nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒01‒11
eight papers chosen by

  1. The UK's Great Demand and Supply Recession By Nick Jacob; Giordano Mion
  2. International Sourcing in Portuguese Companies Evidence from Portuguese Micro Data By Ana Martins; Guida Nogueira; Eva Pereira
  3. Inter-Industry Spillovers in Labor Productivity and Global Value Chain Impacts: Evidence from Turkey By Mohamedou Nasser Dine
  4. Household Enterprises: The Impact of Formality on Productivity and Profits By Nesma Ali; Mohamed Ali Marouani
  5. Zombie Credit and (Dis-)Inflation: Evidence from Europe By Viral V. Acharya; Matteo Crosignani; Tim Eisert; Christian Eufinger
  6. The impact of Covid-19 on productivity By Bloom, Nicholas; Bunn, Philip; Mizen, Paul; Smietanka, Pawel; Thwaites, Gregory
  7. The Role of Imported Inputs in Firms’ Productivity and Exports By Deasy D.P. Pane; Arianto A. Patunru
  8. Does Risk-Taking Behaviour Matter for Bank Efficiency? By Chepngenoh, Florence; Muriu, Peter W; Institute of Research, Asian

  1. By: Nick Jacob; Giordano Mion
    Abstract: We revisit UK’s poor productivity performance since the Great Recession by means of both a suitable theoretical framework and firm-level prices and quantities data for detailed products allowing us to both measure demand, and its changes over time, and distinguish between quantity total factor productivity (TFP-Q), i.e., the capacity to turn inputs into more physical output (number of shirts, liters of beer), and what we call revenue total factor productivity (TFP-R), i.e., productivity calculated using revenue (or value-added) as a measure of output and so the capacity to turn inputs into more revenue. This in turn allows us to measure how changes in TFP-Q, demand and markups ultimately affected revenue TFP, as well as labour productivity, over the Great Recession. Our findings suggest that the poor UK firms’ productivity performance post-recession is due to both a weakening of demand and a decreasing TFP-Q pushing down sales, markups, revenue TFP and labour productivity.
    Keywords: total factor productivity (TFP), revenue TFP, prices, demand, Great Recession, United Kingdom
    JEL: D24 L11 E01 O47 O52
    Date: 2020
  2. By: Ana Martins (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Guida Nogueira (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Eva Pereira (Research Office of the Portuguese Ministry of the Economy and Digital Transition)
    Abstract: Outsourcing is one of the main drivers behind economic globalization, especially international outsourcing. In general terms it refers to the process of moving stages of production to external providers, either domestic (usually labelled as domestic outsourcing) or international (commonly labelled as offshoring or simply outsourcing). Over time, technological advances in transportation and ICT developments, led to a substantial rise in this phenomenon, growing in extent and nature, from simple to more complex tasks related to both manufactures and services supply. International outsourcing is usually expected to reduce production costs and to increase efficiency, however it has received substantial attention from policy makers for its potential negative consequences on the labour market. This paper combines Portuguese firm-level data from the International Sourcing surveys and longitudinal administrative business record data, to explore the impacts of the sourcing status on a variety of firms’ performance measures specially focusing on employment, competitiveness and productivity. The results suggest that international sourcing has an ambiguous effect on firm level total employment, but a positive effect on both the subset of workers that receive a salary (a proxy to employees) and on R&D jobs, coupled with an increasing effect on firm level total labour costs. Alongside these results, our findings also show that offshoring has a positive causal effect on both firm-level export intensity and trade balance, however the efficiency gains hypothesis was not confirmed. In fact, the results show that newly offshoring firms experienced lower labour productivity growth with a negative effect on both capital stock and capital per person employed.
    Keywords: Outsourcing, international sourcing, offshoring, internationalization, productivity, employment and firm productivity, Propensity score matching
    JEL: F23 L24 F61 D24 J24 F16
    Date: 2020–12
  3. By: Mohamedou Nasser Dine (Osaka University)
    Abstract: Based on the world input-output database 2016 (WIOD), this study examines the impact of the global value chain (GVCs), via the backward and forward linkages, on labor productivity. Using a spatial econometric approach, it pays particular attention to the spillover effects in productivity across industries through input-output relations. It is shown that a stochastic shock in productivity in one sector significantly transcends and boosts productivity in other sectors through input-output dependencies. Moreover, productivity significantly declines with backward linkages within their sectors. However, productivity increases with forward linkages both within own sectors and across sectors through input-output relations. A sectoral analysis of the GVCs' effects on productivity reveals that manufacturing backward linkages is negatively associated with productivity not only within own sectors but also across manufacturing sectors, whereas productivity in service sectors rises with forward linkages within and across service sectors. This study shows that ignoring the spillovers effects across sectors causes the estimates to be biased
    Date: 2020–12–20
  4. By: Nesma Ali (Heinrich-Heine University Düsseldorf); Mohamed Ali Marouani (IRD and Paris 1 Pantheon-Sorbonne University)
    Abstract: In this paper, we assess the impact of commercial registration of household enterprises on their labor productivity and profits. Based on the 2012 and 2018 rounds of the Egyptian Labor Market Panel Surveys, we employ an instrumental variable strategy and find a positive effect of formal registration on profit and a much higher positive effect on labor productivity. The main channels are higher capital intensity and assets. In addition to the owner’s gender and education level, labor productivity varies mainly with firms’ assets and shared ownership, while profits are mostly determined by the age of the firm and that of its owner. We also find that the positive effect of formality on performance holds for a select category of owners and firms. Finally, our analysis allows us to identify different policy intervention tools for household firms according to their productivity levels and their distance to a threshold of formality fixed costs.
    Date: 2020–12–20
  5. By: Viral V. Acharya; Matteo Crosignani; Tim Eisert; Christian Eufinger
    Abstract: We show that “zombie credit”—cheap credit to impaired firms—has a disinflationary effect. By helping distressed firms to stay afloat, such credit creates excess production capacity, thereby putting downward pressure on product prices. Granular European data on inflation, firms, and banks confirm this mechanism. Industry-country pairs affected by a rise of zombie credit show lower firm entry and exit rates, markups, and product prices, as well as a misallocation of capital and labor, which results in lower productivity, investment, and value added. Without a rise in zombie credit, inflation in Europe would have been 0.4 percentage point higher post-2012.
    Keywords: zombie lending; undercapitalized banks; disinflation; firm productivity; eurozone
    JEL: E31 E44 G21
    Date: 2020–12–01
  6. By: Bloom, Nicholas (Stanford University); Bunn, Philip (Bank of England); Mizen, Paul (University of Nottingham); Smietanka, Pawel (Bank of England); Thwaites, Gregory (University of Nottingham)
    Abstract: We analyse the impact of Covid-19 on productivity in the United Kingdom using data derived from a large monthly firm panel survey. Our estimates suggest that Covid-19 will reduce TFP in the private sector by up to 5% in 2020 Q4, falling back to a 1% reduction in the medium term. Firms anticipate a large reduction in ‘within-firm’ productivity, primarily because measures to contain Covid-19 are expected to increase intermediate costs. The negative ‘within-firm’ effect is partially offset by a positive ‘between-firm’ effect as low productivity sectors, and the least productive firms among them, are disproportionately affected by Covid-19 and consequently make a smaller contribution to the economy. In the longer run, productivity growth is likely to be reduced by diminished R&D expenditure and diverted CEOs’ time spent on dealing with the pandemic.
    Keywords: Productivity; reallocation; Covid-19; growth
    JEL: O32 O33
    Date: 2020–12–21
  7. By: Deasy D.P. Pane; Arianto A. Patunru
    Abstract: The rise of economic protectionism worldwide has come with re-emergence of mercantilist policies whereby governments push for exports while restricting imports. Against this populist approach, we show that importing inputs can raise productivity and export. Using firm-level data matched with very detailed customs data of Indonesia’s exports and imports during 2008–12, we apply instrumental variable strategy with import tariffs and import weighted real exchange rates as instruments for import of intermediate inputs. We find causality from imported inputs to productivity increase and export growth. Higher access to input varieties has a larger impact than an increase in import volume on export, implying that the main benefits of importing may come from access to broader alternatives of inputs. Furthermore, the impact is also larger when imports originate from developed countries, suggestive of a positive effect of technology and product quality.
    Keywords: imported intermediate inputs, export performance, total factor productivity
    JEL: D22 D24 F13 F14 F31
    Date: 2020
  8. By: Chepngenoh, Florence; Muriu, Peter W; Institute of Research, Asian
    Abstract: In pursuit of financial intermediation between borrowers and savers banks are exposed to various risks which affect efficiency. Using annual panel data for the period 2010 to 2019, this paper investigates the influence of risk-taking behaviour on bank efficiency in a developing economy. Data envelopment analysis technique was used to obtain the profit efficiency scores of each bank and Tobit regression to estimate the impact of various components of bank risks on profit efficiency. Estimation results established that credit and liquidity risks, significantly influence bank efficiency. Therefore, banks should maintain quality assets and a stable liquidity position as they significantly impact on efficiency.
    Date: 2020–12–12

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