nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2019‒05‒06
ten papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Competition and Firm Productivity: Evidence from Portugal By Pedro Carvalho
  2. Land Reform and Productivity: A Quantitative Analysis with Micro Data By Tasso Adamopoulos; Diego Restuccia
  3. Estimating Who Benefits from Productivity Growth: Direct and Indirect Effects of City Manufacturing TFP Growth on Wages, Rents, and Inequality By Hornbeck, Richard; Moretti, Enrico
  4. CONSUMER LENDING EFFICIENCY:COMMERCIAL BANKS VERSUS A FINTECH LENDER By Hughes, Joseph P.; Jagtiani, Julapa; Moon, Choon-Geol
  5. From periphery to core: measuring agglomeration effects using high-speed rail By Ahlfeldt, Gabriel M.; Feddersen, Arne
  6. Government Support and Firm Performance in Vietnam By Nguyen, Hoai Thu Thi; Vu, Huong Van; Bartolacci, Francesca; Quang Tran, Tuyen
  7. Political donations, public procurement and government efficiency By Vitezslav Titl; Kristof De Witte; Benny Geys
  8. Robots and firms By Michael Koch; Ilya Manuylov; Marcel Smolka
  9. Cloud computing and firm growth By Timothy DeStefano; Richard Kneller; Jonathan Timmis
  10. Urbanization, productivity differences and spatial frictions By Calin Arcalean; Gerhard Glomm; Ioana Cosmina Schiopu

  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
    URL: http://d.repec.org/n?u=RePEc:mde:wpaper:0108&r=all
  2. By: Tasso Adamopoulos; Diego Restuccia
    Abstract: We assess the effects of a major land policy change on farm size and agricultural productivity using a quantitative model and micro-level data. We study the 1988 land reform in the Philippines that imposed a ceiling on land holdings, redistributed above-ceiling lands to landless and smallholder households, and severely restricted the transferability of the redistributed farm lands. We study this reform in the context of an industry model of agriculture with a non-degenerate distribution of farm sizes featuring an occupation decision and a technology choice of farm operators. In this model, the land reform can reduce agricultural productivity not only by misallocating resources across farmers but also by distorting farmers' occupation and technology decisions. The model, calibrated to pre-reform farm-level data in the Philippines, implies that on impact the land reform reduces average farm size by 34% and agricultural productivity by 17%. The government assignment of land and the ban on its transfer are key for the magnitude of the results since a market allocation of the above-ceiling land produces about 1/3 of the size and productivity effects. These results emphasize the potential role of land market efficiency for misallocation and productivity in the agricultural sector.
    JEL: O11 O13 O14 O4 O53 Q1 R2 R52
    Date: 2019–04
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:25780&r=all
  3. By: Hornbeck, Richard (Harris School, University of Chicago); Moretti, Enrico (University of California, Berkeley)
    Abstract: We estimate direct and indirect effects of total factor productivity growth in manufacturing on US workers' earnings, housing costs, and purchasing power. Drawing on four alternative instrumental variables, we consistently find that when a city experiences productivity gains in manufacturing, there are substantial local increases in employment and average earnings. For renters, increased earnings are largely offset by increased cost of living; for homeowners, the benefits are substantial. Strikingly, local productivity growth in manufacturing reduces local inequality, as it raises earnings of local less-skilled workers more than the earnings of local more-skilled workers. This is due, in part, to lower geographic mobility of less-skilled workers. However, local productivity growth also has important indirect effects through worker mobility. We estimate that 38% of the overall increase in workers' purchasing power occurs outside cities directly affected by local TFP growth. The indirect effects on worker earnings are substantially greater for more-skilled workers, due to greater geographic mobility of more-skilled workers, which increases inequality in other cities. Neglecting these indirect effects would both understate the overall magnitude of benefits from productivity growth and misstate their distributional consequences. Overall, US workers benefit substantially from manufacturing productivity growth. Summing direct and indirect effects, we find that manufacturing TFP growth from 1980 to 1990 increased purchasing power for the average US worker by 0.5-0.6% per year from 1980 to 2000. These gains do not depend on a worker's education; rather, the benefits from productivity growth mainly depend on where workers live.
    Keywords: local labor markets
    JEL: J20
    Date: 2019–04
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp12277&r=all
  4. By: Hughes, Joseph P. (Rutgers University); Jagtiani, Julapa (Federal Reserve Bank of Philadelphia); Moon, Choon-Geol (HANYANG UNIVERSITY)
    Abstract: We compare the performance of unsecured personal installment loans made by traditional bank lenders with that of LendingClub, using a stochastic frontier estimation technique to decompose the observed nonperforming loans into three components. The first is the best-practice minimum ratio that a lender could achieve if it were fully efficient at credit-risk evaluation and loan management. The second is a ratio that reflects the difference between the observed ratio (adjusted for noise) and the minimum ratio that gauges the lender’s relative proficiency at credit analysis and loan monitoring. The third is statistical noise. In 2013 and 2016, the largest bank lenders experienced the highest ratio of nonperformance, the highest inherent credit risk, and the highest lending efficiency, indicating that their high ratio of nonperformance is driven by inherent credit risk, rather than by lending inefficiency. LendingClub’s performance was similar to small bank lenders as of 2013. As of 2016, LendingClub’s performance resembled the largest bank lenders — the highest ratio of nonperforming loans, inherent credit risk, and lending efficiency — although its loan volume was smaller. Our findings are consistent with a previous study that suggests LendingClub became more effective in risk identification and pricing starting in 2015. Caveat: We note that this conclusion may not be applicable to fintech lenders in general, and the results may not hold under different economic conditions such as a downturn
    Keywords: marketplace lending; P2P lending; credit risk management; lending efficiency
    JEL: C58 G21 L25
    Date: 2019–04–02
    URL: http://d.repec.org/n?u=RePEc:fip:fedpwp:19-22&r=all
  5. By: Ahlfeldt, Gabriel M.; Feddersen, Arne
    Abstract: We analyze the economic impact of the German high-speed rail (HSR) connecting Cologne and Frankfurt, which provides plausibly exogenous variation in access to surrounding economic mass. We find a causal effect of about 8.5% on average of the HSR on the GDP of three counties with intermediate stops. We make further use of the variation in bilateral transport costs between all counties in our study area induced by the HSR to identify the strength and spatial scope of agglomeration forces. Our most careful estimate points to an elasticity of output with respect to market potential of 12.5%. The strength of the spillover declines by 50% every 30 minutes of travel time, diminishing to 1% after about 200 minutes. Our results further imply an elasticity of per-worker output with respect to economic density of 3.8%, although the effects seem driven by worker and firm selection.
    Keywords: accessibility; agglomeration; density; high-speed rail; market potential; transport policy; productivity
    JEL: R12 R38 R48
    Date: 2018–03–01
    URL: http://d.repec.org/n?u=RePEc:ehl:lserod:69763&r=all
  6. By: Nguyen, Hoai Thu Thi; Vu, Huong Van; Bartolacci, Francesca; Quang Tran, Tuyen
    Abstract: Using a sample of private manufacturing SMEs (small and medium-sized enterprises) in the period 2007-15, we analyze the effect of government support on firms’ financial performance in Vietnam. Contrary to many previous studies, we find that government support affects firms’ financial performance after controlling for heterogeneity, unobservable factors and dynamic endogeneity. The finding supports the viewpoint of institutional theory. Also, the study reveals that assistance measures, such as tax exemptions, soft loans and investment incentives to promote financial performance, are vital for the development of Vietnamese private SMEs.
    Keywords: Government support; innovation; firm financial performance; SMEs; Vietnam
    JEL: H7 H71 M2 M21 O3
    Date: 2018–08–04
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:93599&r=all
  7. By: Vitezslav Titl; Kristof De Witte; Benny Geys
    Abstract: Firms’ political donations can induce distortions in the allocation of public procurement contracts. In this article, we employ an advanced non-parametric efficiency model to study the public sector (cost) efficiency implications of such distortions. Using a unique dataset covering the Czech regions over the 2007-2014 period, we find that the efficiency of public good provision is lower when a larger share of public procurement contracts is awarded to firms donating to the party in power (‘party donors’). We link this efficiency difference to two underlying mechanisms: i.e. shifts in procurement contract allocations from firms with previous procurement experience to party donors, and the use of less restrictive allocation procedures that benefit party donors.
    Keywords: political connections, non-parametric efficiency analysis, benefit-of-the-doubt
    JEL: H57 D72 C23
    Date: 2019
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_7591&r=all
  8. By: Michael Koch; Ilya Manuylov; Marcel Smolka
    Abstract: We study the implications of robot adoption at the level of individual firms using a rich panel data-set of Spanish manufacturing firms over a 27-year period (1990-2016). We focus on three central questions: (1) Which firms adopt robots? (2) What are the labor market effects of robot adoption at the firm level? (3) How does firm heterogeneity in robot adoption affect the industry equilibrium? To address these questions, we look at our data through the lens of recent attempts in the literature to formalize the implications of robot technology. As for the first question, we establish robust evidence that ex-ante larger and more productive firms are more likely to adopt robots, while ex-ante more skill-intensive firms are less likely to do so. As for the second question, we find that robot adoption generates substantial output gains in the vicinity of 20-25% within four years, reduces the labor cost share by 5-7%-points, and leads to net job creation at a rate of 10%. These results are robust to controlling for non-random selection into robot adoption through a difference-in-differences approach combined with a propensity score reweighting estimator. Finally, we reveal substantial job losses in firms that do not adopt robots, and a productivity-enhancing reallocation of labor across firms, away from non-adopters, and toward adopters.
    Keywords: automation, robots, firms, productivity, technology
    JEL: D22 F14 J24 O14
    Date: 2019
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_7608&r=all
  9. By: Timothy DeStefano; Richard Kneller; Jonathan Timmis
    Abstract: The arrival of the cloud has enabled a shift in the nature of ICT use, from investment in sunk capital to a pay-on-demand service that allows firms to rapidly scale up. This paper uses new firm-level data to examine the impact of cloud on firm growth in the UK, using zipcode-level instruments of the timing of high-speed fibre availability and expected speeds. We find cloud leads to the growth of young firms in terms of employment and productivity, but they become more concentrated in fewer plants. For older firms we find no scale or productivity growth, but instead disperse activity by closing plants and moving employment further from the headquarters. In addition, the plants that close tend to be those without access to fibre broadband.
    Keywords: firm growth; the cloud; ICT use; employment; productivity
    Date: 2019
    URL: http://d.repec.org/n?u=RePEc:not:notgep:2019-09&r=all
  10. By: Calin Arcalean; Gerhard Glomm; Ioana Cosmina Schiopu
    Abstract: We study decentralized and optimal urbanization in a simple multi-sector model of a rural-urban economy focusing on productivity differences and internal trade frictions. We show that even in the absence of the typical externalities studied in the literature, such as agglomeration, congestion or public goods, the decentralized city size can be either too large or too small relative to that chosen by a planner. In particular, optimal urbanization exceeds decentralized levels when productivity differences in location specific non-traded goods is small, a case typically arising in developed economies. In contrast, developing countries are likely to display overurbanization. A numerical exercise calibrated to Brazilian data suggests that the wedges can be quantitatively important. Urban biased policies - placing a higher weight on the welfare of city dwellers - are closer to optimal policies than decentralized allocations whenever productivity differences in non-traded sectors are either very small or very large. For intermediate productivity differences, the urban bias leads to larger cities even relative to decentralized policies.
    Keywords: city size, productivity differences, multi-sector models, trade costs, welfare
    JEL: R12 R13 O18 J61
    Date: 2019
    URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_7609&r=all

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