nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2022‒01‒24
thirteen papers chosen by

  1. The Importance of Specification Choices When Analyzing Sectoral Productivity Gaps By Merfeld, Joshua D.; Brummund, Peter
  2. The Impact of a New Quality Management Practice on Firm Performance: Evidence from Pakistan By Faran, Mahvish; Taylor, Karl
  3. Impact of Information on Technical Efficiency of Agricultural Production in India By Aritri Chakravarty
  4. The Dimensions of Productivity Change in the U.S. Food Manufacturing Industries By Lopez, Rigoberto A.
  5. The fallacy in productivity decomposition By Simon Bruhn; Thomas Grebel; Lionel Nesta
  6. Adoption and Diffusion of Digital Farming Technologies – Integrating Farm-Level Evidence and System-Level Interaction By Shang, Linmei; Heckelei, Thomas; Börner, Jan; Rasch, Sebastian
  7. The Differentiated Effects of Plot Sizes and Farm-Field Distances in Organic and Conventional Farming Systems: An Economic Analysis at Farm Level By Heinrichs, Julia; Kuhn, Till; Pahmeyer, Christoph; Britz, Wolfgang
  8. Using COVID-19 mortality to select among hospital plant capacity models: An exploratory empirical application to Hubei province By Kristiaan Kerstens; Zhiyang Shen
  9. "Technology and Productivity: A Critique of Aggregate Indicators" By Fred Block
  10. Labor Productivity Growth and Industrialization in Africa By Margaret S. McMillan; Albert Zeufack
  11. Covid-19 pandemic, state aid and firm productivity By Bighelli, Tommaso; Lalinsky, Tibor; Vanhala, Juuso
  12. Rationalizability, Cost-Rationalizability, and Afriat’s Efficiency Index By Matthew Polisson; John Quah
  13. Climate change and agricultural productivity in Myanmar: Application of a new computable general equilibrium (CGE) model By Henning Tarp Jensen; Marcus Keogh-Brown; Finn Tarp

  1. By: Merfeld, Joshua D. (KDI School of Public Policy and Management); Brummund, Peter (University of Alabama)
    Abstract: A consistent finding in the development literature is that average non-farm labor productivity is higher than average farm labor productivity. These differences in average productivity are sometimes used to promote policies which advance the non-farm sector. In this paper, we analyze the importance of two specification choices when comparing productivity gaps, using detailed household panel data from Malawi. Importantly, we are able to calculate both average revenue products (ARPLs) – similar to most of the sectoral productivity gap literature – as well as marginal revenue products (MRPLs). We show that the choice of productivity measure combined with the choice of production function specification can lead to different sectoral productivity rankings. MRPLs from translog production functions suggest the household farm sector is more productive than the household non-farm sector, while MRPLs from a Cobb-Douglas and ARPLs from both a translog and a Cobb-Douglas find the opposite ranking.
    Keywords: non-farm production, agriculture, labor productivity
    JEL: J24 J43 O13 Q12 R23
    Date: 2021–11
  2. By: Faran, Mahvish (University of Sheffield); Taylor, Karl (University of Sheffield)
    Abstract: This paper uses a novel firm level data set to investigate the impact of a unique quality management practice on the production and productivity of a large-scale garments manufacturer in Pakistan. The analysis provides evidence that production complexity is an important element in determining the impact of management practices, as there are sizeable differences in the effects between complex and basic lines of assembly. Most specifications show that the implementation of the new quality management practice has a negative impact on lines at the extreme ends of the complexity spectrum, while conversely it has a positive impact on those basic lines which exhibit the highest levels of complexity. We find evidence consistent with a quantity-quality trade off, in that whilst the implementation of the new management practice generally adversely impacted upon productivity it had the desired effect of reducing the number of daily quality defects observed after the intervention.
    Keywords: quality management practice, productivity, production complexity
    JEL: L2 M2 O14 O32 O33
    Date: 2021–11
  3. By: Aritri Chakravarty (BASE University, Bengaluru)
    Abstract: This paper tries to estimate the impact of information use on technical efficiency of agricultural production in India using propensity score matching method. The study utilises cross-sectional data from the 70th Round of NSSO on Situation Assessment Survey of Farmers (2012-13). Technical efficiency is calculated using a novel technique by Cherchye, (2013) that acknowledges the presence of multiple outputs, output-specific inputs and joint inputs in the data. The results of propensity score matching method show that users of information have a slightly higher efficiency than non-users but the impacts vary largely across different sources of information. The findings hint at a source effect working at large that tends to dampen the true effect of information. Using information from private sources has the largest impact while media has a smaller impact. Public sources don’t show a statistically significant impact, may be due to constraints like lack of infrastructure, manpower and monitoring. Nevertheless, it does not undermine their importance but suggests that they might work through indirect channels that require further exploration.
    Keywords: Agriculture, Information Use, Technical Efficiency, Data Envelopment Analysis, Propensity Score Matching JEL Classification- D24, Q12, Q16
    Date: 2022
  4. By: Lopez, Rigoberto A.
    Keywords: Production Economics
    Date: 2022
  5. By: Simon Bruhn; Thomas Grebel; Lionel Nesta (OFCE - Observatoire français des conjonctures économiques - Sciences Po - Sciences Po)
    Abstract: This paper argues that the typical practice of performing growth decompositions based on log-transformed productivity values induces fallacious conclusions: using logs may lead to an inaccurate aggregate growth rate, an inaccurate description of the microsources of aggregate growth, or both. We identify the mathematical sources of this log-induced fallacy in decomposition and analytically demonstrate the questionable reliability of log results. Using firm-level data from the French manufacturing sector during the 2009-2018 period, we empirically show that the magnitude of the log-induced distortions is substantial. Depending on the definition of accurate log measures, we find that around 60-80% of four-digit industry results are prone to mismeasurement. We further find significant correlations of this mismeasurement with commonly deployed industry characteristics, indicating, among other things, that less competitive industries are more prone to log distortions. Evidently, these correlations also affect the validity of studies that investigate the role of industry characteristics in productivity growth.
    Keywords: productivity decomposition,growth,log approximation,geometric mean,arithmetic mean
    Date: 2021–01–01
  6. By: Shang, Linmei; Heckelei, Thomas; Börner, Jan; Rasch, Sebastian
    Keywords: Research and Development/Tech Change/Emerging Technologies, Productivity Analysis
    Date: 2020–09–18
  7. By: Heinrichs, Julia; Kuhn, Till; Pahmeyer, Christoph; Britz, Wolfgang
    Keywords: Farm Management, Productivity Analysis
    Date: 2020–09–18
  8. By: Kristiaan Kerstens (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Zhiyang Shen
    Abstract: This contribution defines short- and long-run output- and input-oriented plant capacity measures and evaluates them relative to convex and nonconvex technologies. By applying these different plant capacity concepts, the authors seek to measure the use of existing capacities, as well as the evolution and build-up of extra hospital capacity in the Chinese province of Hubei during the outbreak of the COVID-19 epidemic in early 2020. Furthermore, medical literature has established that mortality rates increase with high capacity utilization rates, an insight that this study leverages to select the most plausible of eight plant capacity concepts. The preliminary results indicate that a relatively new, input-oriented plant capacity concept correlates best with mortality.
    Keywords: Data envelopment analysis,Free disposal hull,Efficiency,Plant capacity utilization,Mortality
    Date: 2021–05
  9. By: Fred Block
    Abstract: Economic analysts have used trends in total factor productivity (TFP) to evaluate the effectiveness with which economies are utilizing advances in technology. However, this measure is problematic on several different dimensions. First, the idea that it is possible to separate out the relative contribution to economic output of labor, capital, and technology requires ignoring their complex interdependence in actual production. Second, since TFP growth has declined in recent decades in all of the developed market societies, there is good reason to believe that the decline is an artifact of the slower rates of economic growth that are linked to austerity policies. Third, reliance on TFP assumes that measures of gross domestic product are accurately capturing changes in economic output, even as the portion of the labor force producing tangible goods has declined substantially. Finally, there are other indicators that suggest that current rates of technological progress might be as strong or stronger than in earlier decades.
    Keywords: Total Factor Productivity; Technology; Economic Growth; Economic Output
    JEL: D24 O40 O47
    Date: 2022–01
  10. By: Margaret S. McMillan; Albert Zeufack
    Abstract: Manufacturing has made an important contribution to raising living standards in many parts of the world. Concerns about premature deindustrialization have made some observers skeptical about the potential for manufacturing to play this role in Africa. But employment in African manufacturing has grown rapidly over the past 20 years. These employment gains have been accompanied by: (i) large increases in the number of small manufacturing firms; (ii) limited employment gains in large firms; and (iii) robust labor productivity growth in Africa’s large firms. Limited employment growth in Africa’s large manufacturing firms is partly a result of the capital intensity of the manufacturing sub-sectors in which African countries are most engaged – the processing of resources, and partly a result of rising capital intensity in manufacturing. The potential for manufacturing to raise living standards in Africa depends on indirect job creation by large firms through backward and forward linkages and increasing labor productivity in small firms.
    JEL: L16 L25 L6 O14 O55
    Date: 2021–12
  11. By: Bighelli, Tommaso; Lalinsky, Tibor; Vanhala, Juuso
    Abstract: We study the consequences of the COVID-19 pandemic on productivity by matching firm performance outcomes with corresponding firm-level information on government support. Our cross-country evidence for five EU countries shows that the pandemic led to a significant short-term decline in productivity predominantly driven by the within-firm growth component. A thorough comparative analysis of the distribution of employment and overall direct subsidies, considering separately also relative firm-level support and the probability of being supported, reveals several common characteristics. In general, the pandemic support was distributed rather efficiently, i.e. towards “deserving” firms and only marginally towards “zombie” and non-viable firms. However, government subsidies appear to have had a limited effect on aggregate productivity developments.
    JEL: D22 H25 J38 L29
    Date: 2022–01–14
  12. By: Matthew Polisson; John Quah
    Abstract: This note explains the equivalence between approximate rationalizability and ap- proximate cost-rationalizability within the context of consumer demand. In connection with these results, we interpret Afriat’s (1973) critical cost efficiency index (CCEI) as a measure of cost (in)efficiency, in the sense that a consumer is spending more money than is required to achieve her utility targets.
    Date: 2022–01–05
  13. By: Henning Tarp Jensen; Marcus Keogh-Brown; Finn Tarp
    Abstract: Myanmar is facing climate change (CC) induced changes to the productivity of their critically important rice sector over the coming century. Moreover, the recent five-year Myanmarese Agriculture Development Strategy (ADS) sets out a vision of achieving an '…inclusive, competitive, food and nutrition secure, climate change resilient, and sustainable agricultural system…' by 2030. In this paper, we investigate the productivity pillar of the ADS strategy.
    Keywords: Myanmar, Agricultural technology, Climate change, Agricultural productivity, Computable general equilibrium, Rice
    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.