nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒11‒30
eighteen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Measuring TFP: The Role of Profits, Adjustment Costs, and Capacity Utilization By Diego A. Comin; Javier Quintana Gonzalez; Tom G. Schmitz; Antonella Trigari
  2. Credit Constraints, Labor Productivity and the Role of Regional Institutions: Evidence from Manufacturing Firms in Europe By Andres Rodriguez-Pose; Roberto Ganau; Kristina Maslauskaite; Monica Brezzi;
  3. Assessing Global Potential Output Growth: October 2020 By Xin Scott Chen; Ali Jaffery; Guillaume Nolin; Karim Salhab; Peter Shannon; Subrata Sarker
  4. Land Rental Market Reforms: Can They Increase Outmigration From Agriculture? Evidence From a Quantitative Model By Arnaud Daymard
  5. NETWORKS AND FAMILY FIRM PERFORMANCE: SOME EVIDENCE FROM ITALY By Francesco Aiello; Paola Cardamone; Lidia Mannarino; Valeria Pupo
  6. Addressing the productivity paradox with big data: A literature review and adaptation of the CDM econometric model By Schubert, Torben; Jäger, Angela; Türkeli, Serdar; Visentin, Fabiana
  7. Mandatory Retirement for Judges Improved Performance on U.S. State Supreme Courts By Elliott Ash; W. Bentley MacLeod
  8. Agricultural Productivity as a Prerequisite of Industrialization: Some New Evidence on Trade Openness and Premature Deindustrialization By Arnaud Daymard
  9. Adjusting to China Competition: Evidence from Japanese Plant-product-level Data By Flora Bellone; Cilem Selin Hazir; Toshiyuki Matsuura
  10. Where Does Multinational Profit Go with Territorial Taxation? Evidence from the UK By Langenmayr, Dominika; Liu, Li
  11. How Does Working-Time Flexibility Affect Workers' Productivity in a Routine Job? Evidence from a Field Experiment By Marie Boltz; Bart Cockx; Ana Maria Diaz; Luz Magdalena Salas
  12. Seasonality and Economic Efficiency in the Canadian Airline Industry: Performance in Air Fares Since Deregulation By Snider, Bradley
  13. Improving Productivity of Freight Transportation in Saskatchewan By Churko, B.; Hurst, P.
  14. The Impact of U.S. Regulatory Practices on the Productivity of Ocean Liner Services By Sletmo, Gunnar K.
  15. Social Performance Of Microfinance Institutions in South Asian Region: A Case Study of India,Bangladesh, Nepal and Sri Lanka By S. Saravanan; Brijesh C. Purohit
  16. Do energy efficiency standards hurt consumers?: evidence from household appliance sales By Brucal, Arlan; Roberts, Michael
  17. Schools Targeted for Improvement: Are Small Sample Sizes Masking Poor School Performance? (Infographic) By Kevin Kelly; Lauren Forrow
  18. Credit, banking fragility and economic performance By Jérôme Creel; Paul Hubert; Fabien Labondance

  1. By: Diego A. Comin; Javier Quintana Gonzalez; Tom G. Schmitz; Antonella Trigari
    Abstract: Standard methods for estimating total factor productivity (TFP) growth assume that economic profits are zero and adjustment costs are negligible. Moreover, following the seminal contribution of Basu, Fernald and Kimball (2006), they use changes in hours per worker as a proxy for unobserved changes in capacity utilization. In this paper, we propose a new estimation method that accounts for non-zero profits, structurally estimates adjustment costs, and relies on a utilization proxy from firm surveys. We then compute industry-level and aggregate TFP growth rates for the United States and five European countries, for the period 1995-2016. In the United States, our results suggest that the recent slowdown of TFP growth was more gradual than previously thought. In Europe, we find that TFP was essentially flat during the Great Recession, while standard methods suggest a substantial decrease. These differences are driven by profits in the United States, and by profits and our new utilization proxy in Europe.
    JEL: E01 E30 O30 O40
    Date: 2020–10
  2. By: Andres Rodriguez-Pose; Roberto Ganau; Kristina Maslauskaite; Monica Brezzi;
    Abstract: This paper examines the relationship between credit constraints − proxied by the investment-to-cash flow sensitivity – and firm-level economic performance − defined in terms of labor productivity – during the period 2009-2016, using a sample of 22,380 manufacturing firms from 11 European countries. It also assesses how regional institutional quality affects productivity at the level of the firm both directly and indirectly. The empirical results highlight that credit rationing is rife and represents a serious barrier for improvements in firm-level productivity and that this effect is far greater for micro and small than for larger firms. Moreover, high-quality regional institutions foster productivity and help mitigate the negative credit constraints-labor productivity relationship that limits the economic performance of European firms. Dealing with the European productivity conundrum thus requires greater attention to existing credit constraints for micro and small firms, although in many areas of Europe access to credit will become more effective if institutional quality is improved.
    Keywords: Credit Constraints; Labor Productivity; Manufacturing Firms; Regional Institutions; Cross-Country Analysis; Europe
    JEL: C23 D24 G32 H41 R12
    Date: 2020–11
  3. By: Xin Scott Chen; Ali Jaffery; Guillaume Nolin; Karim Salhab; Peter Shannon; Subrata Sarker
    Abstract: This paper presents updated estimates of potential output growth for the global economy through 2022. Global potential output growth is expected to decline sharply in the aftermath of the COVID-19 pandemic and recover partially by the end of the projection horizon of the October 2020 Monetary Policy Report. More specifically, global potential output growth is expected to decline from 3.3 percent in 2019 to 2.1 percent in 2020 and then recover gradually to 2.7 percent by 2022. While growth is expected to decline in all regions, the negative effects of COVID-19 on trend labour productivity growth in emerging market economies are the largest contributor to the overall expected slowdown in global growth. This also reflects Bank of Canada staff’s assessments of ongoing headwinds from aging, trade tensions and structurally low trend total factor productivity growth across all regions. A partial recovery in all regions is expected to be driven mainly by the gradual recovery in trend total factor productivity growth and trend labour input growth. In the US, potential output growth is expected to decline sharply in 2020, mostly due to a decline in the trend participation rate and a reduction in the growth rate of immigration. By 2022, US potential output growth is expected to partially recover due to an improvement in trend total factor productivity growth and a modest recovery in trend labour input growth.
    Keywords: Potential output; Productivity
    JEL: E20 O4
    Date: 2020–11
  4. By: Arnaud Daymard (Université de Cergy-Pontoise, THEMA)
    Abstract: Recent econometric work has found that policies improving the functioning of the land rental market have increased outmigration from agriculture in the developing world. I investigate this claim using a two-sector model of structural transformation that takes into account the well-known inverse relationship between farm size and farm productivity. Theoretically, outmigration from agriculture depends on how flexible agricultural prices are, while rigid agricultural prices lead to the reverse phenomenon of immigration in agriculture. Practically, the model predicts that for most countries, land rental market reforms cause little labor movement between sectors. In spite of this, these reforms are found to increase substantially the production efficiency and welfare of farmers.
    Keywords: structural transformation, agriculture, land rental markets, land reform
    JEL: O11 O13 O14 O41 F41
    Date: 2020
  5. By: Francesco Aiello (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Paola Cardamone (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Lidia Mannarino (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria); Valeria Pupo (Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF, Università della Calabria)
    Abstract: Using a large sample of Italian small–medium-sized firms, this note analyses the effects of formal inter-firm cooperation on the performance of family firms (FFs). The study is based on the network contract (“Contratto di rete”) implemented in Italy in 2009. The results show that networks have a positive effect on FFs, while no conclusive evidence is found for non-family firms. Additionally, the advantages for southern FFs and for small firms are considerable.
    Keywords: family firms, formal business networks, performance
    JEL: G34 L24 L25
    Date: 2020–11
  6. By: Schubert, Torben (Fraunhofer ISI, and Circle, Lund University); Jäger, Angela (Fraunhofer ISI); Türkeli, Serdar (UNU-MERIT, Maastricht University); Visentin, Fabiana (UNU-MERIT, Maastricht University)
    Abstract: This paper develops the plan for the econometric estimations concerning the relationship between firm productivity and the specifics of the innovation process. The paper consists of three main parts. In the first, we review the relevant literature related to the productivity paradox and its causes. Specific attention will be paid to broad economic trends, in particular the higher importance of intangibles, the increasing importance of knowledge spillovers and servitisation as drivers of the slowdown in productivity growth. In the second part, we introduce a plan for the econometric estimation strategy. Here we propose an extended Crépon-Duguet-Mairesse type of model (CDM), which enriches the original specification by the three influence factors of intangibles, spillovers, and servitisation. This will allow testing the influence of these three factors on productivity at the level of the firm within a unified framework. In the third part, we build on the literature review in order to provide a detailed plan for the data collection procedure including a description of the variables to be collected and the source from which the variables are coming. It should be noted that we will rely partly on structured data (e.g. ORBIS), while many others variables will need to be generated from unstructured sources, in particular the webpages of firms. The use of unstructured data is a particular strength of our proposed data collection procedure because the use of such data is expected to offer novel insights. However, it implies additional risks in terms of data quality or missing data. Our data collection plan explores the maximum potential of variables that will ideally be made available for later econometric treatment. Whether indeed all variables will have sufficient quality to be used in the econometric estimations will be subject to the outcomes of the actual collection efforts.
    Keywords: Productivity, Intangibles, Servitisation, Innovation, R&D, Open Innovation, IPR, Knowledge diffusion, Economic growth, Productivity Paradox, Big data, Large data sets, data collection
    JEL: C55 C80 D24 E22 L80 O31 O32 O34 O40 O47
    Date: 2020–11–11
  7. By: Elliott Ash; W. Bentley MacLeod
    Abstract: Anecdotal evidence often points to aging as a cause for reduced work performance. This paper provides empirical evidence on this issue in a context where performance is measurable and there is variation in mandatory retirement policies: U.S. state supreme courts. We find that introducing mandatory retirement reduces the average age of working judges and improves court performance, as measured by output (number of published opinions) and legal impact (number of forward citations to those opinions). Consistent with aging effects as a contributing factor, we find that older judges do about the same amount of work as younger judges, but that work is lower-quality as measured by citations. However, the effect of mandatory retirement on performance is much larger than what would be expected from the change in the age distribution, suggesting that the presence of older judges reduces the performance of younger judges.
    JEL: D02 J26 J41 J44 K0 K4
    Date: 2020–10
  8. By: Arnaud Daymard (Université de Cergy-Pontoise, THEMA)
    Abstract: Most studies of structural transformation assume a closed economy when modeling. Is this assumption justified in a globalized world? I test the relevance of closed versus open economy models of structural transformation using data on the sectoral productivity levels of developed and developing countries over the 1950-2013 period. The empirical findings suggest that trade openness does affect the mechanics of structural transformation in the way predicted by the theory, but that the practical effect of trade is small. Nonetheless, the difficult creation of manufacturing jobs in Latin America and Africa—a trait commonly referred to as ”premature deindustrialization”—suggests that trade might have a significant role on the mechanics of manufacturing employment, a role that it does not play on agriculture and services. As an alternative to the role of trade, I also emphasize that large fixed costs in the formal manufacturing sector might explain the difficult industrialization of Latin America and Africa.
    Keywords: structural transformation, industrialization, agricultural productivity, international trade
    JEL: O11 O13 O14 O41 F41
    Date: 2020
  9. By: Flora Bellone (Université Côte d'Azur; GREDEG CNRS); Cilem Selin Hazir (Leibniz Institute of Ecological Urban and Regional Development); Toshiyuki Matsuura (Keio Economic Observatory, Keio University)
    Abstract: This study examines how the product mixes of Japanese manufacturing plants have been impacted by the rise of China imports over the period 1997-2014, and the extent that plants' local embeddedness mitigate this causal relationship. We find evidence that China import competition induced both product downsizing and product exit within Japanese manufacturing plants. Moreover, we find that those negative e ects differ across plants according to various plant characteristics including the spatial organization of their parent firm. Finally, we show that both product survival and product sales are positively impacted by external agglomeration economies, but these e ects are strong for standalone plants only, and almost non-existent for plants aliated to spatially compact multi-unit firms.
    Keywords: Import competition, Product Portfolio, Local Product Relatedness
    JEL: F61 L25 D22
    Date: 2020–11
  10. By: Langenmayr, Dominika; Liu, Li
    Abstract: In 2009, the United Kingdom abolished the taxation of profits earned abroad and introduced a territorial tax system. Under the territorial system, firms have strong incentives to shift profits abroad. Using a difference-in-differences research design, we show that profits of UK subsidiaries in low-tax countries increased after the reform compared to subsidiaries of non-UK multinationals in the same countries, by an average of 2.1 percentage points. The increase in profit shifting also leads to increases in measured productivity of the foreign affiliates of UK multinationals of between 5 and 9 percent.
    Keywords: profit shifting,territorial tax system,multinational firms
    JEL: H25 H87 F23
    Date: 2020
  11. By: Marie Boltz; Bart Cockx; Ana Maria Diaz; Luz Magdalena Salas
    Abstract: We conducted an experiment in which we hired workers under different types of contracts to evaluate how flexible working time affects on-the-job productivity in a routine job. Our approach breaks down the global impact on productivity into sorting and behavioral effects. We find that all forms of working-time flexibility reduce the length of workers’ breaks. For part-time work, these positive effects are globally counterbalanced. Yet arrangements that allow workers to decide when to start and stop working increase global productivity by as much as 50 percent, 40 percent of which is induced by sorting.
    Keywords: flexible work arrangements, part-time work, productivity, labor market flexibility, work-life balance
    JEL: J21 J22 J23 J24 J33
    Date: 2020
  12. By: Snider, Bradley
    Keywords: Public Economics
    Date: 2020–10–22
  13. By: Churko, B.; Hurst, P.
    Keywords: Public Economics
    Date: 2020–10–22
  14. By: Sletmo, Gunnar K.
    Keywords: Public Economics
    Date: 2020–10–22
  15. By: S. Saravanan (Post-Doctoral Fellow, Madras School of Economics, Chennai); Brijesh C. Purohit (Professor, Madras School of Economics)
    Abstract: Over the years, microfinance institutions (MFIs) have been propagated for poverty alleviation and support to the underserved area. Different objectives discussed in the literature in regard to these institutions include poverty alleviation, financial efficiency, sustainability and social performance. The last one of these objectives, namely social performance has been least explored the least. This is owing largely to best and agreeable measurement methods. Questions float around the issues whether it should be only qualitative or could be satisfactorily measured quantitatively. In this paper we use the quantitative method. This is in line with some of the seminal studies that have deployed a social measurement index. We calculate and apply this social performance index. We use panel and logistic regressions to explore the impact of other important variables on social performance. Using the data for the years 2009-2014 for 88, 27, 25 and 15 MFIs in four south Asian countries namely, India, Bangladesh, Nepal and Sri Lanka respectively. Our results compare among these countries as well as other studies in the South Asian nations. The results indicate that assets and profitability position and maturity of MFIs play an important role in performing socially and there is no conflict between social performance,efficiency and sustainability of MFIs.
    Keywords: :Microfinance, social performance, measurement index, India, Bangladesh, Nepal, Sri Lanka
    JEL: G21 F34 I31 C01
  16. By: Brucal, Arlan; Roberts, Michael
    Abstract: We build novel welfare-based price indices for major household appliances that leverage changes in same-model prices and how consumers substitute between exiting, continuing and new models. We then evaluate how minimum energy efficiency requirements and changing criteria for Energy Star™ labels affected these indices in the U.S. between 2001 and 2011, a period of time when some appliances experienced standard changes while others did not. We find that prices declined while quality and consumer welfare increased, especially when standards become more stringent. We also find that much of the price index decline can be attributed to standards-induced innovation, or cannibalism, not to inter-manufacturer competition. Our results also add to a growing body of evidence that the Consumer Price Index exaggerates inflation due to inadequate account of quality and substitution to new goods.
    Keywords: energy efficiency; standards; imperfect competition; price indices; ES/R009708/1
    JEL: D12 H23 L68 Q48
    Date: 2019–07–01
  17. By: Kevin Kelly; Lauren Forrow
    Abstract: We examined school accountability systems in two states and identified two features that, when combined, make middle schools more likely than other schools to be identified for TSI because of the performance of their students with disabilities.
    Keywords: rel, ma, mid-atlantic, infographic, schools, improvement, small sample sizes, poor, school performance
  18. By: Jérôme Creel (Observatoire français des conjonctures économiques); Paul Hubert (Observatoire français des conjonctures économiques); Fabien Labondance (Observatoire français des conjonctures économiques)
    Abstract: Drawing on European Union data, this paper investigates the hypothesis that private credit and banking sector fragility may affect economic growth. We capture banking sector fragility both with the ratio of bank capital to assets and non-performing loans. We assess the effect of these three variables on the growth rate of GDP per capita, using the Solow growth model as a guiding framework. We observe that credit has no effect on economic performance in the EU when banking fragilities are high. However, the potential fragility of the banking sector measured by the non-performing loans decreases GDP per capita.
    Keywords: Private credit; Capital to assets ratio; Non-performing loans
    JEL: G10 G21 O40
    Date: 2020

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