nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒04‒27
fourteen papers chosen by

  1. Construction Value Chains and Their Productivity Growth By Kuusi, Tero; Junnonen, Juha-Matti; Kulvik, Martti
  2. Have R&D Spillovers Declined in the 21st Century? By Lucking, Brian; Bloom, Nicholas; Van Reenen, John
  3. Structural change within the services sector, Baumol's cost disease, and cross-country productivity differences By Sen, Ali
  4. Wind of change: Small-scale electricity production and distribution grid efficiency in Sweden By Vesterberg, Mattias; Zhou, Wenchao; Lundgren, Tommy
  5. Business visits, technology transfer and productivity growth By Mariacristina Piva; Massimiliano Tani; Marco Vivarelli
  6. The Social Efficiency for Sustainability: European Cooperative Banking Analysis By Leire San-Jose; Jose Retolaza; Eric Lamarque
  7. Cost of CO2 Emission Mitigation and its Decomposition: Evidence from Coal-fired Thermal Power Sector in India By Surender Kumar; Rakesh Kumar Jain
  8. Technology Adoption, Impact, and Extension in Developing Countries' Agriculture: A Review of the Recent Literature By Kazushi Takahashi; Rie Muraoka; Keijiro Otsuka
  9. Sources of Technical Efficiency among Smallholder Maize Farmers in Southern Malawi By Chirwa Ephraim W.
  10. Sinking or swimming in the cluster labour pool? A firm-specific analysis of the effect of specialized labour By Nils Grashof
  11. Technical Efficiency of Rice Farmers in Northern Ghana By Seidu Al-hassan
  12. The productivity puzzle and the Kaldor-Verdoorn law: the case of Central and Eastern Europe By Hubert Gabrisch
  13. Price-cost margins and fixed costs By Filip Abraham; Yannick Bormans; Jozef Konings; Werner Roeger
  14. How Does Supervision Affect Bank Performance during Downturns? By Uyanga Byambaa; Beverly Hirtle; Anna Kovner; Matthew Plosser

  1. By: Kuusi, Tero; Junnonen, Juha-Matti; Kulvik, Martti
    Abstract: Abstract The construction industry has suffered from low growth in recent decades. Motivated by the economic importance of the industry, we revisit the construction productivity puzzle by analyzing the construction value chains of 12 European countries with data from the World Input–Output and EU KLEMS databases. We decompose construction-related value-added and productivity contributions to the construction industry and the rest of the value chain, and show that the traditional focus on the construction industry is restrictive. There is a substantial amount of construction-related value-added generated in other industries, and the productivity growth in the construction value chains has, for the most part, been seen in them. Furthermore, we show that there is a strong, long-term relationship between construction-related patents and the improvement of total factor productivity in the value chains, but the value chains typically suffer from low efficiency in the use of information technology.
    Keywords: Construction, Productivity, Global value chains, Organization of production, Production management, Industrial structure and structural change
    JEL: D24 L16 L23 M11
    Date: 2020–04–23
  2. By: Lucking, Brian; Bloom, Nicholas; Van Reenen, John
    Abstract: Slow growth over the last decade has prompted policy attention towards increasing R&D spending, often via the tax system. We examine the impact of R&D on firm performance, both by the firm's own investments and through positive (and negative) spillovers from other firms. We analyse panel data on US firms over the last three decades, and allow for time-varying spillovers in both technology space (knowledge spillover) and product market space (product market rivalry). We show that the magnitude of R&D spillovers remains as large in the second decade of the 21st century as it was in the mid 1980s. Since the ratio of the social return to the private return to R&D is about four to one, this implies that there remains a strong case for public support of R&D. Positive spillovers appeared to temporarily increase in the 1995–2004 digital technology boom. We also show how these micro estimates relate to estimates from the endogenous growth literature and give some suggestions for future work.
    Keywords: innovation; patents; productivity; R&D; spillovers
    JEL: O31 O32 O33 F23
    Date: 2019–12–01
  3. By: Sen, Ali
    Abstract: I analyze structural change within the services sector and its implications for Baumol's cost disease and cross-country productivity differences. My results show that Baumol's cost disease becomes less relevant over development: It generates minor declines on aggregate productivity growth rate and accounts for a small share of the productivity growth slow- down. I argue that the existence of services sub-sectors with high-productivity growth rates, progressive services, and their substitutability with other sectors in the economy rationalize these facts. A model consistent with these stylized facts predict that Baumol's cost disease would depress aggregate productivity growth rate less in the future for developed countries. I later analyze cross-country productivity differences. The results in Duarte and Restuccia (2010) hide discrepancies between different services sub-sectors: Although developed countries have caught-up the US in the low-productivity growth services sub-sectors, stagnant services, the opposite conclusions emerge for the progressive/business services. I conclude that the substitutability between progressive/business and stagnant services sectors contribute to increasing aggregate productivity differences between the US and other developed countries. To put differently, structural change facts that limit Baumol's cost disease also advance cross-country productivity differences.
    Keywords: structural change, services, Baumol's cost disease, aggregate productivity.
    JEL: E01 O41 O47 O57
    Date: 2020–03–16
  4. By: Vesterberg, Mattias (CERE - the Center for Environmental and Resource Economics); Zhou, Wenchao (CERE - the Center for Environmental and Resource Economics); Lundgren, Tommy (CERE - the Center for Environmental and Resource Economics)
    Abstract: In this paper, we measure the technical efficiency for local electricity distribution firms in Sweden, and in particular how small- and micro-scale generation affects efficiency scores. Using two-stage data envelope analysis to model the technical efficiency and a double bootstrap approach to estimate the determinants of inefficiencies, we show that firms are heterogenous in terms of inefficiency, but that a large share of small- and micro-scale generation is not associated with more inefficient operations.
    Keywords: Data Envelope Analysis; Bootstrap; Efficiency
    JEL: C14 D42 Q41
    Date: 2020–04–15
  5. By: Mariacristina Piva (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore); Massimiliano Tani (UNSW Canberra, Australia – IZA, Bonn, Germany); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany)
    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: 2020–03
  6. By: Leire San-Jose (UPV/EHU - Universidad del Pais Vasco / Euskal Herriko Unibertsitatea [Espagne]); Jose Retolaza (DEUSTO - Universidad de Deusto [Bilbao] - University of Deusto); Eric Lamarque (IAE Paris - Sorbonne Business School)
    Abstract: This paper seeks to establish the relationship between economic efficiency and social efficiency to analyze the sustainability of banking in Europe. The type-effect has been analyzed, as stakeholder value banks-cooperatives and saving banks-should not be less socially and economically efficient than commercial banks. This European analysis was made using the Bankscope database, as it provides a unique insight into the stakeholder view that clarifies, by an analysis of two-stage boundaries, that there is no single model of social and economic efficiency according to the type of financial entity in Europe. These findings contribute to the social cost paradox and shared value perspective, and more broadly to stakeholder theory. It is established that a tradeoff between economic and social efficiency is not needed. There are different behaviors in different European countries. Moreover, our results could lead to the development of social indicators of the sustainability aspects of organizations without resorting to traditional accounting.
    Keywords: Data Envelopment Analysis (DEA),cooperative banks,stakeholder theory,sustainability,risk,social efficiency,banking
    Date: 2018–09–13
  7. By: Surender Kumar (Department of Economics, Delhi School of Economics); Rakesh Kumar Jain (Indian Railways, New Delhi, India)
    Abstract: We estimate Carbon Mitigation Cost (CMC), and the factors determining change in CMC using environmental production function. The CMC index is defined as the ratio of maximum production of electricity under unregulated and regulated production technology. Change in CMC index is decomposed into technical change, scale change and change in the level of CO2 emissions. The production function is estimated for 45 coal-fired thermal power plants over the period of 2008 – 2012 using Data Envelopment Analysis. Decomposition of CMC change reveals that impacts of changes in scale of operation and CO2 emissions were more than the reduced costs realized due to technical changes. We find that the sample plants in Indian coal-fired thermal power sector had to sacrifice about 3.5 percent of electricity production amounting to 2005US$ 1702 million of revenue loss over the 5 years due to regulation of CO2 emissions.
    JEL: C61 D24 Q22 Q54
    Date: 2020–03
  8. By: Kazushi Takahashi; Rie Muraoka; Keijiro Otsuka
    Abstract: Given the stagnant agricultural productivity and persistent food insecurity in low-income countries - notably in sub-Saharan Africa (SSA) - there has been continued interest in the adoption of new technology and its impact on productivity in these regions. Interestingly, there are signs of Green Revolution in maize and rice in SSA, reflected in sharply increasing yield trends in advanced regions. To increase crop yields and sustain yield gains, recent case studies of technology adoption unanimously recommend the adoption of integrated farm management systems, particularly in SSA. On the other hand, since the 2010s, there have been increasing numbers of studies on social network or farmer-to-farmer technology extension. These studies explore more efficient extension systems than traditional public-sector extension approaches. This article reviews both recent case studies of technology adoption and its productivity impacts as well as studies on agricultural extension to identify common findings, shortcomings, and major remaining issues.
    Keywords: technology adoption, productivity impact, agricultural extension, technological diffusion
    Date: 2019–10
  9. By: Chirwa Ephraim W. (Department of Economics Chancellor College University of Malawi)
  10. By: Nils Grashof (Centre for Regional and Innovation Economics, University of Bremen, Germany)
    Abstract: Human resources are a key factor for firm success, particularly nowadays when most industrial economies face an increasing shortage of qualified labour. With their pooled labour markets, regional clusters have been shown to be a preferable location for firms in order to satisfy their demand for skilled employees. Nevertheless, in light of possible disadvantages (e.g. labour poaching) and the broad field of studies dealing with firm performance differentials, the prevalent assumption that all companies profit equally from the specialized labour pool in clusters must be questioned. Consequently, the aim of this paper is to empirically investigate the conditions and mechanisms through which companies located in clusters can gain, in terms of innovativeness, from the specialized labour pool. By synthesizing theoretical streams 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 examined separately as well as interactively. Apart from revealing that being located in a cluster indeed increases on average firm innovativeness, one of the central findings is that firms benefit unequally within the cluster environment depending on the specific firm-level, cluster-level, industry-/market-level conditions and their respective interactions.
    Keywords: specialized labour pool, cluster, agglomeration, firm performance differentials, innovation
    JEL: C31 J24 L22 O30 R10 R23
    Date: 2020–04–12
  11. By: Seidu Al-hassan (Department of Economics & Entrepreneurship Development (DEED)University for Development Studies (UDS) Tamale, Ghana)
  12. By: Hubert Gabrisch (Wiesbaden Institute for Law and Economics (WILE))
    Abstract: This study attempts to identify the short- and long-run components of the Kaldor-Verdoorn (KV) law in empirical economics. The law claims that demand dynamics drive productivity dynamics. The law is tested with a panel of ten Central and Eastern-European countries, where labour productivity and demand growth have been slowing since 2004/2006 and where fears of an end of convergent growth are spreading. Meanwhile, the gradual slowing of output and productivity growth applies not only to the region considered in this study, but it is also a global phenomenon that is occurring despite remarkable technical progress and that is referred to as the so-called productivity puzzle. However, this puzzle would be solved in light of the KV law. To test for the short-term and long-term properties of this law, least squares and autoregressive distributed lag (ARDL) models are applied. Our results confirm the law for the region; slower productivity growth is not due to 'adverse technological progress' but to weakening external and domestic demand.
    Keywords: Productivity conundrum, Kaldor-Verdoorn law, panel autoregressive distributed lag (ARDL) model, Eastern Europe.
    JEL: C23 E24 O47
    Date: 2020
  13. By: Filip Abraham; Yannick Bormans; Jozef Konings; Werner Roeger
    Abstract: This paper introduces a new method which allows to simultaneously estimate price-cost margins and fixed costs in production, using standard production data on expenditures of inputs and revenue at the firm level. In particular, we exploit properties of the primal and dual price based and cost based Solow residual, in which we allow not only for the flexible treatment of capital (either fixed, variable or a combination of both) but also for the flexible treatment of other input factors, such as labor and intermediate inputs. We use a 30 year long firm level panel of Belgian firms to estimate price-cost margins and fixed costs as a share of revenue to show the following key results: Ignoring fixed costs in production, as in most of the literature, underestimates price-cost margins and overestimates excess profit margins. We also find that fixed costs as well as price-cost margins decline in the last three decades, pushing excess profit margins downwards, suggesting highly competitive markets in Belgium.
    Keywords: Price-cost margins, fixed costs, excess profits, market power, firm level data
    JEL: D21 L13 L16
    Date: 2020–04
  14. By: Uyanga Byambaa; Beverly Hirtle; Anna Kovner; Matthew Plosser
    Abstract: Supervision and regulation are critical tools for the promotion of stability and soundness in the financial sector. In a prior post, we discussed findings from our recent research paper which examines the impact of supervision on bank performance (see earlier post How Does Supervision Affect Banks?). As described in that post, we exploit new supervisory data and develop a novel strategy to estimate the impact of supervision on bank risk taking, earnings, and growth. We find that bank holding companies (BHCs or “banks”) that receive more supervisory attention have less risky loan portfolios, but do not have lower growth or profitability. In this post, we examine the benefits of supervision over time, and especially during banking industry downturns.
    Keywords: economic downturn; supervision; bank performance
    JEL: E5 G21 G28
    Date: 2020–04–08

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