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on Efficiency and Productivity |
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Issue of 2020‒03‒30
nineteen papers chosen by |
| By: | Mendez-Guerra, Carlos |
| Abstract: | This article studies the proximate sources of labor productivity differences across countries. Using a panel dataset for 74 countries covering the 1960-2010 period, it first documents that, relative to the US, labor productivity of the median country has been mostly stagnant, while cross-country disparities have drastically increased. Next, through the lens of a production function framework, it evaluates the proximate sources of labor productivity: physical capital, human capital, and aggregate efficiency. Results show stagnation and increasing disparities in physical capital, growth and decreasing disparities in human capital, and decline and increasing disparities in aggregate efficiency. By including the commonly unaccounted covariance between capital and aggregate efficiency into the analysis, disparities in aggregate efficiency explain most of the disparities in labor productivity across countries. |
| Keywords: | Productivity, Capital Accumulation, Efficiency, Stylized Facts |
| JEL: | O10 O40 O47 |
| Date: | 2020–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:99268&r=all |
| By: | Soroush, Golnoush (Department of Management, Politecnico di Torino, Italy); Cambini, Carlo (Department of Management, Politecnico di Torino, Italy); Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Llorca, Manuel (Department of Economics, Copenhagen Business School) |
| Abstract: | It is generally accepted that institutions are important for economic development. However, whether the performance of regulated utilities within a country is affected by the quality of institutions is yet to be investigated thoroughly. We analyse how the quality of regional institutions impact performance of Italian electricity distribution utilities. We use a stochastic frontier analysis approach to estimate cost functions and examine the performance of 108 electricity distribution utilities from 2011 to 2015. This unique dataset was constructed with the help of the Italian Regulator for Energy, Networks, and Environment. In addition, we use a recent dataset on regional institutional quality in Italy. We present evidence that utilities in regions with better government effectiveness, responsiveness towards citizens, control of corruption, and rule of law, also tend to be more cost efficient. The results suggest that national regulators should take regional institutional diversity into account in incentive regulation and efficiency benchmarking of utilities. |
| Keywords: | institutional quality; stochastic frontier analysis; electricity distribution in Italy; cost efficiency; inefficiency determinants |
| JEL: | D22 L51 L94 O43 |
| Date: | 2020–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2020_004&r=all |
| By: | Chaoran Chen; Diego Restuccia; Raul Santaeulalia-Llopis |
| Abstract: | We assess the effects of land markets on misallocation and productivity by exploiting effective 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 and a calibrated quantitative macroeconomic framework with heterogeneous household-farms that replicates---without targeting---the empirical effects, an outcome that externally validates our model. The empirical effects are nonlinear---impacting more farms farther away from efficient operational scale, consistent with our theory. Further, counterfactual model experiments suggest that the land reform reduces income inequality, is relatively scalable and explains a sizeable proportion of the full extent of misallocation. Additional insights on the role of (in)formality in land markets and its effects on technology adoption are provided. |
| Keywords: | Land markets, rentals, effects, misallocation, productivity, inequality, micro data, quantitative macro, informal markets, technology, fertilizers. |
| JEL: | E02 O10 O11 O13 O43 O55 Q15 Q18 Q24 |
| Date: | 2020–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-661&r=all |
| By: | Ottaviano, Gianmarco I. P.; Peri, Giovanni; Wright, Greg C. |
| Abstract: | This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may impact the productivity of the firm as well as its export costs. The first effect can be understood as the re-assignment of offshore tasks to immigrant workers. The second can be seen as a cost cutting effect due to immigration, and the third as a trade-cost reducing effect. To test the empirical significance and size of these effects, we exploit differences in immigrant inflows across U.K. labor markets and a new firm-level dataset on U.K. service firms. We find that immigrants increase overall productivity in service-producing firms, revealing a cost cutting impact on these firms. They also reduce the extent of country-specific offshoring, consistent with a reallocation of tasks, and they increase country-specific exports, consistent with a reduction in bilateral communication and trade costs. |
| Keywords: | immigration; service trade |
| JEL: | F10 F16 F22 F23 |
| Date: | 2018–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87333&r=all |
| By: | Diego Restuccia; Chaoran Chen; Raul Santaeulalia-Llopis |
| Abstract: | We assess the effects of land markets on misallocation and productivity by exploiting effective variation in land rentals across time and space arising from a large-scale land certifcation reform in Ethiopia, where land remains owned by the state. Our main fnding 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 and a calibrated quantitative macroeconomic framework with heterogeneous household-farms that replicates|without targeting|the empirical effects, an outcome that externally validates our model. The empirical effects are nonlinear|impacting more farms farther away from effcient operational scale, consistent with our theory. Further, counterfactual model experiments suggest that the land reform reduces income inequality, is relatively scalable and explains a sizeable proportion of the full extent of misallocation. Additional insights on the role of (in)formality in land markets and its effects on technology adoption are provided |
| Keywords: | Land markets, rentals, effects, misallocation, productivity, inequality, micro data, quantitative macro, informal markets, technology, fertilizers |
| JEL: | E02 O10 O11 O13 O43 O55 Q15 Q18 Q24 |
| Date: | 2020–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-660&r=all |
| By: | Hamilton,Kirk E.; Naikal,Esther G.; Lange,Glenn-Marie |
| Abstract: | Estimates of total factor productivity growth, a measure of increases in the efficiency of production, have traditionally been based on a two-factor model of labor and fixed capital. Because profits are measured residually in the System of National Accounts, they implicitly include rents on natural resource exploitation, with the result that the contribution of fixed capital to growth in the inputs to gross domestic product is misstated, particularly in resource dependent developing countries. This leads to incorrect measures of total factor productivity growth. Using data on natural resources from the World Bank's Wealth of Nations database and methods combining the Solow growth accounting model with recent work at the Organisation for Economic Co-operation and Development, this paper makes new estimates of total factor productivity growth for 74 developing countries over 1996-2014. In the aggregate, including natural resources as a factor of production increases estimated total factor productivity growth across all country income classes and regions of the world when compared with the traditional two-factor approach. In addition, the estimated total factor productivity growth including natural resources is less volatile over time in the great majority of countries compared with the traditional approach. The availability of World Bank data on natural resource quantities and rents for a wide range of countries suggests that natural resources should be included in total factor productivity growth estimation going forward. Further research could focus on the distinctive roles played by different natural resource endowments. |
| Keywords: | Global Environment,Energy and Natural Resources,Coastal and Marine Resources,Food Security,Oil Refining&Gas Industry,Inequality |
| Date: | 2019–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8704&r=all |
| By: | Imbert, Clement (University of Warwick and JPAL); Seror, Marlon (University of Bristol, DIAL, Institut Convergences Migrations); Zylberberg, Yanos (Chinese University of Hong Kong); Zhang, Yifan (University of Bristol, CESifo, the Alan Turing Institute) |
| Abstract: | How does rural-urban migration shape urban production in developing countries? We use longitudinal data on Chinese manufacturing firms between 2001 and 2006, and exploit exogenous variation in rural-urban migration induced by agricultural price shocks for identification. We find that, when immigration increases, manufacturing production becomes more labor-intensive in the short run. In the longer run, firms innovate less, move away from capital-intensive technologies, and adopt final products that use low-skilled labor more intensively. We develop a model with endogenous technological choice, which rationalizes these findings, and we estimate the effect of migration on factor productivity and factor allocation across firms. JEL codes: D24; J23; J61; O15 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1254&r=all |
| By: | Giuseppe Nicoletti; Indre Bambalaite; Christina von Rueden |
| Abstract: | This paper assesses the possible dynamic effects of occupational entry regulations (OER) on productivity. It combines firm-level productivity data with a new cross-country policy indicator measuring the stringency of OER by the presence of administrative burdens, qualifications requirements, and mobility restrictions, for five professional and ten personal services. The evidence suggests that bold reforms easing OER, especially those concerning qualification requirements, could help increase the contribution of personal and professional services to aggregate productivity growth via two channels: the acceleration of their catch up to best global practices (within-firm channel), where firms in regulated sectors could gain up to 2.5 percentage points of productivity on average; and a higher contribution of labour reallocation to firms’ employment growth (between-firm channel), which could increase by up to 10 percent for the most productive firms. |
| Keywords: | catch-up, occupational licensing, productivity, reallocation, regulations |
| JEL: | J44 O43 L5 O57 L16 C21 |
| Date: | 2020–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1605-en&r=all |
| By: | Tommaso Agasisti (National Research University Higher School of Economics); Aleksei Egorov (National Research University Higher School of Economics); Margarita Maximova (National Research University Higher School of Economics) |
| Abstract: | This paper studies the effect of merger policies in Russia on university efficiency. We consider the non-voluntary merger policy conducted by the Ministry of Education and Science based on university performance indicators. First, the efficiency scores of universities are estimated using a bootstrapped DEA non-parametric technique. The efficiency scores were evaluated for universities that were merged and for a control group formed through propensity score matching before and after the implementation of the policy. Then, a fuzzy regression discontinuity design was implemented in order to reveal the causal impact of mergers on efficiency levels. We find a positive, statistically significant effect of merger policy on university efficiency. The results of the analysis suggest that merged universities experience greater efficiency gains (or smaller efficiency declines) after mergers. |
| Keywords: | Universities, mergers, fuzzy regression discontinuity design, efficiency, DEA, Malmquist index. |
| JEL: | I21 I23 I28 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:226/ec/2020&r=all |
| By: | Seyha Khek; Phon Sophat (National Bank of Cambodia); Vety Meng |
| Abstract: | This study aims to determine how Information Technology (IT) impacts financial inclusion and strengthens the profit of commercial banks and MDIs in Cambodia using two-stage value chain DEA technique. The model also provides the efficiency score and approached factors within financial inclusion and profitability mechanism. The finding suggests that financial inclusion is backed up by strong significant technology while profitability is anchored at 76.5 percent of total banks' profits. Furthermore, through the usage of IT-based transactions at 32 percent, banks and financial institution could enhance 28 percent of profit, and 78 percent of ATMs has been used to promote the access and financial usage. From these results, improving institutional IT adoption could increase financial inclusion and achieves the profit efficiency. |
| Keywords: | Financial inclusion,Profitability,Technology,two-stage Value Chain DEA |
| Date: | 2020–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02496410&r=all |
| By: | Tetsuji OKAZAKI |
| 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: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:cnn:wpaper:20-001e&r=all |
| By: | Mark Bils; Peter J. Klenow; Cian Ruane |
| Abstract: | The ratio of revenue to inputs differs greatly across plants within countries such as the U.S. and India. Such gaps may reflect misallocation which hinders aggregate productivity. But differences in measured average products need not reflect differences in true marginal products. We propose a way to estimate the gaps in true marginal products in the presence of measurement error. Our method exploits how revenue growth is less sensitive to input growth when a plant’s average products are overstated by measurement error. For Indian manufacturing from 1985–2013, our correction lowers potential gains from reallocation by 20%. For the U.S. the effect is even more dramatic, reducing potential gains by 60% and eliminating 2/3 of a severe downward trend in allocative efficiency over 1978–2013. |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-07&r=all |
| By: | Piva, Mariacristina; Tani, Massimiliano; Vivarelli, Marco |
| Abstract: | This paper builds on and considerably extends Piva, Tani and Vivarelli (2018), confirming the key role of Business Visits as a productivity enhancing channel of technology transfer. Our analysis is based on a unique database on business visits sourced from the U.S. National Business Travel Association, merged with OECD and World Bank data and resulting in an unbalanced panel covering 33 sectors and 14 countries over the period 1998-2013 (3,574 longitudinal observations). We find evidence that BVs contribute to fostering labour productivity in a significant way. While this is consistent with what found by the previous (scant) empirical literature on the subject, we also find that short-term mobility exhibits decreasing returns, being more crucial in those sectors characterized by less mobility and by lower productivity performances. |
| Keywords: | Business visits,Labour mobility,Knowledge diffusion,R&D,Productivity |
| JEL: | J61 O33 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:486&r=all |
| By: | Mateo Andrés Rivera Arbeláez; Alejandro Torres |
| JEL: | D24 C14 L6 |
| Date: | 2020–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:col:000122:018003&r=all |
| By: | Schiffbauer,Marc Tobias; Sampi Bravo,James Robert Ezequiel |
| Abstract: | This paper uses a unique data set that captures the elimination of subnational regulatory barriers to firm entry and competition across 1,800 municipalities and matches it with establishment census panel data to estimate the impact on establishment productivity and markups. The elimination of local barriers that were inconsistent with national legislation was the result of legal reforms that strengthened the mandate of Peru's competition authority. Legislative changes in 2013/14 empowered the competition authority to enforce the elimination of illegal, sector-specific subnational regulatory barriers to firm entry and competition, conditional on the existence of a precedence. The changes provide a unique quasi-experimental setting to identify the impact of enforcing competition within the controlled institutional environment of a single country. The paper finds that the elimination of subnational barriers to entry boosted the (revenue) productivity of establishments operating in reform municipalities and sectors relative to establishments in nonreform municipalities/sectors. But it did not raise the establishments'markups, which, if anything, declined, suggesting that physical productivity improved. The paper provides a wide range of evidence supporting a causal interpretation of this finding. The results suggest that strengthening the mandate of institutions enforcing competition is critical to raise productivity. |
| Keywords: | Transport Services,International Trade and Trade Rules,Employment and Unemployment,Food&Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Competition Policy,Competitiveness and Competition Policy |
| Date: | 2019–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8714&r=all |
| By: | Martins, Pedro S. |
| Abstract: | As work changes, firm-provided training may become more relevant for good economic and social outcomes. However, so far there is little or no causal evidence about the effects of training on firms. This paper studies a large training grants programme in Portugal, contrasting successful firms that received the grants and unsuccessful firms that did not. Combining several rich data sets, we compare a large number of potential outcomes of these firms, while following them over long periods of time before and after the grant decision. Our difference-in-differences models estimate significant positive effects on take up (training hours and expenditure), with limited deadweight; and that such additional training led to increased sales, value added, employment, productivity, and exports. These effects tend to be of at least 5% and, in some cases, 10% or more. |
| Keywords: | Training subsidies,Productivity,Counterfactual evaluation |
| JEL: | J24 H43 M53 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:488&r=all |
| By: | Antonio Peyrache (CEPA - School of Economics, The University of Queensland); Angelo Zago (Dipartimento di Scienze Economiche, Università degli Studi di Verona) |
| Abstract: | In this paper we propose an equilibrium computational model of the market for justice that focuses on supply policies aiming to increase the efficiency of the system. We measure performance in terms of completion times and inefficiency in terms of the discrepancy between observed completion time and an efficient benchmark (equilibrium) completion time. By using a rather general production model that can take into account resource use, we can study the (steady state) performance of the justice sector as a whole and improve both on the analysis of length of trials and on standard measures of partial productivity (like the number of defined cases per judge). In order to identify demand and supply and run our counterfactual equilibrium analysis, we focus on a recently collected dataset on the Italian courts of justice system. The Italian case is useful because it provides exogeneous variation in the quantity of interest that allows for identification. It is also interesting because of the heterogeneity of the system in terms of completion times. Overall we find that three supply policies can make a significant contribution to the efficiency of the system: introduction of best practices, break-ups of large courts of justice into smaller ones (to exploit economies of scale), and optimal reallocation of judges across courts (in order to enhance efficiency). We find that, even without introduction of best practices, break- ups and reallocation can reduce the system completion time by around 30%. Although we are critical about the external validity of our results, these results point to the fact that there is large scope for supply policies aiming at improving the processing time of judicial systems. |
| Keywords: | Courts of Justice; Efficiency; Equilibrium; Completion Times |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:147&r=all |
| By: | Nils Grashof |
| Abstract: | Regional clusters have become an inseparable component of modern economies. Spurred by the idea that clusters unrestrictedly encourage firm innovativeness, such as in the lighthouse example of Silicon Valley, the cluster approach has particularly gained attention among policy makers who have supported the creation and development of clusters. Nevertheless, due to a lack of holistic consideration of different influencing variables, the scientific results about the effect of clusters on firm innovative performance are highly contradictive. For companies as well as policy makers, it is therefore still difficult to evaluate the concrete consequences of being located in a cluster. Consequently, the aim of this paper is to empirically investigate the conditions and mechanisms through which companies can gain from being located in clusters, focussing thereby in particular on possible knowledge spillovers. Therefore, based on an integration of the theoretical perspectives from the strategic management (e.g. resource-based view) and the economic geography literature (e.g. cluster approach), variables from three different levels of analysis (micro-level, meso-level and macro-level) are considered separately as well as interactively. By analysing a unique multilevel dataset of 11,889 companies in Germany, including 1,391 firms that are located within a cluster, evidence is found that being located in a cluster has indeed a positive impact on firm innovative performance. However, the results also indicate that firms benefit unequally within the cluster environment, depending on the specific firm, cluster and market/industry conditions. |
| Keywords: | knowledge spillovers, cluster effect, firm performance, multilevelanalysis, innovation |
| JEL: | C31 L10 L22 O30 R10 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2013&r=all |
| By: | Jose Carreno |
| Abstract: | The United States has been experiencing a slowdown in productivity growth for more than a decade. I exploit geographic variation across U.S. Metropolitan Statistical Areas (MSAs) to investigate the link between the 2006-2012 decline in house prices (the housing bust) and the productivity slowdown. Instrumental variable estimates support a causal relationship between the housing bust and the productivity slowdown. The results imply that one standard deviation decline in house prices translates into an increment of the productivity gap -- i.e. how much an MSA would have to grow to catch up with the trend -- by 6.9p.p., where the average gap is 14.51%. Using a newly-constructed capital expenditures measure at the MSA level, I find that the long investment slump that came out of the Great Recession explains an important part of this effect. Next, I document that the housing bust led to the investment slump and, ultimately, the productivity slowdown, mostly through the collapse in consumption expenditures that followed the bust. Lastly, I construct a quantitative general equilibrium model that rationalizes these empirical findings, and find that the housing bust is behind roughly 50 percent of the productivity slowdown. |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:20-04&r=all |