nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒05‒25
twenty papers chosen by

  1. On the Productivity Advantage of Cities By Nick Jacob; Giordano Mion
  2. Ph.D. research output in STEM: the role of gender and race in supervision By Rossello, Giulia; Cowan, Robin; Mairesse, Jacques
  3. World Productivity: 1996 - 2014 By Mehrdad Esfahani; John G. Fernald; Bart Hobijn
  4. Recruitment strategies and match quality - New evidence from representative linked employer-employee data By Brändle, Tobias; Grunau, Philipp; Haylock, Michael; Kampkötter, Patrick
  5. Trade Induced Technological Change: Did Chinese Competition Really Increase European Innovation? By Douglas L. Campbell; Karsten Mau
  6. Agrifood market participation, household economies of specialization and diversification: Evidence from Vietnam By Takeshima, Hiroyuki; Ajmani, Manmeet; Roy, Devesh; Fadhillah, Aniq; Liu, Yanyan
  7. Agricultural Productivity and Rural Household Incomes: Micro-level Evidence from Zambia By Jason Snyder; Thomas Jayne; Nicole Mason; Paul Samboko
  8. Can Agricultural Productivity Growth Shape the Development of the Non-Farm Rural Economy? Geographically Localized Evidence from Zambia By Jason Snyder; Thomas Jayne; Jordan Chamberlin; Paul Samboko; Nicole Mason
  9. Trade, Productivity and (Mis)allocation By Antoine Berthou; John Jong-Hyun Chung; Kalina Manova; Charlotte Sandoz-Dit-Bragard
  10. Working Paper 329 - Human Capital, Productivity, and Structural Transformation By Andinet Woldemichael; Abebe Shimeles
  11. Corporate taxes and firms' performance: A meta-frontier approach By Ana María Iregui-Bohórquez; Ligia Alba Melo-Becerra; Antonio José Orozco-Gallo
  12. Slow Real Wage Growth during the Industrial Revolution: Productivity Paradox or Pro-Rich Growth? By Crafts, Nicholas
  13. Creating opportunity from crisis: raising worker productivity during the pandemic By Bower, Jonathan
  14. Electricity and Firm Productivity: A General-Equilibrium Approach By Stephie Fried; David Lagakos
  15. The life and death of zombies – evidence from government subsidies to firms By Nurmi, Satu; Vanhala, Juuso; Virén, Matti
  16. Tales of the city: what do agglomeration cases tell us about agglomeration in general? By Fagiolo, Giorgio; Silva, Olmo; Strange, William C.
  17. Technology catch-up in agriculture among advanced economies By San Juan Mesonada, Carlos; Sheng, Yu; Sunyer Manteiga, Carlos; Ball, Eldon V.
  18. The Relative Effectiveness of Teachers and Learning Software: Evidence from a Field Experiment in El Salvador By Konstantin Buechel; Martina Jakob; Daniel Steffen; Christoph Kuehnhanss; Aymo Brunetti
  19. The Role of the Locations of Public Sector Varietal Development Activities on Agricultural Productivity By Hiroyuki Takeshima; Abdullahi Mohammed Nasir
  20. Innovative Growth Accounting By Peter J. Klenow; Huiyu Li

  1. By: Nick Jacob; Giordano Mion
    Abstract: Ever since Marshall (1890) agglomeration externalities have been viewed as the key factor explaining the existence of cities and their size. However, while the various micro foundations of agglomeration externalities stress the importance of Total Factor Productivity (TFP), the empirical evidence on agglomeration externalities rests on measures obtained using firm revenue or value-added as a measure of firm output: revenue-based TFP (TFP-R). This paper uses data on French manufacturing firms’ revenue, quantity and prices to estimate TFP and TFP-R and decompose the latter into various elements. Our analysis suggests that the revenue productivity advantage of denser areas is mainly driven by higher prices charged rather than differences in TFP. At the same time, firms in denser areas are able to sell higher quantities, and generate higher revenues, despite higher prices. These and other results we document suggest that firms in denser areas are able to charge higher prices because they sell higher demand/quality products. Finally, while the correlation between firm revenue TFP and firm size is positive in each location, it is also systematically related to density: firms with higher (lower) TFP-R account for a larger (smaller) share of total revenue in denser areas. These patterns thus amplify in aggregate regional-level figures any firm-level differences in productivity across space.
    Keywords: total factor productivity (TFP), density, agglomeration externalities, revenue-based TFP, prices, demand, quality
    JEL: R12 R15 D24 L11
    Date: 2020
  2. By: Rossello, Giulia (UNU-MERIT, Maastricht University); Cowan, Robin (UNU-MERIT, Maastricht University, BETA, Universite de Strasbourg, IUF Descartes, and CREST, Stellenbosch University.); Mairesse, Jacques (UNU-MERIT, Maastricht University, CREST-ENSAE, and NBER)
    Abstract: We study whether student-advisor gender and race couples matter for publication productivity of Ph.D. students in South Africa. We consider the sample of all Ph.D.s in STEM graduating between 2000 and 2014, after the recent systematic introduction of doctoral programs in this country. We investigate the joint effects of gender and race for the whole sample and looking separately at the sub-samples of (1) whitewhite; (2) black-black; and (3) black-white student-advisor couples. We find early career productivity differences: while female students publish on average 10% to 20% fewer articles than males, this is true mainly for female students working with a male advisor, not for those working with a female one. These disparities are similar, though more pronounced, when looking at the joint effects of gender and race for the white-white and black-black student-advisor pairs. We also explore whether publication productivity differences change significantly for students with a high, medium, or low “productivity-profile†, and find that they are U-shaped. Female students with a high (or low) “productivity-profile†studying with female advisors are as productive than male students with a high (or low) “productivity-profile†studying with male advisors.
    Keywords: Gender and race, Student Advisor, South Africa, Doctoral research, research productivity, Role models
    JEL: A14 I23 I24 J15 J16 J24 O32
    Date: 2020–05–15
  3. By: Mehrdad Esfahani; John G. Fernald; Bart Hobijn
    Abstract: We account for the sources of world productivity growth, using data for more than 36 industries and 40 major economies from 1996 to 2014, explicitly taking into account changes in the misallocation of resources in labor, capital, and product markets. Productivity growth in advanced economies slowed but emerging markets grew more quickly which kept global productivity growth relatively constant until around 2010. After that, productivity growth in all major regions slowed. Much of the volatility in world productivity growth reflects shifts in the misallocation of labor across countries and industries. Using new data on PPP-based value-added measures by country and industry, we show that about a third of these shifts is due to employment growing in countries, most notably China and India, that benefit from an international cost advantage. Markups are large and rising and impact the imputed misallocation of capital. However, they have little effect on the country-industry technology contribution to global productivity.
    Keywords: Growth accounting; misallocation; productivity; purchasing power parity; world economy
    JEL: F43 O47 O50
    Date: 2020–03–13
  4. By: Brändle, Tobias; Grunau, Philipp; Haylock, Michael; Kampkötter, Patrick
    Abstract: In economics, the recruitment process of firms is largely treated as a black box. To shed light on this process, we use new representative linked employer-employee data for German private-sector establishments to explore search, selection and screening activities over the years 2012-2018. We document longitudinal changes in hiring policies and address the heterogeneity across establishments relating to size, ownership, sector, and unobserved heterogeneity. Firms' recruitment strategies have sizeable effects on the composition of worker productivity, worker-firm match quality, the number of open vacancies, as well as expected staffing problems. Finally, we outline potential mechanisms and research gaps for future work, where there is room for more detailed and causal evidence.
    Keywords: Recruitment,Hiring Policies,Linked Employer-Employee Data,Worker Productivity,Vacancies,Match Quality
    JEL: J21 J63 M51
    Date: 2020
  5. By: Douglas L. Campbell (New Economic School); Karsten Mau (School of Business and Economics, Maastricht University)
    Abstract: Bloom, Draca, and Van Reenen (2016) find that Chinese competition induced a rise in patenting, IT adoption, and TFP by up to 30% of the total increase in Europe in the early 2000s. Yet average patents per firm fell by 94% for the most China-competing firms in their sample, but also by 94% for non-competing firms. Their findings for patents appear to be driven by the decision to normalize patents by adding one (i.e., patents+1). Since China-competing firms had fewer patents to begin with, adding one induces bias, making it appear as though patents declined by a smaller percentage in the China-competing sectors. When we estimate a negative binomial regression using patents as the dependent variable, correcting several coding errors, we find no (or even negative) correlation between Chinese competition and patent growth.
    Keywords: Patents, China, Europe, Textiles, Trade Shocks, Manufacturing
    JEL: F14 F13 L25 L60
  6. By: Takeshima, Hiroyuki; Ajmani, Manmeet; Roy, Devesh; Fadhillah, Aniq; Liu, Yanyan
    Abstract: Despite the growth of agrifood markets, and gradual structural transformation, smallholders persist in Asia. Such patterns are at odds with the views that market growth should encourage more specialization whereby smallholders’ transition to either larger farmers or specialized non-farm households. Using the panel household data in Vietnam, this study investigates how participation in agrifood markets affect smallholder households’ economies of scope (EOS) in diversifying into agriculture and non-agricultural income-earning activities. We find that, greater agrifood market participation proxied by the increased food purchase generally increases EOS between agriculture and non-agricultural activities at the household level. Moreover, it leads to greater labor productivity in agriculture, and also increases female household members’ diversifications into both agriculture and non-agricultural income-earning activities. These effects are relatively stronger and more consistent than conventional indicators of agrifood product sales or proximity to the market. The results shed more light on how exactly smallholders in Vietnam persist in the face of agrifood market growth, and what kind of their relations with such a growing market can be promoted in ways that enhance their livelihoods in the short- to medium- terms.
    Keywords: VIET NAM; VIETNAM; SOUTH EAST ASIA; ASIA; smallholders; agrifood sector; models; markets; gender; farm income; labour productivity; female labour; agrifood market participation; economies of scope; primal model; dual model
    Date: 2020
  7. By: Jason Snyder; Thomas Jayne; Nicole Mason; Paul Samboko
    Abstract: Key Findings -Changes in district level crop productivity among smallholder farmers have strong and positive lagged multi-year effects on the own-farm incomes of rural households in that district. -This impact is especially true for productivity changes among (a) the highest productivity farms in each district, and (b) smallholder farms cultivating >2 hectares. -There is also some evidence of a similar effect on total income, however this effect is not as robust. -Overall, the least robust set of results are between district-level crop productivity and off-farm household incomes, suggesting that some of the recent critiques of the small farm-led multiplier effect hypothesis mentioned earlier for the African context may be valid. -However, we do find tentative evidence (interpreted with caution due to their lack of significance in the robustness checks) that smaller farm productivity (<2 hectares) indirectly raises off-farm incomes.
    Keywords: Agricultural and Food Policy, Consumer/Household Economics, Food Security and Poverty, International Development
    Date: 2019–12–20
  8. By: Jason Snyder; Thomas Jayne; Jordan Chamberlin; Paul Samboko; Nicole Mason
    Abstract: Key Findings -There is very little micro-level empirical literature estimating farm to non-farm labor linkages from agricultural productivity growth in Africa. Our study helps to fill this gap in Zambia. -We find that a doubling of district level crop productivity is positively associated with a 14%- 17% increase in non-farm labor activity among rural farm households in Zambia. -This impact is even more pronounced for changes in small farm district productivity (<2 hectares), causing a 24%-31% increase non-farm labor activity among rural small farm households. -There is also some evidence, although it is less robust, that increases in productivity among relatively lower productivity farms (relative to each district), also increases non-farm labor activity. -Overall, these results align with the structural transformation hypothesis with regards to labor linkages, and can be used to help justify support for improvements in small-farm crop productivity.
    Keywords: Agricultural and Food Policy, Consumer/Household Economics, Food Security and Poverty, International Development
    Date: 2019–12–19
  9. By: Antoine Berthou; John Jong-Hyun Chung; Kalina Manova; Charlotte Sandoz-Dit-Bragard
    Abstract: We examine the gains from globalization in the presence of firm heterogeneity and potential resource misallocation. We show theoretically that without distortions, bilateral and export liberalizations increase aggregate welfare and productivity, while import liberalization has ambiguous effects. Resource misallocation can either amplify, dampen or reverse the gains from trade. Using model-consistent measures and unique new data on 14 European countries and 20 industries in 1998-2011, we empirically establish that exogenous shocks to export demand and import competition both generate large aggregate productivity gains. Guided by theory, we provide evidence consistent with these effects operating through reallocations across firms in the presence of distortions. (i) Both export and import expansion increase average firm productivity, but the former also shifts activity towards more productive firms, while the latter acts in reverse. (ii) Both export and import exposure raise the productivity threshold for survival, but this cut-off is not a sufficient statistic for aggregate productivity. (iii) Efficient institutions, factor and product markets amplify the gains from import competition but dampen those from export access.
    Keywords: : International Trade, Productivity, Allocative Efficiency.
    JEL: F10 F14 F43
    Date: 2020
  10. By: Andinet Woldemichael (Research Department, African Development Bank); Abebe Shimeles (African Economic Research Consortium)
    Abstract: This paper revisits the role of investment in human capital in closing the productivity gap, boosting labor productivity growth, speeding the rate of structural transformation, and ultimately creating high-quality jobs in Africa. Analysis of detailed sector-level historical data on employment, value added, and human capital shows that investment in human capital is significantly and positively associated with the rate at which countries close the labor productivity gap between agriculture and the rest of the economy. Investment in human capital also significantly increases labor productivity within sectors and the speed at which labor is reallocated from low-productivity to high-productivity employment. In line with other research on this topic, the findings from this study underscore that Africa is ready to benefit significantly from improving human capital through investments in education, health care, and nutrition. JEL Classification: O1; O4;E24;J24
    Keywords: Labor productivity gap, skills, high-productivity jobs, employment
    Date: 2019–12–31
  11. By: Ana María Iregui-Bohórquez (Banco de la República de Colombia); Ligia Alba Melo-Becerra (Banco de la República de Colombia); Antonio José Orozco-Gallo (Banco de la República de Colombia)
    Abstract: Corporate taxes play an important role in the firm's decision-making as they are part of the cost of capital. Thus, understanding the effect of taxes on the performance of firms in the context of frequent tax reforms, as is the case of Colombia, is of great relevance. We use meta-frontier stochastic techniques,which allow us to estimate in two-steps the technical effciency of firms within each economic sector and between economic sectors in relation to the set of firms in the country. Then, using quantile regression analysis, we estimate both the effect of corporate taxation on firm performance as well as the effect of efficiency on firms' tax payments. Results indicate that firms in some economic sectors could be benefiting form better production conditions and that the most effcient firms within each sector paid more taxes, as a share of assets. However, when compared to the meta-frontier, firms with higher effciency paid less taxes, suggesting differences in the tax burden of firms across economic sectors. **** RESUMEN: Los impuestos corporativos juegan un papel importante en la toma de decisiones de las empresas, ya que son parte del costo de uso del capital. Por lo tanto, estudiar la relación entre los impuestos corporativos y el desempeño de las empresas es de gran relevancia, en un contexto de frecuentes reformas tributarias, como es el caso de Colombia. Para el análisis se utilizan técnicas de meta-frontera estocástica que permiten estimar, en dos etapas, la eficiencia técnica de las empresas dentro de cada sector económico y entre sectores económicos en relación con el conjunto de empresas en el país. Luego, se utiliza el análisis de regresión cuantílica para estimar tanto el efecto de los impuestos corporativos sobre el desempeño de las empresas, como el efecto de la eficiencia sobre los pagos de impuestos. Los resultados indican que las empresas, en algunos sectores económicos, podrían beneficiarse de mejores condiciones de producción y que las más eficientes dentro de cada sector pagan más impuestos, como proporción de sus activos. Sin embargo, cuando se comparan con la frontera de producción global del país, las empresas con mayor eficiencia pagan menos impuestos, lo que sugiere diferencias en la carga tributaria entre sectores económicos.
    Keywords: Corporate taxes, Stochastic frontier analysis, firm performance, Impuestos corporativos, frontera estocástica, desempeño empresas
    JEL: C23 D22 H25
    Date: 2020–05
  12. By: Crafts, Nicholas (University of Warwick & University of Sussex)
    Abstract: I examine the implications of technological change for productivity, real wages and factor shares during the industrial revolution using recently available data. This shows that real GDP per worker grew faster than real consumption earnings but labour’s share of national income changed little as real product wages grew at a similar rate to labour productivity in the medium term. The period saw modest TFP growth which limited the growth both of real wages and of labour productivity. Economists looking for an historical example of rapid labour-saving technological progress having a seriously adverse impact on labour’s share must look elsewhere.
    Keywords: Engels’ pause ; factor shares ; industrial revolution ; labour productivity ; real wages JEL codes: N13 ; O33 ; O47
    Date: 2020
  13. By: Bower, Jonathan
    Abstract: Rwanda’s coronavirus “lockdown”, which began on Sunday 22nd March 2020, requires that a large number of people suddenly work from home. This has become increasingly common globally: across the EU, around 17% of employees work from outside their employer’s physical premises using ICT tools; however, working from home (WFH) is a much newer phenomenon among white-collar workers in Rwanda. This brief focuses on the productivity impacts of this in light of international research.
    Keywords: coronavirus; Covid-19
    JEL: R14 J01
    Date: 2020–03–27
  14. By: Stephie Fried; David Lagakos
    Abstract: The lack of reliable electricity in the developing world is widely viewed by policymakers as a major constraint on firm productivity. Yet most empirical studies find modest short-run effects of power outages on firm performance. This paper builds a dynamic macroeconomic model to study the long-run general equilibrium effects of power outages on productivity. The model captures the key features of how firms acquire electricity in the developing world, in particular the rationing of grid electricity and the possibility of self-generated electricity at higher cost. Power outages lower productivity in the model by creating idle resources, by depressing the scale of incumbent firms and by reducing entry of new firms. Consistent with the empirical literature, the model predicts that the short-run partial-equilibrium effects of eliminating outages are small. However, the long-run general-equilibrium effects are many times larger, supporting the view that eliminating outages is an important development objective.
    JEL: E13 E23 O11 O41 Q43
    Date: 2020–05
  15. By: Nurmi, Satu; Vanhala, Juuso; Virén, Matti
    Abstract: We analyze the demographics of zombie firms and durations of zombie spells as well as their determinants, including an application on public subsidies using firm level population panel data from Finland. Firm-level analysis of firm demographics reveals that zombie-firms, as commonly defined in the literature, are often not truly distressed firms but rather companies with temporarily low revenues relative to interest payments. More importantly, we find that roughly a third of these firms are in fact growing companies and two thirds recover from the zombie status to become healthy firms. We also show that the increase of zombie firms over the past 15 years has mainly been driven by cyclical factors, as opposed to a secular trend. In our policy application on government subsidies to firms, estimation results strongly suggest that subsidy-receiving firms are less likely to die, regardless of the type of subsidy. However, with regard to recovery there is heterogeneity in the effects depending on the type of firm and the type of subsidy received. Thus, we do not find a robust positive association of subsidies with zombie recovery.
    JEL: D22 D24 G33 H25 L16 L25 O25
    Date: 2020–05–14
  16. By: Fagiolo, Giorgio; Silva, Olmo; Strange, William C.
    Abstract: This paper considers the heterogeneous microfoundations of agglomeration economies. It studies the co-location of industries to look for evidence of labor pooling, input sharing, and knowledge spillovers. The novel contribution of the paper is that it estimates single-industry models using a common empirical framework that exploits the cross-sectional variation in how one industry co-locates with the other industries in the economy. This unified approach yields evidence on the relative importance of the Marshallian microfoundations at the single-industry level, allowing for like-for-like cross-industry comparisons on the determinants of agglomeration. Using UK data, we estimate such microfoundations models for 97 manufacturing sectors, including the classic agglomeration cases of automobiles, computers, cutlery, and textiles. These four cases – as with all of the individual industry models we estimate – clearly show the importance of the Marshallian forces. However, they also highlight how the importance of these forces varies across industries – implying that extrapolation from cases should be viewed with caution. The paper concludes with an investigation of the pattern of heterogeneity. The degree of an industry’s clustering (localization), entrepreneurship, incumbent firm size, and worker education are shown to contribute to the pattern of heterogeneous microfoundations.
    Keywords: agglomeration; microfoundations; heterogeneity; industrial clusters; ES/G005966/1; ES/J021342/1
    JEL: R14 J01 N0
    Date: 2020–04–26
  17. By: San Juan Mesonada, Carlos; Sheng, Yu; Sunyer Manteiga, Carlos; Ball, Eldon V.
    Abstract: The article tests the hypothesis of convergence in relative levels of total factor productivityacross seventeen member countries of the Organization for Economic Cooperation and Development and tries to identify factors that affect the speed of convergence. Using a paneldata model, we investigate the role of relative factor intensities (i.e. embodiment) and assess the impact of fluctuations in aggregate economic activity (i.e., the business cycle). We also consider the role of human capital spillovers and agricultural policy differences such as the Common Agricultural Policy of the European Union. We use a two-step difference Generalised Method of Moments estimator to quantify the contributions of each of these factors. We find evidence of convergence in productivity levels across the different phases of the business cycle.However, the speed of convergence was higher during contractions (negative output gap) than along expansions. Results show that the speed of convergence among the European countries during the economic slowdown is slower than in Australia, Canada and the United States. Finally, we found significant spillovers from investment in human capital and the productivity of the national economy leading to more rapid productivity growth.
    Keywords: Generalised Method of Moments; OECD Agriculture; Productivity Convergence; Business Cycle; Total Factor Productivity
    JEL: Q17 Q16
    Date: 2020–05–13
  18. By: Konstantin Buechel; Martina Jakob; Daniel Steffen; Christoph Kuehnhanss; Aymo Brunetti
    Abstract: This study provides novel evidence on the relative effectiveness of computer-assisted learning (CAL) software and traditional teaching. Based on a randomized controlled trial in Salvadoran primary schools, we evaluate three interventions that aim to improve learning outcomes in mathematics: (i) teacher-led classes, (ii) CAL classes monitored by a technical supervisor, and (iii) CAL classes instructed by a teacher. As all three interventions involve the same amount of additional mathematics lessons, we can directly compare the productivity of the three teaching methods. CAL lessons lead to larger improvements in students' mathematics skills than traditional teacher-centered classes. In addition, teachers add little to the e ectiveness of learning software. Overall, our results highlight the value of CAL approaches in an environment with poorly quali ed teachers.
    Keywords: computer-assisted learning, productivity in education, primary education, teacher content knowledge
    JEL: C93 I21 J24 O15
    Date: 2020–04
  19. By: Hiroyuki Takeshima; Abdullahi Mohammed Nasir
    Abstract: Key Findings -Crop varietal development in Nigeria is primarily conducted by the public sector. Consequently, most improved crop varieties have been released by a relatively small number of institutes. -Crop productivity in Nigeria can be significantly increased by expanding support for crop varietal development in a manner that increases the similarity in agroecological conditions between the locations where crop breeding is conducted and the areas where farmers produce those crops. -Diversity in the locations of research institutes conducting crop breeding and varietal development matters for overall crop productivity and technical efficiency in Nigeria.
    Keywords: Food Security and Poverty, International Development
    Date: 2019–02–22
  20. By: Peter J. Klenow; Huiyu Li
    Abstract: Recent work highlights a falling entry rate of new firms and a rising market share of large firms in the United States. To understand how these changing firm demographics have affected growth, we decompose produc­tivity growth into the firms doing the innovating. We trace how much each firm innovates by the rate at which it opens and closes plants, the market share of those plants, and how fast its surviving plants grow. Using data on all nonfarm businesses from 1982-2013, we find that new and young firms (ages Oto 5 years) account for almost one-half of growth- three times their share of employment. Large established firms contribute only one-tenth of growth despite representing one-fourth of employment. Older firms do explain most of the speedup and slowdown during the middle of our sam­ple. Finally, most growth takes the form of incumbents improving their own products, as opposed to creative destruction or new varieties.
    Keywords: firm demographics; productivity growth; innovation
    Date: 2020–04–10

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