nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2019‒05‒13
fifteen papers chosen by

  1. Innovation activity in South Africa: Measuring the returns to R&D By Steenkamp Andre; Schaffer Mark; Flowerday Wayde; Goddard John
  2. Impacts of extreme events on technical efficiency in Vietnamese agriculture By Yoro Diallo; Sébastien Marchand; Etienne Espagne
  3. Multi-scale assessment of the economic impacts of flooding:: evidence from firm to macro-level analysis in the Chinese manufacturing sector By Hu, Xi; Pant, Raghav; Hall, Jim W.; Surminski, Swenja; Huang, Jiashun
  4. The banks that said no: the Impact of credit supply on productivity and wages By Franklin, Jeremy; Rostom, May; Thwaites, Gregory
  5. Productivity Indexes and National Statistics: Theory, Methods and Challenges By Diewert, Erwin; Fox, Kevin
  6. The gender gap in firm productivity in Rwanda : Evidence from establishment and household enterprise data By Munyegera Ggombe; Precious Akampumuza
  7. Do High-Quality Local Institutions Shape Labour Productivity in Western European Manufacturing Firms? By Ganau, Roberto; Rodríguez-Pose, Andrés
  8. Allocative Efficiency and Finance By Andrea Linarello; Andrea Petrella; Enrico Sette
  9. From Teacher Quality to Teaching Quality: Instructional Productivity and Teaching Practices in the US By Simon Briole
  10. Are exporters more environmentally friendly? A re-appraisal that uses China's micro-data By Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
  11. How important are management practices for the productivity of small and medium enterprises? By Demenet Axel; Hoang Quynh
  12. Assessing Global Potential Output Growth: April 2019 By Fares Bounajm; Jean-Philippe Cayen; Michael Francis; Christopher Hajzler; Kristina Hess; Guillaume Poulin-Bellisle; Peter Selcuk
  13. Stagnant wages, sectoral misallocation and slowing productivity growth By Schmöller, Michaela
  14. What gains and distributional implications result from trade liberalization? By Maria Bas; Caroline Paunov
  15. An alternative probabilistic frontier analysis to the measurement of eco-efficiency By Kounetas, Konstantinos; Polemis, Michael; Tzeremes, Nickolaos

  1. By: Steenkamp Andre; Schaffer Mark; Flowerday Wayde; Goddard John
    Abstract: Improvements in productivity are necessary to effectively increase economic growth in the long term. The literature emphasizes a positive correlation between firm-level innovation and productivity gains. It is unsurprising, then, that policy makers and researchers widely acknowledge that innovation is one of the major drivers of productivity growth, and is therefore of critical importance to the competitiveness and growth of firms. Research and development (R&D) expenditure is used extensively as a proxy for innovation in the literature.Here, we use a production function approach to estimate the return to R&D in South African manufacturing firms for the period 2009–2014 using South African firm-level data. We find that the return to R&D in South African manufacturing firms is high compared to OECD countries. This analysis has been undertaken several times for OECD countries, but far less frequently for non-OECD countries. These findings therefore are not just novel for South Africa, but for the development economics literature more generally, and raise important insights for innovation policy in South Africa.
    Keywords: Productivity
    Date: 2018
  2. By: Yoro Diallo (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Sébastien Marchand (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Etienne Espagne (CIRED - Centre International de Recherche sur l'Environnement et le Développement - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - CIRAD - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech, AFD - Agence française de développement, CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The aim of this study is to examine farm household-level impacts of weather extreme events on Vietnamese rice technical efficiency. Vietnam is considered among the most vulnerable countries to climate change, and the Vietnamese economy is highly dependent on rice production that is strongly affected by climate change. A stochastic frontier analysis is applied with census panel data and weather data from 2010 to 2014 to estimate these impacts while controlling for both adaptation strategy and household characteristics. Also, this study combines these estimated marginal effects with future climate scenarios (Representative Concentration Pathways 4.5 and 8.5) to project the potential impact of hot temperatures in 2050 on rice technical efficiency. We find that weather shocks measured by the occurrence of floods, typhoons and droughts negatively affect technical efficiency. Also, additional days with a temperature above 31°C dampen technical efficiency and the negative effect is increasing with temperature. For instance, a one day increase in the bin [33°C-34°C] ([35°C and more]) lessen technical efficiency between 6.84 (2.82) and 8.05 (3.42) percentage points during the dry (wet) season.
    Keywords: Weather shocks,Technical efficiency,Rice farming,Vietnam
    Date: 2019–03–22
  3. By: Hu, Xi; Pant, Raghav; Hall, Jim W.; Surminski, Swenja; Huang, Jiashun
    Abstract: We present an empirical study to systemically estimate flooding impacts, linking across scales from individual firms through to the macro levels in China. To this end, we combine a detailed firm-level econometric analysis of 399,356 firms with a macroeconomic input-output model to estimate flood impacts on China's manufacturing sector over the period 2003-2010. We find that large flooding events on average reduce firm outputs (measured by labor productivity) by about 28.3% per year. Using an input-output analysis, we estimate the potential macroeconomic impact to be a 12.3% annual loss in total output, which amounts to 15,416 RMB billion. Impacts can propagate from manufacturing firms, which are the focus of our empirical analysis, through to other economic sectors that may not actually be located in floodplains but can still be affected by economic disruptions. Lagged flood effects over the following two years are estimated to be a further 5.4% at the firm level and their associated potential effects are at a 2.3% loss in total output or 2,486 RMB billion at the macro-level. These results indicate that the scale of economic impacts from flooding is much larger than microanalyses of direct damage indicate, thus justifying greater action, at a policy level and by individual firms, to manage flood risk.
    Keywords: China; flooding; indirect economic impact; manufacturing firms; natural disasters; ES/K006576/1
    JEL: N0
    Date: 2019–04–01
  4. By: Franklin, Jeremy; Rostom, May; Thwaites, Gregory
    Abstract: This paper estimates the effects of changes in bank credit supply on the real economy. We use UK firm-level data around the global financial crisis and information on pre-existing bank lending relationships to isolate exogenous credit supply shocks. We find some evidence that contractions in credit supply substantially reduce labour productivity, wages, and capital per worker within firms, and increase the chance firms will fail. Our results have implications for the welfare costs of financial crises, and for the costs of policy measures affecting credit supply at other times.
    Keywords: banks; credit supply; firm behaviour; productivity
    JEL: D24 G21
    Date: 2019–04–03
  5. By: Diewert, Erwin; Fox, Kevin
    Abstract: This paper reviews the theory underlying the index number approaches used by National Statistical Offices in the construction of productivity indexes. It reviews approaches for measuring output, labour and capital, and highlights persistent and emerging measurement problems.
    Keywords: Productivity measurement, index numbers, GDP mismeasurement, productivity slowdown, digital economy
    JEL: C43 C8 D24 E23 O3 O4
    Date: 2019–04–25
  6. By: Munyegera Ggombe; Precious Akampumuza
    Abstract: Rwanda is one of the countries with the best strategies for women empowerment and gender equality in Africa and globally. Nonetheless, some inequalities exist especially in education attainment.This study investigates the gender gaps in business performance using nationally representative household survey and establishment census data.Ordinary Least Squares results indicate that female-owned business enterprises employ fewer workers and are less productive than male-owned counterparts. Specifically, turnover and net revenue per worker are 20-22 per cent and 22-25 per cent lower among female-owned enterprises.The results are corroborated by propensity score matching estimates, implying that the estimated gender productivity gap is robust to observed heterogeneity between male- and female-owned enterprises.We investigate the potential mechanisms and find that female owners invest less capital, are less likely to seek and/or obtain credit and devote fewer hours per week to their businesses. Credit products targeting collateral-constrained and female-owned household enterprises could partially close the gender productivity gap.
    Keywords: Economic policy (Business enterprises),Gender,Productivity
    Date: 2018
  7. By: Ganau, Roberto; Rodríguez-Pose, Andrés
    Abstract: We investigate the extent to which regional institutional quality shapes firm labour productivity in western Europe, using a sample of manufacturing firms from Austria, Belgium, France, Germany, Italy, Portugal and Spain, observed over the period 2009-2014. The results indicate that regional institutional quality positively affects firms' labour productivity and that government effectiveness is the most important institutional determinant of productivity levels. However, how institutions shape labour productivity depends on the type of firm considered. Smaller, less capital endowed and high-tech sectors are three of the types of firms whose productivity is most favourably affected by good and effective institutions at the regional level.
    Keywords: Cross-Country Analysis; labour productivity; Manufacturing firms; Regional Institutions; Western Europe
    JEL: C23 D24 H41 R12
    Date: 2019–04
  8. By: Andrea Linarello (Bank of Italy); Andrea Petrella (Bank of Italy); Enrico Sette (Bank of Italy)
    Abstract: This paper studies the effect of bank lending shocks on aggregate labor productivity. Exploiting a unique administrative dataset covering the universe of Italian manufacturing firms between 2000 and 2015, we apply the Melitz and Polanec (2015) decomposition at the 4-digit industry level to distinguish the contribution to aggregate productivity growth of: changes in surviving firms’ average productivity, market share reallocation among surviving firms, and firm entry and exit. We estimate the impact of credit shocks on each of these components, using data from the Italian Credit Register to construct industry-specific exogenous credit supply shocks. Only for the 2008-2015 period, we find that a tightening in the supply of credit lowers average productivity but increases the covariance between market share and productivity among incumbents, thus boosting the reallocation of labor. We find no significant effects of credit supply shocks on the contribution made by firm entry and exit. We find that the effects of negative credit shocks on average productivity and reallocation are concentrated in industries with a lower share of tangible capital and collateralized debt.
    Keywords: credit supply shocks, labor productivity, allocative efficiency
    JEL: L25 O47 G01 E44
    Date: 2019–04
  9. By: Simon Briole (PSE - Paris School of Economics, 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)
    Keywords: test scores,education,TIMSS,teacher quality,teaching practices,instruction time
    Date: 2019–01
  10. By: Pei, Jiansuo; Sturm, Bodo; Yu, Anqi
    Abstract: Is a firm's ability to export an important determinant of environmental performance? To answer this question, we construct a unique micro dataset that merged two rich firm-level datasets for China for 2007. When combining this new dataset with well-received empirical specifications, we found that both export status and export intensity are associated with lower sulfur dioxide (SO2) emissions intensity. In addition to the traditional OLS estimation, we verified this association by using the propensity score matching method. Our findings show that the baseline result still holds. In short, exporters are more environmentally friendly than non-exporters,which is in line with previous evidence reported for developed economies. We further discuss mechanisms that explain the observed pattern and show that exporters realize higher abatement efforts compared to non-exporters. This study complements the literature in terms of providing China's micro evidence on SO2 abatement efforts. It also serves as a first step toward a better understanding of the impact of trade on the environment, especially in developing countries.
    Keywords: Exporters and the environment,firm heterogeneity,SO2 emissions,abatement
    JEL: F18 Q53 Q56
    Date: 2019
  11. By: Demenet Axel; Hoang Quynh
    Abstract: Is the lack of ‘managerial capital’, alongside human and financial capital, a constraint on the growth of firms in developing countries? The evidence on this is still mixed, especially among small and medium enterprises.This paper uses a panel of Vietnamese small and medium enterprises to investigate this question. We build a multidimensional measure of managerial capital, combining both practices and attitudes, and link it with consistent estimates of firm-level productivity and mark-up. Even though bias may still affect the estimation of the overall influence of managerial capital on productivity, we show that there is a positive and significant association.Changes in management practices allow firms to be more efficient. Furthermore, we compare this association by firm size, and show that managerial capital is arguably as important for micro and small firms as it is for medium firms. Finally, it appears that the indicators related to ‘entrepreneurial attitudes’ play a more important role than elementary business skills.
    Keywords: Small and medium enterprises,Informal sector (Economics),Entrepreneurship
    Date: 2018
  12. By: Fares Bounajm; Jean-Philippe Cayen; Michael Francis; Christopher Hajzler; Kristina Hess; Guillaume Poulin-Bellisle; Peter Selcuk
    Abstract: This note presents the updated estimates of potential output growth for the global economy through 2021. Global potential output is expected to grow by 3.3 per cent per year over the projection horizon. Two common themes are weighing on potential output growth across regions: trade disputes, which are reducing total factor productivity growth in the United States and China; and aging, which is having a negative impact on labour force participation in the United States, China, the euro area and Japan. While potential output growth is expected to remain fairly stable in the United States, there are offsetting dynamics across other regions. In emerging-market economies, potential growth is projected to strengthen, mainly due to a recovery of investment as well as structural reforms contributing to total factor productivity growth. Potential output is expected to slow in Japan, China and the euro area, as the effects on growth of population aging and declining labour inputs intensify in these regions over the next three years. A moderation in investment growth will also contribute to slower potential growth in China.
    Keywords: International topics; Potential output; Productivity
    JEL: E10 E20 O4
    Date: 2019–05
  13. By: Schmöller, Michaela
    Abstract: I propose a two-sector endogenous growth model with heterogeneous sectoral productivity and sector-specific, nonlinear hiring costs to analyse the link between sectoral resource allocation, low productivity growth and stagnant real wages. My results suggest that an upward shift in the labor supply, triggered for instance by a labor market reform, as among others implemented in Germany in 2003-2005, is beneficial in the long-run as it raises growth of technology, labor productivity and real wages. I show, however, that in the immediate phase following the labor supply shock, labor productivity and real wages stagnate as employment gains are initially disproportionally allocated to low-productivity sectors, limiting the capacity for technology growth and depressing real wages and productivity. I demonstrate that due to the learning-by-doing growth externality in the high-productivity sector the competitive equilibrium is ineffcient as firms fail to internalize the effect of their labor allocation on aggregate growth. Subsidies to high-productivity sector production can alleviate welfare losses along the transition path.
    JEL: E20 E24 E60 O40 O41
    Date: 2019–05–06
  14. By: Maria Bas (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Caroline Paunov (OECD - Directorate for Science - Technology and Innovation)
    Abstract: This paper investigates the distributional impacts of trade liberalization across firms, consumers and workers. Using firm-product-level census data for Ecuador, we exploit exogenous tariff changes at entry to the World Trade Organization. We show that with input tariff cuts firms access higher quality and new input varieties. Consequently, firms increase their product scope and quality, while their production's skill-intensity increases and costs decrease. "Real" productivity (TFPG) increases only in the medium run, following adjustments to produce more and higher quality products. Positive immediate revenue productivity (TFPR) gains result because firms' markups increase. Consumers still gain as quality-adjusted prices decrease and varieties increase. Workers benefit differentially: skilled workers' wages rise compared to less skilled worker's wages. Input-tariff liberalization also has distributional impacts across firms. Only more productive firms with high markups increase product scope and quality and gain market shares. With output-trade liberalization the least productive firms decrease their product scope.
    Keywords: gains from trade,input and output tariff reductions,product scope,product quality,market share,quantity and revenue total factor productivity (TFPQ - TFPR),skill premium,markups,price,foreign inputs quality and variety,firm-product-level data,Ecuador
    Date: 2019–02
  15. By: Kounetas, Konstantinos; Polemis, Michael; Tzeremes, Nickolaos
    Abstract: This study applies a nonparametric time dependent conditional frontier model to estimate and evaluate the convergence in eco-efficiency of a group of 51 US states over the period 1990-2017. Specifically, we utilize a mixture of global and local pollutants (carbon dioxide CO2, sulphur dioxide SO2 and nitrogen oxides NOx) to capture the environmental damage caused by the anthropogenic activities. The empirical findings indicate divergence for the whole sample, while specific groups of convergence club regions are formulated dividing the US states into worst and best performers. Moreover, Our findings reveal significant convergence patterns between the US regions over the sample period.
    Keywords: Eco-efficiency; Convergence clubs; Order-m estimators; Non parametric frontier analysis; US regions
    JEL: C15 Q40 Q53 Q57
    Date: 2019–05–05

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