nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2019‒11‒11
nineteen papers chosen by

  1. Quantifying Heterogeneous Returns to Genetic Selection: Evidence from Wisconsin Dairies By Jared P. Hutchins; Brent Hueth; Guilherme Rosa
  2. A note on the estimation of competition-productivity nexus: A panel quantile approach By Polemis, Michael
  3. Taxation and Public Spending Efficiency: An International Comparison By António Afonso; João Tovar Jalles; Ana Venâncio
  4. Competition, technological change and productivity gains: the contribution of information technologies By Ciriani, Stephane; Jeanjean, Francois
  5. Tangible and Intangible Assets in the Growth Performance of the EU, Japan and the US By Amat Adarov; Robert Stehrer
  6. Does Easing Financing Matter for Firm Performance? By Bose, Udichibarna; Mallick, Sushanta; Tsoukas, Serafeim
  7. An Anatomy of Productivity in Turkey in the AKP Era through a Political Economy Lens By Dincer, Nergiz; Tekin-Koru, Ayca
  8. Nonparametric Measurement of Potential Gains from Mergers: An Additive Decomposition and Application to Indian Bank Mergers By Subhash C. Ray; Shilpa Sethia
  9. Market Power and Cost Efficiency in the African Banking Industry By Simplice A. Asongu; Rexon T. Nting; Joseph Nnanna
  10. How to revive productivity growth? By Cecilia Jona-Lasinio; Stefano Schiavo; Klaus Weyerstrass
  11. A new macroeconomic measure of human capital with strong empirical links to productivity By Jarmila Botev; Balázs Égert; Zuzana Smidova; David Turner
  12. Who leads the IoT ecosystem? a Meta-frontier Approach By Cho, Hosoo; Ryu, Min Ho
  13. Do digital skills foster green diversification? A study of European regions By Artur Santoalha; Davide Consoli; Fulvio Castellacci
  14. Relations between economic development, violence and corruption: A nonparametric approach with DEA and data panel By Alexander Cotte Poveda; Jorge Martinez Carvajal; Nicolas Ronderos Pulido
  15. Productivity and Wages: Common Factors and Idiosyncrasies Across Countries and Industries By Edward P. Lazear
  16. Does Agricultural Value Added Induce Environmental Degradation? Empirical Evidence from an Agrarian Country By Mary O. Agboola; Festus V. Bekun
  17. Effects of Expenditures in Science, Technology and R&D on Technical Change in Countries in Latin America and the Caribbean By Alexander Cotte Poveda; Carolina Jimenez
  18. Estimación de un índice de eficiencia para la Rama Judicial en Colombia: una aproximación mediante análisis de envoltura de datos By Camilo Andrés Mayorquín Adame
  19. Natural Resources in the Theory of Production: The Georgescu-Roegen/Daly versus Solow/Stiglitz Controversy By Quentin Couix

  1. By: Jared P. Hutchins; Brent Hueth; Guilherme Rosa
    Abstract: Estimates of productivity growth in the dairy sector attribute as much as half of observed growth to genetic improvement. Unobserved match quality is an important determinate of genetic selection by dairy farmers that confounds attribution to genetic improvement alone. Using data from a large sample of Wisconsin dairy farms, and national-level data on sire rankings, we develop and estimate a model that accounts for selection behavior, and decompose total productivity change into separate effects for genetic improvement and endogenous selection. We find that selection accounts for as much as 75 percent of the total productivity improvement in our sample. Our results provide evidence for positive assortative matching, whereby farmers who adopt above-average yield genetics also perform better than average for their chosen genetics. Further, we find that management behavior accounts for a significant portion of within-herd cow-level heterogeneity, suggesting that dairy farmers manage their herds at the level of individual cows. Overall, our results indicate that a large portion of productivity growth in dairy farming can be explained by farmers’ ability to identify and select genetics well suited to their production environment.
    JEL: D22 D24 O3 O4 Q1 Q12 Q16
    Date: 2019–11
  2. By: Polemis, Michael
    Abstract: We study the impact of product market competition on productivity in 462 US manufacturing sectors for the period 1958-2009 through the lens of a panel quantile regression analysis. We confirm that there is a nonmonotonic inverse-U relationship between competition and total factor productivity. We argue that the turning point increases substantially as we move to the higher quantiles of the productivity distribution function. Our findings survive robustness checks under alternative competition measure and quantile estimator.
    Keywords: Quantile regression; Competition; Nonlinearities; Manufacturing; US
    JEL: C21 C23 L11
    Date: 2019–10–01
  3. By: António Afonso; João Tovar Jalles; Ana Venâncio
    Abstract: This paper evaluates the relevance of the taxation for public spending efficiency in a sample of OECD economies in the period 2003-2017. First, we compute the data envelopment analysis (DEA) scores and the Malmquist productivity index to measure the change in total factor productivity, the change in efficiency and the change in technology. Second, we explain these newly computed public efficiency scores with tax structures using a reduced-form panel data regression specification. Looking at the period between 2007 and 2017, our main findings are as follows: inputs could be theoretically lower by approximately 32-34%; the Malmquist indices show an overall decrease in technology and in TFP. Crucial for policymaking, we find that expenditure efficiency is negatively associated with taxation, more specifically direct and indirect taxes negatively affect government efficiency performance, and the same is true for social security contributions.
    Date: 2019
  4. By: Ciriani, Stephane; Jeanjean, Francois
    Abstract: This paper addresses the empirical relationship between the level of competition and the rate of productivity growth across thirty sectors of the French production system during the period 1978- 2015. It shows that there exists an optimal level of competition for each sector that is defined by the mark-up that maximizes the growth rate of labor productivity. The information technologies Sectors have the highest mark-ups for maximizing productivity growth. The persistence of nonoptimal mark-ups in French sectors is associated with a 0.4% loss in aggregate average annual labor productivity growth during the period (1.86%). Hence, long-term productivity growth could have reached 2.25% if mark-ups had been at their optimal level. There is a strong significant positive correlation between the optimal mark-up and the rate of Hicks-neutral technical progress in each sector. This finding implies that sectors with high technical progress, as information technologies sectors, require higher mark-ups to maximize their rate of labor productivity growth. Overall, the aggregate economy would benefit from a decrease in the gap between nonoptimal and optimal mark-ups, as such an alignment would foster productivity growth.
    Keywords: Technical progress,productivity growth,mark-up
    JEL: O11 O31 O47 L16
    Date: 2019
  5. By: Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: This paper discusses new results using the EU KLEMS 2019 Release focussing on the role of ICT and intangibles assets employing a growth accounting framework and an econometric analysis. The EU KLEMS 2019 data covers most EU Member States, the US and Japan, forty detailed industries according to NACE Rev. 2 (ISIC Rev. 4) along with nine aggregated industries and spans over the period 1995-2017. In particular, intangible assets outside the boundaries of the national accounts are taken into account. The data are used to study total factor productivity, labour and capital productivity developments in a comparative cross-country and cross-industry dimension with an emphasis on the role of capital investments. Inter alia, the analysis studies the implications of various asset types and particularly the role of ICT and intangible capital, as well as changes in labour services and the composition thereof, as drivers of value added and labour productivity growth. Significant differences in the underlying growth contributions between the pre-crisis and post-crisis periods in growth performances are highlighted. Disclaimer A comparative analysis based on the EU KLEMS Release 2019 The paper is written as part of the project ‘Industry level growth and productivity data with special focus on intangible assets’ under the Service Contract No. ECFIN-116-2018/SI2.784491 financed by the European Commission, DG ECFIN. We would like to thank Dale Jorgenson and participants of the Asian KLEMS conference (14-15 October 2019, Bejing) for useful comments.
    Keywords: EU KLEMS, growth accounting, tangible and tangible assets, ICT and non-ICT capital, productivity and growth
    JEL: C82 D24 O47
    Date: 2019–10
  6. By: Bose, Udichibarna; Mallick, Sushanta; Tsoukas, Serafeim
    Abstract: Financial reforms have been found to be highly important in promoting aggregate productivity. Yet, the linkage between access to finance, firm-level productivity, and exporting performance has been overlooked in the literature. We fill this gap using a rich dataset of 11,612 Indian firms over the period 1988-2014 to study the impact of a unique financial policy intervention on firm performance. We document a significant effect of capital-account liberalization through the lens of an export-oriented policy initiative on firms’ productivity and consequently on their exporting activity. Finally, the beneficial effect of the policy change is more pronounced for financially vulnerable firms, as measured by high debt dependence and low levels of liquidity.
    Keywords: Productivity; Exporting; Financing; FX market liberalization
    Date: 2019–11–08
  7. By: Dincer, Nergiz; Tekin-Koru, Ayca
    Abstract: The main aim of the current paper is to investigate the productivity dynamics of Turkish economy between 2003-2015, during the Adalet ve Kalkınma Partisi (AKP) era, to contribute to the ongoing discussions of long-term economic growth of the country, using a unique data set and firm-level granular productivity analysis. Furthermore, the political economy of the deindustrialization of Turkey is scrutinized as a complement to the productivity analysis. Among a plethora of results, the following three are the most important ones in terms of their policy implications: (i) The aggregate productivity figures underestimate the productivity improvements in the manufacturing sector and overestimate the productivity losses in the services sector. (ii) The productivity growth of manufacturing sector in Turkey has been positive yet evolving towards medium-low tech manufacturing which displays the lowest productivity growth among all manufacturing sectors. (iii) While the surviving firms in the Turkish manufacturing sector have increased their own productivity in the AKP era, in the services sector surviving firms had a negative contribution to aggregate productivity growth.
    Keywords: Productivity, services, manufacturing, deindustrialization, AKP
    JEL: D24 O47 P16
    Date: 2019–10–22
  8. By: Subhash C. Ray (University of Connecticut); Shilpa Sethia (University of Connecticut)
    Abstract: One of the main incentives for voluntary merger between firms in the same industry is the potential gain in the form of lower cost of producing the combined output of the merging firms. Baumol, Panzar, and Willig (1982) showed that subadditivity of the cost function at the combined output level is a precondition for positive cost gains from a merger. In this paper we build on their theoretical model to derive conditions for potential gains from merger in a short run cost framework where not only the outputs but also the fixed inputs of the merging firms are aggregated through merger. We show that subadditivity of the short run ray total cost curve of the merged firm at the combined output bundle is neither necessary nor sufficient for positive gains from merger. We also provide a decomposition of the potential gain from merger into three components related to convexity of the technology, subadditivity of the short run ray total cost, and decrease in the variable cost due to an aggregation of the fixed inputs. Appropriate linear programming models are formulated for measuring the gain from merger and its components using the nonparametric method of Data Envelopment Analysis. We use data for a number of recent mergers of Indian banks in an empirical application of our proposed models.
    Keywords: Sub-additivity, Ray Average Cost, DEA
    JEL: L25 D24 G21
    Date: 2019–09
  9. By: Simplice A. Asongu (Yaoundé/Cameroon); Rexon T. Nting (London, UK); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria)
    Abstract: Purpose- In this study, we test the so-called ‘Quiet Life Hypothesis’ (QLH) which postulates that banks with market power are less efficient. Design/methodology/approach- We employ instrumental variable Ordinary Least Squares, Fixed Effects, Tobit and Logistic regressions. The empirical evidence is based on a panel of 162 banks consisting of 42 African countries for the period 2001-2011. There is a two-step analytical procedure. First, we estimate Lerner indices and cost efficiency scores. Then, we regress cost efficiency scores on Lerner indices contingent on bank characteristics, market features and the unobserved heterogeneity. Findings- The empirical evidence does not support the QLH because market power is positively associated with cost efficiency. Originality/value- Owing to data availability constraints, this is one of the few studies to test the QLH in African banking.
    Keywords: Finance; Savings banks; Competition; Efficiency; Quiet life hypothesis
    JEL: E42 E52 E58 G21 G28
    Date: 2019–01
  10. By: Cecilia Jona-Lasinio; Stefano Schiavo; Klaus Weyerstrass
    Abstract: Providing financial incentives for companies to invest in productivity-enhancing technologies and practices is the key to productivity growth, according to this latest policy report by Cecilia Jona-Lasinio (ISTAT and LUISS Guido Carli), Stefano Schiavo (University of Trento) and Klaus Weyerstrass (Institut für Höhere Studien). Strong investment should also be made into training and workforce skills to exploit the productivity potential of new business models in the digital economy. Competition policy, although not directly related to productivity, is also emerging as an important tool to shape incentives and foster the efficient allocation of resources both across and within sectors and firms. The report analyses the recent trends in labour and total factor productivity in the EU and beyond and identifies factors that influence productivity.
    Date: 2019
  11. By: Jarmila Botev; Balázs Égert; Zuzana Smidova; David Turner
    Abstract: This paper calculates new measures of human capital. Contrary to the existing literature, they are based on realistic rates of return to education, which are allowed to vary substantially across countries and to some extent over time. The new measures perform well in regression analysis explaining productivity across OECD countries and over time. In OECD samples, coefficient estimates are broadly consistent with the private returns underlying the construction of the new measures of human capital. In a wider sample of countries, most estimates imply additional positive social returns.
    Keywords: human capital, mean years of schooling, OECD, productivity, returns to education
    JEL: E24 I20 I26
    Date: 2019–11–13
  12. By: Cho, Hosoo; Ryu, Min Ho
    Abstract: As 5G has recently been commercialized, IoT ecosystem is rapidly growing. There are variety of participants in IoT ecosystem and they continue to innovate in their own way. This paper divided participants of IoT ecosystem into four sub-industries: service, network, platform, and device. This paper applies stochastic frontier analysis (SFA) and compare the efficiency among these sub-industries, which give us information who leads innovation in the sub-industry or between the sub-industries. After analyzing the financial data of Korean IoT companies from 2008 to 2018, this paper show that platform industry had led the innovation of IoT ecosystem in the early stage (until 2007) and after then, network and device industries have led the innovation, while service industry lags relatively behind other industries during the period. Moreover, the empirical findings collectively indicate that meta-frontier index values (TE, TGR and TE*) have all been continuously decreasing, which means that some of highly efficient companies in the IoT ecosystem have consistently maintained their dominance.
    Keywords: IoT ecosystem,stochastic frontier analysis,meta-frontier analysis,IoT industry in Korea,innovation
    Date: 2019
  13. By: Artur Santoalha (TIK Centre, University of Oslo, Norway); Davide Consoli (INGENIO (CSIC-Universitat Politècnica de València), Spain); Fulvio Castellacci (TIK Centre, University of Oslo, Norway)
    Abstract: Within the debate on smart specialisation, there is growing attention towards the features that favour or thwart regions’ ability to pursue sustainable development through eco-innovation. Against this backdrop, the present paper proposes an empirical analysis of the role of local capabilities, of related diversification and of their interaction in a panel of 225 European regions (NUTS 2) between 2002 and 2013. The main novelty is the explicit consideration of digital skills, workforce capabilities associated with the use and development of digital technologies. We find that the e-skills endowment is positively correlated with the probability that regions specialise in new green technological domains. Moreover, digital competences positively moderate the effect of technological relatedness on green diversification. Our results highlight the potential of complementarities between two emerging general-purpose technologies, ICTs and eco-innovations, in the transition towards a greener economy.
    Date: 2019–10
  14. By: Alexander Cotte Poveda; Jorge Martinez Carvajal; Nicolas Ronderos Pulido
    Abstract: This research analyses the connection between homicides, corruption, and economic development in Colombian government departments. This empirical research explores the trends of homicides, corruption, and economic development utilizing different estimation techniques: DEA and econometric analysis with panel data. The DEA is applied to assess socioeconomic performance and interactions of homicides, corruption, and economic progress in Colombian, according to the rank and uncertainty of corruption and violence. Econometric models are Generalized Method of Moments (GMM) estimates to determine the incidence of some institutional and socioeconomic variables on the score range of uncertainty and risk generated by DEA in terms of the level of corruption and homicides. Estimates with DEA data envelopment analysis shows that the risk score associated with homicides and corruption has different tendencies, socioeconomic and political instability are causes that explain the behaviour of this variable over time. The results of the panel data estimation show that there are several hypotheses and theories that explain the effects of corruption and violence on the economic development of countries. This finding indicates the importance of developing effective policies that strengthen public administration, the judicial structure, and public social spending and thus rupture the cycles of corruption and homicides that prevent the creation of sustained economic growth and development.
    Date: 2019–04–19
  15. By: Edward P. Lazear
    Abstract: Average wage growth is closely related to aggregate productivity growth across countries and within countries over time. The commonality of patterns across OECD countries suggests that common factors are at work. Are productivity-based explanations of wage changes consistent with increasing variance in wages as well as increases in mean wages as suggested by skill-biased technological change or other factors? To answer this, it is necessary to observe education-specific productivity growth. Cross-industry comparisons reveal that industries dominated by highly educated workers experienced higher-than-average productivity growth that is more than sufficient to account for increasing skill differentials.
    JEL: J00 J30 M50
    Date: 2019–11
  16. By: Mary O. Agboola (Riyadh, Saudi Arabia); Festus V. Bekun (Northern Cyprus, Turkey)
    Abstract: This study empirically investigates the agriculture-induced environmental Kuznets curve (EKC) hypothesis in an agrarian framework. Annual time series data from 1981–2014 was employed using Augmented Dickey–Fuller and the Phillips–Perron (PP) unit root test complemented by the Zivot and Andrews unit root test that accounts for a single structural break to ascertain stationarity properties of variables under consideration. For the cointegration analysis, an autoregressive distributive lag methodology and the recent novel Bayer and Hanck combined cointegration technique is employed. For the direction of causality, the Granger causality test is used as estimation technique. Empirical findings lend support for the long-run equilibrium relationship among the variables under consideration. This study also validates the inverted U-shaped pattern of EKC for the case of Nigeria, affirming that Nigeria remains at the scale-effect stage of its growth trajectory. Further empirical results show that foreign direct investment attraction helps mitigate carbon emissions in Nigeria. Based on these results, several policy prescriptions on the Nigerian energy mix and agricultural operations in response to quality of the environment were suggested for policymakers, stakeholders, and environmental economists that formulate and design environmental regulations and strategies to realise the Goal 7 of sustainable development goals (SDGs).
    Keywords: Agriculture ecosystem, Energy consumption, Granger Causality, EKC, Nigeria
    JEL: C32 Q1 Q4 Q5
    Date: 2019–01
  17. By: Alexander Cotte Poveda; Carolina Jimenez
    Abstract: This research analyzes the effects of expenditures in science, technology and research and development (R&D) on technical change in countries with a high human development index in Latin America. We argue that with higher investments in science, technology and R&D, the productivity of Latin American countries should increase, thereby offering several advantages for the population. Moreover, we investigated the factors that determine the relationship between economic growth and development and technical change. In this study, we use a technological change model to determine the factors that influence the productivity conditions of every Latin American country analyzed. The findings show that the expenditures in science, technology, R&D and patents have a positive influence on the technological change of those countries.
    JEL: O3 O31 O34 O38
    Date: 2019–06–20
  18. By: Camilo Andrés Mayorquín Adame
    Abstract: En este artículo se propone una medida para la Rama Judicial en Colombia para cuantificar su eficiencia. Se explica por qué es importante la eficiencia, el método escogido para estimarla y la robustez de los resultados encontrados. También se utilizan herramientas de programación de computadores que reflejan su importancia en la economía matemática moderna, además de facilitar y brindar mayores libertades en los cálculos de modelos complejos. Los resultados muestran el comportamiento de los circuitos judiciales escogidos a través de los índices encontrados. Adicionalmente, queda abierta la posibilidad de realizar investigaciones futuras que complementen el análisis de envoltura de datos. ****** This paper proposes a measure for the Judicial Branch in Colombia to quantify its efficiency. It explains why efficiency is important, the method chosen to estimate it, and the robustness of the results found. It also makes use of computer programming tools that reflect their importance in modern mathematical economics, in addition to facilitate and provide greater freedom for the calculations of complex models. The results reflect the behavior of the judicial circuits chosen through the found indices. Additionally, the possibility of carrying out future investigations that complement data envelopment analysis remains open.
    Keywords: rama judicial, circuitos judiciales, eficiencia, programación, economíamatemática, envoltura de datos.
    JEL: C44 C61 K41
    Date: 2019–09–30
  19. By: Quentin Couix (UP1 UFR02 - Université Panthéon-Sorbonne - UFR d'Économie - UP1 - Université Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper provides a theoretical and methodological account of an important controversy between neoclassical resources economics and ecological economics, from the early 1970s to the end of the 1990s. It shows that the assumption of unbounded resources productivity in the work of Solow and Stiglitz, and the related concepts of substitution and technical progress, rest on a model-based methodology. On the other hand, Georgescu-Roegen's assumption of thermodynamic limits to production, later revived by Daly, comes from a methodology of interdisciplinary consistency. I conclude that neither side provided a definitive proof of its own claim because both face important conceptual issues.
    Keywords: Nicholas Georgescu-Roegen,Robert Solow,Joseph Stiglitz,natural resources,theory of production
    Date: 2019–10–24

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