nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2023‒05‒08
eight papers chosen by

  1. Canadian Productivity Growth: Stuck in the Oil Sands By Oliver Loertscher; Pau S. Pujolas
  2. Inference for Aggregate Efficiency: Theory and Guidelines for Practitioners By Léopold Simar; Valentin Zelenyuk; Shirong Zhao
  3. The Contribution of Digital Firms to Productivity Growth in the Manufacturing Sector: A Decomposition Approach By Simon Bruhn; Johanna Deperi
  4. Robots at work: new evidence with recent data By Almeida, Derick; Sequeira, Tiago
  5. A New Production Function Approach By Samidh Pal
  6. A Hybrid Mode of Production, Transaction, and Economic Growth: Implication of Digitalization By Mandal, Biswajit; Roy Chakraborty, Labani; Sanyal, Alapan
  7. Renewal of Companies Through Product Switching By Kuosmanen, Natalia; Valmari, Nelli
  8. Carbon costs and industrial firm performance: Evidence from international microdata By Arjan Trinks; Erik Hille

  1. By: Oliver Loertscher; Pau S. Pujolas
    Abstract: We study the behaviour of Canadian total factor productivity growth over the past 60 years. We find that the observed stagnation during the last 20 years is entirely accounted for by the Oil sector. Higher oil prices made capital-intensive sources of oil like the oil sands viable to extract on a commercial scale. However, the greater input required per barrel of oil slowed productivity growth. Comparing Canadian TFP growth to that of the United States reinforces these results. However, our result should not be interpreted to carry any welfare implications.
    Keywords: Canadian Productivity Stagnation; Oil Sector; TFP
    JEL: D24 E01 O47 O51
    Date: 2023–04
  2. 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: We expand the recently developed framework for the inference for aggregate efficiency, by extending the existing theory and providing guidelines for practitioners. In particular, we develop the central limit theorems (CLTs) for aggregate input-oriented efficiency, analogous to the output-oriented framework established by Simar and Zelenyuk (2018). To further improve the finite sample performance of the developed CLTs, we propose a simple yet easy to implement method through using the biascorrected individual efficiency estimate to improve the variance estimator. The extensive Monte-Carlo experiments confirmed the developed CLTs for aggregate inputoriented efficiency and also confirmed the better performance of our proposed method in the finite sample sizes. Finally, we use two well-known empirical data sets to illustrate the differences across the existing methods to facilitate the use by practitioners.
    Keywords: Data Envelopment Analysis, Efficiency, Non-parametric Efficiency Estimators, Free Disposal Hull, Aggregate Efficiency
    JEL: C1 C3
    Date: 2023–03
  3. By: Simon Bruhn (Ilmenau University of Technology, Ilmenau, Germany); Johanna Deperi (Universita degli Studi di Brescia, Italy; Université Côte d'Azur, CNRS, GREDEG, France)
    Abstract: We show that digital and non-digital firms differ significantly with respect to their contribution to productivity growth. Conducting a decomposition analysis on panel data of publicly listed U.S. manufacturing firms covering the 1990-2015 period, we demonstrate that (i) firmlevel productivity improvements of digital firms consistently exceed those of non-digital firms; (ii) the market selection process works more efficiently for digital firms; and (iii) the negative correlation between productivity changes and changes in market shares is decisively less pronounced for digital than for non-digital firms. We show that these observed differences in productivity growth can be linked to the idiosyncratic characteristics of digital firms, namely the profound exploitation of digital technologies, the scalability of digital business models and the complementarity of digital and labor investments.
    Keywords: Digital firms, industry dynamics, productivity growth, decomposition, labor reallocation
    JEL: E24 J24 L11 L25 O33 O47
    Date: 2022–12
  4. By: Almeida, Derick; Sequeira, Tiago
    Abstract: We reassess the relationship between robotization and the growth in labor productivity with more recent data. We discover that the effect of robot density in the growth productivity substantially decreased in the post-2008 period. In this period, the lower positive effect of robot density in the growth of labor productivity is less dependent on the increase in value added. The data analysis dismisses any positive effect of robotization on hours worked. Results are confirmed by several robustness checks, cross-sectional (and panel-data) IV and quantile regression analysis. By means of the quantile regression analysis, we learn that the effect of robots on labor productivity is stronger for low productivity sectors and that in the most recent period, the effect of robotization felt significantly throughout the distribution. This highlights one of the possible sources of stagnation in the era of robotization and have implication both for labor market and R&D policies.
    Keywords: New General Purpose Technologies, Robotization, Labor Productivity, Productivity Growth, Stagnation
    JEL: E23 J23 O30
    Date: 2023
  5. By: Samidh Pal
    Abstract: This paper presents a new nested production function that is specifically designed for analyzing capital and labor intensity of manufacturing industries in developing and developed regions. The paper provides a rigorous theoretical foundation for this production function, as well as an empirical analysis of its performance in a sample of industries. The analysis shows that the production function can be used to accurately estimate the level of capital and labor intensity in industries, as well as to analyze the capacity utilization of these industries.
    Date: 2023–03
  6. By: Mandal, Biswajit; Roy Chakraborty, Labani; Sanyal, Alapan
    Abstract: This essay attempts to build a simple theoretical model of optimization to decipher the effect of digitalization of a part of the entire production structure which we call here trading or transaction or marketing. In the basic model we use traditional Cobb -Douglas production function to argue that a shift from offline to online may induce increase in profit and subsequent economic growth. However, the effects are not uniform implying that factor-input ratio or factor-intensity of the trading activity has a role to play in this context. We also find that night time utilization due to digitalization further strengthens our results. We then extend the basic model for a CES production function. And it has been observed there that in CES – case we have similar results but the channels are a little different for that both revenue and cost have similar consequences of digitalization. Nevertheless, the essence of the basic results holds true even in a more generalized case.
    Keywords: Digitalization, Selling, Output, Profit, Growth
    JEL: D00 D23 D24 D3 O14 O40
    Date: 2023–04
  7. By: Kuosmanen, Natalia; Valmari, Nelli
    Abstract: Abstract The past few decades have witnessed a slowdown in productivity growth in many advanced economies, including Finland. Against this backdrop, this study investigates product switching in Finnish manufacturing firms during the period of 2009–2019. The findings indicate a growing trend towards specialization, with more firms focusing on a single product. In general, product diversity has decreased over time. Multi-product firms and those with diverse output tend to be larger in terms of value added, sales, and employment. Additionally, these firms are also more likely to export their products compared to single-product firms. While single-product firms outperform multi-product firms in productivity, the study shows that product diversity is positively related to productivity. Furthermore, the study demonstrates that there is a positive relationship between product scope expansion and contraction and an increase in firm size, as compared to firms where product scopes remain unchanged. These findings suggest that product switching is closely related to the economic outcomes of Finnish manufacturing firms.
    Keywords: Manufacturing firms, Multi-product firms, Product switching
    JEL: D22 D24 L11 L25 O14
    Date: 2023–04–21
  8. By: Arjan Trinks (CPB Netherlands Bureau for Economic Policy Analysis); Erik Hille (HHL Leipzig Graduate School of Management)
    Abstract: Entrepreneurs seem to be adapting their business operations to climate policy, instead of relocating their business to countries without or with less stringent climate policies. There is little to no evidence that climate policy has depressed the profit, productivity or turnover of an average industrial firm. This follows from a CPB study into the effect of carbon costs for approximately 3 million firms in 32 countries between 2000 and 2019.
    JEL: D22 H23 Q41 Q48 Q52 Q58
    Date: 2023–04

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