nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2019‒12‒09
twelve papers chosen by

  1. How Does the Public Spending Affect Technical Efficiency? Some Evidence from 15 European Countries By Sabrina Auci; Laura Castellucci; Manuela Coromaldi
  2. The impact of environmental policy stringency on industrial productivity growth: A semi-parametric study of OECD countries By Guohua Feng; Keith R. McLaren; Ou Yang; Xiaohui Zhang; Xueyan Zhao
  3. Productivity, Wages and Profits: Does Firms' Position in the Value Chain Matter? By Mahy, Benoît; Rycx, Francois; Vermeylen, Guillaume; Volral, Mélanie
  4. The public sector and the misallocation of labor: evidence from a policy experiment in India By Baird, Matthew; Chari, A.V.; Nataraj, Shanthi; Rothenberg, Alexander; Telhaj, Shqiponja; Winters, L. Alan
  5. Intangible Capital and Labour Productivity Growth: A Review of the Literature By Roth, Felix
  6. Technical Efficiency in Firm Games with Constant Returns to Scale and α-Returns to Scale By Walter Briec; Marc Dubois; Stéphane Mussard
  7. Evaluating the distributional impacts of drought tolerant maize varieties on productivity and welfare outcomes in rural Nigeria: An Instrumental Variable Quantile Treatment Effect Approach By Olagunju, Kehinde; Ogunniyi, Adebayo; Awotide, Bola; Adenuga, Adewale
  8. Identifying productivity when it is a factor of production By Flynn, Zach
  9. Productivity Dynamics: The Role of Competition in a Service Industry By Breda, Thomas; Bryson, Alex; Forth, John
  10. Seed replacement in pulses and its impact on productivity By Joshi, Kuhu; Joshi, P.K.; Khan, Md. Tajuddin; Kishore, Avinash; Shivaswamy, G.P.
  11. Performance économique des exploitations piscicoles : une analyse par la fonction de profit dans les départements de l’atlantique et du littoral au Sud-Bénin By Hessavi, M.P.; Adegbola, Y.P.; Hounmenou, J.; Sedegnan, C.A.O.; Dessouassi, E.C.; Ajavon, Y.; Sodjinou, E.
  12. Minimum Wage Increase and Firm Profitability: Evidence from Poland By Mykola Babiak; Olena Chorna

  1. By: Sabrina Auci (University of Palermo); Laura Castellucci (University of Rome "Tor Vergata"); Manuela Coromaldi (University of Rome “Niccolò Cusano")
    Abstract: The relationship between government size and economic growth has been widely debated. Departing from this issue, we provide an empirical analysis of the impact of government size on technical efficiency. The aim of this paper is to estimate by using a True Random Effect model the impact of public sector’s size and of public expenditure components on 15 European countries’ technical efficiency from 1996 to 2011. Using the total public expenditure as a proxy for the government size we estimate simultaneously national optimal production function and technical efficiency model by controlling for income distribution and institutional quality. Our main findings show that the effect of public sector’s size on efficiency is positive while the type of public expenditures may have both positive and negative impact. In more details, results suggest that social protection, cultural, and health expenditures have a positive effect on technical efficiency, while others have a negative impact. More controversial is the impact of education expenditure, even if a positive effect on efficiency prevails when controlling for heteroscedasticity.
    Keywords: Stochastic frontier production function, technical efficiency, government spending,European countries
    JEL: C33 H10 H50
    Date: 2019–12–02
  2. By: Guohua Feng (Department of Economics, University of North Texas); Keith R. McLaren (Department of Econometrics and Business Statistics, Monash University); Ou Yang (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne); Xiaohui Zhang (Business School, University of Exeter); Xueyan Zhao (Department of Econometrics and Business Statistics, Monash University)
    Abstract: This paper employs a semi-parametric varying coefficient system approach to investigating the impact of environmental policy stringency on a nation's productivity growth using data for a panel of OECD countries over a period of two decades. A new cross-country proxy of environmental policy stringency is employed. Our results show that while stricter environmental policies might shift a country's total cost in production upward, for countries which have already adopted relatively more stringent environmental policies, further increasing their policy stringency seems to enhance these countries' productivity in the long run. We also find that more stringent environmental policies seem to render a country's use of intermediate inputs more inelastic to their own prices and decrease the substitutability between labour and intermediate inputs in the long run. We argue that more stringent environmental policies would exert tighter control over the use of several intermediate inputs such as energy, raw materials, pollution-intensive services etc, leading to the use of these inputs being less sensitive to changes in their market prices. Tighter control over the use of these intermediate inputs would also render them less of a substitute to labour input.
    Keywords: environmental policy stringency; productivity growth; semi-parametric varying coefficient system; OECD countries
    JEL: C14 D24 Q58
    Date: 2019–11
  3. By: Mahy, Benoît (University of Mons); Rycx, Francois (Free University of Brussels); Vermeylen, Guillaume (University of Mons); Volral, Mélanie (University of Mons)
    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.
    Keywords: global value chains, upstreamness, productivity, rent-sharing, linked employer-employee panel data, product market competition
    JEL: F61 J24 D30 D40 J50
    Date: 2019–11
  4. By: Baird, Matthew; Chari, A.V.; Nataraj, Shanthi; Rothenberg, Alexander; Telhaj, Shqiponja; Winters, L. Alan
    Abstract: State-owned enterprises are often thought to represent a distortion in the labor market, but the implied efficiency losses have not been carefully estimated. This paper presents the first rigorous quantification of the aggregate productivity effects of privatization of public sector enterprises. We study historical episodes of privatization of public sector firms in India over the period 1991-2005, and find evidence of reallocation of labor away from the public sector following privatization. In turn, this reallocation appears to result in a substantial improvement in aggregate productivity and output.
    Keywords: labor; public sector; India
    JEL: J20
    Date: 2019–01
  5. By: Roth, Felix
    Abstract: This paper surveys a wide range of studies on the impact of capital investment in intangible assets on labour productivity growth and highlights their main findings on. Surveying the literature at the country, industry and firm level, this paper finds evidence of the increasing importance of business investment in intangible assets in explaining the dynamics of labour productivity growth. Moreover, the findings reported in the literature surveyed suggest that in order to fully reap the benefits of investment in information and communication technology (ICT) and artificial intelligence (AI), it is essential for businesses to make complementary investment in intangible assets. In addition, the literature on the drivers of business capital investment in intangibles highlights the importance of having in place a well-endowed infrastructure of public intangibles. Judging from the wide range of economic literature surveyed, this paper finds that the contemporary economic debate now broadly acknowledges the importance of intangibles for the transformation of developed economies towards becoming fully-fledged knowledge economies.
    Keywords: Intangible Capital,Labour Productivity Growth,Total Factor Productivity Growth,Information and Communication Technology,Artificial Intelligence,European Union
    Date: 2019
  6. By: Walter Briec (CRESEM - Centre de Recherche sur les Sociétés et Environnements en Méditerranées - UPVD - Université de Perpignan Via Domitia); Marc Dubois (ICCF - Institut de Chimie de Clermont-Ferrand - Clermont Auvergne - Sigma CLERMONT - Sigma CLERMONT - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Stéphane Mussard (CHROME - Détection, évaluation, gestion des risques CHROniques et éMErgents (CHROME) / Université de Nîmes - UNIMES - Université de Nîmes)
    Date: 2019–11–04
  7. By: Olagunju, Kehinde; Ogunniyi, Adebayo; Awotide, Bola; Adenuga, Adewale
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2019–09
  8. By: Flynn, Zach
    Abstract: Economists typically model a plant's productivity as an exogenous characteristic, but the people who run and work at manufacturing plants make choices, at a cost, that affect plant productivity. I develop a method to partially identify the productivity distribution when such choices determine productivity. The method uses a monotone comparative static result I prove in a general economic model. It does not require instruments or timing assumptions. I use the method to study the effect of implementing market-based pricing on productivity in the electricity generation industry.
    Date: 2018–10–17
  9. By: Breda, Thomas (Paris School of Economics); Bryson, Alex (University College London); Forth, John (Cass Business School)
    Abstract: Using panel data for nearly all service providers in a single industry sector, we examine productivity responses to changes in competition in the United States. The sector offers workplace employee representation through trade union branches which compete with one another for union members whose subscriptions they depend on to cover costs. As such, they have an interest in maximising productivity. Ours is the first study to measure service industry productivity using both price and quantity metrics. Consistent with manufacturing studies, we find market entrants have lower prices and higher Total Factor Productivity (TFP) than incumbents. Increased competition from new entrants leads incumbents to reduce the price of union membership; exit rates then rise among incumbents with the lowest prices who are constrained in adjusting their prices downwards. Those with higher TFP have higher survival probabilities. However, increased competition does not induce incumbents to raise their TFP. These findings are consistent with a market in which incumbents learn about market conditions but face high switching costs limiting their ability to invest in the new techniques that underpin the higher TFP of new entrants.
    Keywords: competition, productivity, TFP, trade unions, survival
    JEL: J5 L1 L2 L3
    Date: 2019–11
  10. By: Joshi, Kuhu; Joshi, P.K.; Khan, Md. Tajuddin; Kishore, Avinash; Shivaswamy, G.P.
    Keywords: Crop Production/Industries, Productivity Analysis
    Date: 2019–09
  11. By: Hessavi, M.P.; Adegbola, Y.P.; Hounmenou, J.; Sedegnan, C.A.O.; Dessouassi, E.C.; Ajavon, Y.; Sodjinou, E.
    Keywords: Productivity Analysis, Production Economics
    Date: 2019–09
  12. By: Mykola Babiak (CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences, Politickych veznu 7, 111 21 Prague, Czech Republic); Olena Chorna (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 11000, Prague 1, Czech Republic)
    Abstract: In this paper, we investigate how the increase in minimum wages affect firm profitability. We focus on the firm-level panel data in Poland, where minimum wage growth remained stable and averaged around 4 percent between 2003 and 2007 butaccelerated to 20 percent in 2008. Implementing a difference-in-difference approach in this quasi-experimental setting, we find that the minimum wage increase contributed positively to average wages and negatively to firm profitability. Intuitively, the increased labor costs due to a higher wage floor directly reduce profits in the absence of labor demand adjustments. We formally test and confirm validity of theseempirical predictions in a simple theoretical model of a profit maximizing firm.
    Keywords: Minimum wage, firm profitability, difference-in-difference
    JEL: C21 J23 L25
    Date: 2019–06

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