nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒03‒01
twelve papers chosen by

  1. Environmental efficiency measurement when producers control pollutants under heterogeneous conditions: A generalization of the materials balance approach By Eder, Andreas
  2. Persistent and Transient Inefficiency of Australian States and Territories in Providing Public Hospital Services: An Application of Bayesian Stochastic Finite Mixture Frontier Analysis By Antony Andrews; Sean Kimpton; Omphile Temoso
  3. Growth Accounting in the Dominican Republic 1990-2018: new evidence By Franco Frizzera; Martín Grandes
  4. The Economics of Metrology By Link, Albert
  5. Management, skills and productivity By Emile Cammeraat; Lea Samek; Mariagrazia Squicciarini
  6. Rationing the Commons By Nicholas Ryan; Anant Sudarshan
  7. What Do Cooperative Firms Maximize, if at All? Evidence from Emilia-Romagna in the pre-Covid Decade By Guido Caselli; Michele Costa; Flavio Delbono
  8. Entrepreneurship, growth and productivity with bubbles By Lise Clain-Chamosset-Yvrard; Xavier Raurich; Thomas Seegmuller
  9. Promotions and Productivity: The Role of Meritocracy and Pay Progression in the Public Sector By Erika Deserranno; Philipp Kastrau; Gianmarco León-Ciliotta
  10. Dairy Balance Sheet and Profitability Benchmarks By Martinez, Charles; Bilderback, David; Eckelkamp, Elizabeth; Pepper, Hal; Cross, Tim
  11. Optimal lockdowns: Analysing the efficiency of sanitary policies in Europe during the first wave By Ewen Gallic; Michel Lubrano; Pierre Michel
  12. CEO behavior and firm performance By Bandiera, Oriana; Prat, Andrea; Hansen, Stephen; Sadun, Raffaella

  1. By: Eder, Andreas
    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: 2020
  2. By: Antony Andrews (School of Economics, Faculty of Business, Economics and Law at AUT University); Sean Kimpton (School of Economics, Faculty of Business, Economics and Law at AUT University); Omphile Temoso (Department of Resource and Agricultural Economics, University of New England (Australia))
    Abstract: Current literature on public hospital efficiency in Australia only reveals information on how efficient public hospitals are in the short run. The presence of persistent technical inefficiency arising from long-term systemic problems and government-related regulatory constraints does not appear to have been addressed. Using yearly panel data for the period 2002-2018 on eight Australian states and territories, this study incorporates the measure of both transient and persistent technical inefficiency while controlling for unobserved heterogeneity to obtain a more precise measure of technical efficiency. The results of this study indicate that the technical inefficiency among public hospitals in Australia is persistent rather than transient based on state and territory level data. This implies that policymakers need to formulate comprehensive policies involving a longer time horizon that focuses on reducing the persistence in inefficiency among public hospitals in Australia. The study also calls on policymakers and regulators to disclose hospital-level data to researchers in order to gain further insight into the causes of persistence in inefficiency to formulate effective policies.
    Keywords: stochastic frontier analysis, Australian hospitals, technical efficiency, persistent inefficiency, frontier estimation, Bayesian, STAN
    Date: 2021–02
  3. By: Franco Frizzera; Martín Grandes
    Keywords: Economic Growth, Dominican Republic, Growth Accounting, ICT Capital, Total Factor Productivity.
    JEL: O47 O54 E22
    Date: 2020–12–18
  4. By: Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: Metrology is the study of measurement science. Publicly funded outputs from measurement science have public good characteristics, and thus scholars have previously investigated the economic impact of such outputs on aggregate productivity as a first look at the impact of such public funds on economic activity. This study is the first to explore the relationships between one output from measurement science—calibration tests at the U.S. National Institute of Standards and Technology (NIST)—and aggregate productivity. The finding of a positive relationship is suggested to be a springboard for future research on the economics of metrology.
    Keywords: Metrology; Measurement science; Program management; Calibration tests; Public goods; R&D;
    JEL: H41 H54 O47
    Date: 2021–02–19
  5. By: Emile Cammeraat (OECD); Lea Samek (OECD); Mariagrazia Squicciarini (OECD)
    Abstract: This paper studies how industries’ investment in organisational capital (OC) and workforce skills relate to productivity, building on OECD estimates of OC, output data from the OECD Structural Analysis (STAN) database, and both cognitive and task-based skill indicators from the OECD Programme for the International Assessment of Adult Competencies (PIAAC). The paper finds that at the industry level, workers’ numeracy and endowment of skills related to science, technology, engineering and mathematics (STEM) correlate positively with productivity, and that the positive correlation of STEM skills with productivity is generally larger for OC workers. The paper also finds evidence that skills dispersion harms industry performance. A gap between the ICT skills of OC and non-OC workers seems to trigger a “lost in translation” type of mechanism, whereby communication and information flows become less fluid and impinge upon the economic performance of sectors, correlating negatively with productivity.
    Keywords: Human Capital, ICT, Labour Productivity, Organisational Capital, Skills, STEM
    Date: 2021–02–23
  6. By: Nicholas Ryan (Yale University - Department of Economics); Anant Sudarshan (University of Chicago - Energy Policy Institute)
    Abstract: Common resources may be managed with inefficient policies for the sake of equity. We study how rationing the commons shapes the efficiency and equity of resource use, in the context of agricultural groundwater use in Rajasthan, India. We find that rationing binds on input use, such that farmers, despite trivial prices for water extraction, use roughly the socially optimal amount of water on average. The rationing regime is still grossly inefficient, because it misallocates water across farmers, lowering productivity. Pigouvian reform would increase agricultural surplus by 12% of household income, yet fall well short of a Pareto improvement over rationing.
    Date: 2020
  7. By: Guido Caselli; Michele Costa; Flavio Delbono
    Abstract: The Italian region Emilia-Romagna ranks first among the world’s most important cooperative districts. Using a unique dataset covering all firms registered in the region, we investigate the performance of active firms in the period 2010-18. By focusing on employment, revenue and profits of cooperative firms as compared to conventional firms, we disentangle the differences between the average performance of the two types of companies and detect the presence of a “size effect” driving much of the difference between them. Moreover, our results strengthen previous empirical evidence about the countercyclical role of cooperative firms: they seem to optimize a mixture of employment and profits, assigning a greater weight to the former during downturns and stagnation. Finally, we examine the regional logistics industry and compare also the profitability of employees in the two segments of the sector.
    JEL: L21 L25
    Date: 2021–02
  8. By: Lise Clain-Chamosset-Yvrard (Univ. Lyon, Université Lumière Lyon 2, GATE UMR 5824, F-69130 Ecully, France); Xavier Raurich (University of Barcelona, Department of Economics, Av. Diagonal 696, 08034 Barcelona (Spain)); Thomas Seegmuller (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: Entrepreneurship, growth and total factor productivity are larger when there is a financial bubble. We explain these facts using a growth model with financial bubbles in which individuals face heterogeneous wages and returns on productive investment. The heterogeneity in the return of in- vestment separates individuals between savers and entrepreneurs. Savers buy financial assets, which are deposits or a financial bubble. Entrepreneurs incur in a start-up cost and borrow to invest in productive capital. The bubble provides liquidities to credit-constrained entrepreneurs. These liquidities increase investment and entrepreneurship when the start- up cost is large enough, which explains that growth and entrepreneurship can be larger with bubbles. Finally, productivity can be larger when the bubble further increases the investment of more productive entrepreneurs. This can occur when the return of investment is correlated with wages.
    Keywords: bubble, entrepreneurship, growth, productivity
    JEL: E22 E44 G12
    Date: 2021–02
  9. By: Erika Deserranno; Philipp Kastrau; Gianmarco León-Ciliotta
    Abstract: We study promotion incentives in the public sector by means of a field experiment with the Ministry of Health in Sierra Leone. The experiment creates exogenous variation in meritocracy by linking promotions to performance and variation in perceived pay progression among the lowest tier of health workers. We find that meritocratic promotions lead to higher productivity, and more so when workers expect a steep pay increase. However, when promotions are not meritocratic, increasing the pay gradient reduces productivity through negative morale effects. The findings highlight the importance of taking into account the interactions between different tools of personnel policy.
    Keywords: promotions, meritocracy, pay progression, worker productivity
    JEL: M51 M52 J31 D73
    Date: 2021–02
  10. By: Martinez, Charles; Bilderback, David; Eckelkamp, Elizabeth; Pepper, Hal; Cross, Tim
    Abstract: In any business, recordkeeping is an important practice for financial success. In agriculture, recordkeeping can help producers understand the production/input efficiency, breakeven values, cost structure and profitability drivers for their business. A major benefit can also be financial health analyses. University of Tennessee Extension has developed the Dairy Gauge Benchmarking program to help dairy producers better understand what their financial statements and key ratios suggest about the financial health of their business. Within the program, there are three areas that were developed specifically for gauging a dairy business’s financial health. The three areas are 1) balance sheet and profitability dairy benchmarks, 2) dairy feed benchmarks, and 3) dairy non-feed income and expense benchmarks. This publication is focused on the dairy balance sheet and profitability benchmarks.
    Keywords: Agribusiness, Farm Management, Productivity Analysis
    Date: 2021–02–19
  11. By: Ewen Gallic (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Michel Lubrano (School of Economics, Jiangxi University of Finance and Economics, China and Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Pierre Michel (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.)
    Abstract: Uprising in China, the global COVID-19 epidemic soon started to spread out in Europe. As no medical treatment was available, it became urgent to design optimal non-pharmaceutical policies. With the help of a SIR model, we contrast two policies, one based on herd immunity (adopted by Sweden and the Netherlands), the other based on ICU capacity shortage. Both policies led to the danger of a second wave. Policy efficiency corresponds to the absence or limitation of a second wave. The aim of the paper is to measure the efficiency of these policies using statistical models and data. As a measure of efficiency, we propose the ratio of the size of two observed waves using a double sigmoid model coming from the biological growth literature. The Oxford data set provides a policy severity index together with observed number of cases and deaths. This severity index is used to illustrate the key features of national policies for ten European countries and to help for statistical inference. We estimate basic reproduction numbers, identify key moments of the epidemic and provide an instrument for comparing the two reported waves between January and October 2020. We reached the following conclusions. With a soft but long lasting policy, Sweden managed to master the first wave for cases thanks to a low R 0 , but at the cost of a large number of deaths compared to other Nordic countries and Denmark is taken as an example. We predict the failure of herd immunity policy for the Netherlands. We could not identify a clear sanitary policy for large European countries. What we observed was a lack of control for observed cases, but not for deaths.
    Keywords: SIR models, phenomenological models, double sigmoid models, sanitary policies, herd immunity, ICU capacity constraint
    JEL: C22 C54 I18
    Date: 2021–02
  12. By: Bandiera, Oriana; Prat, Andrea; Hansen, Stephen; Sadun, Raffaella
    Abstract: We develop a new method to measure CEO behavior in large samples via a survey that collects high-frequency, high-dimensional diary data and a machine learning algorithm that estimates behavioral types. Applying this method to 1,114 CEOs in six countries reveals two types: “leaders,” who do multifunction, high-level meetings, and “managers,” who do individual meetings with core functions. Firms that hire leaders perform better, and it takes three years for a new CEO to make a difference. Structural estimates indicate that productivity differentials are due to mismatches rather than to leaders being better for all firms.
    JEL: J50
    Date: 2020–04–01

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