nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒08‒09
thirteen papers chosen by

  1. What do we know from the vast literature on efficiency and productivity in healthcare? A Systematic Review and Bibliometric Analysis By Bao Hoang Nguyen; Robin C. Sickles; Valentin Zelenyuk
  2. Dynamic Technical and Environmental Efficiency Performance of Large Gold Mines in Developing Countries By Magambo, Isaiah Hubert; Dikgang, Johane; Gelo, Dambala; Tregenna, Fiona
  3. Transition to Democracy, Real Wages and Productivity: The Turkish Experience By Erol Taymaz; Ebru Voyvoda; Kamil Yilmaz
  4. The idea of productivity By Diane Coyle
  5. The return on human (STEM) capital in Belgium By Gert Bijnens; Emmanuel Dhyne
  6. Uncertainty, investment and productivity with relational contracts By James Malcomson
  7. Policy Distortions and Aggregate Productivity with Endogenous Establishment-Level Productivity By Jose-Maria Da-Rocha; Diego Restuccia; Marina M. Tavares
  8. Growing More Rice with Less Water: The System of Rice Intensification and Rice Productivity in Vietnam By Guven, Cahit; Tong, Lan; Ulubasoglu, Mehmet
  9. Looking at Local Government Resilience through Network Data Envelopment Analysis By Manejar, Arvie Joy A.; Domingo, Sonny N.
  10. Efficiency of Local Governments in Health Service Delivery: A Stochastic Frontier Analysis By Cuenca, Janet S.
  11. CSR, audit quality and firm performance during COVID-19: an organizational legitimacy perspective By Yadav, Sandeep; Srivastava, Jagriti
  12. Boosting Agricultural Productivity through Parcelization of Collective Certificate of Land Ownership Awards By Galang, Ivory Myka G.
  13. Short-Term Productivity Impact of Smoking Cessation Programs (Japanese) By TAKAHASHI Kohei; NAKAMURO Makiko; OWAN Hideo

  1. By: Bao Hoang Nguyen (School of Economics, University of Queensland, Brisbane, Qld 4072, Australia); Robin C. Sickles (Economics Department, Rice University, Houston, TX 77251-1892, USA); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia)
    Abstract: Our chapter provides a brief introduction to the stochastic frontier paradigm - one of the most powerful techniques for performance analysis developed over the lastfew decades to address various research questions for many contexts with empirical applications in a wide variety of economic sectors such as banking, healthcare, agriculture,and so on. We also document the estimation routines used to implement the classical models as well as the recent developments in this research area for practitioners, especially those who are willing to use Stata, but also with tips on sources for R and Matlab users.
    Keywords: Technical efficiency, Stochastic frontier analysis, Panel data, Semi-parametric, Stata, Matlab, R.
    Date: 2021–06
  2. By: Magambo, Isaiah Hubert; Dikgang, Johane; Gelo, Dambala; Tregenna, Fiona
    Abstract: This study used the by-production model specification to separate emission-generating technologies from ‘desirable outputs’ technology. It then employed the dynamic efficiency model, following the Dynamic Directional Input Distance Function specifications to compute the deterministic, dynamic environmental and technical efficiencies of large gold mines in developing countries. Using firm-level data from 2009 to 2018, the study found that on average, dynamic technical efficiency in these mines was 73%; the average dynamic technical efficiency was observed to have a decreasing trend, of 0.3% annually. The study also found that on average, dynamic environmental efficiency was 56%. However, the average dynamic environmental efficiency trend had a decrease of 0.6% annually. The poor performance and downward trends could be attributed partly to downward investment trends over time, and the increasing complexity of extracting gold deposits from low-grade ore, as well as to prices. They could also be the result either of poor institutional capacity, as far as environmental policies, regulations, and enforcement are concerned; or of supply-side structural rigidity – in particular, low-capacity, and unreliable energy supply, mostly from bad inputs such as coal and heavy fuels or both, which calls for the use of alternative energy sources.
    Keywords: environmental efficiency,gold mines,technical efficiency,undesirable output
    JEL: D24 D25 Q55 Q58
    Date: 2021
  3. By: Erol Taymaz (Department of Economics, METU); Ebru Voyvoda (Department of Economics, METU); Kamil Yilmaz (Department of Economics, Koç University)
    Abstract: We analyze the behavior of plant-level real wages and productivity in Turkish manufacturing after the transition to democracy in 1987 and test whether wages under democracy causes productivity. The Turkish experience provides almost an experimental case: real wages in manufacturing increased by 120% in the 1987-93 period due to (exogenous) political changes, together with unprecedented total factor productivity and labor productivity growth. While these observations provide support for the “democracies pay higher wages” hypothesis, they also stimulate further evaluation of the consequences of such politically-motivated ‘exogenous’ wage hikes on economic performance. Our analysis shows that real wage hikes during the democratic transition forced firms to increase productivity to stay competitive. The findings also help explain why countries that undergo an orderly transition from autocracy to democracy may achieve rapid productivity gains.
    Keywords: Democratic transition, Real wages, Total factor productivity, Labor productivity, Labor unions, Efficiency wages, Long-run growth.
    JEL: D24 E24 J24 P16
    Date: 2021–07
  4. By: Diane Coyle (The Productivity Institute, Bennett Institute for Public Policy, University of Cambridge)
    Keywords: productivity, knowledge capital
    Date: 2021–06
  5. By: Gert Bijnens (Economics and Research Department, NBB); Emmanuel Dhyne (Economics and Research Department, NBB)
    Abstract: Whilst overall productivity growth is stalling, firms at the frontier are still able to capture the benefits of the newest technologies and business practices. This paper uses linked employer-employee data covering all Belgian firms over a period of almost 20 years and investigates the differences in human capital between highly productive firms and less productive firms. We find a clear positive correlation between the share of high-skilled and STEM workers in a firm's workforce and its productivity. We obtain elasticities of 0.20 to 0.70 for a firm's productivity as a function of the share of high-skilled workers. For STEM (science, technology, engineering, mathematics) workers, of all skill levels, we find elasticities of 0.20 to 0.45. More importantly, the elasticity of STEM workers is increasing over time, whereas the elasticity of high-skilled workers is decreasing. This is possibly linked with the increasing number of tertiary education graduates and at the same time increased difficulties in filling STEM-related vacancies. Specifically, for high-skilled STEM workers in the manufacturing sector, the productivity gain can be as much as 4 times higher than the gain from hiring additional high-skilled non-STEM workers. To ensure that government efforts to increase the adoption of the latest technologies and business practices within firms lead to sustainable productivity gains, such actions should be accompanied by measures to increase the supply and mobility of human (STEM) capital. Without a proper supply of skills, firms will not be able to reap the full benefits of the digital revolution.
    Keywords: : human capital, skills, education, productivity, linked employer-employee data
    JEL: E24 I26 J24
    Date: 2021–07
  6. By: James Malcomson
    Abstract: This paper shows that, in the presence of relational contracts, an increase in uncertainty with no change in factor prices reduces capital investment and productivity in the long run even if the parties are otherwise risk neutral.
    Keywords: General capital, specific capital, investment, relational contracts, risk
    Date: 2021–07–15
  7. By: Jose-Maria Da-Rocha; Diego Restuccia; Marina M. Tavares
    Abstract: What accounts for income per capita and total factor productivity (TFP) differences across countries? We study resource misallocation across heterogeneous production units in a general equilibrium model where establishment productivity and size are affected by policy distortions. We solve the model in closed form and show that the effect of policy distortions hinges crucially on the size distribution of establishments approximately satisfying Zipf's law, an empirical phenomenon that can be interpreted to imply that misallocation is low or that the establishments' lifespan is long, or both. More distorted economies feature higher establishment lifespan which amplifies the negative effect of distortions on productivity and establishment growth. Policy distortions substantially reduce aggregate TFP, an effect that is 2.8-fold larger than in the model with unrestricted size distribution and 6.9-fold larger with perfectly correlated distortions.
    Keywords: distortions, misallocation, investment, productivity, Zipf's law.
    JEL: O11 O3 O41 O43 O5 E0 E13 C02 C61
    Date: 2021–08–03
  8. By: Guven, Cahit; Tong, Lan; Ulubasoglu, Mehmet
    Abstract: We study the effects of a large-scale System of Rice Intensification (SRI) program on the water productivity of rice in Vietnam by exploiting the provincial and time variations in SRI uptake and irrigation water supply over the period 2000–2012. Our findings document that the world’s second-largest rice exporter could produce four million tons of more rice with same water supply in the reasonably achievable case of 20% SRI uptake across its provinces. In addition, we find that SRI increases the output of other crops too, due at least partly to its possible water savings and soil nutrition preservation in rice production. Moreover, we show that SRI is more likely to be adopted in provinces with stronger quality of provincial institutions and weaker agricultural capital base. Numerous selectivity and randomization tests affirm that the water productivity effect of SRI is robust to selection in SRI uptake at province and district levels and addressing potential unobservables and omitted variables problems.
    Keywords: Agricultural Technology; SRI; Impact Evaluation; Water Productivity
    JEL: O13 O33 Q18 Q25
    Date: 2021–07–01
  9. By: Manejar, Arvie Joy A.; Domingo, Sonny N.
    Abstract: The study looks into the disaster risk resilience of provincial governments in the Philippines using World Bank (WB) socioeconomic resiliency estimates and cross-sectional data generated by the Department of Interior and Local Government and the Philippine Statistics Authority. Treating provincial governments as decisionmaking units (DMUs) with bureaucratic sub-units at the provincial and city/municipal levels, composite efficiency scores were generated using an integrated Data Envelopment Approach. A WB-generated socioeconomic resiliency scorecard at the provincial level provided comparative output references for the model. Results show that disaster risk reduction and management inputs at the provincial and sub-province levels greatly contribute to improving socioeconomic capacity and decreasing asset risk. However, DMU efficiency scores varied across the different sub-regional domains. A majority of provincial subDMUs also got higher efficiency ratings compared to their municipal/community subDMU counterparts, implying the need to rebalance support and disaster resilience -related initiatives at the sub-provincial levels.
    Keywords: Disaster Risk Reduction and Management, Disaster Resiliency, Data Envelopment Analysis, provincial government
    Date: 2020
  10. By: Cuenca, Janet S.
    Abstract: The study analyzes the efficiency implications of fiscal decentralization using stochastic frontier analysis (SFA). It uses health expenditure (in per capita real terms) data from local government units (LGUs) as input. The output variables of interest include access to safe water and sanitation, health facility-based delivery, and access to hospital inpatient services. It also uses LGU income and its major components (i.e., own-source revenue and income revenue allotment, in per capita real terms) as covariates, as well as the health expenditure decentralization ratio, to account for fiscal autonomy on the expenditure side. Two measures of fiscal decentralization were also used as factors affecting efficiency to account for financial/fiscal autonomy of the LGUs on the income side (i.e., the ratio of own-source revenue to expenditures and ratio of own-source revenue to income). Issues on mismatch between local government fiscal capacity and devolved functions, fragmentation of health system, existence of two-track delivery system, and unclear expenditure assignments, among others, inevitably create inefficiency. These issues should be addressed to fully reap the potential benefits (e.g., efficiency gains) from fiscal decentralization, particularly health devolution.
    Keywords: efficiency, Philippines, fiscal decentralization, health devolution, stochastic frontier analysis
    Date: 2020
  11. By: Yadav, Sandeep; Srivastava, Jagriti
    Abstract: Purpose - COVID-19 induced uncertainty in the firms’ business transactions, product-market competition and financial market cause severe organizational legitimacy crisis. Using the organizational legitimacy perspective, we study the relationship between corporate social responsibility (CSR) activities, audit quality, and firm performance. Design/methodology/approach – We use a quarterly panel of 89,185 firm observations (15,955 unique firms) from 131 countries from July 2018 to December 2020 for 10 quarters. We use a Difference-in-Difference (DiD) method to estimate the effect of CSR activities and audit quality on firm performance during the COVID-19 period. Findings - We find a U-shaped relationship between CSR and firm performance. This relationship is strengthened during COVID-19. In contrast, we find an inverted U-shaped relationship between firm audit quality (audit fee) and firm performance. However, this relationship is weakened during the pandemic. Originality/value – Our study makes important contributions to theory and practice on maintaining organizational legitimacy during the pandemic. During the crisis, managers need to focus on strategies increasing firm value for the time period. This study shows that firms’ temporal legitimacy gaining practices such as CSR activities and audit quality provides an opportunity to increase firm value. Firm managers also need to identify the optimal level of CSR activities and audit fees to balance the cost of agency and the benefits of legitimacy.
    Keywords: CSR, audit quality, COVID-19, firm performance, organizational legitimacy
    JEL: M14 M42
    Date: 2021–06
  12. By: Galang, Ivory Myka G.
    Abstract: Farmers awarded with lands under a collective-Certificate of Land Ownership Awards (CCLOA) have been experiencing problems arising from the collective arrangement (e.g., boundary issues and disputes with other collective members). These issues discourage many farmers from making long-term investment decisions on their land, thereby resulting in lower productivity. With a strong directive from President Rodrigo Duterte, the Department of Agrarian Reform is currently committed to ensure the swift implementation of the Parcelization program, which aims to subdivide collectively-owned CLOAs, whose farmers are not engaged in collective farming. This paper aims to identify benefits and problems in relation to the subdivision of collective land titles. Based on findings of existing studies, individual land ownership has a positive impact on farmers’ decisionmaking and on his/her farming outcomes. Although limited in sample observations, the analytical exercise using Project ConVERGE’s survey data provided additional evidence favoring the acceleration of the subdivision of CCLOAs. It was also pointed out that while parcelization is being pursued, other rural development strategies, such as farm consolidation, could also be undertaken. For a faster and smoother implementation of parcelization program, it would be helpful to adopt a modern cadaster and record-keeping system and to improve agrarian justice delivery system of DAR. <p>Comments to this paper are welcome within 60 days from date of posting. Email
    Keywords: ARBO, agricultural productivity, land reform, Certificate of Land Ownership Award, CLOA, collective CLOA, individual CLOA, DAR
    Date: 2020
  13. By: TAKAHASHI Kohei; NAKAMURO Makiko; OWAN Hideo
    Abstract: As a result of amendments to the Health Promotion Act, smoking was prohibited in schools, hospitals, and government buildings from July 2019, and in principle, smoking was prohibited in offices, factories, and restaurants from April 2020. Previous studies have pointed out the health hazards of smoking and the loss of productivity through smoking breaks, absence from work and presenteeism, but few papers have shown a causal relationship. In this study, we conducted a smoking cessation support program for employees of a manufacturing company and evaluated the effects on health, productivity, and the workplace. Of the 73 participants, 44 were eligible for smoking cessation support (treatment group), of whom 33 successfully quit smoking, meaning a 75% success rate. We find that participation in the smoking cessation program reduced smoking break time by 27 minutes per day, and for those who actually quit smoking, by approximately 50 minutes per day. Smoking cessation was also shown to improve presenteeism by 0.5 standard deviations, reduce stress by 0.9 standard deviations, and decrease the number of sick days and days left early due to health problems in the past month by 0.5 and 0.4 days, respectively, although the differences for absenteeism were significant only at the 10% level. The results imply that smoking cessation boosts productivity even in the short term through the elimination of smoking breaks, improved presenteeism, and reduced absenteeism.
    Date: 2021–07

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.