nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒04‒19
nine papers chosen by

  1. Nonparametric, Stochastic Frontier Models with Multiple Inputs and Outputs By Simar, Léopold; Wilson, Paul
  2. Spatial concentration and firm-level productivity in Kazakhstan By Zarina Adilkhanova
  3. Productivity effects of processing and ordinary export market entry: A time-varying treatments approach By Girma, Sourafel; Görg, Holger
  4. The sources of growth in a technologically progressive economy: the United States, 1899‐1941 By Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter
  5. Efficiency of Microfinance Institutions:analysis of Southern African Development Community (SADC) member countries By Elsa Assiaty de L. A. Agostinho; Raquel M. Gaspar
  6. The performance impact of core component outsourcing: insights from the LCD TV industry By Viswanathan, Madhu; Mukherji, Prokriti; Narasimhan, Om; Chandy, Rajesh
  7. Net stable funding ratio and profit efficiency of commercial banks in the US By Le, Minh; Hoang, Vincent; Wilson, Clevo; Managi, Shunsuke
  8. Drivers of Covid-19 Vaccinations: Vaccine Administration and Delivery Efficiency in the United States By Rajeev K. Goel; Michael A. Nelson
  9. Technology and demand drivers of productivity dynamics in developed and emerging market economies By Dieppe, Alistair; Francis, Neville; Kindberg-Hanlon, Gene

  1. By: Simar, Léopold (Université catholique de Louvain, LIDAM/ISBA, Belgium); Wilson, Paul
    Abstract: Stochastic frontier models along the lines of Aigner et al. (1977) are widely used to benchmark firms' performances in terms of efficiency. The models are typically fully-parametric, with functional form specifications for the frontier as well as both the noise and the inefficiency processes. Studies such as Kumbhakar et al. (2007) have attempted to relax some of the restrictions in parametric models, but so far all such approaches are limited to a univariate response variable. Some (e.g., Simar and Zelenyuk, 2011; Kuosmanen and Johnson, 2017) have proposed nonparametric estimation of directional distance functions to handle multiple inputs and outputs, raising issues of endogeneity that are either ignored or addressed by imposing restrictive and implausible assumptions. This paper extends nonparametric methods developed by Simar et al. (2017) and Hafner et al. (2018) to allow multiple inputs and outputs in an almost fullynonparametric framework while avoiding endogeneity problems. We discuss identification issues and properties of the resulting estimators, and examine their finite-sample performance through Monte-Carlo experiments. Practical implementation of the method is illustrated using data on U.S. commercial banks.
    Keywords: stochastic frontier ; nonparametric ; efficiency
    JEL: C01 C21 C40 C51
    Date: 2021–02–01
  2. By: Zarina Adilkhanova (NAC Analytica, Nazarbayev University)
    Abstract: This paper studies the effect of spatial agglomeration on firms' total factor productivity in Kazakhstan using panel data from 2009 to 2017. We employ a two-stage estimation strategy and control for endogeneity biases by making use of the GMM approach. The results suggest that productivity increases with clustering: a 10% increase in the number of employees of the neighboring firms inside the same industry increases firm-level productivity by 1.36%, while a 10% increase in the employment in other industries enhance firm performance by 1.95%. The productivity gains are higher at the 2-digit regional level rather than at the 9-digit sub-regional level of geographical aggregation, implying that the denser geography increases firms' performance more than in the observed geography.
    Keywords: Agglomeration economies; Total Factor Productivity; Spatial Concentration; Clusters
    JEL: C23 R10 R11 R12 R15
    Date: 2020–12
  3. By: Girma, Sourafel; Görg, Holger
    Abstract: China's policy of encouraging export processing has been the topic of much discussion in the academic literature and policy debate. We use a recently developed econometric approach that allows for time varying "treatments" and estimate economically and statistically significant positive causal effects of entering into export processing and ordinary export markets on subsequent firm level productivity. These productivity effects are shown to be larger than those accruing to firms who enter into ordinary exporting. Interestingly, the estimation of quantile treatment effects shows that the positive effects do not accrue similarly to all types of firms, but are strongest for those at the low to medium end of the distribution of the productivity variable. We also find that export processors gain more when entering the industrialised North rather than the South, while this does not appear to matter much for ordinary exporting.
    Keywords: export processing,firm performance,China,time varying treatments
    JEL: F14 F61 O14
    Date: 2021
  4. By: Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter
    Abstract: We develop new aggregate total factor productivity (TFP) growth estimates for the USA between 1899 and 1941, and sectoral estimates at the most disaggregated level so far, 38 industries. We include hard-to-measure services, and a refined measure of sectoral labour quality growth. The resulting data set supersedes Kendrick (1961), showing TFP growth lower than previously thought, broadly based across industries, and strongly variant intertemporally. The four ‘great inventions’ that Gordon (2016) highlighted were important but less dominant in TFP growth than their predecessors in the British industrial revolution. The findings also make it unlikely the 1930s had the twentieth century's highest TFP growth.
    Keywords: productivity growth; total factor productivity; great inventions; spillovers; United States history
    JEL: N0
    Date: 2019–08–01
  5. By: Elsa Assiaty de L. A. Agostinho; Raquel M. Gaspar
    Abstract: Microfinance is seen as an important tool for financial inclusion and the fight against poverty because it has both a social and financial focus. The main objective of this paper is to evaluate the financial and social efficiency of 18 microfinance institutions (MFIs) in the year 2016 from 8 member countries of the Southern African Development Community (SADC). The methodology chosen is the data envelopment analysis (DEA) with variable returns to scale (VRS) using an input-oriented production approach. The results indicate higher scores of financial efficiency than social efficiency. This may suggest that microfinance institutions adopt a more institutionalist approach over the welfarist approach. We also find evidence that providing financial services to women or the entire disadvantaged population is profitable. However, non-bank financial institutions (NBFIs) and non-governmental organizations (NGOs) are more efficient in this regard than credit unions or banks.
    Keywords: Microfinance, Financial Efficiency, Social Efficiency, DEA and SADC
    JEL: G20 G21
    Date: 2021–04
  6. By: Viswanathan, Madhu; Mukherji, Prokriti; Narasimhan, Om; Chandy, Rajesh
    Abstract: Firms in technology markets often outsource the manufacture of core components – components that are central to product performance and comprise a substantial portion of product costs. Despite the strategic importance of core component outsourcing, there is little empirical evidence (and many conflicting opinions) about its impact on consumer demand. We address this gap with an examination of panel data from the flat panel television industry, across key regions globally. Results from our estimation indicate that core component outsourcing reduces the firm’s ability to be on the technological frontier; this hurts demand, because our estimates suggest that consumers care about firms being on the frontier. On the other hand, such outsourcing also reduces costs. Finally, we find that outsourcing increases the intensity of competition in the marketplace. We assess these (often opposing) effects, and conduct thought experiments to quantify the performance impact of core component outsourcing.
    Keywords: high technology markets; outsourcing; technology frontier
    JEL: R14 J01
    Date: 2021–03–31
  7. By: Le, Minh; Hoang, Vincent; Wilson, Clevo; Managi, Shunsuke
    Abstract: The net stable funding ratio (NSFR) is introduced under Basel III to promote financial stability. Under this new regulation, individual financial institutions are required to maintain a sustainable funding structure; hence this new universal requirement is expected to affect bank operation. In this paper, we provide one of the first empirical examinations of the non-linear relationship between NSFR and profit (in)efficiency for commercial banks using two data sets from Bankscope (for years from 2000 to 2015) and Federal Financial Institutions Examination Council call reports (2000-2013 period). Our results suggest that modest intensification in liquidity helps to reduce bank profit inefficiency (i.e. increase efficiency) but too much liquidity enlargement could increase the inefficiency. This result is consistent with a trade-off hypothesis on the non-linear relationship between liquidity and bank performance.
    Keywords: NSFR, liquidity, profit inefficiency
    JEL: G21 G28
    Date: 2019–10–21
  8. By: Rajeev K. Goel; Michael A. Nelson
    Abstract: This paper adds some formal research to the success of ongoing efforts to combat the COVID-19 pandemic by examining the drivers of the administration and delivery efficiency of coronavirus vaccines. For this purpose, we use data from the 50 US states and place the formal analysis in the context of socio-economic drivers of vaccinations. Results show that state economic prosperity and rural population aid vaccine administration and delivery efficiency. Delivery efficiency improves in states with more nursing homes per capita, in states with more COVID-19 deaths, and with more health workers. The subset of health workers, including physicians and nurses, did not significantly impact administration or efficiency. On the other hand, vaccination efficiency was lower in states with a centralized public health agency. States with a larger share of the elderly population and those with Democrats as governors were no different from others with regard to vaccinations. Robustness checks are performed using vaccination from a more recent period. Finally, a state’s legacy of corrupt activity, across two different time dimensions, is broadly consistent with the greasing effects of corruption. While the study uses data from a single nation that is among the first to start vaccinating its population, the findings have relevance for other nations, especially in the Global South, that are starting vaccinations or lagging behind in delivering vaccines.
    Keywords: Covid-19, coronavirus, vaccine, efficiency, rural, deaths, health workers, corruption, networking, United States
    JEL: H50 H75 I10 I18 K42
    Date: 2021
  9. By: Dieppe, Alistair; Francis, Neville; Kindberg-Hanlon, Gene
    Abstract: Frequently, factors other than structural developments in technology and production efficiency drive changes in labor productivity in advanced and emerging market and developing economies (EMDEs). This paper uses a new method to extract technology shocks that excludes these influences, resulting in lasting improvements in labor productivity. The same methodology in turn is used to identify a stylized example of the effects of a demand shock on productivity. Technology innovations are accompanied by higher and more rapidly increasing rates of investment in EMDEs relative to advanced economies, suggesting that positive technological developments are often capital-embodied in the former economies. Employment falls in both advanced economies and EMDEs following positive technology developments, with the effect smaller but more persistent in EMDEs. Uncorrelated technological developments across economies suggest that global synchronization of labor productivity growth is due to cyclical (demand) influences. Demand drivers of labor productivity are found to have highly persistent effects in EMDEs and some advanced economies. Unlike technology shocks, however, demand shocks influence labor productivity only through the capital deepening channel, particularly in economies with low capacity for counter-cyclical fiscal policy. Overall, non-technological factors accounted for most of the fall in labor productivity growth during 2007-08 and around one-third of the longer-term productivity decline after the global financial crisis. JEL Classification: C30, E32, O40
    Keywords: advanced economies and emerging and developing economies, productivity, technology and technological diffusion
    Date: 2021–04

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