nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒04‒05
twelve papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Choice of Inputs and Outputs for Production Analysis By Subhash C. Ray
  2. Trade-off analysis of cost and nutrient efficiency of coffee farms in vietnam: A more generalised approach By Ho, Thong Quoc; Hoang, Vincent; Wilson, Clevo
  3. The spatial dimension of productivity in Italian co-operatives By OECD
  4. International Taxation and Productivity Effects of M&As By Maximilian Todtenhaupt; Johannes Voget
  5. Unions, Collective Bargaining and Firm Performance By Patrice Laroche
  6. Geographical Exposure to Conflicts and Firm Performance: Evidence from The MENA Region By Daniel Mirza; Rita Der Sarkisian; Chahir Zaki
  7. Productivity development in the construction industry and human capital: a literature review By Matthias Bahr; Leif Laszig
  9. Optimal capital adequacy ratio: an investigation of Vietnamese commercial banks using two-stage DEA By Phuong Anh Nguyen; Bich Le Tran; Michel Simioni
  10. Does the Legal Form Matter for Firm Performance in the MENA Region? By Issam Abdo Ahmad; Ali Fakih
  11. Not a Typical Firm: The Joint Dynamics of Firms, Labor Shares, and Capital–Labor Substitution By Joachim Hubmer; Pascual Restrepo
  12. Impact of technological progress on carbon emissions in different country income groups By Chris Belmert Milindi; Roula Inglesi-Lotz

  1. By: Subhash C. Ray (University of Connecticut)
    Abstract: Production creates value by transforming inputs into outputs. Classification of variables as inputs or outputs depends on the scope of decision making by the firm. Inputs enter the boundary of the firm from outside without any prior processing by the firm and once transformed into outputs exit its jurisdiction without any further processing. This chapter highlights the defining characteristics of inputs and outputs both for single stage and multi-stage production. The necessary conditions that must be met for a valid aggregation of several inputs into total expenditure are discussed both for nonparametric and parametric models of production. Several statistical tests of hypotheses related to aggregation of several inputs or exclusion of individual inputs in nonparametric models are discussed. The technology set of feasible input-output bundles invariably depends on many environmental or contextual variables that are outside the control of the producer. In parametric Stochastic Frontier Analysis they can be directly included as determinants of the mean or variance the technical efficiency factor causing shifts in the production frontier. In nonparametric Data Envelopment Analysis influence of such factors is measured through a second stage regression of efficiency scores on the contextual variables. The alternative approaches of a second stage least squares regression and a truncated regression are briefly discussed. The chapter ends with examples of input-output choice in several popular areas of application like manufacturing, banking, and health care.
    Keywords: Multi-stage production; Input aggregation; Contextual variables; Second stage regression
    JEL: D24 C44
    Date: 2021–03
  2. By: Ho, Thong Quoc; Hoang, Vincent; Wilson, Clevo
    Abstract: Analysis of economic and environmental performance of agricultural production has received increasing attention in both the theoretical and empirical literature (Aldieri et al., 2019). Several methodological approaches have been proposed to measure environmental efficiency and to analyse trade-offs between economic and environmental performance (e.g., Fang, 2020; Shuai and Fan, 2020; Azad and Ancev, 2014; Picazo-Tadeo and Prior, 2009; Reinhard et al., 2000). Within this literature strand, Coelli et al., (2007) offer a distinct approach that utilises the material balance principle to derive cost and environmental efficiency measures. Empirical applications of Coelli et al. (2007) for the purpose of environmental and economic analysis have flourished recently (Hoang and Alauddin, 2012; Nguyen et al., 2012; Hoang and Rao, 2010). However, these empirical applications focus only on the economic and environmental trade-off of technically efficient farms, not all the farms.
    Keywords: Coffee production, Cost efficiency, Environmental efficiency, Trade-off, Vietnam.
    JEL: O13
    Date: 2020–02–08
  3. By: OECD
    Abstract: This report explores the spatial dimension of productivity in the co-operatives of Italy, a country where they make up a relatively large share of total national employment. Co-operatives play a countercyclical role in job creation during crises. In a post-pandemic world, they could make a major contribution to steering the economy towards inclusiveness and sustainability. Productivity growth ensures that co-operatives can achieve both economic and social goals in the future. This report applies a place-based approach to investigate the issue of productivity in co-operatives, given their many interdependencies with local communities. Novel evidence points to the local factors that are linked with the concentration and productivity of co-operatives across regions, sectors and firm size classes in Italy. A comparison with other Italian firms as well as with Spanish co-operatives and other Spanish firms serves to illustrate how productivity performance varies across space and firm types. This report constitutes an empirical test for the analytical approach developed by the OECD Spatial Productivity Lab.
    Keywords: cooperatives, Italy, productivity, regional economics, social economy, Spain
    JEL: D24 E24 J54 L31 O32 O35 P13 Q13 R12
    Date: 2021–03–30
  4. By: Maximilian Todtenhaupt; Johannes Voget
    Abstract: We investigate how changes in firm productivity after M&As are affected by differences in profit taxation between the target and the acquirer. We argue that tax differentials distort the efficient allocation of productive factors following an M&A and thus inhibit the realization of productivity improvements. Using firm-level data on inputs and outputs of production as well as on corporate M&As, we show that the absolute tax differential between the locations of two merging firms reduces the subsequent total factor productivity gain. This effect is concentrated in horizontal M&As and less pronounced when firms can use international profit shifting to attenuate effective differences in taxation.
    Keywords: M&A, productivity, international taxation
    JEL: F23 H25
    Date: 2021
  5. By: Patrice Laroche (UL - Université de Lorraine)
    Abstract: The impact of unions on firm performance has been the subject of debate and controversy in most industrialized countries, particularly in the United States and the United Kingdom. The purpose of this chapter is to review and assess the scope and limitations of the economic analysis of unions as well as the controversies surrounding the conclusions of existing empirical research. Although it is difficult to draw firm and general conclusions on the effects of unions on firm performance, the existing results lead us to consider unions not solely in terms of their costs for the company. Empirical results suggest that unionism is often associated with higher productivity but this relationship might vary across industries, institutional contexts and over time. Estimates of the causal mechanisms through which unions affect productivity allow a better understanding of the effects of unions. The literature on the effect of unions on productivity recognizes that part of this effect may work through reducing employee turnover and other mechanisms, such as technological and organizational innovations, which are essential factors of productivity growth. Recent studies dealing with the effects of unions on firm profits support Freeman and Medoff's (1984) conclusion that unionization is associated with lower profitability. Finally, union activities, especially collective bargaining, trade off some economic efficiency for greater justice in workplaces and reduced inequalities
    Keywords: collective bargaining,productivity,innovation,high-performance work practices
    Date: 2020–12–10
  6. By: Daniel Mirza (University of Tours); Rita Der Sarkisian (Ecole des Ingénieurs de la Ville de Paris (EIVP)); Chahir Zaki (Cairo University)
    Abstract: This paper assesses the impact of insecurity generated by conflicts on firm performance in the Middle East and North Africa (MENA) region. It contributes to the literature in three ways. First, we try to identify the local effect of conflicts using a geospatial approach where we evaluate the exposure of each firm and its shipment routes and infrastructures to conflictual events overtime in a specific location. Second, from a methodological perspective, we adopt a simple methodology – new to the literature- to identify the within-firm effect. To do so, we use two series of information on performance (measured by sales and labor productivity) on the current year t and year t-2, both being reported in the same World Bank Enterprise Survey (WBES) conducted for a country in year t. Third, large datasets from the WBES for six non-oil countries (Egypt, Jordan, Lebanon, Palestine, Tunisia and Morocco) were merged with geospatial measures to conflicts. Key findings show that battles and explosions negatively and robustly affect sales and productivity, all the more so for small and mid-sized firms. Nevertheless, we do not find robust effects of exposure to protests, riots and violence against civilians across different measures of the performance of firms and conclude for further research on these issues.
    Date: 2021–02–20
  7. By: Matthias Bahr; Leif Laszig
    Abstract: Tis paper is a literature review focusing on human capital, skills of employees, demographic change, management, training and their impact on productivity growth. Intrafirm behaviour has been recognized as a potentially important driver for productivity. Results from surveys show that management practices have become more structured, in the sense of involving more data collection and analysis. Furthermore, a strong positive correlation between the measured management quality and firm performance can be observed. Studies suggest that there is a positive association between management score and productivity growth. The lack or low level of employees' skills and qualifications might be in different ways a possible explanation for the observed slowdown of productivity growth. The main reason for the decline in skilled labor is the demographic change. Construction sectors are increasingly affected by demographic developments. Labour reserves in construction are largely exhausted. Shortage of qualified workforce is impacting project cost, schedules and quality.
    Date: 2021–03
  8. By: Jaan Masso; Amaresh K Tiwari
    Abstract: In this paper, using Estonian Community Innovation Survey data, we study the role of R&D, capital accumulation, and innovation output on productivity for entrants and incumbents. We find that the impact of R&D investment on labour productivity is larger for the entrants com- pared to the incumbents. Entrants are found to be more productive and more heterogeneous in their total factor productivity (TFP) than the incumbents. Moreover, entrants who innovate are on average, in terms of TFP, 25% more productive than the entrants who do not, while the corresponding figure for the incumbents is 7%. In addition, it is mostly the incumbents who benefit from within-industry knowledge that is produced outside their own firm. Finally, for both entrants and incumbents, embodied technological change through capital accumulation is found to be more effective in generating productivity growth than R&D expenditure.
    Keywords: R&D, Innovation, Productivity, Entrants, Incumbents, Spillovers
    Date: 2021
  9. By: Phuong Anh Nguyen (VNU-HCM - Vietnam National University - Ho Chi Minh City); Bich Le Tran (VNU-HCM - Vietnam National University - Ho Chi Minh City); Michel Simioni (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Over the last years the Vietnamese banking system has been struggling to restructure, reform governance, consolidate financial statements and build up merge and acquisition, in line with international standards. The Bank for International Settlements (BIS) proposed BASEL III in 2010, whereby banks must increase their minimum Capital Adequacy Ratios (CAR) year by year with a goal of 10.5% by 2019. The objective of this paper is to address the questions: (1) what are the optimal CAR levels for Vietnamese Commercial Banks (2) whether the minimum required CARs stipulated in the Basel II and III are reasonable for Vietnam banking system? The data set consists of a sample of Vietnamese commercial banks over the six-year period from 2010 to 2015. The optimal CARs of banks are calculated using the nonparametric two-stage Data Envelopment Analysis (DEA) model, with two inputs: fixed assets, employee expense and two outputs: interest income, non-interest income. The findings indicate that 92.4% of the banks have the optimal CAR higher than the minimum ratio 10.5% defined in BASEL III. Moreover, 57.98% of the banks should raise their current level of CAR to reach their optimal ones. To conclude, this paper will provide a guideline for Vietnamese banks to decide their optimal CAR to reach the efficiency frontier.
    Keywords: Vietnam banking system,Two-stage DEA,BASEL II,BASEL III,Capital adequacy ratios
    Date: 2021–01–01
  10. By: Issam Abdo Ahmad; Ali Fakih
    Abstract: This paper attempts to study the relationship between firm legal form and firm performance in the Middle East and North Africa Region (MENA) using the World Bank Enterprise Survey (WBES) database. Our analysis shows that open shareholding, closed shareholding, partnership, and limited partnership companies demonstrate an advantage in terms of annual sales and annual productivity growth rates over sole proprietorship firms, and that medium-sized and large-sized firms also demonstrate an advantage over small ones. Our analysis also shows that foreign ownership, exporting activities, the usage of the web in communication with clients and suppliers, and the presence of full-time workers positively affect firm performance. These findings are robust when running the analysis for firms with female participation in ownership. This paper provides directions for strategists targeting at improving the performance of firms.
    Keywords: Legal Form,Firm Performance,MENA Region,
    JEL: C10 G30 L25
    Date: 2021–03–30
  11. By: Joachim Hubmer; Pascual Restrepo
    Abstract: The decline in the U.S. labor share is far from uniform across firms. While the aggregate labor share has declined, especially in manufacturing, retail, and wholesale, the labor share of a typical firm in these industries has risen. This paper studies the dynamics of the substitution of capital for labor at the firm level and its implications for market structure and labor shares. We introduce a model of firm dynamics where firms make costly upfront investments to adopt the capital-intensive technologies required to automate additional tasks. Following a decline in the price of capital, large firms automate more of their tasks and become more capital intensive; while the median firm continues to operate a more labor-intensive technology. In line with firm-level data, our model generates transitions in which the labor share of the median firm increases at the same time as the aggregate labor share declines. We use an extension of our model that allows for endogenous markups to study the role of rising competition and reallocation towards more productive and higher-markup firms as another driver of the decline in the labor share during 1982–2012. We provide a quantitative decomposition showing that reallocation played a minor role in explaining the decline in the labor share in U.S. manufacturing but an important role in retail and other sectors. The substitution of labor with cheaper capital in a widening range of tasks played a more dominant role in explaining the decline of the manufacturing labor share.
    JEL: E22 E23 E24 E25
    Date: 2021–03
  12. By: Chris Belmert Milindi (Department of Economics, University of Pretoria, Pretoria, South Africa); Roula Inglesi-Lotz (Department of Economics, University of Pretoria, Pretoria, South Africa)
    Abstract: This study examines the complex relationship between carbon emissions and technological progress in a sample of 60 countries, divided into four categories based on their per capita income between the periods of 1989-2018. For robustness purposes and due to the broad definition of technology, we use six different proxies to represent technology; namely: Information and telecommunication technology (ICT); patents; public R&D expenditure; total factor of productivity (TFP); and a number of science and technology publications. After applying the fixed-effect method with Driscoll and Kraay standard errors, for the full sample, the results show that the ICT variables are a good instrument for carbon abatement, while R&D expenditure and patents do not have a clear impact on carbon emissions, TFP increases carbon emissions, and science and technology publications are negatively related to carbon emissions. The impact of the indicators on the various income levels groups of countries vary which has significant policy implications.
    Keywords: Technological progress, Income groups, rebound effect, fixed effect methodology with Driscoll and Kraay standards errors
    JEL: O30 O32 C23 Q56
    Date: 2021–03

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