nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒05‒11
ten papers chosen by

  1. The Effects of Local Market Concentration and International Competition on Firm Productivity: Evidence from Mexico By Rodriguez Castelan, Carlos; López-Calva, Luis-Felipe; Barriga Cabanillas, Oscar
  2. Digital technologies and firm performance: Evidence from Europe By Cathles, Alison; Nayyar, Gaurav; Rückert, Désirée
  3. Do environmental and economic performance go together? A review of micro-level empirical evidence from the past decade or so By Dechezleprêtre, Antoine; Koźluk, Tomasz; Kruse, Tobias; Nachtigall, Daniel; De Serres, Alain
  4. Efficiency of microenterprises in the Nigerian economy By Igbekele A. Ajibefun; Adebiye G. Daramola
  5. Going Revolutionary: The Impact of 4IR Technology Development on Firm Performance By Mario Benassi; Elena Grinza; Francesco Rentocchini; Laura Rondi
  6. Productivity, market structure and trade liberalization in Nigeria By Adeola F. Adenikinju; Louis N. Chete
  7. Worker Flows, Reallocation Dynamics, and Firm Productivity: New Evidence from Longitudinal Matched Employer-Employee Data By Elena Grinza
  8. New Productivity Drivers: Revisiting the Role of Digital Capital, FDI and Integration at Aggregate and Sectoral Levels By Amat Adarov; Robert Stehrer
  9. Modeling R&D spillovers to productivity. The effects of tax policy By Thomas von Brasch; Ådne Cappelen; Håvard Hungnes; Terje Skjerpen
  10. Regulatory stress testing and bank performance By Ahnert, Lukas; Vogt, Pascal; Vonhoff, Volker; Weigert, Florian

  1. By: Rodriguez Castelan, Carlos (World Bank); López-Calva, Luis-Felipe (World Bank); Barriga Cabanillas, Oscar (University of California, Davis)
    Abstract: Although market concentration is one of the main impediments to productivity growth globally, data constraints have limited its analysis to developed countries or cross-country studies based on definitions of market concentration across nations and industries. This paper takes advantage of a database that is unusual by developing-country standards by means of leveraging the richness of five rounds of the Mexican Manufacturing Census between 1994 and 2014. The data allow estimation of the effects of local industry concentration on productivity. The main results show that a decline by 10 points in the Herfindahl-Hirschman index (on a 0-100 scale), a measure of market concentration, explains an increase by 1 percent in the total factor productivity of revenue. Local industry concentration also has heterogeneous effects on productivity across industries, while its impact on productivity varies by level of exposure to international markets. Results show that the effect of greater exposure to trade offsets and, in most cases, reverses the negative effects of local concentration on productivity. These results are robust to specifications based on the estimation of firm productivity using the panels of establishment data from the 2009 and 2014 rounds of the economic census, to controlling for a proxy of markups, and to using alternative indicators of local industry concentration.
    Keywords: productivity, market concentration, instrumental variables
    JEL: C26 D24 D4 F12 L1
    Date: 2020–04
  2. By: Cathles, Alison; Nayyar, Gaurav; Rückert, Désirée
    Abstract: As the productivity of the European economy shows signs of slowing down, many hopes are pinned on digital technologies to reverse this trend. This study uses data from the EIBIS 2019 survey to examine whether the adoption of different digital technologies (such as advanced robotics, 3D printing, or Internet of Things) by firms in the EU have different impacts on productivity. It also examines whether these different technologies have different implications for employment growth, and whether there are complementarities between technologies when it comes to firm performance.
    Date: 2020
  3. By: Dechezleprêtre, Antoine; Koźluk, Tomasz; Kruse, Tobias; Nachtigall, Daniel; De Serres, Alain
    Abstract: This article reviews the empirical literature combining economic and environmental performance data at the micro-level, i.e. firm or facility level. The literature has generally found a positive and statistically significant correlation between economic performance, as measured by profitability indicators or stock market returns, and environmental performance, as measured by emissions of pollutants or adoption of international environmental standards. The main reason for this finding seems to be that firms that reduce their material and energy costs experience both better economic performance and lower emissions. Only a small and recent literature analyses the joint causal impact of environmental regulations on environmental and economic performance. Interestingly, this literature shows that environmental regulations tend to improve environmental performance while not weakening economic performance. However, the evidence so far is limited to a handful of environmental regulations that are not extremely stringent, so the result cannot be easily generalized. More research is needed to assess the joint effects of environmental regulations on environmental and economic performance, to explore the heterogeneity of these effects across sectors, countries and types of policies, and to understand which policy designs allow improving environmental quality while not coming at a cost in terms of economic performance of regulated businesses.
    Keywords: Environmental performance; Environmental regulation; Financial performance; Porter hypothesis; Research synthesis; ES/R009708/1
    JEL: O32 Q52 Q55 Q58
    Date: 2019–04–26
  4. By: Igbekele A. Ajibefun; Adebiye G. Daramola (Department of Agricultural Economics and Extension Federal University of Technology Akure, Nigeria)
    Abstract: This study investigates the efficiency of microenterprises in the Nigerian economy, using cross sectional data collected on 180 microenterprises selected from block-making, metalfabricating and saw milling occupational groups. Quantitative estimates obtained from the stochastic frontier production function indicate a wide variation in technical and allocative efficiencies within and across occupational groups and across operational scales. The wide variation in the level of efficiency is an indication that there is ample opportunity for these enterprises to raise their level of efficiency. The level of education of enterprise owners was found to be highly significant in affecting the level of efficiency of the microenterprises. This implies that education is an important policy variable, and could be used by policy makers to improve both technical and allocative efficiency in the sampled enterprises. Hence, education policy that would encourage operators of microenterprises in the country to undergo literacy and training programmes would lead to substantial increase in efficiency of production and hence in the volume of output at the current level of technology. Finally, rising age of enterprise owners was found to lead to decline in the mean efficiency. Therefore, government policy should focus on ways to attract and encourage young entrepreneurs who are agile and able to put in more efforts at raising the level of efficiency.
  5. By: Mario Benassi (Department of Economics, Management, and Quantitative Methods, University of Milan); Elena Grinza (Department of Management and Production Engineering, Politecnico di Torino); Francesco Rentocchini (Department of Economics, Management, and Quantitative Methods, University of Milan); Laura Rondi (Department of Management and Production Engineering, Politecnico di Torino)
    Abstract: Drawing on the knowledge-based view of the firm, we investigate whether firm performance is related to the accumulated stock of technological knowledge associated with the Fourth Industrial Revolution (4IR), and what contextual factors affect this relationship. We test our research questions on a longitudinal matched patent-firm data set on medium and large firms filing 4IR patents at the European Patent Office (EPO). Our results show a significant and economically relevant positive association between the development of 4IR technologies and firm productivity, but no relationship with its profitability, thereby suggesting that the returns from costly technological investments are slow to cash in. We also find that late entrants benefit more from the development of 4IR technological capabilities than early entrants and experience a substantial “boost effect”. We provide empirical support to an explanation of these findings in terms of the ability of late entrants to (i) manage the inherent complexity of the bundle of technologies comprising the 4IR and (ii) exploit profitable downstream applications of the 4IR.
    Keywords: Fourth Industrial Revolution (4IR); patenting; technology development; firm performance; longitudinal matched patent-firm data
    JEL: O33 D24 J24
    Date: 2020–07
  6. By: Adeola F. Adenikinju; Louis N. Chete (Department of Economics University of Ibadan Ibadan, Nigeria)
    Abstract: This study investigates the relationship between trade liberalization and the marketstructure and productivity performance of the Nigerian manufacturing sector. The study uses firm-level panel data for the three years from 1988 to 1990, a period of considerableliberalization in the country. The data cover 382 manufacturing firms. The study shows that in general, the productivity level of Nigerian manufacturing is very low. Thisreflects in part an outcome of years of industrialization strategy that stressed factor accumulation rather than the efficiency with which factors are utilized. The findingsfrom the study show that sectors with a high component of local raw materials generally performed better than those depending on imported inputs. The study also shows that foreign ownership has an important bearing on firm performance and foreign-owned firms generate positive spillover effects on the otherfirms in the industry. Moreover, the findings support the current trade liberalization effort of the government as we found that the policy of trade liberalization and the loweringof average tariff rates open up the economy to foreign investment, the promotion of manufactured exports impinges positively on total factor productivity in the Nigerian manufacturing sector. However, the government needs to exercise some caution withthe pace of import liberalization, as import growth rate was found to have a negative impact on productivity. While this may be a short-run phenomenon, the implication thatthe pace of import liberalization proceeded too fast for domestic firms to cope with
  7. By: Elena Grinza (Department of Management and Production Engineering, Politecnico di Torino, Italy)
    Abstract: This paper investigates the impact of a firm's worker flows on productivity by using unique longitudinal matched employer-employee data. The analysis splits the firm's total worker flows into three components: workers' replacements (excess worker flows), hirings meant to increase the firm's employment level (net hirings), and separations of workers intended to decrease the firm's workforce (net separations). This allows isolating the impact of workers' replacements, which represent the most prominent (and compelling) feature of worker mobility. Endogeneity is dealt with by using a modified version of the Ackerberg et al.'s (2015) control function method, which explicitly accounts for firm fixed effects. The main finding is that excess flows foster productivity, and so do net hirings, while net separations hurt it. The effect of excess flows is heterogeneous and varies widely based on the types of replacements, the categories of workers involved, and the types of firms experiencing such flows. Overall, the findings of this paper highlight the importance of reallocation dynamics to reach better employer-employee matches and call for a reconsideration of policies concerning the flexibility of the labor market.
    Keywords: Worker flows, excess worker flows, firm productivity, semi-parametric estimation of production functions, longitudinal matched employer-employee data.
    JEL: J63 D24
    Date: 2020–02
  8. By: Amat Adarov (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The paper studies the drivers of productivity at country and sectoral levels over the period 2000-2017 with the focus on the impact of capital accumulation and structure. The analysis confirms an especially important role of ICT and intangible digital capital for productivity growth, particularly in the manufacturing sectors. While backward global value chain participation and EU integration are also found to be instrumental for accelerating productivity growth, the impact of inward foreign direct investment is not robustly detected when the data is purged from the effects of special purpose entities and outlier countries.
    Keywords: Productivity, digitalisation, ICT, intangible capital, FDI, capital accumulation, global value chains
    JEL: F14 F15 F21 E22 O47
    Date: 2020–04
  9. By: Thomas von Brasch; Ådne Cappelen; Håvard Hungnes; Terje Skjerpen (Statistics Norway)
    Abstract: We study the role of R&D spillovers when modelling total factor productivity (TFP) by industry. Using Norwegian industry level data, we find that for many industries there are significant spillovers from both domestic sources and from technological change at the international frontier. International spillovers contributed with 38 per cent to the total growth in TFP from 1982 to 2018 while domestic channels contributed with 44 per cent. The remaining 18 per cent is due to interaction effects. We include these channels into a large-scale econometric model of the Norwegian economy to study how R&D policies can promote economic growth. We find that current R&D policies in the form of generous tax deductions have increased growth in productivity and income in the Norwegian economy. The simulation results lend some support to the view that there are fiscal policy instruments that may have very large multipliers, even in the case of a fully financed policy change.
    Keywords: R&D spillovers; total factor productivity; innovation policies
    JEL: C32 C51 D24 E17 O32
    Date: 2020–04
  10. By: Ahnert, Lukas; Vogt, Pascal; Vonhoff, Volker; Weigert, Florian
    Abstract: This paper investigates the impact of stress testing results on bank's equity and CDS performance using a large sample of twelve tests from the US CCAR and the European EBA regimes in the time period from 2010 to 2018. We find that passing banks experience positive abnormal equity returns and tighter CDS spreads, while failing banks show strong drops in equity prices and widening CDS spreads. We also document strong market reactions at the announcement date of the stress tests. Although the institutional designs between US and European stress tests differ, we generally observe similar capital market consequences for both regimes. We complement existing studies by investigating the predictability of stress test outcomes and evaluating strategic options for affected banks and investors.
    Keywords: Banks,Stress Testing,Equity Performance,CDS Performance
    JEL: G00 G21 G28
    Date: 2020

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