nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2022‒05‒16
fifteen papers chosen by

  1. Measurement of total factor productivity: Evidence from French construction firms By Abdoulaye Kané
  2. The UK Productivity “Puzzle” in an International Comparative Perspective By John G. Fernald; Robert Inklaar
  3. The Impact of a New Quality Management Practice on Firm Performance: Evidence From Pakistan By Mahvish Farhan; Karl Taylor
  4. The rule of law and investment in intangible capital: Evidence for the EU-16, 1996-2017 By Roth, Felix
  5. Giving zombie firms a second chance: An assessment of the reform of the Portuguese insolvency framework By Ernesto Nieto Carrillo; Carlos Carreira; Paulino Maria Freitas Teixeira
  6. Are Ideas Really Getting Harder to Find? By Alston, Julian M.; Pardey, Philip G.
  7. On Labor Productivity Growth and the Wage Share with Endogenous Size and Direction of Technical Change By Zamparelli, Luca
  8. The Importance of Technology in Banking during a Crisis By Nicola Pierri; Yannick Timmer
  9. Crises and changes in productivity distributions: a regional perspective in Japan By ADACHI Yusuke; OGAWA Hikaru; TSUBUKU Masafumi
  11. Technology Transfer in Global Value Chains By Thomas Sampson
  12. Early exit from business, performance and neighbours’ influence: a study of farmers in France By Emmanuel Paroissien; Laure Latruffe; Laurent Piet
  13. The quicker the better: Fostering timely responses in public hospitals By Verzulli, R.;; Lippi Bruni, M.;
  14. Export Performance: A Study of Labour and Capital Intensive Manufacturing Industries in India By Sonali Madhusmita Mohapatra
  15. Does digitalization improve government effectiveness ? Evidence from developing and developed countries By Abdoul-Akim Wandaogo

  1. By: Abdoulaye Kané
    Abstract: This paper reviews eight (8) methods of calculating total factor productivity (TFP) in the "construction of residential and non-residential buildings" sector in France. These include fixed-effects estimators; instrumental variables and the generalized method of moments (Blundell and Bond, 1999); Olley and Pakes, 1996; Levinsohn and Petrin, 2003; Wooldridge, 2009; Ackerberg, Caves, and Frazer, 2015; the calibration method; and the data envelopment analysis (DEA) method. Then, using firm-level data from 2009 to 2018, we show that the market structure can be likened to an oligopoly situation and that capital intensity is also very low in this sector. Furthermore, the fixed-effects estimator provides the lowest capital coefficient and overestimates both the absolute value of the scale effect and the intermediate inputs coefficient. The highest capital coefficient is provided by the Wooldridge (2009) estimator. But there is little difference between the TFP measures, especially when semi-parametric methods are used. While the calibration of elasticities shows that the construction sector is labor intensive, the DEA method shows that on average only large firms are fully efficient. To our knowledge, the Ackerberg, Caves and Frazer method be a good estimator of TFP in the French construction sector. Finally, when comparing TFP levels, all estimation methods (fixed effects; Wooldridge, 2009; Olley and Pakes, 1996; Levinsohn and Petrin, 2003 and Ackerberg, Caves, and Frazer, 2015) are strongly positively correlated with each other (over 92%). However, the correlations between these methods and the non-parametric methods (DEA and calibration methods) are very low, even negative with the calibration method.
    Keywords: French construction sector; Production function; Total factor productivity; Parametric estimation; Semi-parametric estimation; Non-parametric estimation; Market structure
    JEL: C13 C14 C23 D24 D43
    Date: 2022
  2. By: John G. Fernald; Robert Inklaar
    Abstract: The UK’s slow productivity growth since 2007 has been referred to as a “puzzle”, as if it were a particularly UK-specific challenge. In this paper, we highlight how the United States and northern Europe experienced very similar slowdowns. The common slowdown in productivity growth was a slowdown in total factor productivity (TFP) growth; we find little evidence that capital deepening was an important independent factor. From a conditional-convergence perspective, most of the UK slowdown follows from the slowdown at the U.S. frontier. From the mid-1980s to 2007, the UK’s relative productivity level moved closer to the level of the U.S. and northern Europe, driven by essentially complete convergence in market services TFP. In contrast, manufacturing lost ground relative to the U.S. frontier prior to 2007, and remains far below the frontier. The relative ground lost after 2007 is modest—cumulating to about 4 percentage points—and is largely attributable to somewhat unfavorable industry weights and industry-specific issues in mining, rather than a systematic UK competitiveness problem.
    Keywords: productivity growth; Great Recession; convergence
    JEL: D24 E23 E44 F45 O47
    Date: 2022–03–23
  3. By: Mahvish Farhan (Sheffield Hallam University, UK); Karl Taylor (Department of Economics, University of Sheffield, UK)
    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
  4. By: Roth, Felix
    Abstract: This paper analyses the relationship between the rule of law (RoL) and intangible capital investment by businesses within a sample of 16 European countries, over the period from 1996 to 2017. Studies on the effects of RoL on intangible capital investment are scarce, hence, the relevance of empirical research in this area. When controlling for endogeneity, the study found a coefficient of 2.0 for the relationship between RoL and investment in intangibles, confirming the significant and positive relationship between the two and highlighting RoL as a driving factor of investment in intangibles and, hence, labour productivity growth in the EU-16.
    Keywords: rule of law (RoL),intangible capital investment,labour productivity growth,European Union (EU)
    JEL: E02 E22 O34 O43 O52 P14
    Date: 2022
  5. By: Ernesto Nieto Carrillo (Ph.D. Student at Faculty of Economics, University of Coimbra); Carlos Carreira (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics); Paulino Maria Freitas Teixeira (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)
    Abstract: In most advanced economies productivity growth has been hampered by barriers that allow zombie firms to survive. We examine the effectiveness of institutional reforms in Portugal that were aimed to improve efficiency in insolvency framework. Estimates show that reallocation barriers declined. The reforms appear to have larger and more effective results in zombie recovery than in exit. Firm size plays a major role in tackling zombie-entrenchment. The decline in barriers has also implied a lower distortion in the economy-wide selection process. The new setting seems to be more desirable than forcing zombie exit at all costs.
    Keywords: Insolvency regimes; Zombie firms; Productivity; Reallocation barriers; Firm exit;Restructuring.
    JEL: D24 G32 G33 K22 L25 O47
    Date: 2022–01
  6. By: Alston, Julian M.; Pardey, Philip G.
    Abstract: Bloom et al. (2020) attribute the post-WWII slowdown in growth of U.S. TFP and other productivity measures to a decline in research productivity. A weakness in their approach is that the authors measure research productivity as the annual growth rate of industrial or economywide productivity divided by the number of researchers, contemporaneously. They give no consideration to the stock-flow relationships whereby current research effort gives rise to increments to a stock of depreciable knowledge and hence an evolving path of enhanced productivity over an extended but possibly finite future period. Using examples from agriculture, for which we have comparatively rich data, we revisit established ideas and evidence on links between research spending and productivity. On both conceptual and empirical grounds, we question whether the evidence supports the claim that a decline in productivity of researchers is responsible for the slowdown in productivity growth that has been observed, the large increases in numbers of scientists and in spending per scientist notwithstanding.
    Keywords: Agricultural and Food Policy, Productivity Analysis
    Date: 2022–04
  7. By: Zamparelli, Luca
    Abstract: This paper combines induced innovation and endogenous growth to investigate both the relation between the wage share and labor productivity growth and the long-run determinants of the wage share. We assume that myopic competitive firms choose the size and direction of technical change to maximize the growth rate of profits. We first prove that the optimal choice of labor productivity growth may be either a positive or a negative function of the wage share, depending on specific restrictions on the innovation technology. Next, by embedding the microeconomic problem into a Classical growth model, we show that a rise in the saving rate may reduce the steady state wage share. Both results conflict with the standard findings of the induced innovation literature, where labor productivity growth is always a positive function of the wage share and where the steady state labor share is independent of the saving rate.
    Keywords: Labor productivity growth, Induced innovation, wage share
    JEL: O30 O40
    Date: 2022–04
  8. By: Nicola Pierri; Yannick Timmer
    Abstract: What are the implications of information technology (IT) in banking for financial stability? Data on US banks' IT equipment and the background of their executives reveals that higher pre-crisis IT adoption led to fewer non-performing loans and more lending during the global financial crisis. Empirical evidence indicates a direct role of IT adoption in strengthening bank resilience; this includes instrumental variable estimates exploiting the historical location of technical schools. Loan-level analysis shows that high-IT banks originated mortgages with better performance, indicating better borrower screening. No evidence points to offloading of low-quality loans, differences in business models, or enhanced monitoring.
    Keywords: Technology; Financial Stability; IT Adoption; Non-Performing Loans; Screening
    JEL: D82 D83 E44 G14 G21 O30
    Date: 2022–04–13
  9. By: ADACHI Yusuke; OGAWA Hikaru; TSUBUKU Masafumi
    Abstract: Is there a difference in resilience to crises between urban and rural areas? By using microdata of establishments in the manufacturing industry in Japan from 2007 to 2014, this study estimated how the productivity distribution of establishments in a region changed during two crises caused by different factors: the Global Financial Crisis of 2008 and the Great East Japan Earthquake in 2011. The results indicate the followings. (i) Although establishments in urban areas experienced a larger leftward shift in the productivity distribution than those in rural areas in both crises, their capacity to recover from crises was shown to be greater. (ii) There are several rural areas in which the productivity distribution did not change significantly as a result of crises, where productivity improvement had already stagnated. (iii) In a few rural areas, the distribution of productivity moved to the left during the crises and did not recover afterward, shifting to a different growth path compared to before the crises.
    Date: 2022–04
  10. By: C.S.C Sekhar; Namrata Thapa (Institute of Economic Growth, Delhi)
    Abstract: The gap between the incomes of agricultural workers vis-a-vis non-agricultural workers in India has widened since the 1990s and improving farmers’ income has emerged as the key policy focus in recent times. In realizing this objective, functioning of the markets is very critical as market imperfections can increase the production and transaction costs of farmers and can have a crucial bearing on farm income. The present study, based on primary data, attempts to explore imperfections (if any) in important markets viz. output, input, factor and credit markets. The study also takes into account the asset base, skill endowments, coping mechanisms of farmers in the face of economic hardships and their social capital. Some of the important government programs have also been analyzed. The study was conducted in four states – Bihar, Gujarat, Madhya Pradesh and Punjab. Based on multi-stage sampling methodology, 1800 households spread over 45 villages and 21 districts were surveyed across four states. Tabular analysis has been complemented by an econometric analysis using data at the household level. The results show a strong inverse relation between land productivity and farm size and this was almost entirely driven by an intensive use of family labour on smaller farms. There was little evidence of differences in intensity of use of any other factor or input. This underlines the prevalence of imperfections mainly in the land and labour markets. The per capita income increased with the farm size though, underlining the positive impact on income of better access to technology and credit of larger farmers.
    Keywords: market imperfections, farm profitability, farmers’ income, small and marginal farmers
    Date: 2021–09
  11. By: Thomas Sampson
    Abstract: Firm-to-firm relationships in global value chains create opportunities for North-South technology diffusion. This paper studies technology transfer in value chains when contracts are incomplete and input production technologies are imperfectly excludable. The paper introduces a new taxonomy of value chains based on whether or not the headquarters firm benefits from imitation of its supplier’s technology. In inclusive value chains, where imitation is beneficial, the headquarters firm promotes technology diffusion. By contrast, in exclusive value chains headquarters seeks to limit supplier imitation. The paper analyzes how this distinction affects the returns to offshoring, the welfare effects of technical change and the social efficiency of knowledge sharing. Weaker intellectual property rights over input production technologies raise welfare when value chains are inclusive, but have the opposite effect under exclusive value chains.
    Keywords: technology transfer, global value chains, incomplete contracts, intellectual property rights, imitation
    JEL: D23 F10 F23 O34
    Date: 2022
  12. By: Emmanuel Paroissien (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Laure Latruffe (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Laurent Piet (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This article investigates the effects of economic performance and neighbours' characteristics on farmers' exit behaviour before retirement age. Using a unique set of social security data describing all French farmers under 50 over the years 2004–2017, we explore how these effects depend on farmers' characteristics and how they stand relative to their neighbours. Our probit estimations reveal that younger farmers and farmers operating smaller farms are more sensitive to their own and neighbours' performance than other farmers. Allowing for an asymmetric comparison effect between farmers and their neighbours, we uncover a nonlinear influence of own and neighbours' profit and size.
    Keywords: Neighbours,Performance,Farms,Exit,Heterogeneity
    Date: 2021
  13. By: Verzulli, R.;; Lippi Bruni, M.;
    Abstract: Pre-surgery waiting times are viewed as a process indicator of the quality of care for hip fracture surgeries. International clinical guidelines recommend that these treatments are performed within two days after hospitalisation. In year 2011, the Italy’s EmiliaRomagna region incentivised hospitals to achieve the target of two days for pre-surgery waiting times, by allowing the chief executives of Local Health Authorities and hospital Trusts to receive greater rewards if they managed to achieve a higher proportion of hip fracture patients treated within the threshold. We analyse the effect of this policy by applying a difference-in-differences estimation strategy on patient-level data between 2007 and 2016. We find that the introduction of managerial incentives reduced hip fracture surgery delays with differences between the treated and control groups increasing over time. There is also evidence of a convergence in the pre-operative waiting times across hospitals, with those experiencing longer surgery delays in the pre-policy period achieving the greatest reductions after policy implementation. Finally, our findings lend support to the hypothesis that hospitals reacted to the policy by targeting patients with less severe health conditions as recorded at the time of hospital admission.
    Keywords: pre-surgery waiting times; public hospitals; managerial incentives;
    JEL: I11
    Date: 2022–04
  14. By: Sonali Madhusmita Mohapatra (Institute of Economic Growth, Delhi)
    Abstract: This paper makes an attempt to explore the export performance and its determinants of labour and capital intensive industries of Indian manufacturing sector for the period of 2004 to 2019. The paper found that the labour-intensive industries are more export-oriented than capital intensive industries. Foreign share, research and development and real effective exchange rate have a positive relationship with the export performance of most of the industries classified under both labour and capital-intensive industry groups. On the other hand, the inverted U shape relation has been found between firm size and export performance. From the policy point of view, the paper suggests that developing export policies for certain industries could help to protect or uphold the export performance of manufacturing sector.
    Keywords: export performance, manufacturing industries, capital-intensive, labour-intensive,foreign share, research and development, size
    Date: 2021–10
  15. By: Abdoul-Akim Wandaogo (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique, UTS - Université Thomas Sankara)
    Date: 2022–03–08

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