nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2022‒06‒27
ten papers chosen by

  1. A Homothetic Data Generated Technology By Antonio Peyrache
  2. Demography, growth and robots in advanced and emerging economies By Matteo Lanzafame
  3. Trade-offs between economic, environmental and social sustainability on farms using a latent class frontier efficiency model: Evidence for Spanish crop farms By Amer Ait Sidhoum; K. Hervé Dakpo; Laure Latruffe
  4. Stochastic Frontier Analysis for Healthcare, with Illustrations in R By Robin C. Sickles; Zhichao Wang; Valentin Zelenyuk
  5. Further Improvements of Finite Sample Approximation of Central Limit Theorems for Envelopment Estimators By Léopold Simar; Valentin Zelenyuk; Shirong Zhao
  6. Proportional Incremental Cost Probability Functions and their Frontiers By Fève, Frédérique; Florens, Jean-Pierre; Simar, Léopold
  7. Accounting for variety By Winkler, Julian
  9. Technological change and domestic outsourcing By Antonin Bergeaud; Clement Malgouyres; Clement Mazet-Sonilhac; Sara Signorelli
  10. Do funds for more teachers improve student outcomes? By Nicolai T. Borgen; Lars J. Kirkebøen; Andreas Kotsadam; Oddbjørn Raaum

  1. By: Antonio Peyrache (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia)
    Abstract: In this paper I propose a method for constructing an enlargement of a variable returns to scale (VRS) data generated production technology that will satisfy homotheticity. The method can be used both with convex and non-convex technologies and both in the single output and multiple output setting. The method is computationally fast, therefore it provides a tool that can be used on large datasets. An empirical illustration is provided based on a dataset of Italian courts of justice
    Keywords: Input Homotheticity, Output Homotheticity, DEA, FDH, Efficiency
    JEL: Q54 Q56
    Date: 2022–04
  2. By: Matteo Lanzafame
    Abstract: This paper provides estimates of the impact of demographic change on labor productivity growth, relying on annual data over 1961-2018 for a panel of 90 advanced and emerging economies. We find that increases in both the young and old population shares have significantly negative effects on labor productivity growth, working via various channels - including physical and human capital accumulation. Splitting the analysis for advanced and emerging economies shows that population ageing has a greater effect on emerging economies than on advanced economies. Extending the benchmark model to include a proxy for the robotization of production, we find evidence indicating that automation reduces the negative effects of unfavorable demographic change - in particular, population aging - on labor productivity growth.
    Keywords: Demographic change; labor productivity; robots.
    JEL: C33 J11 O40
    Date: 2022–03–03
  3. By: Amer Ait Sidhoum; K. Hervé Dakpo; Laure Latruffe (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article studies trade-offs of farms in terms of economic sustainability (proxied here by technical efficiency), environmental sustainability (proxied here by farmers' commitment towards the environment) and social sustainability (proxied here by farmers' contribution to on farm well-being and communities' well-being). We use the latent class stochastic frontier model and create classes based on three separating variables, representing farms' environmental sustainability and social sustainability. The application to a sample of Spanish crop farms shows that more environmentally sustainable farms are likely to have lower levels of technical efficiency. However, improvements in social concerns, both towards own farm and the larger community, may lead to improved technical efficiency levels. In general, our study provides evidence of trade-offs for farms between economic sustainability and environmental sustainability, but also between environmental sustainability and social sustainability.
    Keywords: Sustainable agriculture,Sustainability science,Agricultural economics,Farms,Crops,Agricultural workers,Pesticides,Agriculture
    Date: 2022–01–10
  4. By: Robin C. Sickles (Department of Economics, Rice University, Houston, TX 77251-1892, USA); Zhichao Wang (School of Economics, University of Queensland, Brisbane, Qld 4072, Australia); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia)
    Abstract: In this chapter, we provide a brief overview of the stochastic frontier analysis (SFA) in the context of analysing healthcare, with a focus on hospitals, where it has received most attention. We start with the classical SFA model of Aigner, Lovell and Schmidt (1977) and then consider many of its popular extensions and generalizations in both cross-sectional and panel data (mainly published in Journal of Econometrics, Journal of Business & Economic Statistics and Journal of Productivity Analysis). We also briefly discuss semi-parametric and non-parametric generalizations, spatial frontiers, and Bayesian SFA. Whenever possible, we refer the readers to various applications of these general methods to healthcare, and for hospitals in particular. Finally, we also illustrate some of these methods for real data on public hospitals in Queensland, Australia, as well as provide practical guidance and references for their computational implementations via R.
    Keywords: Stochastic frontier analysis, R, healthcare, hospital, Queensland
    Date: 2022–05
  5. By: Léopold Simar (Institut de Statistique, Biostatistique et Sciences Actuarielles, Université Catholique de Louvain, Voie du Roman Pays 20, B1348 Louvain-la-Neuve, Belgium); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia); Shirong Zhao (School of Finance, Dongbei University of Finance and Economics, Dalian, Liaoning 116025)
    Abstract: nA simple yet easy to implement method is proposed to further improve the finite sample approximation of the recently developed central limit theorems for aggregates of envelopment estimators. Focusing on the simple mean efficiency, we propose using the bias-corrected individual efficiency estimate to improve the variance estimator. The extensive Monte-Carlo experiments confirm that, for relatively small sample sizes (≤ 100), with both low dimensions and especially for high dimensions, our new method combined with the data sharpening method generally provides better ‘coverage’ (of the true values by the estimated confidence intervals) than the previously developed approaches.
    Keywords: Efficiency, Non-parametric Efficiency Estimators, Data Envelopment Analysis, Free Disposal Hull
    JEL: C1 C3
    Date: 2022–04
  6. By: Fève, Frédérique; Florens, Jean-Pierre; Simar, Léopold (Université catholique de Louvain, LIDAM/ISBA, Belgium)
    Abstract: The econometric analysis of cost functions is based on the analysis of the condi- tional distribution of the cost Y given the level of the outputs X ∈ Rp+ and given a set of environment variables Z ∈ Rd. The model basically describes the conditional distribution of Y given X ≥ x and Z = z. In many applications, the dimension of Z is naturally large and a fully nonparametric specification of the model is limited by the curse of the dimensionality. Most of the approaches so far are based on two-stage estimations when the frontier level does not depend on the value of Z. But even in the case of separability of the frontier, the estimation procedure suffers from several prob- lems, mainly due to the inherent bias of the estimated efficiency scores and the poor rates of convergence of the frontier estimates. In this paper we suggest an alternative semi-parametric model which avoids the drawbacks of the two-stage methods. It is based on a class of model called the Proportional Incremental Cost Functions (PICF), adapted to our setup from the Cox proportional hazard models extensively used in survival analysis for durations models. We define the PICF model, then we examine its properties and propose a semi-parametric estimation. By this way of modeling, we avoid the first stage nonparametric estimation of the frontier and avoid the curse of dimensionality keeping the parametric √n rates of convergence for the parameters of interest. We are also able to derive √n-consistent estimator of the conditional order-m robust frontiers (which, by contrast to the full frontier, may depend on Z) and we prove the Gaussian asymptotic properties of the resulting estimators. We illustrate the flexibility and the power of the procedure by some simulated examples and also with some real data sets.
    Keywords: Cost efficiency ; Nonparametric robust frontier ; Proportional hazard model ; Environmental variables
    JEL: C10 C14 C51 D22
    Date: 2022–05–01
  7. By: Winkler, Julian
    Abstract: I introduce a general method to account for the distribution of underlying components (variety) of an aggregate quantity, using the notion of entropy. This accounting decomposition enables a number of insightful applications for index numbers in economics. The cross-entropy of GDP with respect to a benchmark captures the change in its distribution, and thus how well this benchmark matches data for price and volume indices across time. This 'error' changes demonstrably over time. Accounting of variety also lends itself to an decomposition of labour productivity growth by a technology component (how many more `average' goods are produced per unit of labor?), an allocation component (does the distribution of labor inputs converge to the distribution of outputs?), and cost disease (does the distribution of expenditures diverge from the distribution of outputs?).
    Keywords: National accounting, beyond GDP, entropy, misallocation
    JEL: E01 O47
    Date: 2022–05–24
  8. By: Abraham Assefa; Darya Lapitskaya; Lenno Uusküla
    Abstract: The paper studies the effects of technology shocks on the creation and destruction of firms. Using US data and a VAR model the paper finds Schumpeterian creative destruction for investment-specific technology shocks. A positive investment-specific technology shock increases the number of firms opening, but also leads to a higher number of firms closing. In contrast, labour-neutral technology shocks also benefit old firms. An increase in overall productivity leads to an increase in the number of new firms and a drop in the number of failures. Both margins contribute to an increase in the number of firms in the economy. A medium-scale DSGE model with endogenous entry and exit that is that is augmented with additional features is able to capture these stylised facts.
    Keywords: VAR, DSGE, Firm dynamics, Productivity, Firm turnover, Technology shocks, Investment specific technology shocks
    Date: 2022
  9. By: Antonin Bergeaud; Clement Malgouyres; Clement Mazet-Sonilhac; Sara Signorelli
    Abstract: Domestic outsourcing has grown substantially in developed countries over the past two decades. This paper addresses the question of the technological drivers of this phenomenon by studying the impact of the staggered diffusion of broadband internet in France during the 2000s. Our results confirm that broadband technology increases firm productivity and the relative demand for high-skill workers. Further, we show that broad-band internet led firms to outsource some non-core occupations to service contractors, both in the low and high-skill segments. In both cases, we find that employment related to these occupations became increasingly concentrated in firms specializing in these activities, and was less likely to be performed in-house within firms specialized in other activities. As a result, after the arrival of broadband internet, establishments become increasingly homogeneous in their occupational composition. Finally, we provide suggestive evidence that high-skill workers experience salary gains from being outsourced, while low-skill workers lose out.
    Keywords: broadband, firm organization, labor market, outsourcing
    Date: 2021–07–28
  10. By: Nicolai T. Borgen; Lars J. Kirkebøen (Statistics Norway); Andreas Kotsadam; Oddbjørn Raaum
    Abstract: We investigate the effects of a large-scale Norwegian reform that provided extra teachers to 166 lower secondary schools with relatively high student-teacher ratios and low average grades. We exploit these two margins using a regression discontinuity setup and find that the reform reduced the student-teacher ratio by around 10% (from a base level of 22 students per teacher), with no crowding out of other school resources or parental support. However, the reform did not improve test scores and longer-term academic outcomes, and we can reject even small positive effects. We do find that the reform improved the school environment from the students’ perspective, but with the largest impact on aspects most weakly associated with better academic outcomes.
    Keywords: Student-teacher-ratio; class size; test scores; non-cognitive skills; RDD
    JEL: J24 I2
    Date: 2022–06

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