nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒09‒07
twenty-two papers chosen by

  1. Are more productive banks always better? By Rajeswari Sengupta; Harsh Vardhan
  2. Environmentally Adjusted Multifactor Productivity Growth for the Canadian Manufacturing Sector By Gu, Wulong; Willox, Michael; Hussain , Jakir
  3. Accounting for Slower Productivity Growth in the Canadian Business Sector After 2000: Do Measurement Issues Matter? By Gu, Wulong
  4. The Decline of Small Cities: Increased Competition from External Shopping Malls or Long-Term Negative Trends? By Daunfeldt, Sven-Olov; Mihaescu, Oana; Rudholm, Niklas
  5. Intangible investments and productivity performance By Michele Cincera; Julie Delanote; Pierre Mohnen; Anabela Santos; Christoph Weiss
  6. Built Like a House of Cards? - Corporate Indebtedness and Productivity Growth in the Portuguese Construction Sector By José Santos; Nuno Tavares; Gabriel Osório de Barros
  7. Market Power and Cost Efficiency in the African Banking Industry By Asongu, Simplice; Nting, Rexon; Nnanna, Joseph
  8. One Size Does Not Fit All: TFP in the Aftermath of Financial Crises in Three European Countries By Christian Abele; Agnès Bénassy-Quéré; Lionel Fontagné
  9. The Determinants of Total Factor Productivity in the Portuguese Quaternary Sector By Paulo Matos; Pedro Neves
  10. Minimum wage and financially distressed firms: another one bites the dust By Fernando Alexandre; Pedro Bação; João Cerejeira; Hélder Costa; Miguel Portela
  11. In Between the State and the Market: An Empirical Assessment of the Early Achievements of China’s 2015 Electricity Reform By Xuemei Zhenga; Flavio Menezes; Rabindra Nepal
  12. Employee Training and Firm Performance: Quasi-experimental evidence from the European Social Fund By Pedro S. Martins
  13. Loss of Life and Labour Productivity: The Canadian Opioid Crisis By Cheung, Alexander P.; Marchand, Joseph; Mark, Paddy
  14. Inputs, Incentives, and Self-selection at the Workplace By Francesco Amodio; Miguel A. Martinez-Carrasco
  15. International Benchmarking for Country Economic Diagnostics : A Stochastic Frontier Approach By Kumbhakar,Subal C.; Loayza,Norman V.; Norambuena,Vivian
  16. Layoffs and productivity at a Bangladeshi sweater factor By Akerlof, Robert; Ashraf, Anik; Macchiavello, Rocco; Rabbani, Atonu
  17. Talents from Abroad. Foreign Managers and Productivity in the United Kingdom By Dimitrios Exadaktylos; Massimo Riccaboni; Armando Rungi
  18. Bounded Learning from Incumbent Firms By Erzo G. J. Luttmer
  19. China's Productivity Slowdown and Future Growth Potential By Brandt,Loren; Litwack,John; Mileva,Elitza Alexandrova; Wang,Luhang; Zhang,Yifan-000568579; Zhao,Luan
  20. Indicators of the effectiveness and efficiency of digitalization of public administration By Dobrolyubova, Elena (Добролюбова, Елена)
  21. Public Expenditure and private firm performance: using religious denominations for causal inference By Henrique Alpalhão; Marta Lopes; João Pereira dos Santos; José Tavares
  22. Long-run Perspectives on Mid-size Firms: The Role of Productivity and Geographic Scope By Karasik, Leonid; Rollin, Anne-Marie

  1. By: Rajeswari Sengupta (Indira Gandhi Institute of Development Research); Harsh Vardhan (SP Jain Institute of Management & Research)
    Abstract: In this paper, we connect productivity growth in the banking sector with the subsequent build up ofstressed assets on the banks balance sheets. In doing so, we highlight the problems of a methodology that measures productivity based on quantity of loans but does not take into account the quality of credit extended by the banks. We quantify the magnitude of efficiency gains in the banking sector in Indiausing the Malmquist Index techniques for a sample of 33 commercial banks during the period 2002-2018. We find that the Indian banking sector experienced steady productivity growth till about 2011-12, and after that efficiency gains stagnated and even got reversed in the more recent years. We show that the phase of productivity growth is followed by high levels of non-performing assets on the banks balance sheets. We conclude that conventional methods of measuring efficiency gains in the banking sector may convey a misleading picture if they do not take into account the risks associated with the business of banking.
    Keywords: Banking, Bank productivity, Malmquist Index, Indian commercial banks, Technical efficiency, Non-performing asset
    JEL: G21 G28 D24 D61
    Date: 2020–08
  2. By: Gu, Wulong; Willox, Michael; Hussain , Jakir
    Abstract: The need to measure both the desirable outputs (goods and services) and the undesirable outputs (emissions of greenhouse gases [GHGs] and criteria air contaminants [CACs]) from economic activity is becoming increasingly important as economic performance and environmental performance become ever more intertwined. Standard measures of multifactor productivity (MFP) growth provide insights into rising standards of living and the performance of economies, but they may be misleading if only desirable outputs are considered. This study presents estimates of environmentally adjusted multifactor productivity (EAMFP) growth using a new comprehensive database. This database contains information on GHG and CAC emissions, as well as on the production activities of Canadian manufacturers.
    Keywords: Consumer goods and services, Economic performance, Greenhouse gas emissions, Multifactor Productivity, Outputs, Productivity growth
    Date: 2019–05–09
  3. By: Gu, Wulong
    Abstract: Labour productivity growth and multifactor productivity (MFP) growth slowed in Canada and other advanced economies after 2000. Several measurement challenges have been suggested as potential explanations for this trend. These include the measurement of intangible capital in a digital economy, the measurement of natural resource capital in the resource extraction sectors, the effect of infrastructure capital and the effect of cyclical fluctuations in the utilization of capital in industries adversely affected by world demand. This paper focuses on the role of these measurement issues in the slower productivity growth observed in Canada.
    Keywords: Productivity growth, Multifactor productivity, Labour productivity, Business sector
    Date: 2018–10–29
  4. By: Daunfeldt, Sven-Olov (Institute of Retail Economics (Handelns Forskningsinstitut)); Mihaescu, Oana (Institute of Retail Economics (Handelns Forskningsinstitut)); Rudholm, Niklas (Institute of Retail Economics (Handelns Forskningsinstitut))
    Abstract: We use the entry of 17 external shopping malls in Sweden to investigate how they have affected the performance of incumbent firms located in the city centres of small cities. We find that entry by external shopping malls decreased labour productivity for incumbent firms in city centres by -5.31%. However, when using time-specific fixed effects to control for common time trends in retailing in small cities, the impact on labour productivity, revenues, and number of employees due to the entry of external shopping malls becomes insignificant. The negative impact on incumbent firms is thus not due to the entry of external shopping malls but rather due to long-term negative economic trends in these cities.
    Keywords: external shopping malls; city centre; firm performance; agglomeration economies; competition; difference-in-differences
    JEL: D22 L25 P25 R12
    Date: 2020–08–24
  5. By: Michele Cincera; Julie Delanote; Pierre Mohnen; Anabela Santos; Christoph Weiss
    Abstract: Companies in advanced economies are facing new challenges. Investment in intangible assets – such as R&D expenditures, ICT activities, the cost of training employees and spending on improving the organizational process – has gained relevance to overcome market pressure. In the last decade, many studies discussed the impact of intangible investment on firms’ performance. However, comparison of the effect of different types of intangible investments is less well explored. The paper aims to fill this gap by assessing the impact of several intangible investments on productivity using for the first-time data from the EIB Survey on Investment (EIBIS) covering all 28 EU members, in the period 2015-2017. We allow intangible investments to affect productivity through innovation, using an augmented version of the Crépon-Duguet-Mairesse (1998) model. Our results show that all types of intangible investments positively impact labour productivity. However, ICT and acquisition of new skills are more important for explaining productivity gains than R&D investment and organizational improvements. Furthermore, R&D and ICT investments also affect productivity indirectly through their effects on innovation, which itself increases productivity.
    Keywords: R&D; ICT; Intangible investments; Innovation; Productivity
    JEL: O30 O44 O52
    Date: 2020–03
  6. By: José Santos; Nuno Tavares; Gabriel Osório de Barros
    Abstract: Productivity growth in southern European countries has been slowing down at least since the early 2000s. In this regard, Portugal has been no exception to this common trend as productivity growth has been sluggish since the beginning of the century, well before the global financial crisis. At the same time, corporate levels of indebtedness of Portuguese firms have built-up quite substantially until recent years. Although with different levels of intensity across sectors, this pattern was particularly prevalent in the construction sector, rendering it to be a compelling case to study the relation between debt and productivity. Using microdata from Portuguese construction firms, in this paper, we investigate the long-term impact of persistent corporate debt accumulation on total factor productivity growth. To do so, we rely on the framework provided by the estimation of heterogeneous dynamic-panel models. This framework allows us to account for dynamics, feedback effects, firm heterogeneity, and cross-sectional dependencies arising from unobserved common factors. After taking into account the effect of unobserved common factors affecting all firms in the sector as well as firm’s specific characteristics, we find a negative and significant effect of corporate debt-build up on total productivity growth in the industry. This result is robust to different measures of total factor productivity, labour productivity and firms’ indebtedness. Our results suggest that timely measures aiming to reduce debt overhangs by firms may be essential tools to boost productivity growth in the construction sector.
    Keywords: Portugal; construction sector; corporate debt; productivity; heterogeneous dynamic panel models
    JEL: D24 C23 C22
    Date: 2020–02
  7. By: Asongu, Simplice; Nting, Rexon; Nnanna, Joseph
    Abstract: Purpose- In this study, we test the so-called ‘Quiet Life Hypothesis’ (QLH) which postulates that banks with market power are less efficient. Design/methodology/approach- We employ instrumental variable Ordinary Least Squares, Fixed Effects, Tobit and Logistic regressions. The empirical evidence is based on a panel of 162 banks consisting of 42 African countries for the period 2001-2011. There is a two-step analytical procedure. First, we estimate Lerner indices and cost efficiency scores. Then, we regress cost efficiency scores on Lerner indices contingent on bank characteristics, market features and the unobserved heterogeneity. Findings- The empirical evidence does not support the QLH because market power is positively associated with cost efficiency. Originality/value- Owing to data availability constraints, this is one of the few studies to test the QLH in African banking.
    Keywords: Finance; Savings banks; Competition; Efficiency; Quiet life hypothesis
    JEL: E42 E52 E58 G21 G28
    Date: 2019–01
  8. By: Christian Abele (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Agnès Bénassy-Quéré (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Lionel Fontagné (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: We analyse the impact of both the Global Financial Crisis of 2008 and the European sovereign and banking crisis of 2011-13 on firm-level productivity in France, Italy and Spain. We firstly show that relying on a single break date in 2008 misses both the euro crisis and countries' institutional speci_cities. Secondly, although leverage and financial constraints affect firm-level productivity negatively, high-leverage firms su_er more from financial constraints only in Italy, when they are relatively small or when their debt is of short maturity. These results, which are robust to a series of alternative explanations, call for approaches taking into consideration country-level characteristics of financial institutions and time varying _nancing constraints of the firms, instead of pooling data and adopting a common break date. One size does not fit all when it comes to identifying the impact of financial crises on firm level productivity.
    Keywords: total factor productivity,firm-level data,financial constraints,crises
    Date: 2020–06
  9. By: Paulo Matos; Pedro Neves
    Abstract: Quaternary activities have been on the rise, as a consequence of the increasing technological developments and work automation, as they are expected to have an impact on both the future of the job market and the overall economy. As such, and considering that Total Factor Productivity (TFP) constitutes a main driver of output growth, we propose to study its determinants for the quaternary sector. First, we establish several criteria to build our own definition of quaternary activities, as they are not acknowledged in national accounts or other statistics. For such purpose, our empirical assessment is based on a firm level panel dataset, comprising Portuguese firms, between 2006 and 2017. Secondly, we employ the Levinsohn and Petrin (2003)’s methodology to estimate TFP at the firm level. Finally, through a second stage estimation, we build a fixed effects model based on several determinants said to impact firms' TFP, and establish a comparison with the remainder sectors of economic activity. Both descriptive statistics of the database and the final regression outputs provide evidence that quaternary activities differ from the remainder in several characteristics. Our results show that innovation, wage premium and international openness rise the level of TFP, while indebtedness presents an opposite correlation. The age and size of the firm show a non linear relationship with TFP.
    Keywords: Total Factor Productivity, LEVPET, Fixed Effects, Quaternary Sector
    JEL: C33 D22 D24 O31 O47
    Date: 2020–04
  10. By: Fernando Alexandre (NIPE/Universidade do Minho); Pedro Bação (Univ Coimbra, CeBER, FEUC); João Cerejeira (NIPE/Universidade do Minho); Hélder Costa (NIPE/Universidade do Minho); Miguel Portela (NIPE/Universidade do Minho and IZA Bonn)
    Abstract: Since late 2014, Portuguese Governments adopted ambitious minimum wage policies. Using linked employer-employee data, we provide an econometric evaluation of the impact of those policies. Our estimates suggest that minimum wage increases reduced employment growth and profitability, in particular for financially distressed firms. We also conclude that minimum wage increases had a positive impact on firms’ exit, again amplified for financially distressed firms. According to these results, minimum wage policies may have had a supply side effect by accelerating the exit of low profitability and low productivity firms and, thus, contributing to improve aggregate productivity through a cleansing effect.
    Keywords: minimum wage, financially distressed firms, productivity
    JEL: E24 J38 L25
    Date: 2020–07
  11. By: Xuemei Zhenga (School of Economics, Southwestern University of Finance and Economics, Chengdu, China); Flavio Menezes (School of Economics, University of Queensland, Brisbane, Australia); Rabindra Nepal (School of Accounting, Economics and Finance, University of Wollongong, Wollongong, Australia)
    Abstract: This is the first study to investigate and quantify the extent to which the 2015 reform has already impacted the economic and technical performance as well as the security of supply of China’s electricity sector. We use provincial data from 2003 to 2018 to estimate the impacts of the reform on on-grid prices, average retail electricity prices (including those for households) and supply reliability. We adopt fixed effect models together with other dynamic panel data models. We find that the 2015 reform has already had a negative impact on on-grid prices of electricity generated from thermal energy and on overall average retail prices, but the impacts on other prices are not statistically significant. Our results also suggest that the 2015 reform has had significantly negative impacts on technical efficiency, as measured by the coal burned per unit of thermal generation, but no impact on the line loss rate of electricity transmission. In addition, our empirical analysis suggests that the 2015 reform has reduced reliability and increased the instances of supply interruptions. These results are robust to different estimators and models. Finally, the effect of the reform is heterogeneous across regions. Our findings suggest that additional steps are needed to further improve the overall economic efficiency of the electricity sector in China, despite significant progress arising from the 2015 reform. The results may also provide useful lessons for other developing economies aiming to reform their power sectors and who are facing similar choices between the roles of the state and the market in ensuring efficient outcomes.
    Keywords: Electricity sector reform, Market mechanism, China
    JEL: L94 P21 P28
    Date: 2020–07–08
  12. By: Pedro S. Martins
    Abstract: As work changes, firm-provided training may become more relevant; however, there is little 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, and are robust in multiple dimensions of the analysis.
    Keywords: Training subsidies, Productivity, Counterfactual evaluation.
    JEL: J24 H43 M53
    Date: 2020–06
  13. By: Cheung, Alexander P. (University of Alberta, Department of Economics); Marchand, Joseph (University of Alberta, Department of Economics); Mark, Paddy (Nanaimo Regional General Hospital)
    Abstract: The purpose of this study is to measure and quantify the losses in labour productivity due to the Canadian opioid crisis. Since 2016, over 15,393 Canadians have lost their lives due to opioid overdose. It is estimated that 10,775 of these overdose victims were employed in the 5 years prior to their death. This study applies public data to a human capital (HC) model to estimate the total lost productivity to the Canadian economy. The HC model mathematically projects forward the future economic output of an individual overdose victim given their occupation and age (at time of death) until retirement. The total estimated productivity loss is at least $5.71 billion dollars. Given this, the opioid crisis has affected a whole working cross-section of society causing irreversible damage to the Canadian economy in addition to an immeasurable human cost. A multidisciplinary review of the literature regarding opioid use disorder was also undertaken to enhance understanding into the nature of the Canadian opioid crisis in relation to premature deaths and the subsequent losses in labor productivity.
    Keywords: opioid crisis; labour productivity; health economics
    JEL: E24 I10 J17 J24 O47
    Date: 2020–08–27
  14. By: Francesco Amodio (McGill University, CIREQ); Miguel A. Martinez-Carrasco (Universidad de Los Andes)
    Abstract: This paper studies how asymmetric information over inputs affects workers’ response to incentives and self-selection at the workplace. Using daily records from a Peruvian egg production plant, we exploit a sudden change in the worker salary structure and find that workers’ effort, firm profits, and worker participation change differentially along the two margins of input quality and worker type. Firm profits increase differentially from high productivity workers, but absenteeism and quits of these workers also differentially increase. Evidence shows that information asymmetries over inputs between workers and managers shape the response to incentives and self-selection at the workplace.
    Keywords: asymmetric information, input heterogeneity, incentives, self-selection
    JEL: D22 D24 J24 J33 M11 M52 M54 O12
    Date: 2019–12
  15. By: Kumbhakar,Subal C.; Loayza,Norman V.; Norambuena,Vivian
    Abstract: This paper discusses and illustrates the analytical foundations of international comparisons (or benchmarking) for assessing a country's potential for improvement along various dimensions of social and economic development. By providing a methodology for international benchmarking, discussing various alternatives and choices, and presenting a cross-country illustration, the paper can help practitioners be less arbitrary and more systematic in their approach to international comparisons, as well as more realistic in their expectations for a country's improvement. The paper presents the stochastic frontier approach and applies it to estimate feasible frontiers or benchmarks for each variable, country, and year. It then interprets a country's (one-sided) departure from the benchmark as inefficiency or potential for improvement. This contrasts with the literature that compares countries by looking at raw variables or indicators, without considering that countries differ in structural endowments that constrain the maximum performance that a country could achieve in a policy-relevant horizon. The Stochastic Frontier approach also improves upon the literature that uses regression residuals to measure performance. Regression residuals are hard to interpret as inefficiency, because they are mixed with noise and take positive and negative values. As an illustration, the paper uses a panel of 142 countries with yearly data for 2005-14 and considers a set of 10 development indicators. It finds that the potential for improvement does not follow a simple relationship with economic development, with some lower-income countries being closer to their own feasible frontier than more advanced countries are.
    Date: 2020–06–29
  16. By: Akerlof, Robert (University of Warwick); Ashraf, Anik (LMU Munich); Macchiavello, Rocco (London School of Economics and Political Science); Rabbani, Atonu (University of Dhaka)
    Abstract: Conflicts between management and workers are common and can have significant impacts on productivity. We study how workers in a large Bangladeshi sweater factory responded to management’s decision to lay off about a quarter of the workers following a period of labor unrest. Our main finding is that the mass layoff resulted in a large and persistent reduction in the productivity of surviving workers. Moreover, it is specifically the firing of peers with whom workers had social connections – friends – that matters. We also provide suggestive evidence of deliberate shading of performance by workers in order to punish the factory’s management, and a corresponding deliberate attempt by the factory to win the angry workers back by selectively giving them tasks that are more rewarding. By combining ethnographic and survey data on the socialization process with the factory’s internal records, the paper provides a rare glimpse into the aftermath of an episode of labor unrest. A portrait of the firm emerges as a web of interconnected relational agreements supported by social connections.
    Keywords: Layoffs ; Productivity ; Morale ; Relational Contracts JEL codes: J50 ; M50 ; O12
    Date: 2020
  17. By: Dimitrios Exadaktylos; Massimo Riccaboni; Armando Rungi
    Abstract: In this paper, we test the contribution of foreign management on firms' competitiveness. We use a novel dataset on the careers of 165,084 managers employed by 13,106 companies in the United Kingdom in the period 2009-2017. We find that domestic manufacturing firms become, on average, between 7% and 12% more productive after hiring the first foreign managers, whereas foreign-owned firms register no significant improvement. In particular, we test that previous industry-specific experience is the primary driver of productivity gains in domestic firms (15.6%), in a way that allows the latter to catch up with foreign-owned firms. Managers from the European Union are highly valuable, as they represent about half of the recruits in our data. Our identification strategy combines matching techniques, difference-in-difference, and pre-recruitment trends to challenge reverse causality. Results are robust to placebo tests and to different estimators of Total Factor Productivity. Eventually, we argue that upcoming limits to the mobility of foreign talents after the Brexit event can hamper the allocation of productive managerial resources.
    Date: 2020–07
  18. By: Erzo G. J. Luttmer
    Abstract: Social learning plays an important role in models of productivity dispersion and long-run growth. In economies with a continuum of producers and unbounded productivity distributions, social learning can sometimes leave long-run growth rates completely indeterminate. This paper modifies a model in which potential entrants attempt to imitate randomly selected incumbent firms by introducing an upper bound on how much entrants can learn from incumbents. When this upper bound is taken to infinity, a unique long-run growth rate emerges, even though the economy without upper bound has an unbounded continuum of balanced growth rates.
    Keywords: Technology diffusion; Size distribution of firms; Endogenous growth
    JEL: L11 O33
    Date: 2020–08–07
  19. By: Brandt,Loren; Litwack,John; Mileva,Elitza Alexandrova; Wang,Luhang; Zhang,Yifan-000568579; Zhao,Luan
    Abstract: China?s economy grew by an impressive 10 percent per year over four decades. Productivity improvements within sectors and gains from resource reallocation between sectors and ownership groups drove that expansion. However, productivity growth has declined markedly in recent years. This paper extends previous macro and firm-level studies to show that domestic factors and policies contributed to the slowdown. The analysis finds that limited market entry and exit and lack of resource allocation to more productive firms were associated with slower manufacturing total factor productivity growth. Earlier reforms led to state-owned enterprises catching up to private sector productivity levels in manufacturing, but convergence stalled after 2007. Furthermore, the allocation of a larger share of credit and investment to infrastructure and housing led to lower returns to capital, a rapid buildup in debt, and higher risks to growth. China?s growth potential remains high, but its long-term growth prospects depend on reversing the recent decline in total factor productivity growth.
    Keywords: Macroeconomics and Economic Growth,Economic Policy, Institutions and Governance,Construction Industry,General Manufacturing,Pulp&Paper Industry,Textiles, Apparel&Leather Industry,Common Carriers Industry,Business Cycles and Stabilization Policies,Plastics&Rubber Industry,Food&Beverage Industry,Labor Markets,International Trade and Trade Rules,Urban Governance and Management,Urban Housing and Land Settlements,Municipal Management and Reform,Urban Housing
    Date: 2020–06–24
  20. By: Dobrolyubova, Elena (Добролюбова, Елена) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The paper analyzes the experience of international organizations and foreign countries in the development of performance indicators and efficiency of digitalization of public administration. On the basis of foreign experience, taking into account the provisions of Russian strategic and program documents, an integrated approach to assessing the end effects of digitalization of public administration that is significant for key stakeholders - citizens, business, the state and civil servants is justified. The system of indicators of the effectiveness and efficiency of digitalization of public administration presented in the work can be used in monitoring the implementation of the federal project "Digital Public Administration".
    Date: 2020–04
  21. By: Henrique Alpalhão; Marta Lopes; João Pereira dos Santos; José Tavares
    Abstract: We investigate the causal relationship between local government expenditure and private firm performance, using the quantity and naming of civil parishes within each municipality as an instrumental variable. Religious denominations are taken as a proxy for strong local identity, which likely increases competition for resources between neighboring parishes. We explore a dataset on the universe of private firms, local government expenditure categories and socio-economic indicators for all mainland Portuguese municipalities, in a period encompassing both normal and crisis times. The number of parishes per municipality, as exogenously set by the central government, and the number of parishes that display religious denominations are both used as instruments that explain local government spending, indirectly impacting firm performance. We find that both display considerable power in determining total primary and current spending, which then positively impacts private firms' sales and value added. Using religious denominations is found to yield a particularly potent instrument, confirming and expanding the baseline results. In a field that mostly relies on natural experiments for instrumental variable frameworks, our proposed instruments are both easily obtainable and powerful.
    Keywords: instrumental variables, local governments, Local fiscal multiplier, firm performance, fragmentation,Local identity, religion
    JEL: D72 E62 H72
    Date: 2020–06
  22. By: Karasik, Leonid; Rollin, Anne-Marie
    Abstract: This paper uses Canadian business microdata for 1999 to 2013 to study the characteristics of private-sector medium-sized firms that transition to the large or small size classes. A firm’s size class is defined over a three-year window to ensure that it represents the firm’s long-term state rather than a transient state for a given year. The paper examines what distinguishes medium-sized firms that become large from those that revert to being small.
    Keywords: Size of business, Productivity, Private sector
    Date: 2019–02–05

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