nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒05‒03
ten papers chosen by

  1. Spatial internet spillovers in manufacturing By Joël Cariolle; Maëlan Le Goff
  2. Electricity Sector Reform Performance in Sub-Saharan Africa: A Parametric Distance Function Approach By Baños-Pino, José F.; Boto-García, David; Zapico, Emma
  3. Firm characteristics and potential output: a growth accounting approach By Davide Fantino; Sara Formai; Alessandro Mistretta
  4. Managerial talent and managerial practices: are they complements? By Audinga Baltrunaite; Giulia Bovini; Sauro Mocetti
  5. Productivity of the English National Health Service 2018/19 Update By Anastasia Arabadzhyan; Adriana Castelli; Martin Chalkley; James Gaughan; Maria Ana Matias
  6. Social capital and small business productivity: The mediating roles of financing and customer relationships By Christopher Boudreaux; George Clarke; Anand Jha
  7. Bank Efficiency and the Bond Markets: Evidence from the Asia and Pacific Region By Park, Donghyun; Tian, Shu; Wu, Qiongbing
  8. Do Performance Ranks Increase Productivity? Evidence from a Field Experiment By Ashraf, Anik
  9. Assessing global potential output growth and the US neutral rate: April 2021 By Thomas J. Carter; Xin Scott Chen; Ali Jaffery; Christopher Hajzler; Jonathan Lachaine; Peter Shannon; Subrata Sarker; Graeme Westwood; Beiling Yan
  10. What Explains Vietnam's Exceptional Performance in Education Relative to Other Countries? Analysis of the 2012 and 2015 PISA Data By Dang, Hai-Anh; Glewwe, Paul; Vu, Khoa; Lee, Jongwook

  1. By: Joël Cariolle (FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Maëlan Le Goff (Banque de France - Banque de France - Banque de France)
    Abstract: In this paper, we study the spatial spillover effects of internet usage on manufacturing output. Using repeated cross-section datasets of 40,154 manufacturing firms located in 91 developing and transition economies, we adopt an original shift-share instrumental variable setup , and find that a greater diffusion of email technology in locations increases manufacturing firm's sales and productivity. This result is driven by local email dissemination within industries, supporting the existence of network or knowledge spillover effects among proximate firms, engaged in similar or interlinked activities. By contrast, the dissemination of email technology across other industries located in the same place reduces manufacturing firms' performance. However, these inter-industry spillovers are U-shaped, indicating that they remain negative below a local email incidence threshold established at approximately 50% of the local universe of firms, and turn positive only once this threshold is reached. Last, we find that positive Internet spillovers are mediated by firm's own use of the internet technology, and by its absorptive capacity, reflected by its share of skilled production workers, its multi-plant status, and its maturity.
    Keywords: Connectivity,internet,spillovers,manufactures,industrialisation
    Date: 2021–04–14
  2. By: Baños-Pino, José F.; Boto-García, David; Zapico, Emma
    Abstract: This study performs an empirical analysis of the technical efficiency of toll motorway concessionaire companies in Spain. We estimate a dynamic stochastic frontier model using an input-oriented distance function for 30 concessionaires during the 2003-2015 period. Considering a multi-output production technology with light and heavy vehicles, we estimate an autoregressive dynamic specification under a Bayesian framework that acknowledges persistence in firm efficiency due to adjustment costs. Our results reveal: i) large persistence in technical inefficiency in the toll motorway sector, ii) technical change from 2006 onwards, and iii) increasing returns to scale. We derive both short- and long-run inefficiency estimates and document that long-run inefficiency increases with the number of stretches a firm manages; however, inefficiency is unrelated to the political authority that grants the concession. We also find that the marginal cost of light vehicles per kilometre is about half the one for heavy vehicles.
    Date: 2021
  3. By: Davide Fantino (Bank of Italy); Sara Formai (Bank of Italy); Alessandro Mistretta (Bank of Italy)
    Abstract: We apply a growth accounting approach to estimate the contribution to potential output growth in Italy by firms with different characteristics. We do so by exploiting time series obtained by aggregating individual firm data. Results show that during the double-dip recession smaller firms provided the strongest negative contribution to potential output growth, while the recovery was driven by big ones. Young firms always give a positive contribution. Growth within sectors is the main driver of the dynamic of both aggregate trend total factor productivity and the capital labor ratio. Looking at sectoral composition effects, between 2014 and 2018 sectors with lower capital deepening have increased their share in the economy, holding back the aggregate figures.
    Keywords: potential output, heterogeneity
    JEL: D24 E23
    Date: 2021–04
  4. By: Audinga Baltrunaite (Bank of Italy); Giulia Bovini (Bank of Italy); Sauro Mocetti (Bank of Italy)
    Abstract: We examine the role of managerial talent and its interaction with managerial practices in determining firm performance. We build a matched firm-director panel dataset for the universe of limited liability companies in Italy, tracking individuals across different firms over time. We define managerial talent as management's capacity to boost firms' total factor productivity, estimated using a two-way fixed effects model. Combining the data with survey information on a representative sample of firms, we then document that our measure of talent correlates with ex-ante and ex-post indicators of ability, i.e. managers' educational attainment and their forecast precision with respect to the firm's future performance. Most important, we leverage information on the adoption of managerial practices within the firm to examine potential synergies between managerial talent and structured managerial practices, thus bridging two separate strands of the literature. While talent and structured practices do boost firm productivity on their own, there is evidence of complementarities between the two. These findings hold both in a cross-sectional setting and in a panel analysis that accounts for time-invariant firm heterogeneity. Overall, our results indicate that the effectiveness of managerial practices depends on managers' ability to implement them.
    Keywords: Board of directors, managers, corporate governance, productivity, managerial practices
    JEL: G34 M10 D24
    Date: 2021–04
  5. By: Anastasia Arabadzhyan (Centre for Health Economics, University of York, York, UK.); Adriana Castelli (Centre for Health Economics, University of York, York, UK.); Martin Chalkley (Centre for Health Economics, University of York, York, UK.); James Gaughan (Centre for Health Economics, University of York, York, UK.); Maria Ana Matias (Centre for Health Economics, University of York, York, UK.)
    Abstract: This report updates the Centre for Health Economics’ time-series of National Health Service (NHS)productivity growth for the period 2017/18 to 2018/19. This update has not been affected by the COVID-19 pandemic. NHS productivity growth is measured by comparing the growth in outputs produced by the NHS to the growth in inputs used to produce them. NHS outputs include all the activities undertaken for NHS patients wherever they are treated in England. It also accounts for changes in the quality of care provided to those patients. NHS inputs include the number of doctors, nurses and support staff providing care, the equipment and clinical supplies used, and the facilities of hospitals and other premises where care is provided.
    Date: 2021–04
  6. By: Christopher Boudreaux; George Clarke; Anand Jha
    Abstract: How does an entrepreneur's social capital improve small informal business productivity? Although studies have investigated this relationship, we still know little about the underlying theoretical mechanisms driving these findings. Using a unique Zambian Business Survey of 1,971 entrepreneurs administered by the World Bank, we find an entrepreneur's social capital facilitates small business productivity through the mediating channels of firm financing and customer relationships. Our findings identify specific mechanisms that channel social capital toward an informal business' productivity, which prior studies have overlooked.
    Date: 2021–04
  7. By: Park, Donghyun (Asian Development Bank); Tian, Shu (Asian Development Bank); Wu, Qiongbing (Western Sydney University)
    Abstract: This study examines the impact of bond markets on both bank profit and cost efficiency. By employing the stochastic frontier approach and utilizing a large micro dataset for 926 banks covering 27 economies from the Asia and Pacific region over the period from 2004 to 2017, we find that both the bond market development and bond market structure are relevant to bank efficiency. The development of bond markets generally has a positive (negative) effect on bank profit (cost) efficiency. Given the development level of the aggregate bond market, increasing the proportion of corporate bonds will enhance both bank profit and cost efficiency. Moreover, given the development level of a country’s corporate bond market, a greater share of local currency corporate bonds is significantly and positively related to both bank profit and cost efficiency. In addition, increasing share of bank-issued corporate bonds in corporate bonds significantly increases (decreases) bank profit (cost) efficiency. Overall, our results point to the significant importance of local currency corporate bonds to the overall bank efficiency. Our findings provide important implications for both policy makers and bank management.
    Keywords: Asia and Pacific region; bank efficiency; bond market development; bond market structure; stochastic frontier analysis
    JEL: D20 G21 G28
    Date: 2020–03–16
  8. By: Ashraf, Anik (LMU Munich)
    Abstract: Can a firm increase its workers' eff ort by introducing competition through performance-based ranking? On one hand such ranking can increase eff ort because of individuals' desire for status from high ranks, but on the other, it can demotivate them or make them wary of outperforming peers. This paper disentangles the e ffects of demotivation, social conformity, and status associated with ranking through a randomized experiment at a Bangladeshi sweater factory. Treated workers receive monthly information on their relative performance either in private or in public. Both a simple theoretical framework and empirical evidence from the field show that workers' intrinsic desire to be good at work induces privately ranked workers to increase eff ort upon receiving positive feedback, but they get demotivated and decrease e ffort upon receiving negative feedback. Public ranking lead to lower net eff ort relative to private ranking because of a strong preference not to outperform friends. The negative e ffects from demotivation and social conformity may explain why the existing literature finds mixed evidence of impact of ranking workers.
    Keywords: peer effects; productivity; rank incentives;
    JEL: D23 J53 O15
    Date: 2019–11–04
  9. By: Thomas J. Carter; Xin Scott Chen; Ali Jaffery; Christopher Hajzler; Jonathan Lachaine; Peter Shannon; Subrata Sarker; Graeme Westwood; Beiling Yan
    Abstract: We expect global potential output growth to rise to 3 percent by 2022. Relative to the last assessment in October 2020, potential output growth has been revised up across all the regions. The range of the US neutral rate remains unchanged relative to the autumn 2020 assessment.
    Keywords: Interest rates; Monetary policy; Potential output; Productivity
    JEL: E1 E2 E4 E5 F0 O4
    Date: 2021–04
  10. By: Dang, Hai-Anh; Glewwe, Paul; Vu, Khoa; Lee, Jongwook
    Abstract: Despite being the poorest or second poorest participant, Vietnam performed much better than all other developing countries, and even ahead of wealthier countries such as the U.S. and the U.K., on the 2012 and 2015 PISA assessments. We provide a rigorous investigation of Vietnam's strong performance. After making various parametric and non-parametric corrections for potentially non-representative PISA samples, including bias due to Vietnam's large out-of-school population, Vietnam still remains a large positive outlier conditional on its income. Possible higher motivation of, and coaching given to, Vietnamese students only partly explains Vietnam's performance, and this is also the case for various observed household- and school-level variables. Finally, Blinder-Oaxaca decompositions indicate that the gap in average test scores between Vietnam and the other participating countries is due not to differences in students' and schools' observed characteristics, but instead to Vietnam's greater "productivity" of those characteristics.
    Keywords: education,student learning,test scores,enrollment,PISA,Vietnam
    JEL: H0 I2 O1 P3
    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.