|
on Efficiency and Productivity |
|
Issue of 2020‒10‒26
sixteen papers chosen by |
| By: | Dibyendu Maiti (Centre for Development Economics, Delhi School of Economics); Chiranjib Neogi (Indian Statistical Institute, Kolkata) |
| Abstract: | This work provides a method of endogeneity corrected stochastic frontier for efficiency and productivity growth estimation in presence of product and labour market imperfections. The imperfections generate efficiency losses and hence affect the productivity estimates. A modified frontier function based on Cobb-Dauglus form that represents in terms of residue per unit of capital helps estimating the terms containing product and labour market imperfections. To correct the endogeneity issue for input selection, the estimation involves three-stages approaches. First, by applying Battese and Coelli (1992) error component model, the one-sided error is estimated. Second, the Levinsohn and Petrin (2003) approach is applied on the frontier values to estimate efficiency parameters that eliminates the input selection bias by using material cost as a proxy. Third, the endogeneity corrected technical efficiency is recovered from the modified one-sided error. The analysis of threedigit level of Indian industrial data across 17 major states for the period 2008-2016 portrays a strong presence of product and labour market imperfections. While the product market efficiency has deteriorated a bit at the aggregate level, it shows a marginal improvement in the allocative efficiency for the labour market. However, the efficiency level varies across industries. The productivity growth derived by adding the components of efficiency changes is similar to the Solow residual growth. JEL Code: D24, F16, L11. Key Words: Stochastic Frontier Model, market imperfections, productivity growth |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:313&r=all |
| By: | Wang, Pingping; Zhang, Wendong; Li, Minghao; Han, Yijun |
| Abstract: | Farmers in China and many other developing countries suffer from low technical efficiency of chemical fertilizer use, which leads to excessive nutrient runoff and other environmental problems. A major cause of the low efficiency is lack of science-based information and recommendations for nutrient application. In response, the Chinese government launched an ambitious nationwide program called the “Soil Testing and Fertilizer Recommendation Project†(STFRP) in 2005 to increase the efficiency of chemical fertilizer use. However, there has been no systematic evaluation of this program. Using data from a nationally representative household survey, and using wheat as an example, this paper first quantifies the technical efficiency of chemical fertilizer use (TEFU) by conducting stochastic frontier analysis (SFA), then evaluates the impact of STFRP on the TEFU using a generalized difference-in-difference approach. We found that STFRP, on average, increased TEFU in wheat production by about 4%, which was robust across various robustness checks. The lessons learned from STFRP will be valuable for China’s future outreach efforts, as well as for other countries considering similar nutrient management policies. |
| Date: | 2019–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genstf:201901010800001678&r=all |
| By: | Rolf Färe (Department of Economics, Oregon State University and Department of Agricultural and Resource Economics, University of Maryland, USA); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia) |
| Abstract: | The goal of this paper is to investigate the question of importance of Fisher aggregation of the Paasche and Laspeyres versions of Malmquist quantity and productivity indexes from both theoretical and empirical perspectives. We discuss existing justification and provide an alternative theoretical justification based on results from functional equations literature. We also use real data (from Kumar and Russell (2002, American Economic Review)) to illustrate how dramatic the differences in conclusions can be in practice depending on whether one employs Laspeyres or Paasche productivity indexes. |
| Keywords: | Fisher, Laspeyres, Paasche, Malmquist, Productivity Indexes |
| JEL: | D24 E22 E23 E24 O47 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:151&r=all |
| By: | Cette Gilbert; Devillard Aurélien; Spiezia Vincenzo |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:783&r=all |
| By: | Vanessa I. Alviarez; Javier Cravino; Natalia Ramondo |
| Abstract: | We measure the contribution of firm-embedded productivity to cross-country income differences. By firm-embedded productivity we refer to the components of productivity that differ across firms and that can be transferred internationally, such as blueprints, management practices, and intangible capital. Our approach relies on microlevel data on the cross-border operations of multinational enterprises (MNEs). We compare the market shares of the exact same MNE in different countries and document that they are about four times larger in developing than in high-income countries. This finding indicates that MNEs face less competition in less-developed countries, suggesting that firm-embedded productivity in those countries is scarce. We propose and implement a new measure of firm-embedded productivity based on this observation. We find a strong positive correlation between our measure and output per-worker across countries. In our sample, differences in firm-embedded productivity account for roughly a third of the cross-country variance in output per-worker. |
| JEL: | F0 O0 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27915&r=all |
| By: | Céline Bonnet (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Jan Philip Schain (DUCE - Dusseldorf Institute for Competition Economics - Heinrich-Heine-Universität Düsseldorf [Düsseldorf]) |
| Abstract: | In this article, we extend the literature on merger simulation models by incorporating its potential synergy gains into structural econometric analysis. We present a three-step integrated approach. We estimate a structural demand and supply model, as in Bonnet and Dubois (2010). This model allows us to recover the marginal cost of each differentiated product. Then we estimate potential efficiency gains using the Data Envelopment Analysis approach of Bogetoft and Wang (2005), and some assumptions about exogenous cost shifters. In the last step, we simulate the new price equilibrium post merger taking into account synergy gains, and derive price and welfare effects. We use a homescan dataset of dairy dessert purchases in France, and show that for two of the three mergers considered, synergy gains could offset the upward pressure on prices post. Some mergers could then be considered as not harmful for consumers. |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02952921&r=all |
| By: | Vanessa Alviarez; Javier Cravino; Natalia Ramondo |
| Abstract: | We measure the contribution of firm-embedded productivity to cross-country income differences. By firm-embedded productivity we refer to the components of productivity that differ across firms and that can be transferred internationally, such as blueprints, management practices, and intangible capital. Our approach relies on microlevel data on the cross-border operations of multinational enterprises (MNEs). We compare the market shares of the exact same MNE in different countries and document that they are about four times larger in developing than in high-income countries. This finding indicates that MNEs face less competition in less-developed countries, suggesting that firm-embedded productivity in those countries is scarce. We propose and implement a new measure of firm-embedded productivity based on this observation. We find a strong positive correlation between our measure and output per-worker across countries. In our sample, differences in firm-embedded productivity account for roughly a third of the cross-country variance in output per-worker. |
| Keywords: | Development accounting; TFP; Multinational enterprises |
| JEL: | O40 O10 F41 F23 F62 |
| Date: | 2020–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedmoi:88909&r=all |
| By: | Alessio Gaggero; Denni Tommasi |
| Abstract: | The link between time-of-day and productivity on cognitive tasks is crucial to understand workplace efficiency and welfare. We study the performance of University students taking at most one exam per day in the final two weeks of the semester. Exams are scheduled at different time-of-day in a quasirandom fashion. We find that peak performance occurs around lunchtime (1.30pm), as compared to morning (9am) or late afternoon (4.30pm). This inverse-U shape relationship between time-of-day and performance (i) is not driven by stress or fatigue, (ii) is consistent with the idea that cognitive functioning is an important determinant of productivity and (iii) implies that efficiency gains of up to 0.14 standard deviations can be achieved through simple re-arrangements of the time of exams. While researchers have shown that biological factors influence changes in productivity between day and night shifts, we establish that such relationship is also important within a standard day-light shift. A simple back of the envelope calculation applied to an external context that is likely to benefit from our results, elective surgeries, suggests that a different sorting of the cognitive tasks performed by surgeons may lead to an increase in the number of patients saved. |
| Keywords: | time-of-day, cognitive tasks, productivity, efficiency gains, circadian rhythm |
| JEL: | I20 I24 J22 J24 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:msh:ebswps:2020-38&r=all |
| By: | Paul, Bino; Patnaik, Unmesh; Sahu, Santosh Kumar; Awasthi, Mansi |
| Abstract: | In evaluating the economic system, the share of wage in value-added (labour share) assumes significance. We examine the trend of labour share in Indian manufacturing during 2001-14, by using the pooled plant-level data. In the analysis, the heterogeneities with respect to factor share, factor ratio and magnitude of factors (labour and capital) are gauged, while the trend of elasticity of substitution is measured. With this context, we assess if the labour heterogeneity explains the variation in the total factor productivity, taking the industry as a unit of analysis. Further, the analysis looks into the relationship between labour heterogeneity and productivity. Analysing the microdata on the labour force, we gauge the determinants of wage from the vantage of supply. Cues from this analysis point to the need for social up-gradation of Indian manufacturing in terms of decent employment relations and skill. This change may enable India to move from factor abundant system to a productivity-oriented economy in the milieu of steadfast substitution of labour by capital. The novelty of this paper is in pooling the plant-level data across years, while industry level aggregation is resorted to examine the longitudinal dynamics. Quite important, insights emanating from the firm and industry-based data are juxtaposed with the microdata of labour supply to understand the supply side dimensions of wage, while envisioning the implications for the economy of manufacturing to upgrade to a productivity orientation. |
| Keywords: | Labour heterogeneity, TFP, Manufacturing, India |
| JEL: | D24 J01 J30 L6 |
| Date: | 2020–09–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:102904&r=all |
| By: | Kluge, Jan (Institute for Advanced Studies, Vienna, Austria); Lappoehn, Sarah (Institute for Advanced Studies, Vienna, Austria); Plank, Kerstin (Institute for Advanced Studies, Vienna, Austria) |
| Abstract: | This paper aims at identifying relevant indicators for TFP growth in EU countries during the recovery phase following the 2008/09 economic crisis. We proceed in three steps: First, we estimate TFP growth by means of Stochastic Frontier Analysis (SFA). Second, we perform a TFP growth decomposition in order to get measures for changes in technical progress (CTP), technical efficiency (CTE), scale efficiency (CSC) and allocative efficiency (CAE). And third, we use BART – a non-parametric Bayesian technique from the realm of statistical learning – in order to identify relevant predictors of TFP and its components from the Global Competitiveness Reports. We find that only a few indicators prove to be stable predictors. In particular, indicators that characterize technological readiness, such as broadband internet access, are outstandingly important in order to push technical progress while issues that describe innovation seem only to speed up CTP in higher-income economies. The results presented in this paper can be guidelines to policymakers as they identify areas in which further action could be taken in order to increase economic growth. Concerning the bigger picture, it becomes obvious that advanced machine learning techniques might not be able to replace sound economic theory but they help separating the wheat from the chaff when it comes to selecting the most relevant indicators of economic competitiveness. |
| Keywords: | Competitiveness, TFP growth, Stochastic Frontier Analysis, BART |
| JEL: | C23 E24 O47 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihswps:24&r=all |
| By: | Rene Belderbos; Vincent Van Roy; Leo Sleuwaegen |
| Abstract: | We examine to what extent domestic firms reap differential productivity gains from the presence of manufacturing affiliates of multinational firms in the home country (FDI spillovers), in the context of simultaneous participation in international trade through exporting and importing. FDI spillovers can occur within the industry (horizontal) and across industries due to client (forward) or supplier (backward) linkages of multinational firms, but the mechanisms underlying spillover effects may be attenuated if local firms are less reliant on inputs, clients, and competition in the domestic market. Fixed effects panel analyses on a sample of 4594 domestic Belgian firms during 2000-2007 reveal positive effects from horizontal, backward, and forward FDI spillovers on the productivity levels of domestic firms, as long as these firms do not engage in international trade. Horizontal spillovers from FDI are weaker for firms engaging in trade, while forward FDI spillovers do not benefit importing firms. Two-way traders benefit least from FDI spillovers. Forward and backward spillovers, are enhanced by human capital levels in local firms, while horizontal spillovers are reduced. The findings are broadly consistent with the notion that trade engagement and inward FDI can be substitutes in their effects on domestic firms’ productivity. |
| Keywords: | Foreign Direct Investment, Trade, Spillovers, Productivity |
| Date: | 2020–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:ete:msiper:661062&r=all |
| By: | Edoardo Palombo (Queen Mary University of London) |
| Abstract: | Following an unparalleled rise in uncertainty over the Great Recession, the US economy has been experiencing anaemic productivity growth. This paper offers a quantitative study on the link between uncertainty and low productivity growth. Firstly, using micro level data I show that uncertainty accounts for half of the drop in intangible capital stock during the Great Recession. Secondly, to investigate the effect of uncertainty on productivity growth dynamics, I present a novel general equilibrium endogenous growth model with heterogeneous firms that undertake intangible capital investment subject to non-convex costs and time-varying uncertainty. I show that uncertainty can generate slow recoveries and a persistent slowdown in productivity growth when accounting for the empirical discrepancy between the realised and expected changes to the second-moment of fundamentals. |
| Keywords: | Uncertainty, R&D, Innovation, Productivity, Great Recession, Intangible Capital, Slow Recoveries |
| JEL: | O40 O41 O51 |
| Date: | 2020–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:909&r=all |
| By: | Etheridge, Ben; Wang, Yikai; Tang, Li |
| Abstract: | We examine self-reported productivity of home workers during lockdown using survey data from the UK. On average, workers report being as productive as at the beginning of the year, before the pandemic. However, this average masks substantial differences across sectors, by working from home intensities, and by worker characteristics. Workers in industries and occupations characterized as being suitable for home work according to objective measures report higher productivity on average. Workers who have increased their intensity of working from home substantially report productivity increases, while those who previously always worked from home report productivity declines. Notable groups suffering the worst average declines in productivity include women and those in low-paying jobs. Declines in productivity are strongly associated with declines in mental well-being. Using stated reasons for productivity declines, we provide evidence of a causal effect from productivity to well-being. |
| Date: | 2020–10–06 |
| URL: | http://d.repec.org/n?u=RePEc:ese:iserwp:2020-12&r=all |
| By: | Ya Chen (Hefei University of Technology, China); Mike Tsionas (Lancaster University, United Kingdom); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia) |
| Abstract: | In data envelopment analysis (DEA), the curse of dimensionality problem may jeopardize the accuracy or even the relevance of results when there is a relatively large dimension of inputs and outputs, even for relatively large samples. Recently, a machine learning approach based on the least absolute shrinkage and selection operator (LASSO) for variable selection was combined with SCNLS (a special case of DEA), and dubbed as LASSO-SCNLS, as a way to circumvent the curse of dimensionality problem. In this paper, we revisit this interesting approach, by considering various data generating processes. We also explore a more advanced version of LASSO, the so-called elastic net (EN) approach, adapt it to DEA and propose the EN-DEA. Our Monte Carlo simulations provide additional and to some extent, new evidence and conclusions. In particular, we find that none of the considered approaches clearly dominate the others. To circumvent the curse of dimensionality of DEA in the context of big wide data, we also propose a simplified two-step approach which we call LASSO+DEA. We find that the proposed simplified approach could be more useful than the existing more sophisticated approaches for reducing very large dimensions into sparser, more parsimonious DEA models that attain greater discriminatory power and suffer less from the curse of dimensionality. |
| Keywords: | Data envelopment analysis; Data enabled analytics; Sign-constrainedconvex nonparametric least squares (SCNLS); Machine learning; LASSO; Elastic net; Big wide data |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:152&r=all |
| By: | Knutsson, Daniel (Research Institute of Industrial Economics (IFN)); Tyrefors, Björn (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Economic theory predicts that outsourcing public services to private firms will reduce costs, but the effect on quality is ambiguous. We explore quality differences between publicly and privately owned ambulances in a setting where patients are as good as randomly assigned to ambulances of different ownership statuses. We find that privately owned ambulances are better at responding to contracted quality measures but perform worse on noncontracted measures, such as mortality. In fact, a randomly allocated patient has a significantly higher risk of death if a private ambulance is dispatched. We also present suggestive evidence on the mechanism, supporting that private firms cost innovate at the expense of ambulance staff quality. |
| Keywords: | Public outsourcing; Pre-hospital care; Healthcare quality; Health |
| JEL: | D22 D44 H44 I11 L33 P48 |
| Date: | 2020–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1365&r=all |
| By: | Susanto, Stefanny Magdalena |
| Abstract: | Entrepreneurial Orientation adalah proses pembuatan strategi yang mewakili kebijakan dan praktik sebagai dasar dalam bertindak dan mengambil keputusan dalam berwirausaha (Zhang, O'Kane, & Chen, 2020). Dalam penerapannya, Entrepreneurial Orientation sendiri selalu mengedepankan karakter open innovation dan pengelolaan risikonya dengan harapan dapat mengembangkan organisasi / perusahaan di semua tingkat khususnya terhadap unit bisnisnya (Hughes & Hodgkinson, 2020). |
| Date: | 2020–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:9zd4j&r=all |