nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒12‒07
sixteen papers chosen by

  1. Distant but close in sight. Firm-level evidence on French-German productivity gaps in manufacturing By Thomas Grebel; Mauro Napoletano; Lionel Nesta
  2. What drives firm and sectoral productivity in the United Kingdom and in selected European countries? By Eun Jung Kim; Annabelle Mourougane; Mark Baker
  3. The Productivity Cost of Power Outages for Manufacturing Small and Medium Enterprises in Senegal By Lassana Cissokho
  4. Credit constraints, labor productivity and the role of regional institutions: evidence for manufacturing firms in Europe By Rodríguez-Pose, Andrés; Ganau, Roberto; Maslauskaite, Kristina; Brezzi, Monica
  5. Productivity Loss amid Invisible Pollution By Wang, Chunchao; Lin, Qianqian; Qiu, Yun
  6. Accounting for growth in Spain, 1850-2019 By Roses Vendoiro, Juan Ramon; Prados de la Escosura, Leandro
  7. R&D and Innovation: Evidence from Patent Data By Yusuke Oh; Koji Takahashi
  8. Exploring Hospital Efficiency within and between Italian Regions: New Empirical Evidence. By Barra, Cristian; Lagravinese, Raffaele; Zotti, Roberto
  9. The effects of structural reforms: Evidence from Italy By Emanuela Ciapanna; Sauro Mocetti; Alessandro Notarpietro
  10. Boosting productivity in the United Kingdom’s service sectors By Annabelle Mourougane; Eun Jung Kim
  11. Top of the class: the importance of ordinal rank By Murphy, Richard; Weinhardt, Felix
  12. Public finance, government spending and economic growth: the case of local governments in Italy By Tommaso Agasisti; Cristian Barra; Roberto Zotti
  13. Industry dynamics and high-growth firms' contribution to productivity growth By Márta Bisztray; Francesca de Nicola; Balázs Muraközy
  14. Estimating Elasticity of Substitution in CES Production Function: Examining Different Nesting Structures and EU Regions By Vedunka Kopecna; Milan Scasny; Lukas Recka
  15. Effects of Agricultural Extension Services on Farm Productivity in Uganda By Richard Sebaggala; Fred Matovu
  16. A Spatial Analysis of Regional Economic Growth in MENA Countries By Marouane Alaya

  1. By: Thomas Grebel; Mauro Napoletano; Lionel Nesta
    Abstract: We study the productivity level distributions of manufacturing firms in France and Germany, and how these distributions evolved across the Great Recession. We show the presence of a systematic productivity advantage of German firms over French ones in the decade 2003-2013, but the gap has narrowed down after the Great Recession. Convergence is explained by the better growth performance of French firms in the post-recession period, especially of those located in the top percentiles of the productivity distribution. We also highlight the role of sectoral growth, firm size and export intensity in explaining the above convergence. In contrast, the contribution of allocative efficiency was small.
    Keywords: International productivity gaps; productivity distributions; firm level comparisons.
    Date: 2020–11–26
  2. By: Eun Jung Kim; Annabelle Mourougane; Mark Baker
    Abstract: This paper examines the link between barriers to trade and investment and productivity performance, in the United Kingdom and selected European countries using both firm-level and sectoral data. Barriers to trade and investment appear to be a robust determinant of productivity in the long term. Control variables such as spending on R&D and human capital also play a role, though their effects depend on the way they are measured or on the sample. The results are robust across a range of productivity measures as well as to changes in the sectoral coverage and the set of controls.
    Keywords: barriers to trade and investment, firm-level, productivity, sectoral
    JEL: C23 D24 F13
    Date: 2020–11–23
  3. By: Lassana Cissokho (Faculté des Sciences Economiques et de Gestion,Université Cheikh Anta Diop, Senegal)
    Abstract: This paper investigates the productivity effects of power outages on manufacturing SMEs in Senegal, using a panel data on manufacturing firms. Productivity is estimated using stochastic frontier models, and power outages measured by their frequency or their duration. We controlled for firms owning a generator as well. The main results are drawn from random effects in a linear panel model. Nonetheless, the results remain consistent to the robustness checks using different models: a double-sided truncated data model and a generalized linear model, and different productivity measures: data envelopment analysis. We find that power outages have negative significant effects on the productivity of SMEs. For example, the manufacturing sector lost up to around 11.6% of the actual productivity due to power outages in 2011, and small firms appear to be affected more than medium ones, 5% against 4.3%. Further, firms with a generator were successful in countering the adverse effect of power outages on productivity. Besides, another outstanding result is the significant positive effect of access to credit on productivity. At last, it appears that productivity increases with firms’ size.
    Date: 2020
  4. By: Rodríguez-Pose, Andrés; Ganau, Roberto; Maslauskaite, Kristina; Brezzi, Monica
    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
  5. By: Wang, Chunchao; Lin, Qianqian; Qiu, Yun
    Abstract: Ground-level ozone is a continuing problem worldwide, but research on the influences of ozone pollution on labour productivity in developing countries is insufficient. We investigate the effect of ozone pollution on outdoor worker productivity in the service sector using a unique panel dataset of courier productivities from a top five express company in China. Using an instrumental variable constructed from ozone pollution of upwind nearby cities, we find that a one-standard-deviation increase in daily ozone pollution decreases courier productivity by 8.91%. The same increase in ozone in the previous 30 days decreases worker productivity by 37.9%.
    Keywords: ozone pollution,air pollution,labour productivity,outdoor workers,contemporaneous effect,cumulative effect,express delivery industry
    JEL: J24 O13 P23 P28 Q51 Q53
    Date: 2020
  6. By: Roses Vendoiro, Juan Ramon; Prados de la Escosura, Leandro
    Abstract: The current productivity slowdown has stimulated research on the causes of growth. We investigate here the proximate determinants of long-term growth in Spain. Over the last 170 years output per hour worked raised nearly 24-fold dominating GDP growth, while hours worked per person shrank by one-fourth and population trebled. Half of labour productivity growth resulted from capital deepening, one-third from total factor productivity, and labour quality contributed the rest. In phases of acceleration (the 1920s and 1954-85), TFP was labour productivity's main driver complemented by capital deepening. Since Spain's accession to the European Union(1985), labour productivity has sharply decelerated as capital deepening slowed down and TFP stagnated. Up to the Global Financial Crisis (2008) GDP growth mainly resulted from an increase in hours worked per person and, to a less extent, from sluggish labour productivity coming mostly from weak capital deepening. Institutional constraints help explain the labour productivity slowdown.
    Keywords: Spain; Total Factor Productivity; Labour Quality; Capital Deepening; Labour Productivity; Growth
    JEL: N14 N13 O47 E01 D24
    Date: 2020–11–23
  7. By: Yusuke Oh (Bank of Japan); Koji Takahashi (Bank of Japan)
    Abstract: We investigate innovation dynamics in Japanese listed firms by calculating an indicator for the accumulation of innovation based on patent citations, the gcitation stock. h The calculated citation stock has decreased since the mid-2000s, which implies that the pace of innovation accumulation at Japanese listed firms has slowed. Using the citation stock, we show that an increase in a firm fs citation stock contributes to its productivity growth and that the citation stock provides information on whether research and development (R&D) leads to innovation that cannot be captured by focusing on the amount of R&D investment alone. In addition, we find that while higher R&D investment is associated with new innovation, the efficiency of R&D investment in Japan has decreased in recent years. Such a decrease in the efficiency of R&D investment has been reported not only for Japanese firms but also for a wide range of fields around the world, so that firms and research institutions are attempting to maintain the pace of innovation by increasing the number of researchers and research spending. For Japan, where it is difficult to increase the number of researchers due to the declining population, it is important to improve the quality of research through various efforts such as increasing the diversity of researchers.
    Keywords: productivity; patent data; innovation; R&D
    JEL: O31 E23 D24
    Date: 2020–11–27
  8. By: Barra, Cristian; Lagravinese, Raffaele; Zotti, Roberto (University of Turin)
    Abstract: This paper investigates the eciency of Italian hospitals and how their performances have changed over the years 2007-2016, characterized by the great economic recession and budget constraints. We apply the Benefit of Doubt (BoD) approach to determine a composite index that considers the multi-dimensionality of the hospital outcome to be used as main output in a metafrontier production function based on a stochastic frontier framework. The effciency score distribution is then used to construct a Theil index in order to compare over time the inequality of the estimated effciency between hospitals, both within and between regions. The main findings show that the primary source of ineciency comes from managerial ineciency especially for hospitals located in southern regions. A clear and persistent North-South gap in eciency performances of hospitals has been found along with an increase in the inequality in terms of eciency between the areas of the country mostly determined by between region inequality.
    Date: 2020–10
  9. By: Emanuela Ciapanna (Bank of Italy); Sauro Mocetti (Bank of Italy); Alessandro Notarpietro (Bank of Italy)
    Abstract: This paper quantifies the macroeconomic effects of three major structural reforms (i.e., service sector liberalizations, incentives to innovation and civil justice reforms) undertaken in Italy in the last decade. We employ a novel approach that estimates the impact of each reform on total factor productivity and markups in an empirical micro setting and that uses these estimates in a structural general equilibrium model to simulate the macroeconomic impact of the reforms. Our results indicate that, accounting for estimation uncertainty, the increase in the level of GDP as of 2019 due to the sole effect of these reforms (ignoring all the other shocks that the Italian economy suffered in the same period) would be between 3% and 6%. The long-run increase in Italy's potential output would lie between 4% and 8%, with non-negligible effects on the labor market.
    Keywords: structural reforms, DSGE models, liberalization, innovation, civil justice
    JEL: E10 E20 J60 K40 L50 O30
    Date: 2020–11
  10. By: Annabelle Mourougane; Eun Jung Kim
    Abstract: The United Kingdom has been among the most affected OECD economies by the COVID-19 crisis, reflecting the high share of services in output and its integration in the world economy. Productivity growth in the United Kingdom has consistently underperformed relative to expectations and was more disappointing than in most other OECD economies since at least the global financial crisis. Sluggish productivity growth in the service sectors was the main factor behind this weak performance. Raising productivity will help to sustain employment and wages but will require a broad range of policies. Keeping low barriers to trade and competition in the UK service sectors will create a supportive environment for strong productivity performance. Prioritising digital infrastructure in the allocation of the planned increase in public investment is expected to bring large productivity dividends. Reviewing the system of support to small firms in the light of the COVID-19 crisis will help to re-prioritise resources towards young innovative firms. Further increasing public spending on training to develop the digital skills of low-qualified workers, which have been particularly affected by the COVID-19 crisis, will be a double-dividend policy, boosting productivity and lowering inequality.
    Keywords: barriers to trade and investment, digitalisation, productivity, United Kingdom
    JEL: C23 D24 F13
    Date: 2020–11–23
  11. By: Murphy, Richard; Weinhardt, Felix
    Abstract: This article establishes a new fact about educational production: ordinal academic rank during primary school has lasting impacts on secondary school achievement that are independent of underlying ability. Using data on the universe of English school students, we exploit naturally occurring differences in achievement distributions across primary school classes to estimate the impact of class rank. We find large effects on test scores, confidence, and subject choice during secondary school, even though these students have a new set of peers and teachers who are unaware of the students’ prior ranking in primary school. The effects are especially pronounced for boys, contributing to an observed gender gap in the number of Maths courses chosen at the end of secondary school. Using a basic model of student effort allocation across subjects, we distinguish between learning and non-cognitive skills mechanisms, finding support for the latter.
    Keywords: rank; cognitive skills; peer effects; productivity; ES/J003867/1; UKRI block grant
    JEL: I21 J24
    Date: 2020–11–01
  12. By: Tommaso Agasisti (Politecnico di Milano); Cristian Barra (Università di Salerno); Roberto Zotti (Università di Torino)
    Abstract: This paper contributes to the empirical literature on the linkages between decentralized government spending, public finances, and economic growth at the local level. The impact of local government spending on output growth is estimated using a panel of Italian Labor Market Areas - a group of municipalities adjacent to each other, geographically and statistically comparable, characterized by common commuting ows of the working population - during the 2002-2012 period. The attention is focused both on current and capital expenditures as well as on several spending categories. To handle endogeneity problems between public spending and economic development, a system generalized method of moments has been used. The findings indicate a fairly robust negative relationship between local current government expenditure and economic growth. Investment in capital budget turns out to be not statistically significant when the public spending composition is taken into account. Municipalities located in central-southern regions show, instead, negative growth effect of capital spending, underlining the importance of measuring the efficiency of public spending rather than just being concerned with the absolute level of output. Only few of the expenditure categories (Justice, Tourism and Culture) exhibit positive effects on growth, while Administration & Management and Roads & Transportation have negative growth effect in southern regions.
    Keywords: Government size, fiscal decentralization, local expenditures, growth
    JEL: H11 H72 O43
    Date: 2020–11
  13. By: Márta Bisztray (Centre for Economic and Regional Studies, Budapest and Corvinus University Budapest, CERGE-EI Foundation Teaching Fellow); Francesca de Nicola (World Bank, Washington DC); Balázs Muraközy (University of Liverpool Management School, Liverpool and Centre for Economic and Regional Studies, Budapest)
    Abstract: This paper investigates the contribution of high-growth firms (HGFs) to aggregate productivity growth. Four stylized facts emerge. First, HGFs mainly contribute to productivity growth during their high-growth phase but not afterwards. Second, their contribution varies substantially across industries and it is not necessarily positive. Third, the impact on productivity depends on how HGFs are defined. Output-based HGFs substantially outperform employment-based ones in terms of their productivity contribution while the difference in terms of job creation is low. Fourth, HGFs' contribution to productivity is higher in industries where industry dynamics favor growing firms, captured by the strength of reallocation and the relationship between productivity growth and size growth. We present a simple model to show that these patterns arise naturally under realistic correlation structures. Our results suggest that policies supporting HGFs may focus on firms increasing their sales, and these can effectively be complemented by framework policies promoting efficient reallocation
    Keywords: high-growth firms, productivity growth, reallocation, industry dynamics
    JEL: L25 O40
    Date: 2020–11
  14. By: Vedunka Kopecna (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Milan Scasny (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; Charles University, Environment Center); Lukas Recka (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; Charles University, Environment Center)
    Abstract: Elasticity of factor substitution is one of the key parameters of any computational general equilibrium model. Despite a wide use of this model in a policy analysis, there are a few estimates of the elasticity, with almost none for transition economies in Europe. To fill this gap, we estimate the elasticity of substitution between Capital, Labour, Energy and Material in the constant elasticity of substitution (CES) production function. We use a non-linear estimation technique to derive these elasticities for the whole economy and for five different sectors, for the EU as a whole and for its two sub-regions. We find that Cobb–Douglas and the Leontief production functions do not fit the data better than more flexible CES specification, and after evaluating several multiple KLEM nesting structures of the CES production function we conclude that KL-E and KL-EM nesting structures fit the data best in both EU regions and for the most economic sectors. The economy-wide factor substitution elasticity complies to the one reported in the literature, however, its magnitude varies across sectors, and it is much larger for the energy-intensive sectors. The elasticities also differ between the EU economies in the West and in the East, although their magnitude is converging in more recent years. We recommend a set of the specific elasticities to be used in the impact modelling and conclude that the estimates based on more recent data and that are region-specific should be used in CGE-based policy applications.
    Keywords: Elasticity of substitution; Constant elasticity of substitution (CES); nesting structure; KLEM production function; Central and Eastern European Countries
    JEL: C51 D24
    Date: 2020–11
  15. By: Richard Sebaggala; Fred Matovu (Uganda Christian University)
    Abstract: Improving agricultural productivity in Uganda remains a major policy objective given the key role of agriculture in the economy. In this study we evaluate the impact of access to extension services on farm productivity. We use comprehensive baseline survey data collected for monitoring and evaluation of the Agricultural Technology and Agribusiness Advisory Services (ATAAS) project. Applying the ivtreatreg Stata command, and probit 2-stage least squares (2SLS) model that addresses the selection and endogenous bias, we found that access to extension services does not significantly improve the crop productivity of farmers. The finding is consistent with similar studies that control for selection and endogenous bias when estimating treatment effects. We argue that the insignificance of extension contact on productivity when selection and endogenous effects are addressed may reflect the inefficiency of the current extension services in improving farmers’ productivity. In conclusion, the study shows that increasing extension impact on farm productivity will require efforts to improve the quality of extension services that directly translate into productivity effects.
    Date: 2020
  16. By: Marouane Alaya (Portland State University)
    Abstract: In this paper various spatial econometric models are performed to check the existence of spatial growth spillovers across a sample study including 73 countries from MENA, Asia, and Europe over the period 1996-2014. The results indicate the occurrence of positive spatial correlation in terms of economic growth within and between the different regions included in the study. However, the findings are somewhat disappointing for the MENA region since we did not find evidence of the presence of strong connections of MENA economies with the other regions namely Asia and Europe.
    Date: 2020–11–20

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