nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒03‒23
sixteen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Misallocation and Intersectoral Linkages By Sophie Osotimehin; Latchezar Popov
  2. Natural Disasters and Industrial Production Efficiency: Evidence from Prewar Japan By Preeya Mohan; Toshihiro Okubo; Eric Strobl
  3. Geography of smallholders’ tractor adoptions and R&D–Induced land productivity: Evidence from household survey data in Ghana: By Takeshima, Hiroyuki; Liu, Yanyan
  4. Productivity in Europe: Trends and drivers in a service-based economy By Peter Bauer; Igor Fedotenkov; Aurelien Genty; Issam Hallak; Peter Harasztosi; David Martinez Turegano; David Nguyen; Nadir Preziosi; Ana Rincon-Aznar; Miguel Sanchez Martinez
  5. The sources of the evolution of China's provincial economic gap: A green economic growth accounting perspective By Yang, Wenju; Long, Ruiyun
  6. Controlling for environmental conditions in regulatory benchmarking By Emil Heesche; Mette Asmild
  7. Identifying Service Market Reform Priorities in Italy By Nazim Belhocine; Daniel Garcia-Macia
  8. The roles of agroclimatic similarity and returns on scale in the demand for mechanization: Insights from Nigeria By Takeshima, Hiroyuki
  9. The (marginal) cost of technology adoption: A cost-effectiveness analysis of Digital Green’s video-mediated agricultural extension approach in Ethiopia By Bernard, Tanguy; Makhija, Simrin; Spielman, David J.; Abate, Gashaw T.
  10. Autonomy, Performance And Efficiency: An Empirical Analysis Of Russian Universities 2014-2018 By Tommaso Agasisti; Ekaterina Shibanova
  11. Industrial Specialization or Diversity? How High-Speed Rail Fosters Japan’s Regional Agglomeration Economy By Wetwitoo, Jetpan
  12. The Effects of Post-Crisis Banking Reforms By Joao A. C. Santos; Richard K. Crump
  13. Subdued potential growth: Sources and remedies By Sinem Kilic Celik; M.Ayhan Kose; Franziska L. Ohnsorge
  14. Efficiency Perspective on Telecom Mobile Data Traffic By Riko Hendrawan
  15. Environmental Performance in Asia: Overview, Drivers, and Policy Implications By Huang, Bihong; Xu, Yining
  16. The Impact of Deunionization on the Growth and Dispersion of Productivity and Pay By Giovanni Dosi; Richard B. Freeman; Marcelo C. Pereira; Andrea Roventini; Maria Enrica Virgillito

  1. By: Sophie Osotimehin (University of Quebec at Montreal); Latchezar Popov (Texas Tech University)
    Abstract: We analytically characterize the aggregate productivity loss from allocative distortions in a setting that accounts for the sectoral linkages of production. We show that the effects of distortions and the role of sectoral linkages depend crucially on how substitutable inputs are. We find that the productivity loss is smaller if input substitutability is low. Moreover, with low input substitutability, sectoral linkages do not systematically amplify the effects of distortions. In addition, the impact of the sectors that supply intermediate inputs becomes smaller. We quantify these effects in the context of the distortions caused by market power, using industry-level data for 35 countries. With our benchmark calibration, which accounts for low input substitutability, the median aggregate productivity loss from industry-level markups is 1.3%. To assume instead unit elasticities of substitution (i.e., to use a Cobb-Douglas production function) would lead to overestimating the productivity loss by a factor of 1.8. Sectoral linkages do amplify the cost of markups, but the amplification factor is considerably weaker than with unit elasticities.
    Keywords: Aggregate productivity; Input-output; Production network; Misallocation; CES production function; Market power
    JEL: D57 D61 O41 O47
    Date: 2020–02–18
  2. By: Preeya Mohan (Sir Arthur Lewis Institute of Social and Economic Studies, The University of the West Indies); Toshihiro Okubo (Faculty of Economics, Keio University); Eric Strobl (Department of Economics, Bern University)
    Abstract: In this paper, we investigate whether destruction due to natural disasters induces industries to increase their production efficiency using the case of prewar Japan, a period of frequent disasters and technological upgrading. To this end, we compile a regional sectoral data set of natural disaster destruction and production for machinery and textiles during the period. We then employ a stochastic frontier analysis (SFA) approach to estimate the role of disaster events on changes in production efficiency. Our results show that earthquakes led to increases in efficiency for both machinery and textiles, although they were substantially greater for textiles due to recovery persisting longer. In contrast, climate-related natural disaster events played no role in production efficiency.
    Keywords: Stochastic Frontier Analysis (SFA), Natural Disasters, Production Efficiency, Earthquakes, Inefficiency Scores
    JEL: Q54 R11 O47
    Date: 2020–03–01
  3. By: Takeshima, Hiroyuki; Liu, Yanyan
    Abstract: Despite the urbanization and gradual rise of medium-to-large scale farming sector, smallholders without substantial mechanization remain central to agriculture in countries like Ghana. Significant knowledge gaps exist on the adoptions of agricultural mechanization among smallholders for whom the scope for exploiting complementarity with land is limited. We test the hypotheses that high-yielding technologies, which potentially raise total factor productivity and also returns to more intensive farm power use, are important drivers of adoptions of agricultural mechanization among smallholders. Using the three rounds of repeated crosssectional, nationally representative data (Ghana Living Standard Surveys 2006, 2013, 2017), as well as unique tractor-use data in Ghana, and multi-dimensional indicators of agroclimatic similarity with plant- reeding locations, this paper shows that the adoption of rented agricultural equipment and tractors in Ghana has been induced by high-yielding production systems that have concentrated in areas that are agroclimatically similar to plant-breeding locations. These effects hold for mechanization adoptions at both extensive margins (whether to adopt or not) and intensive margins (how much to adopt). These linkages have strengthened between 2006 and 2010s, partly due to improved efficiency in supply-side factors of mechanization.
    Keywords: GHANA, WEST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, agricultural mechanization, technology, land productivity,
    Date: 2019
  4. By: Peter Bauer (European Commission - JRC); Igor Fedotenkov (European Commission - JRC); Aurelien Genty (European Commission - JRC); Issam Hallak (European Commission - JRC); Peter Harasztosi (European Commission - JRC); David Martinez Turegano (European Commission - JRC); David Nguyen (National Institute of Economic and Social Research); Nadir Preziosi (European Commission - JRC); Ana Rincon-Aznar (National Institute of Economic and Social Research); Miguel Sanchez Martinez (European Commission - JRC)
    Abstract: High levels of labour productivity growth are a key element to maintaining high standards of living in the long run in Europe. However, the EU has been experiencing a significant slowdown in labour productivity and total factor productivity growth, a phenomenon which has even exacerbated over the last decade, contrary to what would be expected in the recovery from the financial crisis. The trends and driving forces of the current sluggish productivity growth in Europe are analysed in this report with a special emphasis on services. After reviewing the literature in the field, the report zooms in on the role played by factors such as structural change, intangible investments, firm size distribution, firm demography, labour dynamics, zombie firms, business cycle dynamics and public expenditure and assesses their impact on productivity growth based on a variety of data sources and methodologies. The report focusses on the main results at EU level and includes some cross-country and cross-sectoral comparisons wherever possible.
    Keywords: productivity puzzle, structural change, intangible assets, public expenditure, business cycles, creative job destruction, firm entry, firm exit, firm size, zombie firms, Member States, service sectors
    Date: 2020–03
  5. By: Yang, Wenju; Long, Ruiyun
    Abstract: The inter-provincial economic gap in China is obvious and tends to expand, although it is still unclear why this occurs. This paper combines DEA-based green economic growth accounting, growth convergence test and distribution dynamic analysis to show that China's inter-provincial labor productivity demonstrated significant growth convergence between 1997 and 2016, while it was significantly promoted by capital deepening and obviously inhibited by technological progress and human capital accumulation, and the effect of technological efficiency change remained unclear. In addition, the gap of labor productivity level in China's provinces widened significantly, which can be largely attributed to the combined effects of technological progress and capital deepening. The economic growth accounting analysis ignoring Energy and environmental factors tends to overestimate the relative contribution of factor accumulation and underestimate that of TFP changes, while ignoring human capital will lead to opposite biased results, but both of which do not change the qualitative conclusions mentioned above.
    Keywords: counterfactual analysis,distribution dynamic analysis,green economic growth accounting,multimodal test,non-parametric test
    JEL: O18 O47 R11
    Date: 2020
  6. By: Emil Heesche (Department of Food and Resource Economics, University of Copenhagen); Mette Asmild (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: Data Envelopment Analysis (DEA) is often used by regulators to create a pseudo-competitive environment for sectors with natural monopolies. In addition to develop a theoretically well-behaved model, regulators need to take into account several other factors, such as the political agenda and the historical context of the regulation. This sometimes results in some unconventional approaches, which furthermore are not easily changed. In this paper, we discuss the model used for DEA-based benchmark regulation of the Danish water sector. More specifically, we look at the characteristics of the method the regulator uses to take into account differences in the companies’ environmental conditions. We show how the approach currently used to control for differences in environmental conditions seemingly does not sufficiently control for the actual differences as intended since second stage analysis still reveals significant correlations between the efficiency scores and these external factors. To explain this, we reconsider the second stage analysis, using permutation-based approaches and also accounting for the fact that only those companies that in the DEA assign weights to those output measures adjusted for environmental conditions, will benefit from the adjustments.
    Keywords: Data envelopment analysis; Second Stage Analysis; Environmental Variables; Regulation; Permutation
    JEL: C02 C14 C51 C52 C61 C67 L51
    Date: 2020–03
  7. By: Nazim Belhocine; Daniel Garcia-Macia
    Abstract: Italy’s labor productivity in market services has declined since 2000, underperforming manufacturing and peer European countries, especially in strongly regulated sectors. A model of monopolistic competition is used to identify which service sectors would benefit more from removing entry and/or exit barriers. Using Italian firm-level data, the paper finds that sectors with high markups, such as professional services, would primarily benefit from removing entry barriers. Sectors with a large mass of unproductive firms, such as retail, would instead benefit from removing exit barriers. Policy recommendations to improve efficiency are outlined in relation to the sectoral priorities identified in the data.
    Date: 2020–02–21
  8. By: Takeshima, Hiroyuki
    Abstract: Despite economic transformations and urbanization, declining shares of the workforce employed in the agricultural sector, and gradual growth of agricultural mechanization, production costs in the agricultural sector and food prices remain high in Nigeria relative to those in some of the other developing countries. Understanding how the adoption of mechanical technologies is related to agricultural productivity is, therefore, important for countries like Nigeria. Using farm household data from northern Nigeria as well as var-ious spatial agroclimatic data, this study shows that the adoption of key mechanical technologies in Nigerian agriculture (animal trac-tion, tractors, or both) has been high in areas that are more agro-climatically similar to the locations of agricultural research and de-velopment (R&D) stations, and this effect is heterogeneous, being particularly strong among relatively larger farms. Furthermore, such effects are likely to have been driven by the rise in returns-to-scale in the underlying production function caused by the adoption of these mechanical technologies. Agricultural mechanization, repre-sented here as the switch from manual labor to animal traction and tractors, has been not only raising the average return on scale but also potentially magnifying the effects of productivity-enhancing public-sector R&D on spatial variations in agricultural productivity in countries like Nigeria.
    Keywords: NIGERIA, WEST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, agricultural mechanization, agroclimatic zones, agricultural productivity, innovation adoption, technology, tractors, farm size, animal power, agroclimatic similarity, returns on scale, inverse probability weighting,
    Date: 2019
  9. By: Bernard, Tanguy; Makhija, Simrin; Spielman, David J.; Abate, Gashaw T.
    Abstract: Since 2014, Digital Green and the Government of Ethiopia have been piloting a video-mediated approach to agricultural extension provision. The approach aims to increase the growth rate of yields and output for major food staples by encouraging farmers to adopt productivity-enhancing agricultural technologies and practices. The video-mediated extension approach is highlighted by three integrated components: production of short, localized video content, screening videos in group sessions facilitated by extension agents, and verification of the uptake of the target technologies and practices. A key tenet of this approach is its ability to increase adoption rates at a relatively low cost per farmer.
    Keywords: ETHIOPIA, EAST AFRICA, AFRICA SOUTH OF SAHARA, AFRICA, extension activities, innovation adoption, yields, productivity, capacity building, technology adoption, video technology,
    Date: 2019
  10. By: Tommaso Agasisti (National Research University Higher School of Economics); Ekaterina Shibanova (National Research University Higher School of Economics)
    Abstract: This paper studies the relationship between university institutional autonomy (both formal and informal) and their performance and efficiency using multi-stage empirical methodology. First, we measure an “autonomy-in-use” index, and then we employ Data Envelopment Analysis in order to evaluate institutional efficiency. Lastly, we use a panel fixed effect regression and an instrumental variable approach to provide robust evidence for the relationship between institutional autonomy, performance and efficiency. We find that formal status of autonomy does not predict higher publication activity or efficiency. However, the findings also reveal that informal autonomy is positively associated with efficiency scores, and advanced practices in staff management can contribute to increases in publication activity and overall institutional efficiency
    Keywords: autonomy, higher education management, composite indicator, efficiency analysis
    JEL: I22 I23 I28
    Date: 2020
  11. By: Wetwitoo, Jetpan (Asian Development Bank Institute)
    Abstract: We investigate the relationship between high-speed rail (HSR) and agglomeration economy in the scope of specialization and diversity to answer two questions: first, to determine whether specialization or diversity promotes economic productivity, and second, to determine whether HSR promotes specialization or diversity. Specialization/diversity agglomeration index based on the coefficient of variation of localization agglomeration is proposed to measure city’s specialization and diversity. Our analysis utilizes data of agglomeration across 17 industrial sectors in Japanese municipality level. Depending on the definition of agglomeration diversity, one of the results reveals a U-curve relationship as productivity is plotted in Y-axis and specialization agglomeration in X-axis. In other words, both specialization and diversity benefit to economic productivity. Yet, a city which is not specialized and not with a high level of industrial diversity will be the loser in the economy. For the second question, based on the assumption of a quadratic function, HSR could affect city’s specialization and diversity based on the distance to HSR service. From the results, HSR promotes industrial diversity in the city with HSR service, and the city located around 540 km away from HSR service, while HSR promotes city’s specialization in the city located around 270 km away from HSR service.
    Keywords: agglomeration economy; diversity; economic productivity; high-speed rail; specialization
    JEL: R11 R30 R40
    Date: 2019–05–17
  12. By: Joao A. C. Santos; Richard K. Crump
    Abstract: The financial crisis of 2007-08 exposed many limitations of the regulatory architecture of the U.S. financial system. In an attempt to mitigate these limitations, there has been a wave of regulatory reforms in the post-crisis period, especially in the banking sector. These include tighter bank capital and liquidity rules; new resolution procedures for failed banks; the creation of a stand-alone consumer protection agency; greater transparency in money market funds; and a move to central clearing of derivatives, among other measures. As these reforms have been finalized and implemented, a healthy debate has emerged in the policy and academic communities over the degree to which they have achieved their intended goals and the extent of any unintended consequences that might have arisen in the process.
    Keywords: jl21
    JEL: G2
  13. By: Sinem Kilic Celik; M.Ayhan Kose; Franziska L. Ohnsorge
    Abstract: Global potential output growth has been flagging. At 2.5 percent in 2013-17, post-crisis potential growth is 0.5 percentage point below its longer-term average and 0.9 percentage point below its average a decade ago. Compared with a decade ago, potential growth has declined 0.8 percentage point in advanced economies and 1.1 percentage point in emerging market and developing economies. The slowdown mainly reflected weaker capital accumulation but is also evidence of decelerating productivity growth and demographic trends that dampen labor supply growth. Unless countered, these forces are expected to continue and to depress global potential growth further by 0.2 percentage point over the next decade. A menu of policy options is available to help reverse this trend, including comprehensive policy initiatives to lift physical and human capital and to encourage labor force participation by women and older workers.
    Keywords: Potential growth, potential output, advanced economies, emerging market and developing economies
    JEL: O40 O47 E20
    Date: 2020–03
  14. By: Riko Hendrawan (Telkom University, Jl. Gegerkalong Hilir No. 47, 40251, Bandung, Indonesia Author-2-Name: Kristian WA Nugroho Author-2-Workplace-Name: Faculty Economic and Business, Telkom University, Indonesia Author-3-Name: Gayuh T Permana Author-3-Workplace-Name: Faculty Economic and Business, Telkom University, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - The global industry is transforming into a digital world, evidenced by digital transformation performed by almost all of the industry sectors. One of the digital drivers is the support of connectivity provided by the telecommunication industry. The increasing mobile subscribers, along with the growth of mobile data traffic, is the sign of digital transformation itself. However, the rise of OTT (Over the Top) service providers tends to acquire the revenue share of the current telecom industry, seeing the trend of voice and SMS revenue that projected to decline.Methodology/Technique - This research is intended to measure the impact of increasing mobile data traffic that mostly caused by OTT services to telecom efficiency. The efficiency measurement & analysis were performed using the Stochastic Frontier Approach (SFA) & Data Envelopment Analysis (DEA) method.Findings - By using the SFA method, Maxis (Malaysia) got the highest efficiency score (0.98), followed by AIS (Thailand) with efficiency score 0.94 and Indosat Ooredoo (Indonesia) as the least efficient telecom provider (0.5). However, by using the DEA method, TLKM (Indonesia) got the highest efficient (0.98), and Celcom Axiata (Malaysia) was the least efficient (0.73/0.8).Novelty - The compelling results of this study are variable total asset variable had a significant negative impact on the efficiency score, and the variable of mobile data traffic was not significantly impacting the efficiency value (t-Ratio 0.71).Type of Paper - Empirical.
    Keywords: Telecom Operators; Efficiency; Mobile Data Traffic
    JEL: M10 M15 M19
    Date: 2020–03–30
  15. By: Huang, Bihong (Asian Development Bank Institute); Xu, Yining (Asian Development Bank Institute)
    Abstract: As accompaniments to fast-growing economies, the effects of environmental degradation such as deteriorating water quality, land deforestation and pollution, and frequent atmospheric haze are gaining increasing attention from both policy makers and the public across countries in Asia. We give an overview on environmental performance, disentangle its drivers, and finally advance preliminary policy recommendations for more effective environmental governance in the region.
    Keywords: environment; environmental performance; governance; Asia
    JEL: Q50 Q56 Q58
    Date: 2019–08–26
  16. By: Giovanni Dosi (Scuola Superiore Sant’Anna); Richard B. Freeman (Harvard University and NBER); Marcelo C. Pereira (University of Campinas and Scuola Superiore Sant’Anna); Andrea Roventini (Scuola Superiore Sant’Anna and OFCE, Sciences Po); Maria Enrica Virgillito (Scuola Superiore Sant’Anna)
    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.
    Keywords: Unionisation, productivity slowdown, market selection, reallocation, agent-based model
    JEL: J51 E02 E24 C63
    Date: 2020–02

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