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on Efficiency and Productivity |
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Issue of 2021‒09‒06
fifteen papers chosen by |
| By: | Martin Borowiecki; Jon Pareliussen; Daniela Glocker; Eun Jung Kim; Michael Polder; Iryna Rud |
| Abstract: | This paper analyses the role of intangibles and digital adoption for firm-level productivity in the Netherlands drawing on a newly constructed panel data set of Dutch enterprises. It provides robust evidence on productivity effects of intangibles and digital adoption using firms’ exposure to sector-wide advances in intangible intensity and digital adoption as an instrument. Results show that intangibles as measured by levels of digital skill intensity have a positive and statistically significant impact on firm-level productivity growth in the service sector and for younger firms. Productivity benefits from software investment are strong for low productivity firms. Together, these findings highlight the potential of intangibles to support the productivity catch-up of laggard enterprises. The evidence also suggests that productivity benefits from ICT hardware investment and the uptake of high-speed broadband are positive and sizeable. |
| Keywords: | digitalisation, intangibles, productivity, skills |
| JEL: | D24 E22 J24 O33 |
| Date: | 2021–09–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1680-en&r= |
| By: | Urata, Shujiro (Asian Development Bank Institute); Baek, Youngmin (Asian Development Bank Institute) |
| Abstract: | We examine the impact of local firms’ participation in global value chains (GVCs) on productivity by considering three different patterns of GVC participation. We conducted a DID-PSM estimation involving three countries, Indonesia, the Philippines, and Viet Nam, and 17 manufacturing sectors in 2009 and 2015. We found an endogenous relationship between firm productivity and GVC participation: firms that enter GVCs have high productivity before participating in the GVCs (selection effect), and only Indonesian firms which entered GVCs had a high productivity growth after joining GVCs (learning effect). These two effects were only found for firms which both import intermediate goods and export output, and not for firms which only either import or export. We also found that indirect exporting does not improve a local firm’s productivity. We give several recommendations to help firms and governments facilitate the participation of firms in GVCs. |
| Keywords: | global value chains; productivity |
| JEL: | D24 F14 L11 |
| Date: | 2021–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:1245&r= |
| By: | Marc Blatter; Andreas Fuster |
| Abstract: | This paper analyzes efficiency and profitability in the Swiss banking sector over the period 1997-2019. We find strong evidence for scale economies: for most banks in the sample, efficiency and profitability increase with bank size. Using an instrumental variables strategy for a subset of geographically restrained banks, we find that the effect of size on efficiency and profitability is likely causal. Scale economies have been more pronounced since 2010 than in the years prior to the global financial crisis. There is little evidence for scale economies for the largest (systemically important) banks; their relatively lower efficiency and lower profitability appear driven by certain aspects of their business model. Our results further indicate that good capitalization and high efficiency and profitability are compatible. |
| Keywords: | Bank efficiency, profitability, economies of scale, financial regulation |
| JEL: | G21 G28 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:snb:snbwpa:2021-15&r= |
| By: | Hong Ngoc Nguyen (The University of Queensland, Australia); Christopher O'Donnell (The University of Queensland, Australia) |
| Abstract: | Public service managers generally make input choices in the face of uncertainty about the demand for their services. However, this is generally not taken into account when estimating cost efficiency. The conventional approach to estimating cost efficiency is based on the assumption that managers choose inputs to minimise the cost of producing observed outputs. However, when demand is unknown at the time input decisions are made, many managers will instead choose inputs to minimize the cost of meeting various output targets. This paper explains how data envelopment analysis (DEA) methods can be used to account for demand uncertainty when estimating cost, technical and allocative efficiency. In doing so, it explains how DEA can be used to estimate the effects of demand uncertainty on costs. The methodology is applied to data on hospital and health service providers in the Australian state of Queensland. We obtain estimates of cost, technical and allocative efficiency that are quite different from the estimates obtained using a conventional approach that ignores demand uncertainty. Our empirical results also indicate that demand uncertainty has a significant effect on hospital costs. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:qld:uqcepa:166&r= |
| By: | Haqiqi, Iman; Aqababaei, Monireh |
| Keywords: | Productivity Analysis, Resource/Energy Economics and Policy, Environmental Economics and Policy |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312777&r= |
| By: | Jia, Yanan; Hennessy, David A.; Feng, Hongli |
| Keywords: | Productivity Analysis, Production Economics, Resource/Energy Economics and Policy |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312916&r= |
| By: | Tetsuji Okazaki (Faculty of Economics, The University of Tokyo) |
| Abstract: | After the World War I, the environment of the Japanese coal mining industry changed drastically concerning the labor market and the government regulation. While the wage increased around three times, working hours and labor conditions came to be strictly regulated according to the international treaty. To cope with the new environment, coal mining firms made great efforts to enhance productivity. While the basic measure was introducing labor saving technologies such as coal pick, coal cutter and belt conveyor, major firms with multiple coal mines tried to enhance average productivity by reallocating resources to relatively efficient mines. This paper explores the intrafirm resource reallocation and its productivity implication focusing on Mitsubishi Mining Co., one of the major coal mining firms, and compares it with the cases of the two other largest coal mining firms, Mitsui Mining Co. and Hokkaido Colliery & Steamship Co.. |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:tky:jseres:2021cj301&r= |
| By: | Partha Pratim Dube (Garalgacha Surabala Vidyamandir, West Bengal, India, 712708) |
| Abstract: | This paper considers the prospects for constructing a model of TFP of investment, technological progress and growth of the technological share in TFP that determines the nature of economic growth. Two models are considered: a model emphasising investment, technological progress and its impact on TFP and a model emphasising a relation of investment, TFP and growth of technological share in TFP through the experience process. The claims in mode 1 and model 2 presented here differ from those in most standard economic literature: the relation between investment and TFP is considered, the relation between technological efficiency and technological progress is established and their effect on TFP is shown. A quotient between technological progress and investment is constructed that hampers the growth of technological progress. This gives a caution to the financial institutions about the enhancement of the quotient. |
| Keywords: | Total Factor Productivity; Investment; Technological Progress; India; Technological Efficiency; Growth |
| JEL: | B22 D22 D24 O32 O43 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:sko:wpaper:bep-2021-05&r= |
| By: | Anica, Sharaban T.; Elbakidze, Levan |
| Keywords: | Resource/Energy Economics and Policy, Environmental Economics and Policy, Productivity Analysis |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea21:312881&r= |
| By: | Betts, Caroline |
| Abstract: | This paper develops a quantitative framework to evaluate the sectoral origins of economic growth. First, I decompose growth in aggregate growth accounting variables–GDP per working age person, a capital factor, an hours’ worked factor, and an implied total factor productivity factor–into sectoral contributions. I decompose the TFP factor growth contribution of a sector into 1) sector-share weighted, within-sector TFP factor growth, and 2) several residual allocative effects. Second, I interpret structurally the observed sectoral contributions by comparing them to those predicted by a multi-sector neoclassical growth model. Using the framework to account for Japan’s economic growth slowdown I find that, empirically, two factors quantitatively dominated Japan’s slowing GDP per working age person in the 1990s. First, a large decline in aggregate TFP growth relative to the 1980s, driven by 1) slower within-industrial sector TFP growth, and 2) negative residual effects due to faster value-added reallocation towards services which mediated a larger impact of the sector for aggregate capital deepening. Second, a large fall in hours worked per working age person, originating mainly in smaller industrial sector contributions. In the 2000s, continued GDP per working age person and aggregate TFP growth decay were due largely to slower within-service sector TFP growth. In the 2010s, anemic aggregate TFP factor growth equal to just 18 percent of its 1980s value was depressed by zero service sector TFP growth; a modest growth rate recovery in GDP per working age person originated in rapid increases in hours worked per working age person, via roughly equal increases in industrial and service sector contributions. A calibrated three-sector growth model absent frictions, featuring sectoral TFP time series as inputs, reproduces closely the time-series from 1980–2018 of a) hours shares of sectors, b) GDP per working age person, and c) the aggregate TFP factor. It captures quite well a) sample-average aggregate TFP growth, b) aggregate TFP growth rate changes across decades, c) the decomposition of aggregate TFP factor growth into total “within-sector” TFP and total residual contributions of sectors, and d) “within-sector” TFP growth contributions of agriculture, industry, and services. The model cannot replicate the sources of, or sectoral contributions to, observed–albeit small–TFP growth residual effects. More importantly, the model’s predicted hours factor (hours per working age person): 1) captures only 46 percent of the decline in industry’s contribution to the fall in aggregate hours factor growth in the 1990s; 2) declines in the 2000s, while hours factor growth is positive in the data; 3) captures only 47 percent of observed average hours factor growth in the 2010s; and 4) allocates too much of the 2010s increase in aggregate hours factor growth to industry. A higher intertemporal elasticity of substitution, a higher Frisch elasticity, and an aggregate labor (policy) wedge resolve some, but exacerbate other, model failures. |
| Keywords: | Economic Growth, Neoclassical Growth Model, Structural Change, Total Factor Productivity, Japan. |
| JEL: | E13 O41 O47 O53 |
| Date: | 2021–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109285&r= |
| By: | GARZON DELVAUX Pedro; RIESGO ALVAREZ Laura; GOMEZ Y PALOMA Sergio (European Commission - JRC) |
| Abstract: | The report assesses the relationship between land size and performance in the developing world. Farm and plot performance data were gathered through an exhaustive review of mostly peer-reviewed publications over the last 22 years (1997-2018) in English, French and Spanish. Following the screening of the material, a selection of 472 papers was reviewed, creating a pool of over 1100 individual observations or cases. Both specific and general agricultural economics studies using land area as explaining variable in their performance estimates were explored. Three groups of indicators (i.e. gross output, net value and efficiency) were analysed according to area size in an effort to capture global indicators of performance, beyond the too often used partial indicators (e.g. yield or gross value per area). Analyses based on farm data show that there has been a revival of interest on the question particularly on sub-Saharan Africa (SSA) agriculture, given the increased rate of specific literature publications. The review looked for evidence documenting the various possible relationships that could relate the size of an agricultural holding to its performance (i.e. direct, inverse and non-monotonic). The main explanations shaping the size-performance relationship were explored, namely: the contextual rural input market (i.e. labour, land, input, etc.) imperfections but also methodological shortcomings of the existing literature. On the one hand, inverse relationship (IR) is clearly the dominant type of interaction between cropped land area and agricultural performance using the most common performance indicator group used (gross output mainly populated by studies using yield or total value). However, the economic literature has clearly demonstrated that the use of this type of indicator of performance is generally ill-advised in assessing the farm size performance relationship. On the other hand, the less frequent but more global productivity indicator group of "efficiency" and "net values" do not report such a clear-cut relationship. As a matter of fact, cases using "efficiency" performance indicators are more likely to record a direct relationship than IR. Moreover, the emergence of non-monotonic relationships needs to be highlighted showing that the relationship may not be constant. Tests conducted on the existing material clearly associate a number of rural factor market imperfections with the prevalence of the IR. Hence, IR is more likely to be a symptom of imperfections and lack of opportunities for rural labour than an advantage of a given type of farms. In turn, methodological reasons explored also indicate that narrower ranges of farm size in a given study increase the reporting of IR, particularly in SSA and when analysing partial performance indicators. From being an established stylised “fact” in development economics, IR may not be taken for granted because of empirical complexities in accurately assessing it but also because there is evidence that such a relationship depends on the performance indicator analysed. Hence, IR may not necessarily be considered systematic, continuous, stable through time, irreversible or universal. From a broader development intervention perspective, and based on the review results, the recommended performance indicators (i.e. net value and efficiency) show that larger farms tend to be more performant than the smaller farms. However, this does not suggest the abandonment of smallholders by policy as there are both critical economic and social justifications for the direct improvement of the living conditions of a large share of the population in most of the developing world. It rather advocates a revisited and expanded development role for medium sized ones. |
| Keywords: | farm size-performance relationship, inverse relationship, developing countries, Africa, Asia, Latin America and the Caribbean, Middle-east and North Africa |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc120526&r= |
| By: | Wolfgang Briglauer (Vienna University of Economics and Business (WU)); Michał Grajek (ESMT European School of Management and Technology) |
| Abstract: | The deployment of new broadband networks (NBNs) based on fiber-optic transmission technologies promises high gains in terms of productivity and economic growth, and has attracted subsidies worth billions from governments around the world in the form of various state aid programs. Yet, the effectiveness and the efficiency of such programs remains largely unstudied. We employ panel data from 32 OECD countries during 2002-2019 to provide robust empirical evidence of both. We find that state aid significantly increases NBNs by facilitating the deployment of new connections to 22% of households in the short term and 39.2% in the long term. By comparing the actual amounts of state aid support to the estimated impact on GDP growth, we also find it to be highly cost efficient, as the programs break even after three years on average. |
| Keywords: | Fiber optic technology, state aid, ex-post evaluation, efficiency, OECD countries |
| JEL: | C51 C54 H25 L52 O38 |
| Date: | 2021–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:esm:wpaper:esmt-21-01&r= |
| By: | Franz Fuerst; Yana Akhtyrska |
| Abstract: | The commercial real estate sector contributes a sizable share to greenhouse gas emissions from the built environment due to its structural characteristics. The existence of an energy efficiency gap (EEG) between potential cost-effective measures and the actions being undertaken by the property industry has been subject to debate in the extant literature. Proponents of the EEG point to principal-agent problems, regulatory and technological risk and uncertainty over future energy prices as important drivers. Despite government-led efforts to decarbonise the sector through incentivisation of energy efficiency retrofits, evidence has emerged that a simple “fix and forget” approach will not suffice for large air-conditioned properties with complex systems and numerous stakeholders involved. Specifically, several studies have found that there is relatively little correlation between the proven energy efficiency of a building in operation and its energy performance certificate. This study tests if US office buildings with proactive energy management practices 1) consume less energy and, as a result, 2) command higher rental premia. Hence, the suggested study sets out to first survey and classify the efficiency of operational practices of a building, which past studies have not taken into account. These components can be found in the existing LEED dataset and include the frequency of commissioning and implementation of capital measures to upgrade energy efficiency equipment, the presence of building automation systems and advanced metering infrastructure. These measures are then analysed with a difference-in-difference approach and more advanced techniques. The results of this analysis will be valuable to policymakers, particularly in the UK and other European countries that are about to embark on an ambitious net zero carbon policy for commercial and domestic buildings. Information on achieved rents, as available from the CompStak database, is regressed on the constructed operational efficiency variable while controlling for a number of confounding variables. The insights shed light onto the potential financial returns to these measures in the office sector. |
| Keywords: | Energy Consumption; Green Buildings; Office Buildings; Proactive Energy Management |
| JEL: | R3 |
| Date: | 2021–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2021_124&r= |
| By: | Pavel Chakraborty (Department of Economics, Management School, Lancaster University); Rahul Singh (Economics and Social Sciences Area, Indian Institute of Management, Bangalore) |
| Abstract: | We study the effects of technical barriers to trade (TBTs) imposed by destination markets on prices, marginal costs, and markups of Indian manufacturing exporters. Using detailed firm-product-level data on prices and production from PROWESS, we first identify the underlying component of prices (i.e. marginal costs and markups), and use those as our outcomes of interest in the second stage. We find that (i) introduction of TBTs by importing countries increases marginal costs by 5% and prices by 4%, (ii) there is considerable heterogeneity based on exporters’ initial productivity, (iii) productive exporters (those belonging to the lower deciles) experienced an increase in marginal costs and decrease in markups compared to low productivity exporters, and (iv) overall effects are driven by private firms (both domestic and foreign) belonging to intermediate input industries. |
| Keywords: | technical barriers to trade, prices, marginal costs, markups, exporters |
| JEL: | F1 F14 F16 |
| Date: | 2021–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:era:wpaper:dp-2021-26&r= |
| By: | Junko Doi (Kansai University, Osaka University); Takao Fujii (Kobe City University of Foreign Studies, Kobe University); Shinya Horie (Onomichi City University, Kobe University); Jun Iritani (Osaka Gakuin University); Sumie Sato (Nagoya University of Economics, Kobe University); Masaya Yasuoka (Kwansei Gakuin University) |
| Abstract: | We aggregate an economy consisting of two commodities, two factors, and two producers into an economy with one commodity, two factors and one producer. Our aggregation method has three characteristic features. One is that an aggregated TFP and price level are defined respectively by individual TFPs and prices of commodities. Another is that our aggregation method includes an aggregation of production functions that has been considered intractable. We resolve that difficulty by specifically devoting attention to equilibrium. The other is that the total values of an original and an aggregated economy are identical. |
| Keywords: | aggregation, macro production function, price level, TFP |
| JEL: | E23 D24 B41 O41 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:228&r= |