nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒04‒12
fifteen papers chosen by

  1. Addressing spatial dependence in technical efficiency estimation: A Spatial DEA frontier approach By Julian Ramajo; Miguel A. Marquez; Geoffrey J. D. Hewings
  2. Quantifying the effects of Special Economic Zones using spatial econometric models By Template-Type: ReDIF-Paper 1.0; Zhaoying Lu
  3. Interdependence between research and development, climate variability and agricultural production: evidence from sub-Saharan Africa By Bannor, Frank; Dikgang, Johane; Kutela Gelo, Dambala
  4. Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data By Tasso Adamopoulos; Diego Restuccia
  5. Bank profitability determinants: comparing the United States, Nigeria and South Africa By Ozili, Peterson
  6. The Technology and Knowledge Spillover Effects of FDI on Labour Productivity By Norhanishah Mohamad Yunus
  7. Cost Minimization is Essential for the Sustainable Development of an Industry: A Mathematical Economic Model Approach By Mohajan, Haradhan
  8. Changing Returns to Scale in Manufacturing 1880-1930: The Rise of (Skilled) Labor? By Jeanne Lafortune; Ethan G. Lewis; José Pablo Martínez; José Tessada
  9. Identification of Peer Effects using Panel Data By Marisa Miraldo; Carol Propper; Christiern Rose
  10. The importance of technology in banking during a crisis By Timmer, Yannick
  11. Work-from-Home Productivity during the COVID-19 Pandemic: Evidence from Surveys of Employees and Employers By Morikawa, Masayuki
  12. When Did Growth Begin? New Estimates of Productivity Growth in England from 1250 to 1870 By Paul Bouscasse; Emi Nakamura; Jón Steinsson
  13. Estimation of a Supply Function By Merino Troncoso, Carlos
  14. Productivity of Firms Using Relief Policies During the COVID-19 Crisis By Morikawa, Masayuki
  15. Covid-19 Economic Stimulus and State-level Power Sector Performance: Analyzing the Efficiency Parameters. By Kaur, Amandeep; Chakraborty, Lekha; Rangan, Divy

  1. By: Julian Ramajo; Miguel A. Marquez; Geoffrey J. D. Hewings
    Abstract: This paper introduces a new specification for the nonparametric production-frontier based on Data Envelopment Analysis (DEA) when dealing with decision-making units whose economic performances are correlated with those of the neighbors (spatial dependence). To illustrate the bias reduction that the SpDEA provides with respect to standard DEA methods, an analysis of the regional production frontiers for the NUTS-2 European regions during the period 2000-2014 was carried out. The estimated SpDEA scores show a bimodal distribution do not detected by the standard DEA estimates. The results confirm the crucial role of space, offering important new insights on both the causes of regional disparities in labour productivity and the observed polarization of the European distribution of per capita income.
    Date: 2021–03
  2. By: Template-Type: ReDIF-Paper 1.0; Zhaoying Lu (Graduate School of Economics, Osaka University)
    Abstract: This paper evaluates the effects of a place-based program in China?Special Economic Zone (SEZ) program. It adds to the existing literature by introducing spatial proximity to understand the effects of SEZs on the local economy. Using a panel data set over the period from 2004 to 2007, the empirical results find that SEZs have positive spillover effects on regional productivity, most of which are from the neighborhood. Meanwhile, there exists a positive interdependence between local firms onregional productivity. The magnitude of spillover effects of SEZs is robust to changes in sample data, weight matrices selection, and alternative explanatory variables.
    Keywords: Special Economic Zone, Place-based Policy, Spatial Analysis,Productivity, Spillovers
    JEL: C21 C23 R10 O21
  3. By: Bannor, Frank; Dikgang, Johane; Kutela Gelo, Dambala
    Abstract: The performance of the agricultural sector in sub-Saharan Africa (SSA) remains low compared to other regions. This is often attributed to the fact that agriculture in SSA is rain-fed, as well as to inadequate investment in research and development (R&D). It is well documented in the literature that climate variability is a possible reason for the low productivity observed in agriculture. It is similarly well documented that R&D investment affects the growth of agricultural productivity. This paper investigates whether public spending on R&D mitigates the negative effects of climate variability (measured by variability in rainfall) on agricultural productivity in SSA. We do so by employing a dynamic production model, and the Generalised Methods of Moments (GMM) technique. Based on cross-country panel data from the period 1995 to 2016, our empirical findings reveal that both climate variability and the interaction of R&D with climate variability are strongly correlated with agricultural productivity. As expected, climate variability reduces agriculture productivity by 0.433% to 0.296%. The interaction of R&D and climate variability enhances agricultural productivity by 0.124% to 0.065%. We also show that R&D is an absorption channel for the inimical effects of climate variability, and that the way in which climate variability impacts agricultural productivity depends on the magnitude of spending on R&D; in order to move from a negative to a positive impact of climate variability on agricultural productivity, public spending on R&D must increase by 3.492% to 4.554%. We conclude that to address the negative effects of climate variability, there is a need for governments to prioritise and increase spending on R&D.
    Keywords: Agriculture; Climate variability; R&D; Productivity; Sub-Saharan Africa (SSA)
    JEL: Q1 Q16 Q18 Q5 Q54
    Date: 2021–01–05
  4. By: Tasso Adamopoulos; Diego Restuccia
    Abstract: We quantify the role of geography and land quality for agricultural productivity differences across countries using high-resolution micro-geography data and a spatial accounting framework. The rich spatial data provide for each cell of land covering the entire globe, the potential yield for 18 crops, which measures the maximum attainable crop output given soil quality, climate conditions, terrain topography, and a given level of cultivation inputs. While there is considerable heterogeneity in land quality across space, even within narrow geographic regions, we find that low agricultural land productivity is not due to unfavourable geographic endowments. If countries produced current crops in each cell according to potential yields, the rich-poor agricultural yield gap would virtually disappear, from 214 percent to 5 percent. We also find evidence of additional aggregate productivity gains attainable through spatial reallocation and changes in crop production.
    Keywords: agriculture, land quality, productivity, spatial allocation, crop choice, cross-country.
    JEL: O11 O14 O4
    Date: 2021–03–31
  5. By: Ozili, Peterson
    Abstract: This study investigates the determinants of banking sector profitability in South Africa, Nigeria and the United States. The findings reveal that cost efficiency, the size of non-performing loans and overhead cost ratio are significant determinants of the banking sector profitability. In the comparative analysis, the findings from South Africa show that the cost efficiency ratio, overhead cost to total asset ratio and non-performing loans are significant determinants of banking sector profitability. In the United States, capital adequacy ratio and the size of non-performing loans are significant determinants of banking sector profitability. In Nigeria, the overhead cost to total asset ratio and cost efficiency ratio are significant determinants of the banking sector profitability. The descriptive analysis reveal that bank net interest margin and return on asset are higher in Nigeria and lowest in the United States which suggests that the Nigerian banking sector is more profitable than the US banking sector. Return on equity is higher in South Africa and lowest in the United States.
    Keywords: banks, profitability, non-performing loans, efficiency, Nigeria, South Africa, United States.
    JEL: G20 G21 G28 G29
    Date: 2021
  6. By: Norhanishah Mohamad Yunus (School of Distance Education, Universiti Sains Malaysia, Malaysia Author-2-Name: Noraida Abdul Wahob Author-2-Workplace-Name: Unit Peneraju Agenda Bumiputera, Prime Minister's Department,47810, Petaling Jaya, Selangor, Malaysia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - The purpose of this study is to investigate both "technology" and "knowledge" effects of foreign direct investment (FDI) on labour productivity in the medium-high manufacturing industries' classification in Malaysia. Methodology/Technique - This study employs a Seemingly Unrelated Regression (SUR) estimator. Findings - The results conclude that diffusion of knowledge, which increases labour productivity, is greater via "learning effects" as compared to the investor countries' capital investments in the medium-high manufacturing industries. Novelty - This study expands the body of knowledge about the benefits of FDI spillovers on labour productivity according to specific investor countries, however, are rarely researched particularly in developing countries and at the industry level. Type of Paper - Empirical.
    Keywords: Foreign Direct Investment; Labour Productivity; Technology Spillovers; Knowledge Spillovers
    JEL: E60 J24
    Date: 2021–03–31
  7. By: Mohajan, Haradhan
    Abstract: The method of Lagrange multiplier is a very useful and powerful technique in multivariable calculus. In this study interpretation of Lagrange multiplier is given with satisfactory mathematical calculations and shows that its value is positive. For the sustainable development of an industry, cost minimization policy is crucial. In any industry the main objective is to minimize production cost for maximizing its profit. By considering Lagrange multiplier technique application an attempt has been taken here in cost minimization problem subject to production function as an output constraint. To predict future performance of an industry, mathematical calculations are necessary and all the procedures are given in this paper with detail mathematical procedures. In this study an attempt has been taken to minimize cost by considering three variables capital, labor, and other inputs of an industry by the application of economic models subject to a budget constraint, using Lagrange multiplier technique, as well as, using necessary and sufficient conditions for minimum value.
    Keywords: Lagrange multiplier, cost minimization, mathematical economical models, sustainability
    JEL: C6 C61 C67
    Date: 2021–01–30
  8. By: Jeanne Lafortune; Ethan G. Lewis; José Pablo Martínez; José Tessada
    Abstract: This paper estimates returns to scale for manufacturing industries around the turn of the twentieth century in the United States by exploiting an industry-city panel data for the years 1880-1930. We estimate decreasing returns to scale on average over the period, contrary to most of the existing literature, because our empirical methodology allows us to separate returns to scale from "agglomeration" effects. We also find that returns to scale grew substantially after 1910, mostly because the return to labor grew. We find that this was more marked in industries that were more intensive in human capital and energy at the beginning of the period and in cells that were less competitive. Overall, results suggest that technological change and lack of initial competition played relevant roles in the rise of larger establishments in manufacturing.
    JEL: J23 N61 N62 R12
    Date: 2021–04
  9. By: Marisa Miraldo (Imperial College Business School,); Carol Propper (Imperial College Business School); Christiern Rose (School of Economics, University of Queensland, Brisbane, Australia)
    Abstract: This paper provides new identification results for panel data models with contextual and endogenous peer effects. Contextual effects operate through individuals’ time-invariant unobserved heterogeneity. Identification hinges on a conditional mean restriction requiring exogenous mobility of individuals between groups over time. Some networks governing peer interactions preclude identification. For these cases we propose additional conditional variance restrictions. We conduct a Monte-Carlo experiment to evaluate the performance of our method and apply it to surgeon-hospital-year data to study take-up of minimally invasive surgery. A standard deviation increase in the average time-invariant unobserved heterogeneity of other surgeons in the same hospital leads to a 0.12 standard deviation increase in take-up. The effect is equally due to endogenous and contextual effects.
    Keywords: Peer effects, panel data, networks, identification, innovation, healthcare
    Date: 2020–12–03
  10. By: Timmer, Yannick
    Abstract: We study the implications of information technology (IT) in banking for financial stability, using data on US banks’ IT equipment and the tech-background of their executives. We find that one standard deviation higher pre-crisis IT adoption led to 10% fewer non-performing loans during the global financial crisis. We present several pieces of evidence that indicate a direct role of IT adoption in strengthening bank resilience; these include instrumental variable estimates exploiting the historical location of technical schools. Loan-level analysis reveals that high-IT adoption banks originated mortgages with better performance and did not offload low-quality loans. JEL Classification: O3, G21, G14, E44, D82, D83
    Keywords: financial stability, it adoption, non-performing loans, technology
    Date: 2021–03
  11. By: Morikawa, Masayuki
    Abstract: Using data from original surveys of employees and employers, this study examines the prevalence, intensity, and productivity of working from home (WFH) practices during the coronavirus disease 2019 (COVID-19) pandemic in Japan. The results reveal that the mean WFH productivity relative to working at the usual workplace was about 60–70 percent, and it was lower for employees and firms that started WFH practice only after the spread of the COVID-19 pandemic. However, there is a large dispersion of WFH productivity, both by individual and firm characteristics. Highly educated and high-wage employees tended to exhibit a relatively small reduction in WFH productivity. The results obtained from the employee and employer surveys were generally consistent with each other.
    Keywords: COVID-19, productivity, social distancing, working from home
    JEL: D24 I12 J22 J24 M12 M54 R41
    Date: 2021–03
  12. By: Paul Bouscasse; Emi Nakamura; Jón Steinsson
    Abstract: We provide new estimates of the evolution of productivity in England from 1250 to 1870. Real wages over this period were heavily influenced by plague-induced swings in the population. We develop and implement a new methodology for estimating productivity that accounts for these Malthusian dynamics. In the early part of our sample, we find that productivity growth was zero. Productivity growth began in 1600—almost a century before the Glorious Revolution. Post-1600 productivity growth had two phases: an initial phase of modest growth of 4% per decade between 1600 and 1810, followed by a rapid acceleration at the time of the Industrial Revolution to 18% per decade. Our evidence helps distinguish between theories of why growth began. In particular, our findings support the idea that broad-based economic change preceded the bourgeois institutional reforms of 17th century England and may have contributed to causing them. We also estimate the strength of Malthusian population forces on real wages. We find that these forces were sufficiently weak to be easily overwhelmed by post-1800 productivity growth.
    JEL: N13 O11 O47
    Date: 2021–03
  13. By: Merino Troncoso, Carlos
    Abstract: In this chapter I provide a brief introduction of the production and supply function. The theoretical neoclassical model, has limited capacity to explain data. Recent structural econometric techniques provide better estimation results and are able to explain entry, exit and investment decisions of firms.
    Keywords: Production function, productivity, returns of scale, subadditivity, efficiency
    JEL: L00 L40
    Date: 2021–04–04
  14. By: Morikawa, Masayuki
    Abstract: Based on an original survey of Japanese firms, this study presents an overview of the characteristics of firms that used policy measures to mitigate the negative impacts of the COVID-19 pandemic, with an emphasis on the assessment of pre-pandemic productivity. According to the results, many firms are taking advantage of financial support programs, employment assistance subsidies, and subsidies to sustain businesses. The productivity of firms using these support measures was found to be lower than that of non-user firms prior to the pandemic, suggesting that low-productivity firms have been affected seriously by the crisis. The policy implication is that relief policies under the recent COVID-19 crisis should be temporary and such policies should be modified to enable the smooth reallocation of resources.
    Keywords: COVID-19, firm support policies, productivity, cleansing effect, reallocation effect
    JEL: D24 H25 L25
    Date: 2021–02
  15. By: Kaur, Amandeep (National Institute of Public Finance and Policy); Chakraborty, Lekha (National Institute of Public Finance and Policy); Rangan, Divy (National Istitute of Public Finance and Policy)
    Abstract: Against the backdrop of the COVID-19 pandemic, the Government of India, as part of economic stimulus package, increased the borrowing limit of the States from 3 to 5 per cent of GSDP. The power sector reform at the State-level is one of the criteria to avail this extra-borrowing. We analyse the efficiency parameters of power sector and observe that there are statewise differentials in the financial and operational indicators of power sector. We notice that the average AT C (Aggregate Technical and Commercial) losses that should have been 15
    Date: 2021–03

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.