nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒01‒18
nineteen 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. Environmental efficiency measurement when producers control pollutants under heterogeneous conditions: a generalization of the materials balance approach By Andreas Eder
  3. Scale, market power and competition in a digital world: Is bigger better? By Michael McMahon; Sara Calligaris; Eleanor Doyle; Stephen Kinsella
  4. Digital technology adoption, productivity gains in adopting firms and sectoral spill-overs: Firm-level evidence from Estonia By Natia Mosiashvili; Jon Pareliussen
  5. Generalised Commensurability Properties of Efficiency Measures: Implications for Productivity Indicators By Walter Briec; Audrey Dumas; Kristiaan Kerstens; Agathe Stenger
  6. Allocative Efficiency and Aggregate Productivity Growth in Canada and the United States By Lin Shao; Rongsheng Tang
  7. Analysis of the Relationship Between Intellectual Capital and Firm Performance: An Empirical Research on Borsa Istanbul By Dogan, Mesut; Kevser, Mustafa
  8. Productivity, Mortality, and Technology in European and US Coal Mining, 1800-1913 By Javier Silvestre
  9. Worker Surveillance Capital, Labour Share and Productivity By Askenazy, Philippe
  10. In the Eye of the Storm Firms and Capital Destruction in India By Martino Pelli; Jeanne Tschopp; Natalia Bezmaternykh; Kodjovi M. Eklou
  11. Is British Output Growth Related to its Uncertainty? Evidence using Eight Centuries of Data By Don Bredin; Stilianos Fountas; Christos Savva
  12. Managerial Performance of a Female-Owned and Home-Based Firm By Oladipo, Oluwasheyi S.; Platt, Katarzyna; Shim, Hyoung Suk
  13. Seizing the productive potential of digital change in Estonia By Damien Azzopardi; Patrick Lenain; Margit Molnar; Natia Mosiashvili; Jon Pareliussen
  14. Drivers of food safety adoption among food processing firms: A nationally representative survey in Ghana By Asante, Seth B.; Ragasa, Catherine; Andam, Kwaw S.
  15. Productivity outcomes in online labor markets and within-task complexity and difficultly By Mourelatos, Evaggelos; Giannakopoulos, Nicholas; Tzagarakis, Manolis
  16. How Does Working-Time Flexibility Affect Workers' Productivity in a Routine Job? Evidence from a Field Experiment By Marie Boltz; Bart Cockx; Ana Diaz; Luz Salas
  17. American Business Cycles 1889-1913: An Accounting Approach By Dou Jiang; Mark Weder
  18. Digital spillovers and SMEs’ performance in Sub-Saharan Africa By Joel Cariolle
  19. Productivity Gaps and Job Flows: Evidence from Censal Microdata By Elías Albagli; Mario Canales; Chad Syverson; Matías Tapia; Juan Wlasiuk

  1. By: Thomas Grebel (TU - Ilmenau University of Technology [Germany]); Mauro Napoletano (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po, SKEMA Business School, SSSUP - Scuola Universitaria Superiore Sant'Anna [Pisa]); Lionel Nesta (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (... - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015 - 2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po)
    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. JEL classification: L10,N10,D24
    Date: 2020–09–13
  2. By: Andreas Eder (University of Natural Resources and Life Sciences Vienna, Institute of Sustainable Economic Development)
    Abstract: This article provides a generalization of the materials balance-based production model introduced by Coelli et al. (2007). Based on this, some new environmental efficiency (EE) measures are presented. The Coelli et al. (2007) EE measure and its extension by Rødseth (2016) produce biased efficiency estimates if the material flow coefficients (MFCs) are heterogeneous across decision-making units and non-discretionary. Furthermore, the Coelli et al. (2007) measure fails to reward emission reductions by emission control. To overcome these shortcomings, this paper proposes production models which allow for heterogeneous MFCs reflecting differences of external environmental factors or non-controllable heterogeneities in inputs and outputs, and which properly take into account emission abatement activities. Based on this, we provide new EE measures and decompose them into i) a part reflecting emission control efficiency (ECE), ii) a part measuring material input efficiency (MIE), and iii) a part reflecting the efficient allocation between material and non-material inputs (environmental allocative efficiency, EAE). The approach is illustrated by an empirical application to arable farming in Austria utilizing data from 90 farms for the year 2011. Soil erosion is considered an undesirable output and land a material input. The average EE, ECE, MIE, and EAE are 0.53, 0.96, 0.69, and 0.79, respectively. The results indicate that actual output can be potentially achieved with 47% less soil loss. Most of the potential to improve EE is due to differences in MIE and EAE. Removing inefficiencies in the implementation of existing, subsidized erosion controls allows soil loss to be reduced by 4%.
    Keywords: Emission-generating technologies, Materials balance condition, Weak-G disposability, Data envelopment analysis, Non-discretionary factors, Soil erosion, Crop farms
    JEL: C61 D24 Q12 Q15
    Date: 2021–01
  3. By: Michael McMahon (OECD); Sara Calligaris (OECD); Eleanor Doyle (Cork University Business School); Stephen Kinsella (University of Limerick)
    Abstract: This report assesses the impact of digitalisation on competition by examining the evolution of mark-ups and multifactor productivity (MFP) across firms of different sizes. It finds that size is positively related to mark-ups and that this relationship has strengthened over time. This trend has been accompanied by an increase in the relative productivity advantage of larger firms and both changes are more pronounced in digital-intensive sectors, suggesting that digitalisation may be an underlying driver. Policy makers may need to consider appropriate responses if digital technologies affect larger and smaller firms in a heterogeneous manner.
    Keywords: Digitalisation, Intangible Assets, Mark-ups, Market Power, Multifactor Productivity, Scale
    JEL: D2 D24 L1 L2 O33
    Date: 2021–01–18
  4. By: Natia Mosiashvili; Jon Pareliussen
    Abstract: With a newly constructed firm-level dataset combining various survey- and registry data from Statistics Estonia, this paper sheds new light on the labour productivity premium from adopting digital technologies and boosting digital skill use. The productivity premium is decomposed into a direct effect benefitting the firms actually increasing their digital intensity, and an indirect effect of belonging to a sector with high digital intensity. The firm-level productivity premium of being an adopting firm is consistently positive and sizeable across different digital technologies and measures of skill intensity. The evidence also suggests positive spill-over effects in manufacturing sectors and sectors with a high routine task content and thus a high automation potential.
    Keywords: Digitalisation, productivity, skills, training
    JEL: D24 E22 J24 M53 O33
    Date: 2020–12–16
  5. By: Walter Briec (Universite de Perpignan, LAMPS, 52 Avenue Villeneuve, F-66000 Perpignan, France); Audrey Dumas (Universite de Perpignan, CDED, 52 Avenue Villeneuve, F-66000 Perpignan, France); Kristiaan Kerstens (IESEG School of Management, CNRS, Univ. Lille, UMR 9221-LEM, 3 rue de la Digue, F-59000 Lille, France); Agathe Stenger (Universite de Perpignan, CDED, 52 avenue de Villeneuve, F-66000 Perpignan, France)
    Abstract: We analyse the role of new weak and strong commensurability conditions on efficiency measures and especially on productivity measurement. If strong commensurability fails, then a productivity index (indicator) may exhibit a homogeneity bias yielding inconsistent and contradictory results. In particular, we show that the Luenberger productivity indicator (LPI) is sensitive to proportional changes in the input-output quantities, while the Malmquist productivity index is not affected by such changes. This is due to the homogeneity degree of the directional distance function under constant returns to scale. In particular, the directional distance function only satisfies the weak commensurability axiom in general. However, if the directional distance function is a diagonally homogeneous function of the technology, then the directional distance function satisfies strong commensurability. This explains why the direction of an arithmetic mean of the observed data works well. Numerical examples and an empirical illustration are proposed. Under a translation homothetic technology, the LPI is not affected by any additive directional transformation of the observations.
    Keywords: Malmquist and Luenberger productivity, Directional and proportional distance function, Weak and strong commensurability
    JEL: C43 C67 D24
    Date: 2021–01
  6. By: Lin Shao; Rongsheng Tang
    Abstract: This paper evaluates the contribution of allocative efficiency to the aggregate productivity growth in Canada and the US. In particular, we are interested in explaining two puzzling facts: 1) the slowdown in productivity growth during the 1970s and the 2000s in the US, and 2) the widening Canada-US productivity gap since the middle of the 1980s. We extend the framework of Oberfield (2013) to derive sufficient statistics for allocative efficiency and decompose aggregate productivity in an input-output economy à la Jones (2013). The lack of improvement in allocative efficiency can explain two-thirds of the US’s productivity slowdown and more than one-third of the widening Canada-US productivity gap. The allocation of capital, rather than labor, was the main driver behind the overall movement in allocative efficiency. Resources allocated to service sectors were significantly lower than the optimal level. It improved markedly over time, especially in the US before the 2000s.
    Keywords: Economic models; Productivity
    JEL: C67 D4 D57 E23
    Date: 2021–01
  7. By: Dogan, Mesut; Kevser, Mustafa
    Abstract: Purpose: The purpose of this research is to reveal the effect of firms' intellectual capital on financial performance. Firms invest in intangible assets as well as tangible assets in order to gain competitive advantage (Atan ve Tuncer, 2019). Within the scope of intangible fixed assets, the most investment is made to intellectual capital. Intellectual capital has three basic dimensions: human capital, structural capital and customer capital (Soylu, 2020). In the 21st century, where technology changes and develops very rapidly, companies create added value by using their intellectual capital and turn the added value into profit. In this respect, intellectual capital is knowledge that can turn into profit (Çetin, 2005). Methodology: The intellectual capital levels of companies operating in the Borsa Istanbul Industrial Index were measured by the Intellectual Value Added Coefficient (VAIC) method for the period of 2015-2019. The relationship between the obtained coefficient and financial performance indicators, return on assets ratio (ROA), return on equity (ROE) and Tobin's Q ratio, was analyzed by panel data method. Findings: According to the results of the research, there is a statistically significant and positive relationship between the intellectual capital coefficient and profitability rates and Tobin's Q ratio. Conclusion- The results obtained show the positive effect of intellectual capital on firm performance. Companies can focus on intellectual capital investments and increase their productivity for sustainable financial performance.
    Keywords: Intellectual capital,ROA,ROE,Tobin’s Q,intellectual value added coefficient
    JEL: C61 E22 G30
    Date: 2020
  8. By: Javier Silvestre (Universidad de Zaragoza)
    Abstract: European coal production underwent a period of dramatic increase from the early nineteenth century to 1913. A consensus exists, however, for a depiction of the coal industry as, to a high degree, technologically stagnant throughout the long nineteenth century. Macro-inventions, or general purpose technologies, in fact, appeared at either end of the period. In the interregnum, therefore, the increase in European coal production would have mainly been the result of adding more labor rather than developing new technology. This paper aims to revise this interpretation. First, long-term series of labor productivity and fatality rates data are presented. Second, a link between improvements in Europe both in productivity and safety in conjunction with a series of “small-scale”, for the most part complementary to labor and closely related to questions of safety, technological innovations is proposed. A comparison of productivity and safety for European countries is established with the US.
    Keywords: Long nineteenth-century coal mining, productivity, mortality, technology, Europe, United States
    JEL: N70 N50 N30 Q35 O33
    Date: 2021–01
  9. By: Askenazy, Philippe (CNRS)
    Abstract: This paper proposes a basic model with two types of capital: productive capital directly involved in the production process and capital devoted to monitoring workers. Surveillance capital intensifies workers' job strain, while wage recognition encourages their engagement. Firms face a double trade-off between the two types of capital and between incentives and labour costs. Under simple assumptions, up to a certain threshold, technological innovation improves productivity, wages and profits at the same pace, leading to a at labour share in income. Then, once the threshold is breached, profit-maximization initiates a transfer from productive capital to monitoring tools. This progressive shift generates a decline in the labour share and a productivity slowdown, despite greater job strain. The model suggests the possibility of a third phase in which productivity and wages recover.
    Keywords: declining labour share, productivity slowdown, effort-reward imbalances, surveillance
    JEL: O33 O40 J20 J30
    Date: 2020–12
  10. By: Martino Pelli; Jeanne Tschopp; Natalia Bezmaternykh; Kodjovi M. Eklou
    Abstract: This paper examines the response of firms to capital destruction, using a new measure of firm exposure to tropical storms as a negative exogenous shock on firms’ capital stock. Drawing on a panel of Indian manufacturing firms between 1995 and 2006, we establish that, depending on their strength, storms destroy up to 75.3% of the fixed assets of the median firm (in terms of its productivity and industry performance). We quantify the response of firm sales within and across industries and find effects akin to Schumpeterian creative destruction, where surviving firms build back better. Within an industry, the sales of less productive firms decrease disproportionately more, while across industries capital destruction leads to a shift in sales towards more performing industries. This build-back better effect is driven by firms active in multiple industries and, to a large extent, by shifts in the firm-level production mix within a firm’s active set of industries. Finally, while there is no evidence that firms adjust by investing in new industry lines, firms tend to abandon production in industries that exhibit lower comparative advantage.
    Keywords: Comparative advantage;Total factor productivity;Capital productivity;Natural disasters;Productivity;WP,ISIC firm,single-establishment firm,tropical storm
    Date: 2020–09–25
  11. By: Don Bredin (University College Dublin); Stilianos Fountas (Department of Economics, University of Macedonia); Christos Savva (Cyprus University of Technology)
    Abstract: We examine the empirical relationship between output variability and output growth for Britain using data for eight centuries covering the 1270 to 2014 period. Drawing on the economic history literature, we split the full sample period in four subperiods and use GARCH models to measure output growth uncertainty and estimate its e ect on average growth. Within each sub-sample we allow output growth to depend on the state of the system, e.g. 2-regime switching model would switch between high-growth and low-growth regimes. We find that the e ect of uncertainty on growth di ers depending on the existing growth regime. Low-growth regimes are associated with a negative e ect of uncertainty on growth, and medium or high-growth regimes are associated with a positive e ect. These findings are consistent across the four states of economic development. Our results indicate why the empirical literature to date has found mixed results when examining the e ect of uncertainty on growth.
    Keywords: output variability, output growth, GARCH models, regime switching.
    JEL: C22 C51 C52 E32
    Date: 2021–02
  12. By: Oladipo, Oluwasheyi S. (State University of New York at Old Westbury); Platt, Katarzyna (State University of New York at Old Westbury); Shim, Hyoung Suk (CUNY - College of Staten Island)
    Abstract: Female entrepreneurship has been regarded as inferior to its male equivalent in terms of performance. Literature on gender differences in entrepreneurship focus mostly on showing the differences, but not much literature discusses where the differences come from, and how to mitigate them. This paper empirically examines the joint effect of female ownership and being home-based on owners' managerial performance. We estimate the average treatment effect of female-owned and homebased firms on return on assets (ROA) using the 2007 Survey of Business Owners (SBO) micro data. From the main estimation result, the marginal effects of female ownership and home-based business are both negative. The estimated ROA gains of female ownership and home-based business are about -37.20% and -67.17%, respectively. In contrast, we find that the joint effect of female ownership and home-based business is about 39.53% ROA gain. Our finding suggests that female-owned firms can outperform under the appropriate supporting conditions, such as if they are able to remove travel time and costs by establishing their businesses at home.
    Keywords: firm performance, female owners
    JEL: L25 L26 J16
    Date: 2020–12
  13. By: Damien Azzopardi; Patrick Lenain; Margit Molnar; Natia Mosiashvili; Jon Pareliussen
    Abstract: Technologies such as cloud computing, software to automate supplier- and customer relations, online platforms and artificial intelligence seem to offer a vast potential to boost productivity and living standards. However, aggregate productivity growth has declined sharply across the OECD over the past decades. Estonia is no exception, though it is well placed to gain from digital technology diffusion, with strong digital foundations, including advanced and secure physical and digital infrastructure and world-leading e-government services. Turning this potential into a productivity boost necessitates speeding up digital take-up also outside of the ICT sector and fostering the complementarities between digital technologies, skills and policies. Skills are high in general, and the supply of ICT specialists is picking up. There is still potential to improve digital user skills, and notably to put skills to better use by improving management skills and practices. Business-friendly regulations in general and pioneering attempts in some areas will likely spur the adoption of digital technologies. However, insolvencies are too slow and costly, command-and-control regulations relatively frequent and public ownership in network industries is high. Strengthening collaboration between industry associations, labour unions and industry clusters within technology investments, internationalisation, skill supply and management practices could help the country better realise complementarities between technologies, skills and policies, and thereby tap deeper into the productivity potential offered by digital technologies.
    Keywords: automation, Digitalisation, productivity, skills
    JEL: D24 D47 E22 J24 O33 O38
    Date: 2020–12–16
  14. By: Asante, Seth B.; Ragasa, Catherine; Andam, Kwaw S.
    Abstract: Globally, food system transformation is characterized by the increasing importance of food safety and quality standards for consumers. This trend is challenging for the food processing sector in Ghana, which is dominated by micro and small firms. This study investigates the factors influencing the adoption of food safety practices and the effect of such adoption on the profitability of nationally representative food processing firms in Ghana using instrumental variable approach and matching techniques. The study uses nationally representative data for 511 food processing firms. The data show few food processing firms (20 percent) have adopted food safety practices. Wide diversity of firms was observed, and firm size, firm age, registrations, trainings, processing activities, types of buyers, and number of distinct products explain the differing firm adoption of food safety practices. We also find that adopters of food safety practices earn more per month than do nonadopting firms, implying the presence of economic incentive to adopt food safety practices. Support in terms of food safety awareness and training to food processing firms can help improve adoption of food safety practices.
    Keywords: GHANA; WEST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; surveys; food safety; food processing; enterprises; food systems; firm performance
    Date: 2020
  15. By: Mourelatos, Evaggelos; Giannakopoulos, Nicholas; Tzagarakis, Manolis
    Abstract: We analyze the impact of within-task difficulty and complexity on workers' productivity in online labor markets. Using a randomized control quasi-experiment in AMT we are able to define the difficulty and complexity embodied in requested sub-tasks within a problem-solved task. We find that our productivity measures are negatively related to the difficulty and complexity of a specific sub-task. This finding is robust to several sources of workers' heterogeneity and to different pay schemes.
    Keywords: Productivity,Online Labor markets,Task Difficulty and Complexity
    JEL: J24 D90
    Date: 2020
  16. By: Marie Boltz (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Bart Cockx (UGENT - Ghent University [Belgium], Institute for the Study of Labor (IZA) Bonn - Institute for the Study of Labor (IZA) Bonn, CESifo - Center for Economic Studies and Ifo for Economic Research - CESifo Group Munich, UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain, ROA - Real Instituto y Observatorio de la Armada); Ana Diaz (Pontificia Universidad Javeriana); Luz Salas (Pontificia Universidad Javeriana)
    Abstract: How Does Working-Time Flexibility Affect Worker's Productivity in a Routine Job? Evidence from a Field Experiment 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.
    Abstract: Nous avons mené une expérience dans laquelle nous avons offert différents types de contrats à des candidats pour évaluer comment la flexibilité dans le temps de travail affecte la productivité au travail dans un poste avec des tâches routinières. Notre approche décompose l'impact global sur la productivité en l'effet de sélection ex ante et l'effet comportemental ex post durant le contrat. Nous constatons que toutes les formes de flexibilité du temps de travail réduit la durée des pauses prises par les employés. Pour le travail à temps partiel, ces effets positifs sont globalement contrebalancés. Par contre, le contrat qui permet aux employés de décider quand commencer et arrêter de travailler augmentent la productivité totale de près de 50%, dont 40% sont induits par un effet de sélection positive pour ce type de contrat.
    Keywords: flexible work arrangements,part-time work,productivity,labor market flexibility,work-life balance,horaires de travail flexibles,travail à temps partiel,productivité,flexibilité du marché du travail,équilibre entre vie professionnelle et vie privée
    Date: 2020–10
  17. By: Dou Jiang (Nanjing University of Finance and Economics); Mark Weder (Department of Economics and Business Economics, Aarhus University and CAMA)
    Abstract: This paper quantitatively investigates the Depression of the 1890s and the 1907 recession in the United States. Business Cycle Accounting decomposes economic fluctuations into their contributing factors. The results suggest that both the 1890s and the 1907 recessions were primarily caused by factors that affect the efficiency wedge, i.e. slumps in the economy’s factor productivity. Distortions to the labor wedge played a less important role. Models with financial market frictions that translate into the efficiency wedge are the most promising candidates for explaining the recessionary episodes.
    Keywords: Business cycles, Depression of the 1890s, Recession of 1907
    JEL: E32 E44 N11
    Date: 2020–01–06
  18. By: Joel Cariolle (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)
    Abstract: In this policy brief, we use survey data from the WBES to provide an empirical assessment of the contribution of digital technologies diffusion to African SMEs' performance. Compared to existing empirical evidence on the impacts of digital technologies on African firms, the quantitative analysis hereafter presented incorporates various novelties.
    Date: 2020–09–30
  19. By: Elías Albagli; Mario Canales; Chad Syverson; Matías Tapia; Juan Wlasiuk
    Abstract: A large body of work has highlighted the importance of employment reallocation as a driver of aggregate productivity growth, but there is little direct evidence on the extent and nature of this process. We use an administrative matched employer-employee census for Chile to provide novel insights on the relationship between productivity gaps between firms and job transitions. As expected, the fraction of worker flows reflecting movements from lower- to higher-productivity firms is greater than that of the opposite sign, but only marginally so. Almost half of all transitions occur "down the firm-productivity ladder." This process is also highly heterogeneous across several dimensions. Up-the-ladder flows are more likely for direct job-to-job transitions than those that pass through non-employment. They are also much more likely for young, highskilled workers, whose job transitions comprise in an accounting sense the lion’s share of aggregate productivity growth. Interestingly, workers with higher job turnover rates contribute proportionally the least to aggregate productivity growth. Put together, this evidence is suggests that the productivity benefit of job reallocation might have a net benefit, but this benefit reflects massive and heterogeneous gross flows underneath.
    Date: 2020–12

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