nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒10‒19
ten papers chosen by

  1. How Weather Affects the Decomposition of Total Factor Productivity in U.S. Agriculture By Plastina, Alejandro; Lence, Sergio H.; Ortiz-Bobea, Ariel
  2. The Ties That Bind Us: Social Networks and Productivity in the Factory By Afridi, Farzana; Dhillon, Amrita; Sharma, Swati
  3. Growth factors in developed countries: A 1960-2019 growth accounting decomposition By Gilbert Cette; Aurélien Devillard; Vincenzo Spiezia
  4. On Productivity Measurement and Interpretation: Some Insights on Italy in the European Context By Roberta De Santis; Valeria Ferroni
  5. Drivers of Profit Inefficiency in Iowa Crop Production By Sawadgo, Wendiam P. M.; Plastina, Alejandro
  6. The Effect of Brexit on UK Productivity: Synthetic Control Analysis By Farid, Moatazbellah
  7. Environmental regulation and productivity growth: main policy challenges By Roberta De Santis; Piero Esposito; Cecilia Jona-Lasinio
  8. On the Simultaneous Openness Hypothesis: FDI, Trade and TFP Dynamics in Sub-Saharan Africa By Asongu, Simplice; Nnanna, Joseph; Acha-Anyi, Paul
  9. The Age-Productivity Profile:Long-Run Evidence from Italian Regions By Federico Barbiellini; Matteo Gomellini; Lorenzon Incoronato; Paolo Piselli
  10. Place-based policies and spatial disparities across European cities By Ehrlich, Maximilian V.; Overman, Henry G.

  1. By: Plastina, Alejandro; Lence, Sergio H.; Ortiz-Bobea, Ariel
    Abstract: Despite the major role of climate in agricultural production, few studies have analyzed how weather fluctuations affect the measurement and decomposition of Total Factor Productivity (TFP). This article proposes a novel framework to decompose TFP change accounting for the influence of weather. Specifically, we estimate the contribution of weather variations, technical change, technical and allocative efficiency, as well as markup, scale and price effects to TFP change. The underlying technology is represented by a multi-input, multi-output flexible input distance function with quasi-fixed inputs of production, and is estimated for major U.S. producing regions using Bayesian methods. To assess the role of weather in the decomposition of TFP growth, we contrast findings from our proposed method with those of a baseline model that ignores weather effects. Overall, our TFP growth estimates are highly similar to those obtained from official USDA indices. However, we find that the contribution of non-weather components to TFP is 14% lower when we account for weather variations. This weatherrelated bias is particularly strong in the Central region of the country. This overestimation of TFP growth that is attributable to non-weather components in previous research thus implies that estimated rates of return to public R&D are also overestimated, which has profound policy implications. This is the first study to document how ignoring weather can bias the decomposition of TFP change estimates.
    Date: 2019–11–12
  2. By: Afridi, Farzana (Indian Statistical Institute); Dhillon, Amrita (King's College London); Sharma, Swati (Indian Statistical Institute)
    Abstract: We use high frequency worker level productivity data from garment manufacturing units in India to study the effects of caste-based social networks on individual and group productivity when workers are complements in the production function but wages are paid at the individual level. Using exogenous variation in production line composition for almost 35,000 worker-days, we find that a 1 percentage point increase in the share of own caste workers in the line increases daily individual productivity by about 10 percentage points. The lowest performing worker increases her effort by more than 15 percentage points when the production line has a more homogeneous caste composition. Production externalities that impose financial costs due to worker's poor performance on co-workers within her social network can explain our findings. Our results suggest that even in the absence of explicit group-based financial incentives, social networks can be leveraged to improve both worker and group productivity.
    Keywords: caste, social networks, labor productivity, assembly lines, India
    JEL: Y40 Z13 J15 J24
    Date: 2020–09
  3. By: Gilbert Cette (Banque de France and Aix Marseille Univ, CNRS, AMSE, Marseille, France); Aurélien Devillard (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Vincenzo Spiezia (OECD)
    Abstract: Using a new and original database, our paper contributes to the growth accounting literature with three original aspects: first, it covers a long period from the early 60's to 2019, just before the COVID-19 crisis; second, it analyses at the country level a large set of economies (30); finally, it singles out the growth contribution of ICTs but also of robots. The original database used in our analysis covers 30 developed countries and the Euro Area over a long period allowing to develop a growth accounting approach from 1960 to 2019. This database is built at the country level. Our growth accounting approach shows that the main drivers of labor productivity growth over the whole 1960-2019 period appear to be TFP, non-ICT and non-robot capital deepening, and education. The overall contribution of ICT capital is found to be small, although we do not estimate its effect on TFP. The contribution of robots to productivity growth through the two channels (capital deepening and TFP) appears to be significant in Germany and Japan in the sub-period 1975-1995, in France and Italy in 1995-2005, and in several Eastern European countries in 2005-2019. Our findings confirm also the slowdown in TFP in most countries from at least 1995 onwards. This slowdown is mainly explained by a decrease of the contributions of the components 'others' in the capital deepening and the TFP productivity channels.
    Keywords: growth, productivity, ICTs, robots
    JEL: O31 O33 O47
    Date: 2020–10
  4. By: Roberta De Santis; Valeria Ferroni
    Abstract: Over the period 1995–2016, the Italian performance in terms of productivity was poor in historical terms and in comparison with its main international partners. This issue goes beyond Italy, with declining productivity growth observed, from the second half of the nineties, in several other advanced economies. Possible explanations for the slowdown include factors such as lower capital investment by firms, decreased competition, excessive regulation, and capital misallocation. The diffuse slowing rates of measured productivity growth has also raised questions on whether GDP and output current compilation methods are adequate (i.e. the mis-measurement hypothesis). The “ICT revolution” has created new ways of exchanging and providing goods and services as result of increased connectivity. These developments challenge the way economic activity is traditionally measured. There are also measurement problems associated with estimating output and input volumes especially related to the quality of price indexes for some products and services. These problems have an impact on productivity estimates and might impair international comparability. In this paper, we intend to investigate what the core problems in productivity measurement and interpretation are in the European context, with a specific focus on Italy
    Keywords: Productivity, GDP, mismeasurement, prices, digitalization
    Date: 2019–03
  5. By: Sawadgo, Wendiam P. M.; Plastina, Alejandro
    Abstract: In this paper, we use data envelopment analysis and a panel of Iowa farms to evaluate profit inefficiency in corn and soybean production. We find that farms have, on average, profit inefficiency scores of 89.4% in combined corn and soybean production, suggesting that profit could be increased by 89.4% if farms eliminated technical and allocative inefficiencies. Overall, profit efficiency improved from 2011 to 2018, a period generally characterized by decreasing farm net worth. Moreover, while factors such as farm size and operator age affect technical inefficiency, these variables do not have a significant effect on profit inefficiency, while farms’ net worth per acre and crop insurance indemnity payments positively affect profit inefficiency. Land tenure does not have a significant effect on technical or profit inefficiency.
    Date: 2020–01–01
  6. By: Farid, Moatazbellah
    Abstract: In this paper I analyse the effect of Brexit on UK labour productivity and its components using a synthetic control methodology. My results show that the Brexit vote had a negative impact on labour productivity, causing GDP per hour worked to decrease by 2.4% by 2019 in comparison to the absence of Brexit. The two components of labour productivity are GDP and hours worked. I find that the decrease in the GDP is more than the increase in hours worked per person, causing the labour productivity to decline
    Keywords: Brexit, Labour productivity, Productivity puzzle, Synthetic control method
    JEL: E24 E65 F13 O47
    Date: 2020–09–21
  7. By: Roberta De Santis; Piero Esposito; Cecilia Jona-Lasinio
    Abstract: In this paper, we investigate the environmental regulation-productivity nexus for 14 OECD countries over the years 1990-2015 and discuss its main policy challenges. Our findings support the hypothesis that environmental policies generate positive productivity returns through innovation as suggested by Porter and Van Der Linde (1995). We find that environmental policies have a productivity growth-promoting effect. Both market and non-marked based policies exert a positive but differentiated impact on labour and multifactor productivity growth. Environmental policy measures generate also potentially mixed redistributive impacts. As for specific polices, green taxes display the largest effect on multifactor productivity although with potentially negative redistributive impact. We also find that environmental regulation exerts indirect positive effect on productivity growth fostering capital accumulation especially in high ICT intensive countries.
    Keywords: Environmental regulation, productivity, innovation, Porter hypothesis
    Date: 2020–08
  8. By: Asongu, Simplice; Nnanna, Joseph; Acha-Anyi, Paul
    Abstract: This study assesses the simultaneous openness hypothesis that trade modulates foreign direct investment (FDI) to induce positive net effects on total factor productivity (TFP) dynamics. Twenty-five countries in Sub-Saharan Africa and data for the period 1980 to 2014 are used. The empirical evidence is based on the Generalised Method of Moments. First, trade imports modulate FDI to overwhelmingly induce positive net effects on TFP, real TFP growth, welfare TFP and real welfare TFP. Second, with exceptions on TFP and welfare TFP where net effects are both positive and negative, trade exports modulate FDI to overwhelmingly induce positive net effects on real TFP growth and welfare real TFP. In summary, the tested hypothesis is valid for the most part. Policy implications are discussed.
    Keywords: Productivity; Foreign Investment; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2020–01
  9. By: Federico Barbiellini (Bank of Italy); Matteo Gomellini (Bank of Italy); Lorenzon Incoronato (University College London (UCL) and Centre for Research and Analysis of Migration (CReAM)); Paolo Piselli (Bank of Italy)
    Abstract: This paper leverages spatial and time-series variation in the population age structure of Italian regions to uncover the causal effect of demographic shifts on labour productivity. Such effect is analysed along a ‘first-order’ channel stemming from the direct relation between an individual’s age and productivity, and a ‘second-order’ channel that captures the productivity implications of a more or less dispersed age distribution. We propose an estimation framework that relates labour productivity to the entire age distribution of the working-age population and employs instrumental variable techniques to address endogeneity issues. The estimates return a hump-shaped age-productivity profile, with a peak between 35 and 40 years, as well as a positive productivity effect associated with a more dispersed age distribution.
    Keywords: productivity, demography, age distribution, working-age population, long-run
    JEL: J11 J21 N30
    Date: 2020–10
  10. By: Ehrlich, Maximilian V.; Overman, Henry G.
    Abstract: Spatial disparities in income levels and worklessness in the European Union are profound, persistent and may be widening. We describe disparities across metropolitan regions and discuss theories and empirical evidence that help us understand what causes these disparities. Increases in the productivity benefits of cities, the clustering of highly educated workers and increases in their wage premium all play a role. Europe has a long-standing tradition of using capital subsidies, enterprise zones, transport investments and other place-based policies to address these disparities. The evidence suggests these policies may have partially offset increasing disparities but are not sufficient to fully offset the economic forces at work.
    JEL: J1 R14 J01
    Date: 2020–08–01

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