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on Efficiency and Productivity |
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Issue of 2019‒10‒07
ten papers chosen by |
| By: | Fernando M. Aragon Sanchez; Diego Restuccia; Juan Pablo Rud |
| Abstract: | We revisit the long-standing empirical evidence of an inverse relationship between farm size and productivity using rich microdata from Uganda. We show that farm size is negatively related to yields (output per hectare), as commonly found in the literature, but positively related to farm productivity (a farm-specific component of total factor productivity). These conflicting results do not arise because of omitted variables such as land quality, measurement error in output or inputs, or specification issues. Instead, we reconcile the findings emphasizing the role of farm-specific distortions and returns to scale in traditional farm production. We exploit unique regional variation in land tenure regimes in Uganda in evaluating the role of farm-specific distortions. Our findings point to the limited value of yields (or land productivity) in establishing the farm size-productivity relationship. More generally, we demonstrate the limitation of using farm size in guiding policy applications. |
| JEL: | C33 D24 E02 E13 O11 O12 O13 O4 O5 Q15 Q18 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26331&r=all |
| By: | Fernando Aragon, Diego Restuccia, Juan Pablo Rud (Simon Fraser University); Diego Restuccia (University of Toronto and NBER); Juan Pablo Rud (Royal Holloway, University of London and Institute for Fiscal Studies) |
| Abstract: | We revisit the long-standing empirical evidence of an inverse relationship between farm size and productivity using rich microdata from Uganda. We show that farm size is negatively related to yields (output per hectare), as commonly found in the literature, but positively related to farm productivity (a farm-specific component of total factor productivity). These conflicting results do not arise because of omitted variables such as land quality, measurement error in output or inputs, or specification issues. Instead, we reconcile the findings emphasizing the role of farm-specific distortions and returns to scale in traditional farm production. We exploit unique regional variation in land tenure regimes in Uganda in evaluating the role of farm-specific distortions. Our findings point to the limited value of yields (or land productivity) in establishing the farm size-productivity relationship. More generally, we demonstrate the limitation of using farm size in guiding policy applications. |
| Keywords: | Farm size, productivity, yields, land markets, distortions, agriculture, policy, regions, technology |
| JEL: | O4 O5 O11 O12 O13 E02 E13 Q15 Q18 C33 D24 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp19-05&r=all |
| By: | Peter Gal; William Witheridge |
| Abstract: | Productivity growth has declined in most advanced economies in the past two decades and there are signs that the pace of global value chain (GVC) integration has slowed in the post-crisis period. This paper explores the role of GVCs - international trade in intermediate inputs - for multi-factor productivity growth using a range of cross-country industry-level data sources. We find that greater participation in GVCs is associated with faster domestic productivity growth at the industry level. We estimate that if GVCs had continued to grow at their pre-crisis trend, productivity growth would have been around 1 percentage point faster over the subsequent five years in both manufacturing and services. We also find that the productivity-enhancing direction of trade differs between sectors. For manufacturing sectors, greater use of intermediate inputs from foreign sources (backward participation) is linked with faster productivity growth, reflecting the beneficial effects of having access to better quality or cheaper inputs. For services sectors, it is more the sales of intermediates (forward participation) that is associated with productivity gains, in line with the traditional role of services in foreign trade as providing inputs to other activities. Looking by partner country, GVC participation with higher productivity countries is particularly productivity enhancing. We also find that GVC integration spurs greater domestic innovation activity. |
| Keywords: | global value chains, innovation, productivity |
| JEL: | F14 D24 O30 |
| Date: | 2019–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaac:19-en&r=all |
| By: | Calligaris, Sara; Del Gatto, Massimo; Hassan, Fadi; Ottaviano, Gianmarco I. P.; Schivardi, Fabiano |
| Abstract: | Productivity has recently slowed down in many economies around the world. A crucial challenge in understanding what lies behind this “productivity puzzle” is the still short time span for which data can be analysed. An exception is Italy, where productivity growth started to stagnate 25 years ago. The Italian case can therefore offer useful insights to understand the global productivity slowdown. We find that resource misallocation has played a sizeable role in slowing down Italian productivity growth. If misallocation had remained at its 1995 level, in 2013 Italy’s aggregate productivity would have been 18% higher than its actual level. Misallocation has mainly risen within sectors rather than between them, increasing more in sectors where the world technological frontier has expanded faster. Relative specialization in those sectors explains the patterns of misallocation across geographical areas and firm size classes. The broader message is that an important part of the explanation of the productivity puzzle may lie in the rising difficulty of reallocating resources across firms within sectors where technology is changing faster rather than between sectors with different speeds of technological change. |
| Keywords: | missallocation; TFP; productivity; puzzle; Italy |
| JEL: | D24 O11 O47 |
| Date: | 2018–09–21 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:90271&r=all |
| By: | Chaoran Chen; Diego Restuccia; Raul Santaeulalia-Llopis |
| Abstract: | We assess the effects of land markets on misallocation and productivity by exploiting policy-driven variation in land rentals across time and space arising from a large-scale land certification reform in Ethiopia, where land remains owned by the state. Our main finding from detailed micro panel data is that land rentals substantially reduce misallocation and increase agricultural productivity. Our evidence builds from an empirical difference-in-difference strategy, an instrumental variable approach, and a calibrated quantitative macroeconomic framework with heterogeneous household-farms that replicates, without targeting, the empirical effects. These effects are nonlinear, impacting more farms farther away from efficient operational scale, consistent with our theory. Using our model, we find that more active land markets reduce inequality, an important concern for the design of land policy. We also find that the positive effects of land markets are mainly driven by formal market rentals as opposed to informal rentals. Finally, our analysis also provides evidence that land markets increase the adoption of more advanced technologies such as the use of fertilizers. |
| Keywords: | Land markets, rentals, effects, misallocation, productivity, inequality, micro data, quantitative macro, informal markets, technology, fertilizers. |
| JEL: | E02 O10 O11 O13 O43 O55 Q10 Q15 Q18 Q24 D5 |
| Date: | 2019–09–26 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-649&r=all |
| By: | Crafts, Nicholas (University of Warwick); Mills, Terence C. (Loughborough University) |
| Abstract: | This paper re-examines UK productivity growth in the decades before World War I using a new dataset compiled by Thomas and Dimsdale (2017). We find that the productivity slowdown of the early 20th century was quite modest and does not deserve to be called a climacteric. A more serious slowdown in labour productivity growth occurred in the 1870s. Neither of these episodes should be regarded as a precedent for the current severe deterioration in UK productivity performance. Nor should a late-Victorian productivity slowdown be attributed to the end of the steam age despite the popularity of this belief. |
| Keywords: | climacteric; growth accounting; Hodrick-Prescott filter; productivity slowdown JEL Classification: N13; O47 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:437&r=all |
| By: | Miguel Martín-Retortillo (Universidad de Alcalá, Spain); Vicente Pinilla (Universidad de Zaragoza e Instituto Agroalimentario de Aragón, Spain) |
| Abstract: | In recent decades, the debate on economic growth has largely focused the role-played by institutions, geography, trade, and culture. In line with this concern, this study analyses the underlying causes of agricultural productivity growth in Europe in the second half of the twentieth century. To achieve this objective, a calculation of the Total Factor Productivity growth in European agriculture is made and an econometric model is proposed to determine the importance of these fundamental causes. Our study highlights that inclusive institutions, policies to support agriculture that do not discourage innovation, qualified human capital and a full openness to international trade are key factors for favouring growth of productivity in agriculture. |
| Keywords: | Agricultural productivity, European agriculture, Fundamental causes of economic growth, Comparative economics |
| JEL: | N54 O13 O47 P51 Q10 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:1912&r=all |
| By: | Dale-Olsen, Harald (Institute for Social Research, Oslo); Finseraas, Henning (Institute for Social Research, Oslo) |
| Abstract: | We study the importance of linguistic diversity in the workplace for workplace productivity. While cultural diversity might improve productivity through new ideas and innovation, linguistic diversity might increase communication costs and thereby reduce productivity. We apply a new measure of languages' linguistic proximity to Norwegian linked employer-employee Manufacturing data from 2003-12, and find that higher workforce linguistic diversity decreases productivity. We find a negative effect also when we take into account the impact of cultural diversity. As expected proficiency in Norwegian of foreign workers improves since their time of arrival in Norway, the detrimental impact disappears. |
| Keywords: | productivity, diversity, language diversity, GMM |
| JEL: | J15 D24 J24 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12621&r=all |
| By: | Vanessa Alviarez (University of British Columbia); Javier Cravino (University of Michigan); Natalia Ramondo (UCSD) |
| Abstract: | We use data on the cross-country operations of multinational enterprises and their foreign affiliates to separate the components of productivity that are internationally mobile from those that are immobile. We show that the productivity factors that are embedded in firms and can be transferred globally account for about 20 percent of the observed differences in TFP across European countries, thought its importance varies widely across countries. This indicates large potential gains form convergence in `firm-embedded' productivity. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1188&r=all |
| By: | Anthony Savagar (University of Kent) |
| Abstract: | I show that sluggish variation in firm entry over the business cycle can account for significant variation in measured TFP through profit and markup channels. I develop a model of dynamic firm entry, oligopolistic competition and returns to scale in order to decompose TFP fluctuations into technical change, economic profit and markup fluctuations. I show that economic profits cause short-run upward bias in measured TFP, but this subsides to upward bias from endogenous markups as firm entry adjusts. I analyze dynamics analytically through a nonparametric DGE model that allows for a perfect com-petition equilibrium such that there are no biases in measured TFP. Given market power, simulations show that measured TFP is 40%higher than technology in the short-run, due solely to profits, and 20% higher in the long-run due solely to markups. The speed of firm adjustment (‘business dynamism’) will determine importance of each bias. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:819&r=all |