nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒04‒26
ten papers chosen by

  1. Smallholder farmers’ adaptation to climate change and its potential contribution to UN’s sustainable development goals of zero hunger and no poverty By Khanal, Uttam; Wilson, Clevo; Rahman, Sanzidur; Lee, Boon; Hoang, Vincent
  2. Methodologies for assessing government efficiency By O’Loughlin, Caitlin; Simar, Léopold; Wilson, Paul
  3. Gender effect on microfinance social efficiency: A robust nonparametric approach By Fall, François Seck; Tchuigoua, Hubert Tchakoute; Vanhems, Anne; Simar, Léopold
  4. Evaluation of Chinese provincial ecological well-being performance based on the driving effect decomposition By Wang, Shengyun; Zhang, Jingjing; Chu, Meifen; Li, Jing
  5. Migration Costs, Sorting, and the Agricultural Productivity Gap By Qingen Gai; Naijia Guo; Bingjing Li; Qinghua Shi; Xiaodong Zhu
  6. Investigating farming efficiency through a two stage analytical approach: Application to the agricultural sector in Northern Oman By Amar Oukil; Slim Zekri
  7. Productivity Growth and Workers’ Job Transitions: Evidence from Censal Microdata By Elias Albagli; Mario Canales; Chad Syverson; Matias Tapia; Juan Wlasiuk
  8. Board composition and performance of state-owned enterprises: Quasi-experimental evidence By Audinga Baltrunaite; Mario Cannella; Sauro Mocetti; Giacomo Roma
  9. Efficiency of Courts in China – Does Location Matter? By Dong, Xiaoge
  10. How Krugman forgot agriculture and misread the sources of Asia’s growth By Peter Warr

  1. By: Khanal, Uttam; Wilson, Clevo; Rahman, Sanzidur; Lee, Boon; Hoang, Vincent
    Abstract: Climate change is likely to worsen poverty, and agriculture-dependent groups and poorest countries are at the greatest risk. Farmers’ have begun developing and implementing climate change adaptations. This study investigates the extent to which climate change adaptations by smallholder farmers have the potential to contribute to the UN’s sustainable development goals of no poverty (SDG 1) and zero hunger (SDG 2). To this end, the study measures the impact of such adaptations on food production using farm-level survey data from Nepal. We utilize a matching technique and stochastic production frontier model to examine the productivity and efficiency of farmers. Results reveal that the group of farmers adopting adaptations exhibit higher levels of productivity and technical efficiency in food production as compared to the non-adopters. It is evident from the results that policy makers should encourage farming households in climate change adaptations, which have the potential to enhance farmers’ productivity and efficiency in agriculture thereby contributing to two of the United Nations Sustainable Development Goals (SDGs) of eradicating hunger and poverty (SDG’s target indicators 2.3).
    Keywords: Adaptation; food security; production frontier; selection bias; sustainable development goals; Nepal.
    JEL: O13 Q15 Q54
    Date: 2020–06–08
  2. By: O’Loughlin, Caitlin; Simar, Léopold (Université catholique de Louvain, LIDAM/ISBA, Belgium); Wilson, Paul
    Abstract: Nonparametric methods are widely used for assessing the performance of firms and other organizations in the private and public sectors. Typically, FDH or DEA estimators that estimate the attainable sets and its efficient boundary by enveloping the cloud of observed units in the appropriate input-output space are used. The statistical properties of these estimators have been established and inference is available using appropriate nonparametric techniques. In particular, hypotheses on model structure and the production process can be tested using using recent theoretical results including Central Limit Theorems on limiting distribution of means of efficiency scores. This chapter shows how these results can be used for testing the equality of means of efficiency, convexity of production sets and separability with respect to environmental factors are considered, and in addition for analyzing the dynamics of the production process over time. An empirical illustration is provided by using the various results and tests to examine the performance of municipal governments in the U.S. in providing local public goods.
    Date: 2021–01–01
  3. By: Fall, François Seck; Tchuigoua, Hubert Tchakoute; Vanhems, Anne; Simar, Léopold (Université catholique de Louvain, LIDAM/ISBA, Belgium)
    Abstract: The main objective of this study is to assess the impact of gender on microfinance social efficiency. Our methodology is based on nonparametric techniques to estimate the gender effect. We use a conditional directional free disposal hull (FDH) approach as well as its robust version of order-; we study the effect of the heterogeneity factor on the difference of conditional and non conditional inefficiencies as well as on the inefficiency level using a local linear regression and we test the significance of its effect using a wild double bootstrap procedure. Using a cross-country sample of 680 microfinance institutes (MFIs) in 2011 from six main regions of the world, our findings suggest that gender diversity has globally a positive impact on the microfinance social efficiency. However, the nature of the effect depends on the considered heterogeneity factor and we find that the boardroom gender diversity effect is linear, whereas the effect of the percentage of women loan officers is non linear (U-shaped on the difference of inefficiencies and inverted U-shaped on the inefficiency levels). We assess the robustness of our findings on various subsamples (global or regional scale, and also depending on the considered profit oriented status). Our findings reinforce the importance of the role played by women in MFI social efficiency.
    Keywords: OR in developing countries ; Microfinance ; Gender ; Social Efficiency ; Heterogeneity ; Nonparametric Robust frontier models
    Date: 2020–08–27
  4. By: Wang, Shengyun; Zhang, Jingjing; Chu, Meifen; Li, Jing
    Abstract: The focus of this paper is three-fold. First, it recalculates the HDI and EFI, use the ratio of HDI and EF to build the EWP, then evaluate and analyze the EWP of China's provinces. Second, it develops a unique ecological well-being performance (EWP) model, which is divided into two driving effects: the well-being effect of economic growth and the ecological efficiency of economic growth. Third, using the Human Development Index (HDI), it measures the well-being effect and ecological efficiency of economic growth in 31 Chinese provinces. Based on the EWP results, it divides the Chinese provinces into five types from economic leading and upgrading to overall descending. The research results show that China's HDI has greatly improved from 2006 to 2016, displaying a trend of "Beijing, Tianjin and Shanghai take the lead in upgrading, and then the uprising trend expands from east to west". However, during the same period from 2006 to 2016, the growth rate of China's people’s well-being was significantly lower than that of per capita ecological footprint (EF), and the overall EWP declined. China's growth in people’s well-being is decoupled from economic growth, which indicates that China’s rapid economic growth was not followed by a similar progress in China’s people’s well-being. The above results suggest that China's total factor productivity (TFP) and green total factor productivity (GTFP) were improving but in different degrees during the above period. Other results show that, the carbon footprint has always been the largest component of China's EF, and the GTFP has always been lower than the TFP. According to the technology progress index and scale efficiency driving of change index, China’s provinces mainly focus on provincial TFP rather than GTFP. This paper suggests that the different types of provinces should adopt different strategies to improve their EWP in order to promote high-quality economic development.
    Keywords: Ecological Well-being Performance (EWP), Human Development Index (HDI), Ecological Footprint (EF), Green Total Factor Productivity (GTFP), Driving Effect
    JEL: Q57
    Date: 2021–04–11
  5. By: Qingen Gai; Naijia Guo; Bingjing Li; Qinghua Shi; Xiaodong Zhu
    Abstract: We use a unique panel dataset and a policy experiment as an instrument to estimate the impact of policy-induced migration cost reductions on rural-to-urban migration and the associated increase in labor earnings for migrant workers in China. Our estimation shows that there exist both large migration costs and a large underlying productivity difference between rural agricultural and urban non-agricultural sectors in China. More than half of the observed labor earnings gap between the two sectors can be attributed to the underlying productivity difference, and less than half of the gap can be attributed to sorting of workers. We also structurally estimate a general equilibrium Roy model and use it to quantify the effects of reducing migration costs on the observed sectoral productivity difference, migration, and aggregate productivity. If we implement a hukou policy reform by setting the hukou liberalization index in all regions of China to the level of the most liberal region, the observed agricultural productivity gap would decrease by more than 30%, the migrant share would increase by about 9%, and the aggregate productivity would increase by 1.1%. In contrast, in a partial equilibrium in which the underlying productivity difference does not change with migration cost, the hukou policy reform would reduce the observed agricultural productivity gap by only 9%, the migrant share would increase by more than 50%, and the aggregate productivity would increase by 6.8%.
    Keywords: Migration cost; sorting; agricultural productivity gap; panel data; general equilibrium Roy model; China
    JEL: E24 J24 J61 O11 O15
    Date: 2021–04–17
  6. By: Amar Oukil; Slim Zekri
    Abstract: In this paper, we develop a two-stage analytical framework to investigate farming efficiency. In the first stage, data envelopment analysis is employed to estimate the efficiency of the farms and conduct slack and scale economies analyses. In the second stage, we propose a stochastic model to identify potential sources of inefficiency. The latter model integrates within a unified structure all variables, including inputs, outputs and contextual factors. As an application ground, we use a sample of 60 farms from the Batinah coastal region, an agricultural area representing more than 53 per cent of the total cropped area of Oman. The findings of the study lay emphasis on the inter-dependence of groundwater salinity, irrigation technology and operational efficiency of a farm, with as a key recommendation the necessity for more regulated water consumption and a readjustment of governmental subsidiary policies.
    Date: 2021–04
  7. By: Elias Albagli; Mario Canales; Chad Syverson; Matias 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 at the worker-firm level. We use an administrative matched employer-employee census for Chile to provide novel insights into the relationship between job transitions and productivity variation across firms. As many theories would predict, worker flows from lower- to higher-productivity firms are larger than those of the opposite sign. Empirically, however, this is only marginally so. Almost half of all transitions occur “down the firm productivity ladder.” This process is also highly heterogeneous along several dimensions. Up-the-ladder flows are more likely for direct job-to-job transitions than those that pass through nonemployment. They are also much more likely for young, high-skilled workers, whose job transitions comprise in an accounting sense the lion’s share of aggregate productivity change. Interestingly, workers with the highest job turnover rates contribute proportionally the least to aggregate productivity changes. Put together, this evidence implies that the productivity mechanics of job reallocation yields a net benefit, but this hides massive and heterogeneous gross flows underneath.
    JEL: D2 E23 J2 J6 L11
    Date: 2021–04
  8. By: Audinga Baltrunaite (Bank of Italy); Mario Cannella (Northwestern University); Sauro Mocetti (Bank of Italy); Giacomo Roma (Bank of Italy)
    Abstract: The quality of governance crucially affects corporate outcomes, and may be particularly important for state-owned enterprises (SOEs) not disciplined by market competition forces. We examine the impact of board composition on the performance of companies controlled by public entities in Italy. For this purpose, we exploit a reform-induced exogenous change in board composition, aimed at increasing female representation and at reducing the revolving-door phenomenon. The law’s provisions were binding for SOEs, but not for companies with a minority share of public ownership, allowing us to adopt a difference-in-differences estimation. The results show that female presence on the boards of directors of SOEs has increased, while that of former politicians has decreased. The new directors have mostly replaced older and less talented men, thereby rejuvenating the boards and improving their quality. To assess the effects of the board shake-up on firm performance, we analyse companies’ balance sheets and survey information on citizens’ satisfaction with the provision of local public services and on objective measures of their quality. While we detect no significant effects on firm productivity, we find that profitability increases and leverage decreases, thereby reducing corporate credit risk. Finally, there is evidence consistent with an improvement in the quality of SOEs’ output.
    Keywords: governance, state-owned enterprises, board composition, gender quotas.
    JEL: G34 L32 H42
  9. By: Dong, Xiaoge
    Abstract: In this paper, we focus on determinants of judicial efficiency in China, with efficiency estimates of district courts obtained from data envelopment analysis (DEA). Our dataset comprises 1584 local courts pooled from the year 2014 - 2017. Controlling for local economic development level as well as the financial status and staff quality of local courts, we find a significant and robust impact of the location of local courts. More specifically, the performance of a court will be better when it is located in/closer to a higher city tier, the city center, the city government, or the provincial government even if the economic development of such areas is no better than others. Such courts probably receive (in)-direct political support and favorable local policy. Our result thus also has implications for judicial independence in China. Although the Chinese Central Government has been trying to separate the local legal system from local politics, local courts are still being affected by geopolitical factors in reality.
    Keywords: Chinese Court system,Court efficiency,data envelopment analysis,geopolitics
    JEL: K1 K40 K30 N45 P21 P37
    Date: 2021
  10. By: Peter Warr
    Abstract: In his famous 1994 essay ‘The Myth of Asia’s Miracle’, Paul Krugman argued that the growth of output per person in Asia was due almost entirely to increasing primary factor inputs per head of population – raising labour force participation and adding capital to labour. He called this ‘perspiration’, which he distinguished from ‘inspiration’ – productivity growth derived from technical change. According to Krugman’s sources, the latter contributed very little. The article rightly discounted the ‘miracle’ rhetoric that had been applied to Asia’s rapid economic growth over the preceding two decades, but it missed a key point. By focusing on the economic record of enclave, city-based economies like Singapore and Hong Kong, which lack traditional agriculture, Krugman overlooked the role of agriculture and the process of structural transformation. This is the mechanism through which workers relocate from low-productivity employment in agriculture to higher-productivity employment in industry and, more especially, services, raising overall labour productivity. The present paper demonstrates the importance of this matter, using data for Thailand and Indonesia. It shows that structural transformation contributed 47 per cent of long-term growth of labour productivity in Thailand and 28 per cent in Indonesia.
    Keywords: Asia’s miracle; structural transformation; productivity growth; agriculture; Thailand; Indonesia
    JEL: O13 O47 O53
    Date: 2021

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.