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on Efficiency and Productivity |
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Issue of 2020‒02‒03
sixteen papers chosen by |
| By: | Evguenia Bessonova; Anna Tsvetkova |
| Abstract: | The paper focuses on trends in the convergence of labour and multifactor productivity in Russia. Using firm-level data for the 2011-2016 period, we obtain the following result: low-productivity firms grow faster than high-productivity ones. Despite this, the initial gap between the most and the least productive firms in the Russian economy is so wide that it is hardly possible to overcome in the short term. Moreover, we find that this gap has increased over the 2011-2016 period, suggesting divergence in productivity levels of Russian firms. To verify the divergence within narrowly defined industries, we also use the stochastic frontier analysis. Our estimates confirm divergence in most industries. |
| Keywords: | productivity gap, beta-convergence, sigma-convergence, stochastic frontier analysis. |
| JEL: | D24 E22 O47 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:bkr:wpaper:wps51&r=all |
| By: | Ya Chen (Hefei University of Technology, China); Mike Tsionas (Lancaster University, United Kingdom); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia) |
| Abstract: | We propose an improvement of the finite sample approximation of the central limit theorems (CLTs) that were recently derived for statistics involving production efficiency scores estimated via Data Envelopment Analysis (DEA) or Free Disposal Hull (FDH) approaches. The improvement is very easy to implement since it involves a simple correction of the variance estimator with an estimate of the bias of the already employed statistics without any additional computational burden and preserves the original asymptotic results such as consistency and asymptotic normality. The proposed approach persistently showed improvement in all the scenarios that we tried in various Monte-Carlo experiments, especially for relatively small samples or relatively large dimensions (measured by total number of inputs and outputs) of the underlying production model. This approach therefore is expected to produce more accurate estimates of confidence intervals of aggregates of individual efficiency scores in empirical research using DEA or FDH approaches and so must be valuable for practitioners. We also illustrate this method using a popular real data set to confirm that the difference in the estimated confidence intervals can be substantial. A step-by-step implementation algorithm of the proposed approach is included in the Appendix. |
| Keywords: | DEA; sign-constrained convex nonparametric least squares (SCNLS); LASSO; elastic net; big data |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:145&r=all |
| By: | Tetsuji Okazaki (Faculty of Economics, The University of Tokyo) |
| Abstract: | This paper investigates how mechanization, white-collar human capital, and the complementarity between them led to an improvement in the labor productivity of bluecollar workers. We estimated production functions that included interaction terms between variables representing the intensity of physical capital and white-collar human capital, using detailed mine-level panel data from the coal mining industry in prewar Japan. We found that mechanization and white-collar human capital were indeed complementary. That is, in the mines where mechanization proceeded, and only in those mines, the higher the education level of white-collar workers was, the larger was the impact on the labor productivity of blue-collar workers. |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:tky:fseres:2020cf1137&r=all |
| By: | Cooper, Zack; Gibbons, Stephen; Skellern, Matthew |
| Abstract: | This paper examines the impact of a government programme which facilitated the entry of for-profit surgical centres to compete against incumbent National Health Service hospitals in England. We examine the impact of competition from these surgical centres on the efficiency – measured by pre-surgery length of stay for hip and knee replacement patients – and case mix of incumbent public hospitals. We exploit the fact that the government chose the broad locations where these surgical centres (Independent Sector Treatment Centres or ISTCs) would be built based on local patient waiting times – not length of stay or clinical quality – to construct treatment and control groups that are comparable with respect to key outcome variables of interest. Using a difference-in-difference estimation strategy, we find that the entry of surgical centres led to shorter pre-surgery length of stay at nearby public hospitals. However, these new entrants took on healthier patients and left incumbent hospitals treating patients who were sicker. This paper highlights a potential trade-off that policymakers face when they promote competition from private, for-profit firms in markets for the provision of public services. |
| Keywords: | hospital competition; public-private competition; market entry; market structure; outsourcing; hospital efficiency; risk selection; cream skimming; public services; ES/M010341/1 |
| JEL: | C23 H57 I11 L1 L32 L33 R12 |
| Date: | 2018–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:90094&r=all |
| By: | Pinchetti, Marco |
| Abstract: | In this paper, I incorporate a Schumpeterian mechanism of creative destruction in a medium-scale DSGE framework. In the model, a sector of profit-maximizing innovators invests in R&D and endogenously gen- erates productivity gains, ultimately determining the economy's growth rate. I estimate the model using Bayesian methods on U.S. data of the last 25 years (1993q1-2018q4) in order to disentangle the key forces underlying the productivity slowdown experienced by the US economy since the early 2000s. In contrast with the previous literature, I exploit Fernald (2014) data on TFP, factor utilization and labour quality to discipline the production function, and find that the bulk of the TFP slowdown is due to a decrease in innovation's ability to generate TFP gains. These findings challenge the view of a large part of the literature, according to which the recent TFP dynamics in the US are mostly driven by demand slumps and/or liquidity crunches. |
| Keywords: | DSGE model, Endogenous TFP, Schumpeterian Growth, TFP Slowdown |
| JEL: | E24 E32 E5 O47 |
| Date: | 2020–01–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:98316&r=all |
| By: | Léopold Simar (Institut de Statistique, Biostatistique et Sciences Actuarielles, Université Catholique de Louvain, B1348 Louvain-la-Neuve, Belgium); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia) |
| Abstract: | We propose an improvement of the finite sample approximation of the central limit theorems (CLTs) that were recently derived for statistics involving production efficiency scores estimated via Data Envelopment Analysis (DEA) or Free Disposal Hull (FDH) approaches. The improvement is very easy to implement since it involves a simple correction of the variance estimator with an estimate of the bias of the already employed statistics without any additional computational burden and preserves the original asymptotic results such as consistency and asymptotic normality. The proposed approach persistently showed improvement in all the scenarios that we tried in various Monte-Carlo experiments, especially for relatively small samples or relatively large dimensions (measured by total number of inputs and outputs) of the underlying production model. This approach therefore is expected to produce more accurate estimates of confidence intervals of aggregates of individual efficiency scores in empirical research using DEA or FDH approaches and so must be valuable for practitioners. We also illustrate this method using a popular real data set to confirm that the difference in the estimated confidence intervals can be substantial. A step-by-step implementation algorithm of the proposed approach is included in the Appendix. |
| Keywords: | Data Envelopment Analysis, DEA; Free Disposal Hull, FDH; Statistical Inference; Production Efficiency; Productivity. |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:144&r=all |
| By: | Reinhold Kosfeld (University of Kassel); Timo Mitze (Southern University of Denmark) |
| Abstract: | Modern cluster theory provides reasons for positive external effects that accrue from the interaction of spatially proximate firms operating in common and related fields of economic activity. In this paper, we examine the impact of R&D-intensive clusters as a key factor of regional competitiveness on productivity and innovation growth. In analogy to the industry-oriented concepts of related and unrelated variety (Frenken, Van Oort, Verburg 2007), we differentiate between effects of cluster specialisation and diversity. The identification of R&D-intensive clusters is based on a hybrid approach of qualitative input-output analysis and spatial scanning (Kosfeld and Titze 2017). Our empirical study is conducted for a panel of German NUTS-3 regions in 2001-2011. To comprehensive account for specialisation and diversity effects of clustering we adopt a spatial econometric approach, which allows us to identify these effects beyond the geographical boundaries of a single region. After controlling for regional characteristics and unobserved heterogeneity, a robust ‘cluster strength’ effect (i.e. specialization) on productivity growth is found within the context of conditional convergence across German regions. With regard to the underlying mechanisms, we find that the presence of a limited number of R&D-intensive clusters in specific technological fields is most strongly linked to higher levels of regional productivity growth. While we also observe a positive effect of cluster strength on innovation growth once we account for spatial spillovers, no significant effects of ‘cluster diversity’ can be identified. This indicates that some but not all cluster-based regional development strategies are promising policy tools to foster regional growth processes. |
| Keywords: | Industry clusters, regional competitiveness, cluster specialisation, cluster diversity, correlated random effects model |
| JEL: | L16 R11 R15 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:202001&r=all |
| By: | Sang, Nguyen Minh |
| Abstract: | Income Diversification and Bank Efficiency in Vietnam |
| Date: | 2017–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:9x2yz&r=all |
| By: | Richard Hornbeck; Martin Rotemberg |
| Abstract: | We examine impacts of market integration on the development of American manufacturing, as railroads expanded through the latter half of the 19th century. Using new county-by-industry data from the Census of Manufactures, we estimate substantial impacts on manufacturing productivity from relative increases in county market access as railroads expanded. In particular, the railroads increased economic activity in marginally productive counties. Allowing for the presence of factor misallocation generates much larger aggregate economic gains from the railroads than previous estimates. Our estimates highlight how broadly-used infrastructure or technologies can have much larger economic impacts when there are inefficiencies in the economy. |
| JEL: | D24 N61 N71 R1 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26594&r=all |
| By: | Andrea Ricci |
| Abstract: | What is the link between flexible employment, labour productivity and wages? Taking advantage of an original firm level database combining information from Rilevazione Imprese e Lavoro (RIL) conducted by INAPP on a representative sample of Italian firms with the AIDA archive, we explore the nexus between temporary employment, labour productivity and wages along the distributions of labour productivity and wages. By applying conditional quantile technique with additive fixed effects, we detect a strong negative relationship between the use of fixed-term contracts and both labour productivity and wages. The effect of temporary employment on firms’ labour productivity and wages is heterogeneous along the distributions. Low-productive firms - recurring more to temporary contracts - are also more affected by an incremental use of short-term work arrangements risking to be trapped in a vicious cycle of low-productivity and low-wages. |
| Keywords: | Labour productivity, Wages, Temporary employment, Firm-level analysis |
| JEL: | J2 J24 J31 L25 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:ast:wpaper:0050&r=all |
| By: | Matteo Deleidi; Walter Paternesi Meloni; Luigi Salvati; Francesca Tosi |
| Abstract: | The promotion of regional convergence is at the heart of the European cohesion policy,although how to stimulate it still is a debated question in the economic theory. Endorsing a Kaldorian perspective, we investigate the determinants of labour productivity in Italian regions by applying Panel Structural VAR modelling to 1981-2013 data. By esplicitly considering the endogeneity among the studied variables, we find that labour productivity is stimulated by output growth and capital accumulation. Our findings bear important implications in terms of policy advice, leading to the conclusion that considerable public investment is necessary to stimulate economic growth and productivity especially in economically depressed areas, like the Italian Mezzogiorno. |
| Keywords: | Labour productivity; Technical progress; Investment; Regional differentials; Panel SVAR |
| JEL: | C33 O18 O47 R11 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:ast:wpaper:0051&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria); Paul N. Acha-Anyi (Walter Sisulu University, South Africa) |
| Abstract: | This study assesses the simultaneous openness hypothesis that trade modulates foreign direct investment (FDI) to induce positive net effects on total factor productivity (TFP) dynamics. Twenty-five countries in Sub-Saharan Africa and data for the period 1980 to 2014 are used. The empirical evidence is based on the Generalised Method of Moments. First, trade imports modulate FDI to overwhelmingly induce positive net effects on TFP, real TFP growth, welfare TFP and real welfare TFP. Second, with exceptions on TFP and welfare TFP where net effects are both positive and negative, trade exports modulate FDI to overwhelmingly induce positive net effects on real TFP growth and welfare real TFP. In summary, the tested hypothesis is valid for the most part. Policy implications are discussed. |
| Keywords: | Productivity; Foreign Investment; Sub-Saharan Africa |
| JEL: | E23 F21 F30 L96 O55 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:20/001&r=all |
| By: | Era Dabla-Norris; Mark Gradstein; Fedor Miryugin; Florian Misch |
| Abstract: | The extent of tax compliance has important implications for revenue yield, efficiency and the fairness of any tax system. Tax evasion undermines revenue collection, distorts competition, and undermines a country’s development prospects. In this paper, we investigate whether higher productivity causally leads to lower tax evasion. We first present stylized facts consistent with this view and develop a model that illustrates one potential transmission channel. Second, we test the model predictions at the firm level using the self-reported share of declared income as proxy for tax evasion for a large sample of emerging and developing economies. Our results suggests that productivity improvements by firms can lead to lower tax evasion. |
| Keywords: | economic development, firm productivity, tax evasion |
| JEL: | D20 H26 O47 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8002&r=all |
| By: | Luigi Burroni (Centre d'études européennes et de politique comparée) |
| Abstract: | Since mid-1990s social sciences have re-started to give attention to the role played by the state in promoting economic growth, with important contributions from economists, sociologists and political scientists. This attention further increased after the economic and financial crisis of 2007/08 with a rising strand of research that is focusing on the institutional foundations of different growth models in advanced economies. This paper is related to this wide strand of research and analyses how industrial policies can favor the emerging of institutional conditions that are conducive to economic growth. In particular, the paper analyzes the neglected relationship between public policies and labor productivity in OECD countries. The focus is on four policy arenas that have a direct impact on labor productivity: labor market, human capital, innovation and on the efficiency of public administration. The analysis underlines a strong association between labour productivity and public policies addressed to promote training and activation, tha quality of educational institutions and inter-institutional networks in innovation. Other kind of policies, such as those addressed to flexibilise the labour market or to reduce labour costs or to increase the average number of years of schooling seem to play a minor role. |
| Keywords: | Industrial Policies; Labour Market Regulation; Education; Labour Productivity ; Economic Growth |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/5r4i3252ep948ot3ojtc37goi7&r=all |
| By: | Bertani, Filippo; Raberto, Marco; Teglio, Andrea |
| Abstract: | Since the last 30 years, the economy has been undergoing a massive digital transformation. Intangible digital assets, like software solutions, web services, and more recently deep learning algorithms, artificial intelligence and digital platforms, have been increasingly adopted thanks to the diffusion and advancements of information and communication technologies. Various observers argue that we could rapidly approach a technological singularity leading to explosive economic growth. The contribution of this paper is on the empirical and the modelling side. First, we present a cross-country empirical analysis assessing the correlation between intangible digital assets and different measures of productivity. Then we figure out their long-term impact on unemployment under different scenarios by means of an agent-based macro-model. |
| Keywords: | Intangible assets, Digital transformation, Total factor productivity, Technological unemployment, Agent-based economics |
| JEL: | C63 |
| Date: | 2020–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:98233&r=all |
| By: | Giovanni Dosi; Richard B. Freeman; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito |
| Abstract: | This paper presents an Agent-Based Model (ABM) that seeks to explain the concordance of sluggish growth of productivity and of real wages found in macro-economic statistics, and the increased dispersion of firm productivity and worker earnings found in micro level statistics in advanced economies at the turn of the 21st century. It shows that a single market process unleashed by the decline of unionization can account for both the macro and micro economic phenomena, and that deunionization can be modeled as an endogenous outcome of competition between high wage firms seeking to raise productive capacity and low productivity firms seeking to cut wages. The model highlights the antipodal competitive dynamics between a “winner-takes-all economy” in which corporate strategies focused on cost reductions lead to divergence in productivity and wages and a “social market economy” in which competition rewards the accumulation of firm-level capabilities and worker skills with a more egalitarian wage structure. |
| JEL: | C63 E02 E24 J51 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26634&r=all |