nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2019‒01‒21
eleven papers chosen by

  1. The impact of private R&D on the performance of food-processing firms: Evidence from Europe, Japan and North America By Pedro Andres Garzon Delvaux; Heinrich Hockmann; Peter Voigt; Pavel Ciaian; Sergio Gomez y Paloma
  2. Does environmental heterogeneity affect the productive efficiency of grid utilities in China? By Liu, X-Y.; Liu, L-Q.; Xie, B-C.; Pollitt, M.
  3. Productivity and Resource Misallocation: Evidence from Firms in Middle East and North Africa (MENA) Region Countries By Eleftherios Giovanis; Oznur Ozdamar
  4. Unconventional monetary policy and productivity: Evidence on the risk-seeking channel from US corporate bond markets By Silvia Albrizio; Marina Conesa; Dennis Dlugosch; Christina Timiliotis
  5. Land Use Restrictions, Misallocation in Agriculture, and Aggregate Productivity in Vietnam By Le, Kien
  6. PESETA III: Climate change impacts on labour productivity By Simon Gosling; Jamal Zaherpour; Dolores Ibarreta
  7. Regional Alignment and Productivity Growth By Benjamin Montmartin; Ludovic Dibiaggio; Lionel Nesta
  8. What's Behind the Figures? Quantifying the Cross-Country Exporter Productivity Gap By Kozo Kiyota; Toshiyuki Matsuura; Lionel Nesta
  9. Productivity, wages and profits: Does firms’ position in the value chain matter? By Benoît Mahy; François Rycx; Guillaume Vermeylen; Mélanie Volral
  10. Productivity, Structural Change and Skills Dynamics in Tunisia and Turkey By Gunes Arkadas Asik; Mohamed Ali Marouani; Michelle Marshalian; Ulas Karakoc
  11. International Competition and Rent Sharing in French Manufacturing By Lionel Nesta; Stefano Schiavo

  1. By: Pedro Andres Garzon Delvaux (European Commission – JRC); Heinrich Hockmann (Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO) (Halle, Germany)); Peter Voigt (European Commission – DG ECFIN); Pavel Ciaian (European Commission – JRC); Sergio Gomez y Paloma (European Commission – JRC)
    Abstract: This report investigates the impact of corporate research and development (R&D) on firm performance in the food-processing industry. The agro-food industry is usually considered to be a low-tech sector (the share of total output that is attributable to R&D is around 0.27% in the EU). However, the agro-food industry is very heterogeneous. On the one hand, there are many highly innovative food-processing firms with intensive R&D activity and, on the other hand, many food-processing firms derive and adopt innovations from other sectors such as machinery, packaging and other manufacturing suppliers. We perform data envelopment analysis (DEA) with two-step bootstrapping, which allows us to correct the bias in (in)efficiency and generate unbiased estimates for (in)efficiencies. We use a corporate dataset of 307 companies from agriculture and food-processing industries from the EU, the USA, Canada and Japan for the period 1991–2009. The estimates suggest that R&D has a positive effect on firms’ performance, with marginal gains decreasing at the R&D level, and performance differences detected across regions and food sectors. General public expenditure in R&D is also associated with a positive impact on firm performance. As a result, policy support for this type of non-high-tech innovative sector is expected to generate growth. However, results that suggest heterogeneity in R&D effects across EU Member States may point to differences in the implications of innovation policies across EU regions.
    Keywords: Research and development, corporate R&D, productivity, technical efficiency, stochastic frontier analysis, DEA, double bootstrapping, agro-food, food-processing industry
    JEL: L66 O16 O30 Q16
    Date: 2018–09
  2. By: Liu, X-Y.; Liu, L-Q.; Xie, B-C.; Pollitt, M.
    Abstract: China’s electricity industry has experienced a reform whereby the generation sector is being opened up to competition but the transmission and distribution sectors are still regulated. Efficiency and benchmarking analyses are widely used for improving the performance of regulated segments, and the impact on efficiency of observable environmental factors, together with unobservable characteristics, has gained increasing attention in recent years. This study uses alternative stochastic frontier models combined with input distance functions to study the productive efficiency of 29 grid firms of China over the period 1993–2014 and investigates the effect of observed environmental factors and unobserved heterogeneity. The results indicate that efficiency is sensitive to model specification and illustrates the presence of observed and unobserved heterogeneity. The number of customers, power delivered and network length are demonstrated to have positive impacts on the utilities’ efficiency while adverse environmental conditions harm the operation of grid utilities, but policy regulations may offset the negative impact. Finally, we suggest that there is room for efficiency improvement in the distribution grid, which could be encouraged by incentive regulation, even taking due account of environmental heterogeneity.
    Keywords: Grid industry; Efficiency estimation; Stochastic frontier analysis; Environmental heterogeneity; China
    JEL: L94
    Date: 2018–06–25
  3. By: Eleftherios Giovanis (Manchester Metropolitan University, Business School); Oznur Ozdamar
    Abstract: Resource reallocation from low to high productivity firms can generate large aggregate productivity gains with further potential benefits to economic growth. This study examines the productivity and resource misallocation in a sample of countries in the Middle East and North Africa (MENA) region and Turkey. The analysis relies on data derived from the World Bank Enterprise Surveys over the period 2008-2016 of firms in Egypt, Turkey and Yemen. Furthermore, in the analysis we include various firm characteristics, and we explore major state-business relations (SBRs) and their association to resource misallocation. The results are mixed where in Egypt and Turkey female ownership and international quality are positively associated with productivity and allocation efficiency, while in all cases obstacles in SBRs present a negative and significant correlation with the firms’ performance and productivity, reducing the allocation efficiency and increasing the dispersions on output and capital
    Date: 2018–12–10
  4. By: Silvia Albrizio; Marina Conesa; Dennis Dlugosch; Christina Timiliotis
    Abstract: We examine the relationship between lax monetary policy, access to high-yield bond markets and productivity in the US between 2008 and 2016. Using monetary policy surprises, obtained from changes in interest rates futures in narrow windows around FOMC announcements, we isolate the increased access to high-yield bond markets relative to investment-grade bond markets that is due to unconventional monetary policy (UMP). We find that through the risk-taking channel, UMP has increased investors’ appetite for high-yield US corporate bonds, thereby increasing access to high-yield bond markets for firms with a higher risk profile. Since the relationship between credit ratings and firm-level productivity is U-shaped, the aggregate effect on productivity is a priori unclear. Turning to the real economy, we thus analyse whether this additional access to finance had an effect on aggregate productivity by altering the reallocation of resources across firms. Our results show that unconventional monetary policy induced less investment in tangible capital by high-productive firms. However, before drawing conclusions on the net effects of UMP on aggregate productivity, we discuss a number of issues that this paper could not deal with due to data limitations, including prominently whether this apparent misallocation may have been offset by a shift in the composition of investments towards more intangible investment.
    Keywords: bond markets, capital reallocation, productivity, Unconventional monetary policy, United States
    JEL: F23 D22 O33 D24 E52 G21 G32 G33 J63 O16 O47
    Date: 2019–01–14
  5. By: Le, Kien
    Abstract: We evaluate the effects of restricted land use rights on aggregate productivity using micro-level data within a quantitative model. In particular, we exploit the Rice Land Designation Policy in Vietnam, which forces farmers to produce rice on almost 45% of plots of land. The policy provides a natural setting for investigating the aggregate effects of land use misallocation. We quantify the impacts of this system by formulating a two-sector model featuring production and occupation choices. We also use digitized versions of Vietnam’s Local Land Use Atlas and Global Agro-Ecological Zones database to construct a micro-spatial dataset that shapes important features of the model and allows us to compare the restricted against a counterfactual efficient allocation. The main findings suggest that eliminating all land use restrictions leads to 10.6% gain in agricultural total factor productivity and 4.36% increase in real GDP per capita. While misallocation in agriculture has been studied extensively, our research highlights a novel source of misallocation that is prevalent in other countries such as China, Myanmar, Uzbekistan, among others.
    Keywords: Agriculture, misallocation, land use restrictions, aggregate productivity, Vietnam
    JEL: O11 O13 O4
    Date: 2018–12–20
  6. By: Simon Gosling; Jamal Zaherpour; Dolores Ibarreta (European Commission - JRC)
    Abstract: This study uses five impact models that describe observed relationships between labour productivity and temperature, with climate model simulations from five climate models under a high emissions scenario (RCP8.5), i.e. 25 climate-impact model combinations, to assess the impact of climate change on outdoor and indoor labour productivity respectively, at the national-scale, across Europe. This is the first assessment to use multiple impact models with multiple climate models and to consider the potential effects of adaptation on lowering the impacts relative to no adaptation taking place. Impacts are estimated for the end of century (2071-2100) and near-term (2021-2050), relative to present-day (1981-2010). Impacts are also estimated under a mitigation scenario, where global-mean warming is 2°C relative to pre-industrial. Impacts are assessed with and without adaptation respectively. Planned adaptation is represented as an adjustment in work activities following recommendations by the US Occupational Safety & Health Administration to consider the adjustment of work shifts during hot periods – all labour takes place at night instead of day-time, under the adaptation assumption. Without climate change mitigation and adaptation, daily average outdoor labour productivity could decline by around 10-15% from present-day levels in several southern European countries by the end of the century (Bulgaria, Greece, Italy, Macedonia, Portugal, Spain and Turkey). Countries in northern Europe could also see declines in daily average outdoor labour productivity but the declines are considerably smaller than for the southern countries, at around 2-4% (Denmark, Estonia, Finland, Norway and Sweden). The magnitude of impact on indoor labour productivity is generally 2-4 percentage points lower than for impacts on outdoor labour productivity, for the three most sensitive impact models, while for the two least sensitive impact models, the differences are smaller. There is uncertainty in the magnitude of projected climate change impacts on labour productivity due to: 1) differences in the projections of climate between different climate models; and 2) the use of different impact models. Both sources of uncertainty are significant. The range in projected impacts due to using multiple climate models is comparable to the range in impacts from using multiple impact models with only one climate model. Adaptation and mitigation have the potential to significantly lessen the impacts of climate change on declines in labour productivity across Europe. For some countries the impacts can be up to around 10 percentage points lower with adaptation than without, for some climate-impact model combinations, at the end of the century under high emissions (e.g. Bulgaria, Croatia, Greece, Italy, Spain and Turkey). However, the declines in daily average outdoor labour productivity could still be around 5% relative to present-day in these countries (and up to 10% for Greece, with one climate-impact model combination). Whilst the potential benefits of adaptation are clear from this assessment, it is important to be aware of the caveats associated with the adaptation modelling approach employed. These include an assumption of the entire work force engaged in moderate to heavy labour shifting to night-time working, acknowledgment that night-time working can be associated with negative health effects, and potentially higher costs of night-time working due to energy requirements for lighting and higher wages for working unsocial hours. Such a change in working practices is optimistic, but not implausible, since currently around 20% of workers in Europe are employed on shift work involving night work. Limiting global warming to below 2°C (and assuming no adaptation) could avoid a substantial proportion of impacts in the European countries that see the largest impacts without mitigation (Bulgaria, Greece, Italy, Macedonia, Portugal, Spain and Turkey). With some climate-impact model combinations the declines in labour productivity can be up to 10 percentage points lower in these countries with mitigation when compared to without mitigation
    Keywords: climate change, labour, productivity, heat stress
    Date: 2018–11
  7. By: Benjamin Montmartin (SKEMA Business School - SKEMA Business School, OFCE - OFCE - Sciences Po); Ludovic Dibiaggio (SKEMA Business School - SKEMA Business School); Lionel Nesta (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique, OFCE - OFCE - Sciences Po)
    Date: 2018–12–07
  8. By: Kozo Kiyota (Keio Economic Observatory - Keio University); Toshiyuki Matsuura (Keio Economic Observatory - Keio University); Lionel Nesta (OFCE - OFCE - Sciences Po, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique)
    Date: 2018–12–07
  9. By: Benoît Mahy (University of Mons (humanOrg) and DULBEA); François Rycx (Université libre de Bruxelles (CEB and DULBEA), humanOrg, IRES, GLO and IZA); Guillaume Vermeylen (University of Mons (humanOrg) and DULBEA); Mélanie Volral (University of Mons (humanOrg) and DULBEA)
    Abstract: This paper is the first to estimate the impact of a direct measure of firm-level upstreamness on productivity, wage costs and profits (i.e. productivity-wage gaps). To do so, we merged detailed Belgian linked panel data, covering all years from 2002 to 2010, to a unique data set developed by Dhyne et al. (2015), which contains accurate information on the position of (almost) each commercial firm in the value chain at each year. We rely on the methodological framework that has been pioneered by Hellerstein et al. (1999) to estimate dynamic panel data models at the firm level. Our estimates show that if upstreamness increases by one step (that is, by approximately, one standard deviation), productivity rises on average by 5%. They also indicate that productivity gains associated to upstreamness are shared almost equally between wages and profits. However, upstreamness is found to be more beneficial for workers’ wages in less competitive environments, where the price-elasticity of demand for firms’ products is typically smaller. Overall, these findings are compatible with the assertion that firms should move up the value chain to be more productive and profitable, but also that being higher in the value chain is likely to facilitate firms’ control over strategic downstream activities. Our results can also be understood through the application of the Melitz (2003) model to the value chain framework.
    Keywords: global value chain, supstreamness, productivity, rent-sharing, Linked employer- employee panel data, Product market competition
    JEL: J24 D30 D40 J50
    Date: 2018–10
  10. By: Gunes Arkadas Asik (Tobb University of Economics and Technology); Mohamed Ali Marouani; Michelle Marshalian; Ulas Karakoc
    Abstract: This article explores the contribution of the structural change and the skill upgrading of the labor force to productivity growth in Tunisia and Turkey in the post-WorldWar II period. Our growth decomposition shows that productivity growth is explained by intra-industry changes for both countries during the import substitution period. Structural change played an important role in Turkey for a longer period of time than in Tunisia. Based on a regression analysis, we find evidence that skill upgrading had a causal impact on productivity growth in Turkey, as productivity has mainly been driven by the increasing share of highly educated workers within sectors rather than the reallocation of skilled labor between sectors. In addition, skill upgrading has been as important as physical capital accumulation. On the other hand, OLS and IV evidence do not support similar mechanisms for Tunisia.
    Date: 2018–12–10
  11. By: Lionel Nesta (OFCE - OFCE - Sciences Po); Stefano Schiavo (Università di Trento)
    Keywords: threshold models,policy mix,Directed technical change,environmental policies
    Date: 2019–01–07

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.