nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2023‒04‒17
fifteen papers chosen by

  1. Agricultural Productivity in Southern Cone Countries By Daniel Lema; Nicolás Gatti
  2. Policy Distortions and Aggregate Productivity with Endogenous Establishment-Level Productivity By Jose-Maria Da-Rocha; Diego Restuccia; Marina M. Tavares
  3. Measuring CO2 emission reduction potential using a cost approach By Kassoum Ayouba; Jean-Philippe Boussemart; Raluca Parvulescu
  4. Enhancing labour productivity by improving nutrition in Kenya: micro-econometric estimates for dynamic CGE model calibration By Ramos, Maria Priscila; Custodio, Estefania; Jiménez, Sofía; Sartori, Martina; Ferrari, Emanuele
  5. How does the regional presence of foreign-owned multinational enterprises affect local start-up performance By Grillitsch, Markus; Martynovich, Mikhail; Nilsson, Magnus; Schubert, Torben
  6. Labor Market Institutions, Productivity, and the Business Cycle: An Application to Italy By Josué Diwambuena; Raquel Fonseca; Stefan Schubert
  7. Racial Diversity and Team Performance: Evidence from the American Offshore Whaling Industry By Michele Baggio; Metin M. Cosgel
  8. Modeling Determinants of Private Banks Profitability in Ethiopia By mohammed, habib
  9. Estimating the Impact of the Minimum Energy Efficiency Standard on Property Prices By Sandi, Eleni
  10. Financial performance of dairy farms participating in Minnesota Dairy Initiative (MDI) over time By Weir, Rebecca; Hadrich, Joleen
  11. Does ICT access and usage reduce growth inefficiency in Sub-Saharan Africa? By Désiré Avom; Gilles Dufrénot; Sylvie Eyeffa
  12. Technology gaps, trade and income By Sampson, Thomas
  13. Board of Directors’ Networks, Gender, and Firm Performance in a Male-Dominated Industry: Evidence from U.S. Banking By Owen, Ann; Temesvary, Judit; Wei, Andrew
  14. Production Technology, Market Power, and the Decline of the Labor Share By Agustin Velasquez
  15. The effect of air pollution on US aggregate production By Avila Uribe, Antonio

  1. By: Daniel Lema; Nicolás Gatti
    Keywords: Agricultural productivity, efficiency, stochastic frontiers
    JEL: Q16 Q18
    Date: 2021–11
  2. By: Jose-Maria Da-Rocha; Diego Restuccia; Marina M. Tavares
    Abstract: What accounts for income per capita and total factor productivity (TFP) differences across countries? We study resource misallocation across heterogeneous production units in a general equilibrium model where establishment productivity and size are affected by policy distortions. We solve the model in closed form and show that policy distortions have a substantial negative effect on establishment productivity growth, average establishment size, and aggregate productivity. Calibrating a distorted benchmark economy to U.S. data, we find that empirically reasonable variations in distortions generate reductions in aggregate TFP of more than 24 percent while slightly increasing concentration in the establishment size distribution. If distortions in addition lower the exit rate of incumbent establishments, as supported by some empirical evidence, the aggregate TFP loss doubles to 48 percent.
    Keywords: distortions, misallocation, investment, productivity, establishment size.
    JEL: O11 O3 O41 O43 O5 E0 E13 C02 C61
    Date: 2023–03–31
  3. By: Kassoum Ayouba (Université Clermont Auvergne, AgroParisTech, INRAE, VetAgro Sup, UMR Territoires, F-63170, Aubière, France, 9 avenue Blaise Pascal, CS 20085. 63178 Aubière - France); Jean-Philippe Boussemart (Univ. Lille, CNRS, IESEG School of Management, UMR 9221 –LEM, F-59000, France. 3, rue de la Digue, 59000 Lille, France); Raluca Parvulescu (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 –LEM, F-59000, France. 3, rue de la Digue, 59000 Lille, France)
    Abstract: Departing from traditional approaches based on treating carbon dioxide (CO2) emissions as a bad output, thus relying on the weak disposability assumption, CO2 emissions are considered in this paper as a cost to minimize. We extend the Coelli et al. (2007) pollution cost approach preserving the materials balance condition by considering that peers are evaluated, besides their energy use, on their carbon intensity per total energy consumption. The proposed methodology is applied to estimate the extent to which a selection of 33 OECD and BRICS countries can reduce their CO2 emissions given their Gross Domestic Product and population over the period 2001-2019. Our results indicate that the period mean reduction potential for CO2 emissions of 53% (i.e., an efficiency level of 47%) can be decomposed into a 36% reduction in the energy intensity and a 27% decrease in the carbon intensity of energy (i.e., efficiency of 64% and respectively, 73%).
    Keywords: Carbon dioxide emissions, Emission-generating technologies, Pollution cost, Energy use, Activity model, Data envelopment analysis (DEA)
    JEL: Q52 Q40 D24 C61
    Date: 2023–03
  4. By: Ramos, Maria Priscila; Custodio, Estefania; Jiménez, Sofía; Sartori, Martina; Ferrari, Emanuele
    Abstract: Kenya is particularly concerned about the achievement of the Sustainable Development Goal #2 (SDG #2: zero hunger), and its associated consequences for society. Malnutrition in all its forms (stunting, wasting, micronutrient deficiencies and/or overweight/obesity) can compromise human development and economic growth through different pathways. In this context, it is possible to identify at least two pathways through which improving FS&N could enhance labour productivity. Improving the dietary nutrients intake (calories, macro and micronutrients) could allow for better (i) learning capacity and (ii) the reinforcement of health conditions. Besides, education and good health improve labour productivity. Thus, the aim of this paper is to provide insights about the linkages between FS&N indicators and labour productivity for dynamic pathways in a CGE framework, particularly modelling baseline’s drivers about L-productivity and growth. Moreover, the estimates would also allow performing food policy scenarios to get positive impacts over nutrition and health and thus, on economic growth. Our results show that, indeed, daily micronutrients (iron, zinc, calcium, vitamins B2 and A) intakes are significant and positive to explain labour productivity improvement (wage increase), as well as education, while disabilities and/or diseases impact negatively and significantly on labour performance. We also note that in the case of vitamins C and B12 the relation is negative when all the variables are included in the regression but positive when we consider them separately. All in all, results confirm the virtuous cycle between health, nutrition, education and labour productivity.
    Keywords: Food Security and Poverty, Labor and Human Capital
    Date: 2022
  5. By: Grillitsch, Markus (CIRCLE, Lund University); Martynovich, Mikhail (CIRCLE, Lund University); Nilsson, Magnus (CIRCLE, Lund University); Schubert, Torben (CIRCLE, Lund University)
    Abstract: This paper analyses how the presence of foreign-owned multinational enterprises (MNEs) affects the performance of start-ups in the same region. Focusing on the population of Swedish start-ups and MNEs between 2007 and 2015, we investigate the relationship between start-up productivity and regional share of MNE employment. We find effects that differ by sectoral belonging of start-ups and MNEs. Notably, while the effects of the local presence of foreign-owned MNEs are negative when start-ups and local MNEs belong to the same sector, they are positive for the local presence of MNEs in related and (to some weaker extent) unrelated sectors. Moreover, we find that as start-ups mature the effect of the local presence of foreign-owned MNEs on start-up productivity increases, irrespective of their sectoral belonging. We interpret this as evidence of age-dependent processes of learning, legitimacy building, and resource accumulaton allowing start-ups to reap the benefits while mitigating negative effects of MNE proximity. Interestingly, we show that the documented effects are more pronounced for service firms, particularly in the knowledge-intensive sectors.
    Keywords: Productivity; start-ups; MNE
    JEL: M13 M16 R11
    Date: 2023–03–27
  6. By: Josué Diwambuena; Raquel Fonseca; Stefan Schubert
    Abstract: This paper studies the effect of labor market institutions on the cyclicality of labor productivity and aggregate fluctuations in Italy. It uses a New Keynesian model with labor market frictions and labor effort when two wage bargaining settings (efficient Nash and right-to-manage) interact with three types of hiring costs. We focus on three sets of labor market deregulation modeled as a fall in wage rigidity, hiring costs, and the bargaining power of workers. We show that, when labor effort varies, reforms trigger procyclical productivity under efficient bargaining, and countercyclical productivity under right-to-manage bargaining. Reforms also have different effects on cyclical moments. Second, we estimate the model with Bayesian techniques and find that productivity is mainly driven by technology shocks.
    Keywords: Labor market institutions, labor productivity, business cycles, hiring costs, effort.
    JEL: E24 E32 C51 C52
    Date: 2023
  7. By: Michele Baggio (University of Connecticut); Metin M. Cosgel (University of Connecticut)
    Abstract: In this paper we contribute to the literature on diversity and team performance by exploiting unique data from the natural experiment of American offshore whaling industry during the period between 1807 and 1912. Teams are represented by the crew operating onboard of whaling vessels and performance is measured by the value of the output captured during voyage. Combining information from multiple data sources, we document the existence of a U-shaped relationship between racial diversity and team performance. The nonlinear effect was transmitted by conflicts and skill complementarity among the whalemen. Crews adapted to diversity over time, as the effect shifted from being negative to negligible and then positive between short, medium, and long term voyages.
    JEL: D24 J15 J24 L25 M14 N11 O47
    Date: 2023–03
  8. By: mohammed, habib
    Abstract: Profitability of financial institutions play a vital role in determining the effectiveness and efficiency of the financial system globally and it is dominated by the banking industry. These banks generates profits that results panel data that requires panel model to analyze and explore determinant factors associated with its profitability. The aim of this article to model determinants of private banks profitability in Ethiopia during 2012–2021 considering its dynamic nature. Return on assets, return on equity, and net interest margin were used as profitability indicators and analyzed using dynamic panel model estimation methods based on system generalized moment estimation techniques. The exploratory data analysis result showed the profitability; return on asset was seems stable while return on equity was decreased and net interest margin was increased with decreasing rate. The model specification result showed one-step system generalized moment method estimation was an appropriate estimation technique as model estimation result directs lagged profitability, capital adequacy, asset quality and branch of banks have positive significant effect on private banks profitability. Similarly inflation rate and economic growth rate have positively determine private banks profitability on macroeconomic side. Despite to this results liquidity was significant negative bank specific determinant of private banks profitability in Ethiopia. The study result recommends consideration on capital adequacy, asset quality, liquidity, branch of banks for the private banks profitability. In addition, this study will call upcoming research to include other financial determinants suggests such as credit risk and non-performing loan with improving the estimation method of panel autoregressive distributed lag models for modeling private banks profitability in Ethiopia.
    Keywords: Dynamic Panel Model, Ethiopia, Generalized Moment Method, Panel Data, Private Banks, Profitability
    JEL: C10
    Date: 2023–03–16
  9. By: Sandi, Eleni (University of Warwick)
    Abstract: The Minimum Energy Efficiency Standard (MEES) aims to improve the energy efficiency of privately rented properties in England and Wales. Previous literature identifies this policy intervention as a driver of transition risk as it devalues substandard real estate. This paper reveals that MEES also devalues neighbouring houses meant to be una↵ected by the policy, i.e. above-standard properties. The study leverages a dataset that combines energy efficiency and transaction data at the postcode level to capture this spatial externality. A concentration measure for sub-standard properties within a neighbourhood is constructed, which is applied to aggregate and property level analyses using a difference-in-difference specification. The aggregate analysis reveals that an incremental increase in the concentration of sub-standard housing within a postcode sector after introducing the standard leads to a 20.1% decrease in aggregate prices for above-standard houses. A repeated sales regression run on property-level data finds that an increase in concentration leads to a more plausible 4.03% decrease in prices for above-standard properties. These results imply potential problems for homeowners who may find themselves in negative equity due to the aggregate price drop, which may also negatively impact their pro-environmental investments
    Keywords: C43 ; Q54 ; Q58 ; R31 JEL classifications: Climate Policy ; Transition Risk ; House Prices ; Concentration Measure
    Date: 2023
  10. By: Weir, Rebecca; Hadrich, Joleen
    Keywords: Farm Management, Livestock Production/Industries
    Date: 2023–03
  11. By: Désiré Avom (Université de Yaoundé II); Gilles Dufrénot (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Sylvie Eyeffa (Université de Yaoundé II)
    Abstract: This paper investigates whether or not the access to and use of ICT can help African countries reduce their growth inefficiencies. Inefficiency is measured, on the one hand, by the gap between a country's growth rate and its own frontier, and on the other hand by the relative position of each country compared to the best achievers. We find that if countries were doing a better job of controlling corruption and improving citizen participation in politics, they would achieve higher growth efficiency performance by using ICT. When countries are compared with each other, considering the growth "frontier" as countries in the sample, then growth differentials are explained primarily by non-ICT factors of growth (human capital, schooling rates, capital growth rates, etc.). The role of ICT factors is secondary. But they contribute to growth to a greater extent for the best achievers (compared to the lowest and middle achievers) because they are better endowed with ICT factors than the others.
    Keywords: ICT, African countries, growth inefficiency, frontier, quantiles
    Date: 2023–03–01
  12. By: Sampson, Thomas
    Abstract: This paper quantifies the contribution of technology gaps to international income inequality. I develop an endogenous growth model where cross-country differences in R&D efficiency and cross-industry differences in innovation and adoption opportunities together determine equilibrium technology gaps, trade patterns and income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries. I calibrate R&D efficiency by country and innovation-dependence by industry using R&D, patent and bilateral trade data. Counterfactual analysis implies technology gaps account for one-quarter to one-third of nominal wage variation within the OECD.
    Keywords: technology gaps; development accounting; comparative advantage; innovation; technology diffusion; endogenous growth
    JEL: D21 D24 D31 F14 O31 O33 O47
    Date: 2023–02–01
  13. By: Owen, Ann; Temesvary, Judit; Wei, Andrew
    Abstract: Leadership roles in banking remain dominated by men; only about one in six bank board members is female. Connections among board members can improve firm performance, but women on boards are much less connected than men. In this paper, we study how gender relates to the role of connections: how do connected female versus male board members affect banks’ performance? Using IV techniques to account for the endogeneity of connections, we find that (1) better connected female (but not male) board members improve bank profitability and reduce earnings management; (2) connections of women on important board committees also improve performance – especially when the share of women on the board is relatively high (above the median).
    Keywords: bank boards; professional networks; gender diversity; instrumental variables
    JEL: G21 G34 J16
    Date: 2023–03
  14. By: Agustin Velasquez
    Abstract: The labor share has been declining in the United States, and especially so in manufacturing. This paper investigates the role of capital accumulation and market power in explaining this decline. I first estimate the production function of 21 manufacturing sectors along time series and including time-varying markups. The elasticities of substitution for most sectors are estimated below one, implying that capital deepening cannot explain the labor share decline. I then track the long-run evolution of the labor share using the estimated production technology parameters. I decompose aggregate labor share changes into sector re-weights, capital-labor substitution, and market power effects. I find that the increase in market power, as reported in recent studies, can account for, at least, 76 percent of the labor share decline in manufacturing. Absent the rise in market power, the labor share would have remained constant in the second half of the 20th century.
    Keywords: Labor share; elasticity of substitution; capital accumulation; market power; labor share decline; market power effects; capital-labor substitution; market power narrative; markup series; capital share; Manufacturing; Income
    Date: 2023–02–10
  15. By: Avila Uribe, Antonio
    Abstract: A growing literature has documented sizeable negative effects of air pollution on individuals’ health, labour market performance and human capital accumulation, all determinants of a country’s overall economic activity. So what are the effects of air pollution on aggregate economic production? To answer this, I study the effects of PM2.5 on county-level GDP, GDP per capita, and GDP per employee in the United States (2006-2018) by exploiting a detailed dataset of yearly air pollution exposure by county and a set of instrumental variables. In my main specification, I use exogenous year-to-year variation in wildfire-induced PM2.5 exposure from air trajectories simulations. Contrary to recent studies in China and the EU, which find large negative effects in all regions, my results show no effect for the US. However, these headline results mask spatial and temporal heterogeneity. Economically relevant negative effects appear to be present in rural areas during working days or when base levels or air pollution are above the median, and in the trade sector and educational services. The results are robust to various alternative specifications and alternative instruments previously used in the literature, such as thermal inversions or smoke plume polygons.
    Keywords: air pollution; GDP; productivity; US; wildfires
    JEL: R11 Q53 Q54 O40 O47 O51
    Date: 2023–03–14

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