nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2022‒03‒07
eight papers chosen by

  1. Incentive regulation, productivity growth and environmental effects: the case of electricity networks in Great Britain By Victor Ajayi; Karim Anaya; Michael Pollitt
  2. Are Ideas Really Getting Harder To Find? R&D Capital and the Idea Production Function By Jakub Growiec; Peter McAdam; Jakub Mućk
  3. Management and Misallocation in Mexico By Nicholas Bloom; Leonardo Iacovone; Mariana Pereira-Lopez; John Van Reenen
  4. Subsidies to microfinance institutions: How do they affect cost efficiency and mission drift? By Anastasia Cozarenco; Valentina Hartarska; Ariane Szafarz
  5. Prudential Regulation and Bank Efficiency : Evidence from WAEMU Zone By Said-Nour Samake
  6. The effect of climate policy on innovation and economic performance along the supply chain: A firm- and sector-level analysis By Antoine Dechezleprêtre; Tobias Kruse
  7. Does Over-Education Raise Productivity and Wages Equally? The Moderating Role of Workers' Origin and Immigrants' Background By Jacobs, Valentine; Rycx, Francois; Volral, Mélanie
  8. Public Expenditures Efficiency On Education Distribution in Developing Countries By Jean-François Brun; Constantin Thierry Compaore

  1. By: Victor Ajayi (EPRG, CJBS, University of Cambridge); Karim Anaya (EPRG, CJBS, University of Cambridge); Michael Pollitt (EPRG, CJBS, University of Cambridge)
    Keywords: Total factor productivity, incentive regulation, electricity networks, emissions
    JEL: D24 H23 L43 L94
    Date: 2021–11
  2. By: Jakub Growiec; Peter McAdam; Jakub Mućk
    Abstract: We supplement the 'Idea Production Function' (IPF) with measures of R&D capital. We construct a time series of R&D capital stock in the US (1968-2019) based on cumulated R&D investment. We estimate the IPF with patent applications as R&D output, allowing for a flexible treatment of unit productivity of R&D capital and R&D labor. We find that the elasticity of substitution between R&D input factors is 0.7-0.8 and significantly below unity. This implies that R&D capital is an essential factor in producing ideas, complementary to R&D labor. We also identify a systematic positive trend in R&D labor productivity at about 1% per year on average and a cyclical trend in R&D capital productivity. Our results suggest that instead of 'ideas getting harder to find', there is an increasing scarcity of R&D capital needed to find them.
    Keywords: R&D, Long-Run Growth, Technical Change, Estimation, CES.
    JEL: O30 O40 O47
    Date: 2022–02
  3. By: Nicholas Bloom; Leonardo Iacovone; Mariana Pereira-Lopez; John Van Reenen
    Abstract: We argue that greater misallocation is a key driver of the worse management practices in Mexico compared to the US. These management practices are strongly associated with higher productivity, growth, trade, and innovation. One indicator of greater misallocation in Mexico is the weaker size-management relationship compared to the US, particularly in the highly distorted Mexican service sector. Second, the size-management relationship is weaker in smaller markets, measured by distance to the US for manufacturing firms and population density for service firms. Third, municipalities with weaker institutions, measured by contract enforcement, crime, and corruption, have a weaker size-management relation. These results are consistent with frictions lowering aggregate management quality and productivity.
    JEL: J0
    Date: 2022–02
  4. By: Anastasia Cozarenco; Valentina Hartarska; Ariane Szafarz
    Abstract: The costs and benefits of subsidized microfinance are still controversial. We utilize a cost-function estimation approach that accounts for the double bottom line (social and financial) of microfinance institutions (MFIs) to evaluate how subsidies affect both cost efficiency and risk of mission drift. We control for endogenous self-selection into the business models of credit-only versus credit-plus-deposit. Our results suggest that MFIs that both supply loans and collect deposits need no subsidies to be cost-efficient. In addition, subsidies to these MFIs are associated with an increase in deposit size, which might hurt the most disadvantaged depositors. In sum, combining subsidized funds from donors with deposits increases the risk of mission drift, and can therefore be socially undesirable.
    Keywords: Finance; Microfinance; Cost Efficiency; Scale Economies; Subsidies
    JEL: O14 D24 G21 O16 F35
    Date: 2022–02–22
  5. By: Said-Nour Samake (UB - Université de Bordeaux)
    Abstract: This paper aims to analyze the impact of prudential regulation on banking efficiency in the West African Economic and Monetary Union (WAEMU). Using system GMM estimator and panel data from 98 banks in WAEMU zone, we find that prudential regulation related to (i) Loan loss provisions (LLPR) positively affect banking efficiency. While (ii) Capital requirements (CAP); (iii) Liquidity requirements (LIQ); (iv) Loan restrictions (LOANR) and (v) Limits on leverage (LLV) negatively influence banking efficiency in the WAEMU zone. Moreover, we find that small and low-risk banks benefit in terms of efficiency, from stringent prudential regulation, while high-risk banks and large banks are the main losers. Similarly, we also find that, in the face of strict prudential regulation, government and domestic banks are inefficient, while the efficiency of foreign and privately managed banks improves. Overall, our findings support the idea that prudential regulation must be well calibrated and adapted to the specific characteristics of banks so that it does not impede banking efficiency and the proper functioning of the banking system, but also, by the same token, financial stability in the WAEMU zone.
    Keywords: Risk,Financial stability,Banks,Efficiency,Prudential regulation,WAEMU,CBWAS
    Date: 2022–01–23
  6. By: Antoine Dechezleprêtre (OECD); Tobias Kruse (OECD)
    Abstract: The paper empirically assesses the effect of climate policy stringency on innovation and economic performance, both directly on regulated sectors and indirectly through supply chain relationships. The analysis is based on a combination of firm- and sector-level data, covering 19 countries and the period from 1990 to 2015. The paper shows that climate policies are effective at inducing innovation in low-carbon technologies in directly regulated sectors. It does not find evidence that climate policies induce significant innovation along the supply chain. In addition, there is no evidence that climate policies – through the channel of clean innovation – either harm or improve the economic performance of regulated firms. This supports the evidence that past climate policies have not been major burdens on firms’ competitiveness, and that clean innovation may enable firms to compensate for the potential costs implied by new environmental regulations.
    Keywords: Firm performance, Low carbon innovation, Policy evaluation, Porter Hypothesis
    JEL: Q55 Q58 O38 L25
    Date: 2022–02–15
  7. By: Jacobs, Valentine (Free University of Brussels); Rycx, Francois (Free University of Brussels); Volral, Mélanie (University of Mons)
    Abstract: We provide first evidence of the impact of over-education, among natives and immigrants, on firm-level productivity and wages. We use Belgian linked panel data and rely on the methodology from Hellerstein et al. (1999) to estimate ORU (over-, required, and under-education) equations aggregated at the firm level. Our results show that the over-education wage premium is higher for natives than for immigrants. However, since the differential in productivity gains associated with over-education between natives and immigrants outweighs the corresponding wage premium differential, we conclude – based on OLS and dynamic GMM-SYS estimates – that over-educated native workers are in fact underpaid to a greater extent than their over-educated immigrant counterparts. This conclusion is refined by sensitivity analyses, when testing the role of immigrants' background (e.g. region of birth, immigrant generation, age at arrival in the host country, tenure).
    Keywords: immigrants, over-education, productivity, wages, linked panel data, Belgium
    JEL: J24 J71
    Date: 2022–02
  8. By: Jean-François Brun (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Constantin Thierry Compaore (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: The paper assesses the efficiency of public expenditures in decreasing the unequal distribution of education in developing countries over the period 1980–2010. For this purpose, we use partial frontier estimator to compute output and input efficiency scores. Moreover, we analyze the determinants of education output efficiency by using Exponential Fractional Regression Models (EFRM). The results show that on average, developing countries can reduce their education inequality by 30% without changing their public expenditures on education. Developing countries improved their output efficiency over the study period. However, their input efficiency has decreased relatively slightly since 2005. The results also show that logarithm of GDP and its square, urbanization, government stability and democracy are the main determinants of education output efficiency for both logit and Cloglog specifications.
    Keywords: Education inequality,Efficiency,Public spending
    Date: 2021–01–20

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