nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒05‒17
ten papers chosen by

  1. Credit Constraints, Labor Productivity and the Role of Regional Institutions: Evidence from Manufacturing Firms in Europe By Brezzi, Monica; Ganau, Roberto; Maslauskaite, Kristina; Rodríguez-Pose, Andrés
  2. Is climate variability subversive for agricultural total factor productivity growth? Long-run evidence from sub-Saharan Africa By Bannor, Frank; Dikgang, Johane; Gelo, Dambala
  3. The UK's Great Demand and Supply Recession By Jacob, Nicholas; Mion, Giordano
  4. Personnel Management and School Productivity: Evidence from India By Lemos, Renata; Muralidharan, Karthik; Scur, Daniela
  5. Productivity, Place, and Plants: Revisiting the Measurement By Schoefer, Benjamin; Ziv, Oren
  6. Productivity and the Welfare of Nations By Basu, Susanto; Pascali, Luigi; Schiantarelli, Fabio; Servén, Luis
  7. Productivity premia and firm heterogeneity in Eastern Africa By Demena, B.A.; Msami, J.; Mmari, D.E.; van Bergeijk, P.A.G.
  8. Productivity, Place, and Plants By Benjamin Schoefer; Oren Ziv
  9. On a geometric programming approach to profit maximization: the case of CES technology By Vedran Kojić
  10. Research and innovation policies and productivity growth By Reinhilde Veugelers

  1. By: Brezzi, Monica; Ganau, Roberto; Maslauskaite, Kristina; Rodríguez-Pose, Andrés
    Abstract: This paper examines the relationship between credit constraints â?? proxied by the investment-to-cash flow sensitivity â?? and firm-level economic performance â?? defined in terms of labor productivity â?? during the period 2009-2016, using a sample of 22,380 manufacturing firms from 11 European countries. It also assesses how regional institutional quality affects productivity at the level of the firm both directly and indirectly. The empirical results highlight that credit rationing is rife and represents a serious barrier for improvements in firm-level productivity and that this effect is far greater for micro and small than for larger firms. Moreover, high-quality regional institutions foster productivity and help mitigate the negative credit constraints-labor productivity relationship that limits the economic performance of European firms. Dealing with the European productivity conundrum thus requires greater attention to existing credit constraints for micro and small firms, although in many areas of Europe access to credit will become more effective if institutional quality is improved.
    Keywords: credit constraints; Cross-Country Analysis; Europe; labor productivity; Manufacturing firms; Regional Institutions
    JEL: C23 D24 G32 H41 R12
    Date: 2020–11
  2. By: Bannor, Frank; Dikgang, Johane; Gelo, Dambala
    Abstract: It is expected that production in the agricultural sector will be significantly affected by climate change. Therefore, it is projected that countries with extreme climatic conditions will suffer a long-term decline in agricultural productivity beyond the short-term loss of production. Given the gross domestic product (GDP) value of agriculture in many sub-Saharan African (SSA) countries, the effects of climate change on agriculture are likely to permeate their economies. The long- and short-run effects of climate variability on agricultural total factor productivity (TFP) growth in 14 SSA countries are examined using panel data from 1995 to 2016. We employ a twofold approach. First, we use the Data Envelopment Approach (DEA) to calculate the Malmquist Index of Maize Productivity growth. Second, we apply a fully modified ordinary least square estimator and the Granger causality test in heterogeneous mixed panels to evaluate the long- and short-run impacts of climate variability on agricultural TFP development. The empirical results from the long-run analysis show that maize agricultural TFP is negatively associated with climate variability for only five countries. In the short run, our empirical estimation indicates no evidence of causality effect. To mitigate the negative long-run effects – and given that spending on R&D is found to produce negative effects in some of those five countries – policymakers should take immediate action to provide farmers with adequate and expeditious irrigation facilities, including the construction of dams to harvest and store rainfall water for future use.
    Keywords: total factor productivity; climate variability; data envelope approach; fully modified ordinary least square; heterogeneous mixed panel.
    JEL: Q1 Q16 Q18 Q54
    Date: 2021–05–01
  3. By: Jacob, Nicholas; Mion, Giordano
    Abstract: We revisit UK's poor productivity performance since the Great Recession by means of both a suitable theoretical framework and firm-level prices and quantities data for detailed products allowing us to both measure demand, and its changes over time, and distinguish between quantity total factor productivity (TFP-Q), i.e., the capacity to turn inputs into more physical output (number of shirts, liters of beer), and what we call revenue total factor productivity (TFP-R), i.e., productivity calculated using revenue (or value-added) as a measure of output and so the capacity to turn inputs into more revenue. This in turn allows us to measure how changes in TFP-Q, demand and markups ultimately affected revenue TFP, as well as labour productivity, over the Great Recession. Our findings suggest that the poor UK firms' productivity performance post-recession is due to both a weakening of demand and a decreasing TFP-Q pushing down sales, markups, revenue TFP and labour productivity.
    Keywords: demand; great recession; prices; Revenue TFP; Total factor productivity (TFP); United Kingdom
    JEL: D24 E01 L11 O47 O52
    Date: 2020–12
  4. By: Lemos, Renata; Muralidharan, Karthik; Scur, Daniela
    Abstract: This paper uses new data to study school management and productivity in India. We report four main results. First, management quality in public schools is low, and ~2 s.d. below high-income countries with comparable data. Second, private schools have higher management quality, driven by much stronger people management. Third, people management quality is correlated with both independent measures of teaching practice, as well as school productivity measured by student value added. Fourth, private school teacher pay is positively correlated with teacher effectiveness, and better-managed private schools are more likely to retain more effective teachers. Neither pattern is seen in public schools.
    Keywords: Management Practices; school performance; student value added
    JEL: I25 M5 O1
    Date: 2021–01
  5. By: Schoefer, Benjamin; Ziv, Oren
    Abstract: Why do cities differ so much in productivity? We document that most of the measured dispersion in productivity across US cities is spurious and reflects granularity bias: idiosyncratic heterogeneity in plant-level productivity and size, combined with finite plant counts. As a result, economies with randomly reallocated plants exhibit nearly as high a variance as the empirical economy. Stripping out this bias using our nonparametric split-sample strategy reduces the raw variance of place effects by about two thirds to three quarters. For new plants, about four fifths of the dispersion reflects granularity bias, and new plants' place effects are only imperfectly correlated with those of older plants. These US-based patterns broadly extend to the 15 European countries we study in internationally comparable firm-level data.
    JEL: D24 L11 R12
    Date: 2021–01
  6. By: Basu, Susanto; Pascali, Luigi; Schiantarelli, Fabio; Servén, Luis
    Abstract: We show that the welfare of a countryiÌ s infinitely-lived representative consumer is summarized, to a first order, by total factor productivity (TFP), appropriately defined, and by the capital stock per capita. The result holds for both closed and open economies, regardless of the type of production technology and the degree of product market competition. Welfare-relevant TFP needs to be constructed with prices and quantities as perceived by consumers, not firms. Thus, factor shares need to be calculated using after-tax wages and rental rates. We use these results to calculate welfare gaps and growth rates in a sample of advanced countries with high-quality data on output, hours worked, and capital. We also present evidence for a broader sample that includes both advanced and developing countries.
    Keywords: productivity; Solow residual; TFP; welfare
    JEL: D24 D90 E20 O47
    Date: 2020–12
  7. By: Demena, B.A.; Msami, J.; Mmari, D.E.; van Bergeijk, P.A.G.
    Abstract: Productivity development is a key issue for export-driven growth and development. We use East African Community (EAC) firm-level data. Instead of focusing on single EAC partners, using the World Bank Enterprise Surveys, investigate firm-level productivity difference for seven countries that are part of the COMESA-EAC-SADC tripartite free trade area (TFTA). Using export and ownership dimensions, we identify four types of firms: National Domestic, National Exporters, Foreign Domestic and Foreign Exporters. We find a clear export productivity premium for national manufacturing firms and service sectors, but not for foreign owned firms. We also find clear foreign-ownership productivity premium for both domestic and exporting firms in manufacturing sectors but less clear in services sectors. The gap between national export premium and foreign-ownership premium is stronger in manufacturing firms as opposed to service sectors. Moreover, we find clear and strong productivity premia in size, training programmes and level of development in the manufacturing firms. In the services sector, these premia are always smaller and only significant for medium-sized firms. There is no difference in experience premium between sectors in terms of both significance and magnitude of the estimated coefficients.
    Keywords: Productivity, exports, firm heterogeneity, FDI, sub-Saharan Africa, EAC.
    JEL: O12 J24 F23 D20 O55
    Date: 2021–05–06
  8. By: Benjamin Schoefer; Oren Ziv
    Abstract: Why do cities differ so much in productivity? Using a split-sample IV strategy, we document that up to three quarters of the large measured dispersion in productivity across US cities is spurious and reflects the "luck of the draw" of idiosyncratically heterogeneous plants. Due to this granularity bias, economies with randomly reallocated plants exhibit nearly as high a variance as the empirical economy. For new plants, four fifths of the raw dispersion reflects granularity bias, and their productivity is only imperfectly correlated with that of older plants, which dominate measured productivity levels. These US-based patterns broadly extend to European countries.
    JEL: D22 D24 E23 R0 R12
    Date: 2021–05
  9. By: Vedran Kojić (Faculty of Economics and Business, University of Zagreb)
    Abstract: In this note, we give a generalization of the results for the profit maximization problem in the case of the Cobb-Douglas production function presented by Liu in [Appl. Math. Comput. 182 (2006), 1093-1097]. By using geometric programming, we solve a profit maximization problem in the case of the CES production function and show how the results obtained by Liu can be derived from our results.
    Keywords: profit maximization, Cobb-Douglas technology, CES technology, geometric programming
    JEL: C60 C65 D21 D24
    Date: 2021–03–26
  10. By: Reinhilde Veugelers
    Abstract: This Working Paper is an output from the MICROPROD project, which received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement no. 822390. We review the evidence on the impact of public intervention on private research and innovation, and how research and innovation and R&I policies affect growth in the applied macro models most commonly used in European Union policy analysis. The evidence suggests that...
    Date: 2021–05

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