nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2023‒07‒10
fourteen papers chosen by

  1. Identification and Estimation of Production Function with Unobserved Heterogeneity By Hiroyuki Kasahara; Paul Schrimpf; Michio Suzuki
  2. Minimum Wages, Productivity, and Reallocation By Haelbig, Mirja; Mertens, Matthias; Müller, Steffen
  3. The Contribution of Reallocation to U.S. GDP Growth: Measurement Using Tiered Aggregation By Jon D. Samuels; Mun S. Ho
  4. Economic Aspects of Profit Maximization if Cost of Principal Raw Material Increases By Mohajan, Devajit; Mohajan, Haradhan
  5. Tracking Cultivated Assets in Measures of Capital By Rachel Soloveichik
  6. Various Problems Arise in Industrial Economics If Wage Rate Increases: A Study for Nonlinear Budget Constraint By Mohajan, Devajit; Mohajan, Haradhan
  7. The Impact of E-Training System on Employees’ Job Performance By Dareen Ahmed Farouk
  8. DYNAMICS OF GLOBAL AGRICULTURAL PRODUCTIVITY AND DEMOCRATIC GOVERNANCE STRUCTURE: LOOKING AT EFFECTS AND DIRECTIONS TO SUSTAINABLE FOOD SUPPLY By Nmadu, Job Nda; Mohammed, Usman S.; Nmadu, Yebosoko T.; Sallawu, Halima; Nmadu, Sokoyami B.; Ndanitsa, Mohammed A.; Yisa, Ezekiel S.; Baba, Kpotun M.; Amos, Taiwo T.; Jirgi, Abigail J.
  9. Effect of Information and Communication Technology on Financial Performance of Deposit Money Bank in Nigeria By Obasa, Rotimi Sunday Mr.; Gurowa, S. U
  10. Perfect So Far? Substitutability Between Wind & Solar and Dirty Electricity Generation By Anthony Wiskich
  11. Civil justice in Italy, length of proceedings, productivity of the courts and stability of judgments By Marialuisa Cugno; Silvia Giacomelli; Laura Malgieri; Sauro Mocetti; Giuliana Palumbo
  12. SME Failures Under Large Liquidity Shocks: An Application to the COVID-19 Crisis By Pierre-Olivier Gourinchas; Şebnem Kalemli-Özcan; Veronika Penciakova; Nicholas Sander
  13. Risk and rewards of residential energy efficiency By Bohorquez Correa, Santiago
  14. FDI and superstar spillovers: Evidence from firm-to-firm transactions By Mary Amiti; Cédric Duprez; Jozef Konings; John Van Reenen

  1. By: Hiroyuki Kasahara; Paul Schrimpf; Michio Suzuki
    Abstract: This paper examines the nonparametric identifiability of production functions, considering firm heterogeneity beyond Hicks-neutral technology terms. We propose a finite mixture model to account for unobserved heterogeneity in production technology and productivity growth processes. Our analysis demonstrates that the production function for each latent type can be nonparametrically identified using four periods of panel data, relying on assumptions similar to those employed in existing literature on production function and panel data identification. By analyzing Japanese plant-level panel data, we uncover significant disparities in estimated input elasticities and productivity growth processes among latent types within narrowly defined industries. We further show that neglecting unobserved heterogeneity in input elasticities may lead to substantial and systematic bias in the estimation of productivity growth.
    Date: 2023–05
  2. By: Haelbig, Mirja (IWH Halle); Mertens, Matthias (IWH Halle); Müller, Steffen (IWH Halle)
    Abstract: We study the productivity effect of the German national minimum wage by applying administrative firm data. At the firm level, we confirm positive effects on wages and negative employment effects and document higher productivity even net of output price increases. We find higher wages but no employment effects at the level of aggregate industry×region cells. The minimum wage increased aggregate productivity in manufacturing. We do not find that employment reallocation across firms contributed to these aggregate productivity gains, nor do we find improvements in allocative efficiency. Instead, the productivity gains from the minimum wage result from within-firm productivity improvements only.
    Keywords: minimum wage, firm productivity, output prices, factor reallocation
    JEL: L11 L25 J31 D24
    Date: 2023–05
  3. By: Jon D. Samuels; Mun S. Ho (Bureau of Economic Analysis)
    Abstract: Resources moving from less productive to more productive sectors can increase aggregate output without any underlying change in production technology, yet the impact of these reallocations is challenging to measure because it involves measuring unobserved counterfactual production where resources have not moved. We construct measures of counterfactual production by implementing an Industry-Level Production Account with a tiers structure. Aggregate gross domestic product (GDP) and total factor productivity growth constructed bottom-up from the micro- (industry) level captures the true data-generating process for the sources of growth. The counterfactual accounts employ restrictions that impose a constraint that reallocating outputs and inputs have no impact on aggregate production, so that the difference between the two measures captures the economic impact of reallocations. We find that reallocations contributed 0.30 percent per year on average out of total GDP growth of 2.39 percent per year from 1987–2018. Almost all of this can be accounted for as reallocations of value added within manufacturing (for example, to the computer producing sector from other manufacturing sectors) and across sectors to the information and trade sectors.
    JEL: E01
    Date: 2021–10
  4. By: Mohajan, Devajit; Mohajan, Haradhan
    Abstract: In this study sensitivity analysis of various inputs is discussed, when per unit cost of principal raw materials is increased. The organization has its main target of achieving maximum profit through the adjustment of various inputs and outputs in future production. In this study Cobb-Douglas production function is considered as a profit function to investigate sensitivity analysis during profit maximization procedures. In this article the method of Lagrange multiplier is applied to represent higher dimensional unconstrained problem from the lower dimensional constrained problem. Moreover, the determinant of the 6×6 bordered Hessian matrix and 6×6 Jacobian are applied for the augmentation of the sensitivity analysis efficiently.
    Keywords: Principal raw materials, Lagrange multiplier, profit maximization, sensitivity analysis
    JEL: C3 C51 C61 C67 I3 J3 J53 L6
    Date: 2023–03–20
  5. By: Rachel Soloveichik (Bureau of Economic Analysis)
    Abstract: Americans invested $72 billion in cultivated assets in 2019. By category, investment was: $7 billion in long-lived food animals, $2 billion in horses, $10 billion in farm plants, and $53 billion in landscaping plants. System of National Accounts 2008, the internationally agreed guidelines for national accounts, explicitly recommends that cultivated assets should be tracked in measures of capital (United Nations Statistics Division 2008, sec. 10.88–10.96). This recommendation has been widely accepted and most European Union countries currently track some cultivated assets in their measures of capital (Jager 2017). In addition, the U.S. agricultural productivity accounts have considered tracking cows in their measures of capital (Ball and Harper 1990). However, this recommendation is not currently implemented in either the U.S. National Economic Accounts (Bureau of Economic Analysis 2019) or the U.S. agricultural productivity accounts (Shumway et al. 2015). This paper explores how capitalizing those cultivated assets changes the U.S. National Economic Accounts from 1929 to 2019 and the production accounts from 1948 to 2019. First, real gross domestic product (GDP) growth before 1990 decreases slightly when cultivated farm assets are capitalized. Second, the 2000s housing bubble and bust appears more dramatic when cultivated landscaping is capitalized along with other real estate investment. Third, measured real estate sector productivity growth falls noticeably when cultivated landscaping is tracked as capital in the production accounts. This paper explores on how capitalizing cultivated biological resources might change economic statistics from 1929 to 2019. To start out, investment in cultivated farm assets grew slower than overall gross domestic product (GDP) before 1990. As a result, real GDP growth before 1990 decreases by 0.01 percentage point per year when cultivated farm assets are capitalized. Second, the housing bubble and bust during the 2000’s appears more dramatic when landscaping plants are capitalized along with other types of real estate investment. Third, measured real estate sector productivity growth falls noticeably when landscaping plants are tracked in the joint BEA-BLS production accounts.
    JEL: E01 O17 Q1
    Date: 2021–09
  6. By: Mohajan, Devajit; Mohajan, Haradhan
    Abstract: This study tries to discuss the economic effects of various inputs if the wage rate of a firm is increased. Cobb-Douglas production function, 6×6 bordered Hessian matrix, and 6×6 Jacobian are used here during the mathematical calculations to investigate economic predictions. Adjustment of various inputs and outputs in future production are essential for the profit maximization. Therefore, appropriate decisions can make the firm stronger to face the various challenges of the twenty first century. In the study profit maximization is considered with subject to the nonlinear budget constraint.
    Keywords: Profit maximization, nonlinear budget constraint, wage rate
    JEL: C3 D2 D24 D31 D5 D57 I3 J3 J53
    Date: 2023–04–02
  7. By: Dareen Ahmed Farouk (German University in Cairo, Egypt)
    Abstract: The development of information and communication technology has made e-training a vital function of human resource management within any organization, especially in recent years. Reliance on this type of training has increased to invest in human assets and help employees acquire new skills and knowledge, develop their current skills, increase their productivity and raise the quality of their performance in the work environment. The aim of this paper is to explore the impact of the E-Training System dimensions (Efficiency – Methods – Environment) on employee job performance. It is a quantitative study that uses an electronic questionnaire as a data collecting tool from a sample of working in private sector companies in the Egyptian market. The main findings demonstrated that the perceived E-Training dimensions has a positive impact on Employee Job performance. Moreover, it also showed that perceived E-Training efficiency is the most significant predictor for employee job performance, followed by the E-Training environment. However, there were no significant differences in employees’ perceptions of a-E-Training Efficiency b- E-Training Methods c- E-Training Environment, according to their gender, educational level, and age groups.
    Keywords: Human Recourses Management Practices (HRMP), E-Training, Job Satisfaction, Productivity, Job Performance
    Date: 2022–10
  8. By: Nmadu, Job Nda; Mohammed, Usman S.; Nmadu, Yebosoko T.; Sallawu, Halima; Nmadu, Sokoyami B.; Ndanitsa, Mohammed A.; Yisa, Ezekiel S.; Baba, Kpotun M.; Amos, Taiwo T.; Jirgi, Abigail J.
    Keywords: Research Methods/Statistical Methods, International Development, Productivity Analysis
    Date: 2023
  9. By: Obasa, Rotimi Sunday Mr. (DLK CLOTHING SIGNATURES LTD); Gurowa, S. U
    Abstract: This study investigated the impact of information and communication technology (ICT) on financial performance of deposit money banks (DMBs) in Nigerian. The research link the idea in ICT productivity literature to that of ICT financial performance by exploring the role of complementary investment and externalities on ICT financial performance relationship in a factor modelling framework. The study adopt an Ex-post-facto research design that is entrenched in post-positivist ontology. Data for the study is obtained from Central Bank of Nigeria (CBN) annual report or statistics bulletin for 16 years, i.e. 2005-2020, and annual report of 14 DMBs in Nigeria. Analyzing the data using iterative interactive fixed effect (IIFE) model reveals that complementary investment reduces the strong positive effect of POS, and reverse the weak negative effect of IB to become positive, while the strong negative effect of MB to becomes weak and positive. Externalities on the other hand increases the weak negative effect of ATM on financial performance. Therefore, the study recommended that banks co-invest more in complementary capital, such as learning to build the necessary organisation knowledge needed to benefit from ICT investment adequately. In addition, the bank should also co-innovate and re-organise its operational process and structure to withstand any eventual security challenges.
    Date: 2023–02–07
  10. By: Anthony Wiskich
    Abstract: Wind and solar are driving the clean transition in electricity: this paper uses panel data to investigate how these technologies substitute with dirty (fossil fuel) electricity generation. Production functions with a constant and a variable elasticity of substitution are estimated. Results suggest a higher elasticity of substitution than previous estimates, aligning with long-run analysis from electricity dispatch models and assumptions often made in economic models. Little evidence is found of the elasticity decreasing so far. However, the uptake of wind and solar decreases the utilisation rates of dirty capital.
    Keywords: elasticity of substitution, climate change, energy, electricity, production function
    JEL: O33 Q41 Q42 Q54 Q58
    Date: 2023–06
  11. By: Marialuisa Cugno (Ministry of Justice); Silvia Giacomelli (Bank of Italy); Laura Malgieri (Ministry of Justice); Sauro Mocetti (Bank of Italy); Giuliana Palumbo (Ministry of Justice)
    Abstract: Based on the new data available, the paper (i) provides a more detailed assessment of the performance of civil courts than in the past and (ii) examines the territorial gaps and the role of supply and demand factors in explaining the heterogeneities observed. The analysis confirms significant differences in the length of the proceedings, in particular between the South and the Center-North of Italy. The supply and demand factors considered account for more than half of these differences. Courts where proceedings last longer on average (and where there is a greater number of pending proceedings) are characterized by low productivity, in some cases, and, in others, by an imbalance between human resources and workflows, suggesting the need to tailor policy interventions to the different situations of the courts. Conversely, no differences are observed between these two macro regions in the appeal and reform rates of judgments and there is no correlation between these variables and the length of the proceedings, suggesting the absence of trade-offs between speed of proceedings and accuracy and stability of judgements.
    Keywords: civil justice, length of civil proceedings, appeal rate, litigation rate, productivity, human resources, digitalization, courts
    JEL: K4
    Date: 2022–10
  12. By: Pierre-Olivier Gourinchas; Şebnem Kalemli-Özcan; Veronika Penciakova; Nicholas Sander
    Abstract: We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization that introduces a financial friction that limits firms’ borrowing capacity to smooth temporary shocks to liquidity. In this framework, firm exit arises from the interaction between this financial friction and fluctuations in cash flow due to aggregate and sectoral changes in demand conditions, as well as more traditional shocks to productivity. To evaluate the implications of our model, we use firm-level data on small and medium-sized enterprises (SMEs) in 11 European countries. We confirm that our framework is consistent with official failure rates in 2017–2019, a period characterized by standard business cycle fluctuations in demand. To capture a large liquidity shock, we apply our framework to the COVID-19 crisis. We find that, in the absence of government support, SME failure rates would have increased by 6.01 percentage points, putting 3.1 percent of employment at risk. Our results are consistent with the premise that financial frictions lead to inefficient exit as, without government support, the firms failing due to COVID-19 have similar productivity and past growth to firms that survive the COVID-19 crisis.
    Keywords: Firm dynamics; International topics; Coronavirus disease (COVID-19)
    JEL: D22 E65 H81
    Date: 2023–06
  13. By: Bohorquez Correa, Santiago (Tilburg University, School of Economics and Management)
    Date: 2023
  14. By: Mary Amiti (Federal Reserve Bank of New York. 33 Liberty Street, New York, NY 10045); Cédric Duprez (National Bank of Belgium and University of Mons); Jozef Konings (Nazarbayev University Graduate School of Business and KULeuven); John Van Reenen (London School of Economics and MIT.)
    Abstract: Despite competition concerns over the increasing dominance of global corporations, many argue that productivity spillovers from multinationals to domestic firms justify pro-FDI policies. For the first time, we use firm-to-firm transaction data in a developed country to examine the impact of forming a new relationship with a multinational, and find a TFP increase of about 8% three or more years after the event. Sales to other buyers, trade and customer quality also increase. However, we also document that starting to supply other “superstar firms” such as those who heavily export or are very large also increases performance by similar amounts, even if the superstar is a non-multinational. Placebos on starting relationships with smaller firms and novel identification strategies relying solely on demand shocks to superstar firms support a causal interpretation. A model of technology transfer rationalizes these effects and also correctly predicts (i) falls in post-event markups; (ii) the type of firms who form superstar relationships and (iii) bigger treatment effects from superstars intensive in R&D, IT and/or human capital. In addition to productivity spillovers, we document the transmission of “relationship capabilities” and “dating agency” effects as the increase in new buyers is particularly strong within the superstar firm’s existing network. These results suggest an important role for raising productivity through the supply chains of superstar firms regardless of their multinational status.
    Keywords: Productivity, FDI, spillovers.
    JEL: F23 O30 F21
    Date: 2023–06

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