| Abstract: | In this paper, we reconcile two different strands of the literature: the literature on how new goods impact prices and the literature on productivity growth and firm turnover. The decomposition we propose generalises the framework currently used in the literature. Moreover, we extend the estimator for the demand elasticity, proposed by Feenstra (1994) and supplemented by Soderbery (2015). To illustrate the decomposition and estimator, we analyse the case of firm turnover in Norway. Our results indicate that net creation of new varieties from firm turnover contributes by about one half percentage point to annual aggregate productivity growth. |
| Keywords: | Aggregation, Productivity growth, New varieties, Demand elasticity, Panel data, Two-stage estimator |
| JEL: | C43 E24 O47 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:nsr:escoed:escoe-dp-2018-11&r=eff |
| By: | Ping Wang (Washington University in St. Louis); Chong Yip (Chinese University of Hong Kong); Russell Wong (Federal Reserve Bank of Richmond) |
| Abstract: | Income disparity across countries has been large and widening over time. This paper develops a tractable model where factor requirements in production technology do not necessarily match a country's profile of factor endowments. Assimilation balances this multi-dimensional endowment-technology mismatch and reduces the efficiency loss. New measures to the TFP and relative factor disadvantage are derived. The model can generate a novel trade-off between income level and income growth, depending on the assimilation ability and the relative factor endowment differences of the country. With the endowment-technology mismatch, our assimilation model accounts for 80%-98% of the global income variation over the past 50 years. The widening of mismatch accounts for 40%-60% of the global growth variation, whereas capital and human capital account for about one third and zero. Approximately 30% of the growth performance in miracle Asian economies can be attributed to successful assimilation which narrows the mismatch, whereas almost 70% of growth stagnation in trapped African economies is due to the lack of assimilation which widens it. A country can fall into a middle-income trap after a reversal in the mismatch. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:347&r=eff |
| By: | Alfaro, Laura; Cunat, Alejandro; Liu, Yanping; Fadinger, Harald |
| Abstract: | We evaluate manufacturing firms' responses to changes in the real exchange rate (RER) using detailed firm-level data for a large set of countries for the period 2001-2010. We uncover the following stylized facts: In export-oriented emerging Asia, real depreciations are associated with faster growth of firm-level TFP, higher sales and cash-flow, and higher probabilities to engage in R&D and to export. We find negative effects for firms in other emerging economies, which are relatively more import dependent, and no significant effects for firms in industrialized economies. Motivated by these facts, we build a dynamic model in which real depreciations raise the cost of importing intermediates, affect demand, borrowing-constraints and the profitability of engaging in innovation (R&D). We decompose the effects of RER changes on productivity growth across regions into these channels. We estimate the model and quantitatively evaluate the different mechanisms by providing counterfactual simulations of temporary RER movements and conduct several robustness analyses. Effects on physical TFP growth, while different across regions, are non-linear and asymmetric. |
| Keywords: | real exchange rate , innovation , productivity , exporting , importing , financial constraints , firm-level data |
| JEL: | F O |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:mnh:wpaper:45052&r=eff |
| By: | Cesar Blanco (Central Bank of Paraguay); Xavier Raurich (Universitat de Barcelona) |
| Abstract: | The differences in labor productivity between developed and developing countries are substantially larger in agriculture than in non-agriculture. We argue that structural change within agricultural sectors explains part of these differences. We consider two agricultural sectors that are differentiated only by the capital intensity of the production function. As capital accumulates, the price of the non-capital intensive agricultural sector relative to the price of the capital intensive agricultural sector increases. This price change drives a process of structural change within agriculture that depends on the value of the elasticity of substitution among agricultural goods. When this elasticity is large, we show that this structural change driven by capital accumulation implies (i) a reduction in the number of farmers; (ii) an increase in the average farm size; (iii) an increase in the capital intensity of the agricultural sector relative to the non-agricultural sector; and (iv) an increase in the labor productivity of the agricultural sector relative to the non-agricultural sector. We highlight that if the elasticity is low then the sectoral composition within the agricultural sector remains constant, which implies that capital intensity does not increase, the increase in the average farm size is small and, hence, the increase in the labor productivity of the agricultural sector is also small. We conclude that structural change within agriculture contributes to explain the fast increase in agricultural productivity. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:772&r=eff |
| By: | Mulanga Chikobola, Musaka |
| Keywords: | Agricultural and Food Policy, Crop Production/Industries, Productivity Analysis |
| Date: | 2017–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:ags:cmpart:256258&r=eff |
| By: | Glass, Anthony J. (Loughborough U); Kenjegalieva, Karligash (Loughborough U); Sickles, Robin C. (Rice U and Loughborough U); Weyman-Jones, Thomas (Loughborough U) |
| Abstract: | We extend the emerging literature on spatial frontier methods in a number of respects. One contribution includes accounting for unobserved heterogeneity. This involves developing a random effects spatial autoregressive stochastic frontier model which we generalize to a common correlated effects specification to account for correlation between the regressors and the unit specific effects. Another contribution is the introduction of the concept of a spatial efficiency multiplier to show that the efficiency frontiers from the structural and reduced forms of a spatial frontier model differ. To demonstrate various features of the estimators we develop we carry out a Monte Carlo simulation analysis and provide an empirical application. The application is to a state level cost frontier for U.S. agriculture which is a popular case in the efficiency literature and is thus well-suited to highlighting the features of the estimators we propose. |
| JEL: | C23 C51 D24 Q10 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:riceco:18-003&r=eff |
| By: | Pian Shu; Claudia Steinwender |
| Abstract: | This chapter reviews the empirical economics literature on the impact of trade liberalization on firms' innovation-related outcomes. We define and examine four types of shocks to trade flows: import competition, export opportunities, access to imported intermediates, and foreign input competition. Our review reveals interesting heterogeneities at the country and firm levels. In emerging countries, trade liberalization appears to spur productivity and innovation. In developed countries, export opportunities and access to imported intermediates tend to encourage innovation, but the evidence on import competition is mixed, especially for firms in the United States. At the firm level, the positive effects of trade on innovation are more pronounced at the initially more productive firms while the negative effects are more pronounced at the initially less productive firms. |
| JEL: | F13 F14 O3 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24715&r=eff |
| By: | Trofimov, Ivan D. |
| Abstract: | Recent global financial crisis and ongoing turbulence in the global economy revived interest in the classical hypothesis of declining profit rates and vanishing profit opportunities as one of the reasons of economic instabilities. This paper, while not joining theoretical debate on the driving factors of profit rates’ decline, reconsiders empirically the hypothesis of the secular decline in economy-wide profit rates. A panel of unit root tests is used and deterministic and stochastic trend models (with or without structural breaks) are estimated. It is shown that instead of continuous downward trend, profit rates exhibit diverse dynamics – random walk, deterioration with breaks, reversals, or the absence of trend. Likewise, it is shown in an exploratory analysis that a variety of factors were determining profit rates, with capital productivity and competitive dynamics in the economy likely being the most salient. |
| Keywords: | Profit rates, time series, unit root, trend estimation, classical political economy |
| JEL: | B51 C22 P17 |
| Date: | 2018–06–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88248&r=eff |
| By: | Hawk, Ashton; Pacheco-de-Almeida, Gonçalo |
| Abstract: | To investigate time compression dis-economies (TCD), this study estimated time-cost elasticities using 459 oil and gas global investment projects (1997-2010). Results show that the average cost of accelerating investments is negative: a firm could cut $6.3 million in costs of a single project by accumulating asset stocks one month faster. About 88 percent of the projects exhibit negative time-cost elasticities with over 39 percent of unrealized economies of time compression. Only 12 percent of the projects are subject to TCD. These time inefficiencies or frictions do not negate the existence of TCD, but suggest they are less prevalent than assumed in the literature. Management experience, R&D investment, firm size, economic development and political stability are shown to be associated with greater time compression efficiency. |
| Keywords: | Sustainable Competitive Advantage; Temporal Frictions; Time Compression Diseconomies; Time Inefficiencies; Time-Cost Tradeoff |
| JEL: | D22 D24 L71 M11 M20 |
| Date: | 2018–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1283&r=eff |
| By: | Pedro Bento; Diego Restuccia |
| Abstract: | We construct a new dataset for the average employment size of establishments across sectors and countries from hundreds of sources. Establishments are larger in manufacturing than in services, and in each sector they are larger in richer countries. The cross-country income elasticity of establishment size is remarkably similar across sectors, about 0.3. We discuss these facts in light of several prominent theories of development such as entry costs and misallocation. We then quantify the sectoral and aggregate impact of entry costs and misallocation in an otherwise standard two-sector model of structural transformation with endogenous firm entry and firm-level productivity. We find that observed measures of misallocation account for the entire range of establishment-size differences across sectors and countries and almost 50 percent of the difference in non-agricultural GDP per capita between rich and poor countries. |
| Keywords: | establishment size, manufacturing, services, distortions, misallocation, productivity. |
| JEL: | O1 O4 O5 E02 E1 |
| Date: | 2018–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-612&r=eff |
| By: | Yeager, Elizabeth A.; O'Brien, Cody |
| Keywords: | Agricultural Finance, Farm Management, Risk and Uncertainty |
| Date: | 2017–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nc1117:263910&r=eff |
| By: | Micheels, Eric T.; Paulson, Nicholas D.; Skolrud, Tristan |
| Keywords: | Farm Management, Financial Economics, Production Economics |
| Date: | 2017–10–02 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nc1117:263896&r=eff |
| By: | Md Mahbubur Rahman (McMaster University); Oksana Leukhina (Federal Reserve Bank of St. Louis); Raghav Paul (University of Washington) |
| Abstract: | It is well known that the gap in agricultural labor productivity accounts for most of the output gap between rich and poor countries. Furthermore, development economists have pointed out that the low agricultural productivity in poor countries stems from the persistence of small non-mechanized farms. We propose and quantify a novel explanation for this phenomenon. We begin with a premise that residing in a rural area provides access to a network that effectively insures its residents against income fluctuations. If living in the rural area provides access to "insurance", households are less willing to migrate to the city - where labor earnings risk is uninsured. As a result, labor remains cheap in agriculture, and the incentives for switching to capital-intensive methods of farming are weak. In order to understand the quantitative importance of this mechanism, we calibrate the model to Indian data and study an abstract policy intervention - provision of complete insurance against earnings risk in the city. Our framework successfully accounts for the urban-rural consumption gap. The policy intervention decreases the share of workers in agriculture from 0.59 to 0.52, increases capital demand per firm by 79 percent, the average farm size increases by 9 percent and the labor productivity gap between the two sectors decreases by 32 percent. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:1305&r=eff |
| By: | Greer, Glen; Kaye-Blake, Bill |
| Keywords: | Research Methods/ Statistical Methods |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nzar17:269522&r=eff |