nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2022‒05‒30
fifteen papers chosen by

  1. India’s Banks: Lending to Productive Firms? By Mr. Divya Kirti; Soledad Martinez Peria; Siddharth George; Rajesh Vijayaraghavan
  2. Does Government Spending Efficiency Improve Fiscal Sustainability? By António Afonso; José Alves
  3. A New Macroeconomic Measure of Human Capital Exploiting PISA and PIAAC: Linking Education Policies to Productivity By Balazs Egert; Christine de la Maisonneuve; David Turner
  4. Efficiency Assessment of Maternal health services in the Aspirational Districts of EAG states in India: A Data Envelopment Analysis Approach By Suresh Sharma; Vandana Sharma
  5. Towards an explanation of a declining trend in capacity utilisation in the US economy By Santiago J. Gahn
  6. Stylized facts on the evolution of profit rates in the US: Evidence from firm-level data By Leila Davis; Joao de Souza
  7. Roles of public expenditures and public investments on the demand and productivity of agricultural inputs/services: Some insights from Nigeria By Takeshima, Hiroyuki; Edeh, Hyacinth; Andam, Kwaw S.
  8. The economic performance of transitional and non-transitional organic dairy farms: A panel data econometric approach in Brittany By Elodie Letort; Aude Ridier
  9. The Structural and Productivity Effects of Infrastructure Provision in Developed and Developing Countries By Orea, Luis; José A. Pérez-Méndez; Álvarez, Inmaculada C.
  10. Multiproduct Mergers and the Product Mix in Domestic and Foreign Markets By Jackie M.L. Chan; Michael Irlacher; Michael Koch
  11. Productivity By John Van Reenen
  12. Measuring Firm Activity from Outer Space By Katarzyna Anna Bilicka; André Seidel
  13. What drives the risk of European banks during crises? New evidence and insights By Ion Lapteacru
  14. A Neural Network Approach to the Environmental Kuznets Curve By Mikkel Bennedsen; Eric Hillebrand; Sebastian Jensen
  15. Employee Relations Practices and Firm performance: A Conceptual Model Proposal By Abdeljalil Miliani; Aziz El Khazzar; Imad Lhassan

  1. By: Mr. Divya Kirti; Soledad Martinez Peria; Siddharth George; Rajesh Vijayaraghavan
    Abstract: Capital misallocation is widely thought to be an important factor underpinning productivity and income gaps between advanced and emerging economies. This paper studies how well Indian banks allocate capital across firms with varying levels of productivity. The analysis reveals that the link between productivity and bank credit growth is weaker for firms with significant ties to public sector banks, especially in years when public sector banks represent a large share of new credit. Large flows of credit to unproductive firms represent important missed growth opportunities for more productive firms. These results suggest that measures to improve governance of public sector banks, potentially including privatization, would help reduce capital misallocation.
    Keywords: Productivity, bank lending, allocation of credit; capital misallocation; public sector bank; PSB dependence; PSB share; credit growth; Bank credit; Credit; Productivity; State-owned banks; Commercial banks; Global
    Date: 2022–04–29
  2. By: António Afonso; José Alves
    Abstract: We evaluate the impact of government spending efficiency on fiscal sustainability for a panel of 35 OECD countries during the period of 2007-2020. To answer our research question we first compute the magnitude of the responses of government revenues to changes in government spending. Next, we make use of so-called government spending efficiency scores, which efficiently indicate how governments can maintain their level of performance whilst using fewer inputs. Our results show that for the input efficiency scores obtained, countries’ fiscal balance and fiscal sustainability is directly improved by the use of less public resources, whilst maintaining the same level of output. In the cases of the output efficiency scores, the commitment of increased government outputs can lead to higher economic growth and the generation of additional government revenues, which also improves fiscal sustainability. Specifically, rationalising public expenditures without jeopardising the actual level of public goods and provision of services is a stronger determinant of fiscal sustainability, as well as for the improvement of the primary budget balance.
    Keywords: fiscal sustainability, spending efficiency, panel data
    JEL: C23 E21 E62 H50 H62
    Date: 2022
  3. By: Balazs Egert; Christine de la Maisonneuve; David Turner
    Abstract: This paper provides a new measure of human capital using PISA and PIAAC surveys, and mean years of schooling. The new measure is a cohort-weighted average of past PISA scores (representing the quality of education) of the working age population and the corresponding mean years of schooling (representing the quantity of education). In contrast to the existing literature, the relative weights of each component are not imposed or calibrated but directly estimated. The paper finds that the elasticity of the stock of human capital with respect to the quality of education is three to four times larger than for the quantity of education. The new measure has a strong link to productivity with the potential for productivity gains being much greater from improvements in the quality than quantity component of human capital. The magnitude of these potential gains in MFP is considerable but the effects materialise with long lags. The paper simulates the impact of a particular reform to education policy (pre-primary education) on human capital and productivity to demonstrate the usefulness of the new measure for policy analysis.
    Keywords: human capital, PISA, PIAAC, mean years of schooling, education policies, productivity, OECD countries
    JEL: E24 I20 I25 I26 I28
    Date: 2022
  4. By: Suresh Sharma; Vandana Sharma (Institute of Economic Growth, Delhi)
    Abstract: India has achieved a momentous leap in economic growth in last few decades despite that it exhibits two disparate spectrums. At one spectrum, there are rapidly urbanizing mega-cities and wealth expansion of prosperous communities, while on the other hand a large number of people are lacking essential healthcare accessibility, social services and securities. Even in the healthcare system this gap is prominent and is expanding due to virtual alienation of the lagging masses by the health system essentially dominated by the private sector. At this juncture the role of the Government in enabling a sustainable health infrastructure with suitable manpower becomes very critical for the lagging units. The study keeps this as a primary backdrop to throw light onto the performance of the aspirational districts in the Empowered Action Groups (EAG) states of the country. The study sought to assess the performance of these districts by drawing to sum up the efficiency of health outcomes across a range of input-output spectrum specifically targeted to maternal health. Strengthening maternal health services in aspirational districts has been a key concern for policymakers across India and the present study will establish the input lacunae hindering the achievement of the desired outputs. Data Envelopment Analysis (DEA) was used to analyze the efficiencies in terms of maternal health care for the aspirational districts. For the application of the said method, Institutional Deliveries (ID) was chosen as the output variable. Perusal of the DEA results reveal startling lags in terms of efficiencies observed in each of these districts with regards to maternal health. The results of this study showed that 84 percent of the aspirational districts in the EAG states are operating at less than optimal level and 42 of these obtained efficiency scores below 80 percent. This finding implies that the inefficient districts could significantly improve their efficiency by better resource management and allocation. The results suggested that the district of Gaya has the maximum scope to increase the output (Institutional Deliveries) from its current levels. The study has also quantified the peers for inefficient aspirational districts. Sirohi and Bokaro being the most cited peers certainly have put forth key takeaways in terms of strengthening maternal healthcare models for other aspirational districts.
    Keywords: Aspirational Districts, EAG states, Maternal Healthcare systems, Technical Efficiency, Data Envelopment Analysis
    Date: 2020–12
  5. By: Santiago J. Gahn
    Abstract: In this paper I analyse a declining trend of effective capacity utilisation in the United States. After identifying determinants of normal capacity utilisation in the literature, I find that this declining trend of the FRB’s capacity utilisation is also present in the output-capital ratio of the NBER-CES sectoral database since 1958. Results suggest that permanent changes on technical change (K/L), distribution (W/Y ) and output have transitory effects on the output-capital ratio, my proxy of effective capacity utilisation.
    Keywords: capacity utilisation, technical change, income distribution, Panel Structural VAR
    JEL: B50 E11 E22 O41 O47
    Date: 2022–05
  6. By: Leila Davis; Joao de Souza
    Abstract: This paper builds on the literature analyzing the aggregate profit rate to describe profitability across the distribution of firms in the post-1970 U.S. economy. While median profitability mirrors well-established aggregate patterns, including a falling rate of profit through the mid- 1980s and a recovery thereafter, it also masks a striking post-1980 widening of the distribution. In this paper, we document this widening of the profitability distribution, and identify factors driving changes in profit rates at each end of the distribution. At the top, we show that, while top-end operational profit rates (operational returns on tangible capital) soar after 1980, this rise disappears when accounting for financial and intangible assets. We show that firms with high operational profit rates hold large stocks of financial and intangible assets, relative to those with high total profitability, but that larger shares of these assets fail to translate into higher returns on all assets. Thus, once accounting for post-1980 changes in asset composition, growth in top profit rates disappears. At the bottom, profit rates of the least profitable quintile of U.S. nonfinancial corporations become systematically and increasingly negative after the early 1980s. We show that this decline reflects persistently negative average profitability in new post-1970 cohorts, rather than falling profitability within continuing firms.
    Keywords: Profit rates; intangible assets; cash; entry dynamics
    JEL: B5 L1
    Date: 2022–05
  7. By: Takeshima, Hiroyuki; Edeh, Hyacinth; Andam, Kwaw S.
    Abstract: Knowledge gaps remain as to how longer-term public investments (PI) such as agricultural research and development (R&D), and short-term interventions through other public expenditures in agriculture (PEA) complement each other in enhancing productivity and efficiency in the agrifood sector. This study attempts to partly fill this gap by using nationally representative panel household survey data, subnational PEA data, locations of national agricultural R&D, and various spatial agroclimatic data in Nigeria. The analyses generally indicate that marginal returns to agricultural inputs/services (fertilizer, agricultural mechanization, irrigation, extension, agricultural equipment, and family labor) often increase by PI that raise overall agroclimatic similarity (AS) (through R&D locations), as well as increase PEA-share by subnational governments. There is often complementarity between these PI and PEA, particularly for extension services, investment in agricultural equipment, irrigation, and in the northern part of the country. Promoting further adoptions of modern inputs/services, increasing PEA-share, and selecting PI for agricultural R&D given in-country variations in agroclimatic conditions can help raise agricultural profitability and incomes in Nigeria.
    Keywords: NIGERIA; WEST AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; public expenditure; public investment; farm inputs; services; productivity; mechanization; fertilizers; agricultural productivity; research; agricultural services; stratified difference-in-difference propensity-score matching
    Date: 2022
  8. By: Elodie Letort (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Aude Ridier (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - INSTITUT AGRO Agrocampus Ouest - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)
    Abstract: The economic performance of organic dairy farms, especially during the transitional period, is not consensus in economics studies, depending on the method used, the type of indicators, the nature and scale of the performance indicator, the geographical location. We compare the economic and financial performance of both conventional and organic dairy farms based on a mixed effect panel data model estimated on 1,016 farm micro-data collected between 2007and 2018 in two departments of Brittany. As in other studies, we find that the herd size influences positively all economic and financial indicators. Even if the growth in assets is heterogeneous among organic farms, it is higher than in other farms, which decreases their return on assets. Finally, even if they share the same objective of food autonomy and sparing variable expenses, dairy farms based on grassland production system do not exhibit the same performance dynamics as organic farms.
    Abstract: La littérature existante sur les performances des exploitations biologiques est abondante, mais il est encore difficile aujourd'hui d'identifier les résultats spécifiques de performance des exploitations biologiques dans la mesure où les échantillons sont très petits. Les résultats obtenus sont également très dépendants des régions et des secteurs agricoles étudiés, des indicateurs de performance économique et des méthodes utilisées. Dans ce papier, nous comparons les performances économiques et financières des exploitations laitières conventionnelles et biologiques à partir d'un modèle à effets mixtes estimé sur 1 016 micro-données collectées entre 2007 et 2018 dans le département d'Ille-et-Vilaine (Bretagne, France). Comme dans d'autres études, nous constatons que la taille du troupeau influence positivement tous les indicateurs économiques et financiers. Même si la croissance des actifs est hétérogène entre les exploitations biologiques, elle est plus élevée que dans les autres exploitations, ce qui diminue leur rendement sur actifs. Enfin, même si elles partagent le même objectif d'autonomie alimentaire et d'économie de charges variables, les exploitations laitières basées sur un système de production herbager ne présentent pas la même dynamique de performance que les exploitations biologiques.
    Keywords: Organic farms,Economical and financial performance,Mixed effect model,Agriculture biologique,Performances économiques et financières,Modèle à effets mixtes
    Date: 2022–04–08
  9. By: Orea, Luis; José A. Pérez-Méndez; Álvarez, Inmaculada C.
    Abstract: This paper evaluates the impact of the land consolidation (LC) processes that have taken place in Asturias over recent decades. These processes received European funding given that their purpose is to improve the economic activity in rural areas. As many parishes have been involved in two or more LC processes, we use a Difference-in-Difference (DiD) approach with heterogeneous treatment timings to examine the temporal evolution of parishes’ livestock production and farms. To our best knowledge, a similar DiD model has not been estimated as yet in the literature. We examine whether LC helps to reverse rural depopulation in Asturias. We find that parishes’ livestock production increases about 3% on average once one or more LC processes have been implemented, and that the LC processes have especially attenuated the decline in the number of farms in (coastal) parishes where dairy farms predominate. We do not find strong evidence regarding the effectiveness of the LC processes in securing the level of rural population, except in some of the parishes located in western Asturias.
    Date: 2021
  10. By: Jackie M.L. Chan; Michael Irlacher; Michael Koch
    Abstract: This paper investigates the effects of mergers on the product mix of multiproduct firms. Thus, we open the black box of post-merger efficiency improvements to reveal a new margin of adjustment along the product dimension. We analyze horizontal mergers in a theoretical model where oligopolistic firms employ a flexible manufacturing technology and allocate assets between differentiated varieties. After a merger, acquirers drop products from their consolidated domestic product portfolio and reallocate assets towards core varieties. We further demonstrate that such merger-induced efficiency gains imply greater activity in foreign markets. Using detailed Danish register data, we document novel facts regarding mergers and multiproduct firms and find empirical evidence strongly supporting the model’s predictions. Our results show that the number of domestic products of the post-merger acquirer falls relative to the sum of the premerger acquirer and target, that skewness of domestic sales rises towards core products, and that export activity increases.
    Keywords: multiproduct firms, horizontal mergers, flexible manufacturing, exports, product mix, event study
    JEL: F12 F14 G34 L22 L25
    Date: 2022
  11. By: John Van Reenen
    Abstract: Economics is the study of how to share out scarce resources. But it is also about how to make those resources less scarce by creating a bigger economic pie to share. The key to economic growth is increased productivity - producing more goods or services relative to the amount of money and work going in. Economists study how firms and countries can become more productive.
    Keywords: Productivity, Management, Growth, Innovation, R&D, Technology, Firms
    Date: 2022–03–03
  12. By: Katarzyna Anna Bilicka; André Seidel
    Abstract: To understand how global firm networks operate, we need consistent information on their activities, unbiased by their reporting choices. In this paper, we collect a novel dataset on the light that factories emit at night for a large sample of car manufacturing plants. We show that nightlight data can measure activity at such a granular level, using annual firm financial data and high-frequency data related to Covid-19 pandemic production shocks. We use this data to quantify the extent of misreported global operations of these car manufacturing firms and examine differences between sources of nightlight.
    Keywords: multinational firms, nightlight data, global firm networks
    JEL: H32 H26 F23
    Date: 2022
  13. By: Ion Lapteacru (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Based on an extensive dataset of 1,156 European banks over the 1995-2015 period, we aim to provide new insights on the determinants of European banks' risk-taking during crisis events, employing a novel asymmetric Z-score. Our results suggest that more capital, lower ratios of loans to deposits and of liquid assets to total assets and lower share of non-deposit and short-term funding in total funding are associated with lower bank risk and this relationship is stronger during the crises. Moreover, having low costs compared to their revenues reduces the risk of European banks in normal times and has the same impact during the crises. Being involved in non-interest-generating activities makes banks riskier. Finally, being large and having higher net interest margin make banks more stable, but this positive effect is diminished for the size and vanished for the profitability during crisis times. And some differences are observed between Western and Eastern European countries.
    Keywords: European banking,bank risk,financial crisis,Z-score
    Date: 2022–03–30
  14. By: Mikkel Bennedsen (Aarhus University and CREATES); Eric Hillebrand (Aarhus University and CREATES); Sebastian Jensen (Aarhus University and CREATES)
    Abstract: We investigate the relationship between per capita gross domestic product and per capita carbon dioxide emissions using national-level panel data for the period 1960-2018. We propose a novel semiparametric panel data methodology that combines country and time fixed effects with a nonparametric neural network regression component. Globally and for the regions OECD and Asia, we find evidence of an inverse U-shaped relationship, often referred to as an environmental Kuznets curve (EKC). For OECD, the EKC-shape disappears when using consumption-based emissions data, suggesting the EKC-shape observed for OECD is driven by emissions exports. For Asia, the EKC-shape becomes even more pronounced when using consumption-based emissions data and exhibits an earlier turning point. JEL classifcation: C14, C23, C45, C51, C52, C53 Key words: Territorial carbon dioxide emissions, Consumption-based carbon dioxide emissions, Environmental Kuznets curve, Climate econometrics, Panel data, Machine learning, Neural networks
    Date: 2022–05–24
  15. By: Abdeljalil Miliani (UAE - Université Abdelmalek Essaâdi); Aziz El Khazzar (UAE - Université Abdelmalek Essaâdi); Imad Lhassan (UAE - Université Abdelmalek Essaâdi)
    Abstract: Employee relations management has become an important topic in management sciences, for practitioners and theorists. Also, it's an aspect of human resource management that has an impact on the performance of SMEs and large firms in the 21st century due to increased competition, changing customer needs, technology and globalization in an ever-changing business environment. In the same context, global and local firms are challenged to build good relationships with their employees in order to improve their performance (financial and non-financial performance) in a changing business environment. Aspects of employee relations that can affect firm performance include employee engagement, employee expression, and employee involvement. When it comes to performance, this is a polysemous concept that is difficult to define. However, there are several researchers who have increasingly focused on the criteria for evaluating firm performance, which are based on the financial and non-financial conception of performance, and which have a relationship with social factors. This paper aims to shed original light on a subject that is still little addressed in management sciences. Our goal is to study the contribution of employee relations practices to firm performance. Through a critical and in-depth reading, we will be able to propose a new research model to explain the impact of employee relations practices on firm performance. The model developed states that employee relations practices indirectly influence the level of firm performance. Moreover, it shows that the variables related to human capital (job satisfaction), without forgetting justice at work (organizational variable) fill a central place and favor the contribution of employee relations to firm performance.
    Keywords: Firm performance,Job Satisfaction,Employee Relations,Organizational Justice
    Date: 2022

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