nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2023‒08‒21
sixteen papers chosen by

  1. Productivity measurement - Reassessing the production function from micro to macro By Josh Martin; Rebecca Riley
  2. Gender and Productivity By Jill Rubery; Isabelle Bi
  3. Does Productivity Change at All in Swedish District Courts? Empirical Analysis Focusing on Horizontal Mergers By Xiaoqing Chen; Kristiaan Kerstens; Mike Tsionas
  4. Exploring the link between diversification strategy and economic performance in the Moroccan real estate sector: A Data Envelopment Analysis approach By Prof. Saadi, T
  5. Macroeconomic Perspectives on Productivity By David Jordan
  6. The impact of ICT adoption on productivity: Evidence from Portuguese firm-level data By João Amador; Cátia Silva
  7. How institutions shape the economic returns of public investment in European regions By Kerui Du; Luis Orea; Inmaculada C. Alvarez
  8. Learning by necessity: Government demand, capacity constraints, and productivity growth By Ethan Ilzetzki
  9. Impacts of ownership changes on emissions and industrial production: Evidence from Europe By Chlond, Bettina; Germeshausen, Robert
  10. Regional development and efficiency in Morocco: an empirical analysis By Mohammed Sghiar; Ahmed Lakssissar
  11. Institutional shareholding, common ownership and productivity: A cross-country analysis By Maria Bas; Lilas Demmou; Guido Franco; Javier Garcia-Bernardo
  12. Identifying and assessing intensive and extensive technologies in European dairy farming By Laure Latruffe; Andreas Niedermayr; Yann Desjeux; K. Herve Dakpo; Kassoum Ayouba; Lena Schaller; Jochen Kantelhardt; Yan Jin; Kevin Kilcline; Mary Ryan; Cathal O’donoghue
  13. Permutation tests on returns to scale and common production frontiers in nonparametric models By Anders Rønn-Nielsen; Dorte Kronborg; Mette Asmild
  14. Is there a trade-off between productivity and employment?: A cross-country micro-to-macro study By Sara Calligaris; Flavio Calvino; Rudy Verlhac; Martin Reinhard
  15. Optimal Ownership and Firm Performance: An Analysis of China’s FDI Liberalization By Peter Eppinger; Hong Ma
  16. The Predictive Impact of Climate Risk on Total Factor Productivity Growth: 1880-2020 By Desiree M. Kunene; Renee van Eyden; Petre Caraiani; Rangan Gupta

  1. By: Josh Martin (Bank of England, ESCoE and The Productivity Institute); Rebecca Riley (King's College London and The Productivity Institute)
    Keywords: productivity, economic measurement, production function
    Date: 2023–07
  2. By: Jill Rubery (Work and Equalities Institute, Alliance Manchester Business School, The Univeristy of Manchester); Isabelle Bi (Work and Equalities Institute, Alliance Manchester Business School, The Univeristy of Manchester)
    Keywords: productivity, gender, GDP, women
    Date: 2023–03
  3. By: Xiaoqing Chen (School of Management Science and Engineering, Nanjing University of Information Science and Techno- logy, Nanjing, Jiangsu, China, and IESEG School of Management, 3 rue de la Digue, F-59000 Lille, France,); Kristiaan Kerstens (Univ. Lille, CNRS, IESEG School of Management, UMR 9221 - LEM - Lille Economie´ Management, F-59000 Lille, France); Mike Tsionas (Montpellier Business School, France & Lancaster University Management School, UK)
    Abstract: This contribution is the first to compare the Malmquist and Hicks-Moorsteen pro- ductivity indices in the context of horizontal mergers of Swedish district courts during the period 2000-2017. It is also the first to calculate these productivity indices for con- vex and nonconvex nonparametric frontier specifications in courts under both constant and variable returns to scale. Moreover, a one-sample symmetric Wilcoxon test and a t-test are performed on the average productivity index to determine whether it is significantly different from unity. Also Li-test statistics examine the differences in pro- ductivity between these two indices or between convexity and nonconvexity for a given index. Furthermore, we compare these two productivity indices before and after the mergers to investigate the impact of the horizontal merger activity. The empirical res- ults indicate that overall there is no significant technical change at all. Furthermore, horizontal mergers overall do neither result in technical change, nor in post-merger productivity gains.
    Keywords: Horizontal mergers; Malmquist productivity index; Hick-Moorsteen productivity index; Convex and Nonconvex Nonparametric Technologies
    Date: 2023–06
  4. By: Prof. Saadi, T (ISCAE, Km 9, 5 Route de Nouasseur BP. 8114, Casablanca, Morocco Author-2-Name: Author-2-Workplace-Name: ISCAE, Km 9, 5 Route de Nouasseur BP. 8114, Casablanca, Morocco Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - This study examines the relationship between diversification strategy and company economic performance in the Moroccan real estate sector. The research focuses on measuring the impact of diversification on technical and Scale efficiency using the Data Envelopment Analysis (D.E.A.) method. The objective is to provide empirical evidence regarding the performance differences between diversified and undiversified companies in the Moroccan real estate industry context. Methodology - Data was collected on sales, inventory, and personnel expenses to construct the input-output ratio from a sample of 60 companies in the Moroccan real estate sector. Diversified and undiversified firms were identified based on their business activities. The Data Envelopment Analysis (D.E.A.) method was then applied to measure these companies' technical and Scale efficiency. Findings - The results reveal that diversified companies in the Moroccan real estate sector exhibit significantly higher economic efficiency, around 40% compared to 31% for undiversified firms. Moreover, diversified firms demonstrate superior pure technical efficiency with a score of 47%, while undiversified firms lag at 36%. However, the two groups have no significant difference in scale efficiency. These findings highlight the positive impact of diversification on overall efficiency and suggest the potential benefits of adopting diversified strategies in the real estate industry. Novelty - This study contributes to the existing literature by exploring the relationship between diversification and performance in the particular context of the real estate industry in Morocco. The findings of this study have practical implications. Managers and policymakers can utilize the results to understand the potential benefits of diversification and consider incorporating this strategy into their business models. Type of Paper - Empirical/ Review"
    Keywords: Economic performance, D.E.A., diversification, Morocco, real estate sector, technical and Scale efficiency, slack
    JEL: L10 R15 R30 M21
    Date: 2023–06–30
  5. By: David Jordan (Queen's University Belfast)
    Keywords: productivity, industrial policy, institutions, devolution, interwar manufacturing
    Date: 2023–02
  6. By: João Amador; Cátia Silva
    Abstract: In this paper we study the impact of ICT adoption on the level of labour productivity and TFP of Portuguese firms in the period 2004-2018. For this purpose we combine firm-level annual survey data for different dimensions of ICT adoption and balance sheet variables that allow for the computation of productivity and control for several dimensions of heterogeneity. The paper uses a Bartik (1991) shift-share type instrumental variable and results state that there is a positive and sizeable impact from ICT adoption on TFP and labour productivity. One standard deviation increase in the first principal component that captures overall ICT adoption by the firm leads to an increase of 25 percent in TFP and an increase of 58 percent in labour productivity. When the analysis is made separately, online sales and the creation of a website stand out as the most relevant dimensions for productivity gains.
    JEL: J24 O3 O4
    Date: 2023
  7. By: Kerui Du; Luis Orea; Inmaculada C. Alvarez
    Abstract: In this article, we introduce a new command spxtsfa for fitting spatial stochastic frontier models in Stata. Over the last decades, an important theoretical progress of stochastic frontier models is the incorporation of various types of spatial components. Models with the ability to account for spatial dependence and spillovers have been developed for efficiency and productivity analysis, drawing extensive attention from industry and academia. Due to the unavailability of the statistical packages, the empirical applications of the new stochastic frontier models appear to be lagging. The spxtsfa command provides a routine for estimating the spatial stochastic frontier models in the style of Orea and Álvarez (2019) and Galli (2022), enabling users to handle different sources of spatial dependence. In the presented article, we introduce the spatial stochastic frontier models, describe the syntax and options of the new command, and provide several examples to illustrate its usage.
    Date: 2023
  8. By: Ethan Ilzetzki (London School of Economics (LSE); Centre for Macroeconomics (CFM))
    Abstract: This paper studies how firms adapt to demand shocks when facing capacity constraints. I show that increases in government purchases raise total factor productivity measured in quantity units (TFPQ) at the production-line level. Most of the productivity gains are concentrated in plants facing tighter capacity constraints, a phenomenon I call “learning by necessity”. The evidence is based on newly digitized and detailed data on production, productivity, and capacity utilization from archival sources on US World War II aircraft production. Shifts in military strategy provide an instrument for aircraft demand at the production-line level. I show that plants adapted to surging demand by improving production methods, outsourcing, and combating absenteeism, but did so primarily when facing tighter capacity constraints. Greater wartime production is also associated with more patenting in the decade following the war for capacity constrained plants. The study speaks to a long historical debate on whether and how demand factors can affect productivity growth.
    Date: 2023–01
  9. By: Chlond, Bettina; Germeshausen, Robert
    Abstract: Firm ownership is a major determinant for the economic performance of firms, and emissions of pollutants are often by-products of industrial production. We investigate the impact of ownership on pollutant emissions of firms and their in- dustrial facilities in Europe jointly with their output, productivity, and other key economic outcomes. To disentangle the influence of ownership from other firm characteristics, we analyse the effects of ownership changes in an event-study approach. We find that industrial facilities and firms decrease their emissions and industrial output after a change in ownership. Emissions intensity and productivity do not change suggesting that reductions in emissions follow proportional reductions in output rather than reflecting changes in pollution abatement technology. We find some evidence for positive spillover effects on productivity and profits of other facilities and firms owned by the acquiring parent company after a change in ownership.
    Keywords: Ownership changes, pollution, productivity, event study
    JEL: D22 D23 Q53
    Date: 2023
  10. By: Mohammed Sghiar (LARCEPEM, FSJES Souissi, Université Mohammed V de Rabat, Maroc); Ahmed Lakssissar (LARCEPEM, FSJES Souissi, Université Mohammed V de Rabat, Maroc)
    Abstract: The advanced regionalization project in Morocco essentially aims to achieve integrated and sustainable territorial development and the reduction of regional disparities. For several years, the State, public establishments and local authorities have implemented economic and social policies and programs in all regions of Morocco aimed primarily atthe creation of wealth, the reduction of poverty and inequalities and improving youth employability. In this sense, the objective of this paper is to measure the level of efficiency of Moroccan regions in the use of socio-economic factors to promote regional development. The data envelopment analysis (DEA) method was used to analyze the efficiency of the regions between 2001 and 2017 and the Malmquist index to study the factors of production. The results show that the level of efficiency of Moroccan regions is around the efficiency frontier but without remarkable progress in terms of productivity between the two periods. Changing this situation requires implementing territorial policies adapted to the development needs of each region, improving the efficient management of resources and seizing the unprecedented opportunities of technological progress to generate productivity gains.
    Abstract: Le chantier de régionalisation avancée au Maroc vise essentiellement la réalisation d'un développement territorial intégré et durable et la réduction des disparités régionales. Depuis plusieurs années, l'État, les établissements publics et les collectivités territoriales ont mis en place des politiques et des programmes économiques et sociaux dans toutes les régions du Maroc visant en priorité la création de la richesse, la réduction de la pauvreté et des inégalités et l'amélioration de l'employabilité des jeunes. Dans ce sens, l'objectif de ce papier est de mesurer le niveau d'efficience des régions marocaines dans l'utilisation des facteurs socio-économiques pour promouvoir le développement régional. La méthode d'analyse d'enveloppement des données (DEA) a été utilisée pour analyser l'efficience des régions entre 2001 et 2017 et l'indice de Malmquist pour étudier les facteurs de production. Les résultats montrent que le niveau d'efficience des régions marocaines se situer aux alentours de la frontière d'efficience, mais sans progrès remarquables en termes de productivité entre les deux périodes. Le changement de cette situation nécessite de mettre en œuvre des politiques territoriales adaptées aux besoins de développement de chaque région, d'améliorer de la gestion efficiente des ressourceset de saisir les opportunités inédites du progrès technologique à générer des gains de productivité.
    Keywords: Efficiency, regional development, Morocco, Efficience, développement régional, Maroc
    Date: 2023–06–23
  11. By: Maria Bas; Lilas Demmou; Guido Franco; Javier Garcia-Bernardo
    Abstract: The increase in institutional ownership, the shift towards passive portfolio management and the rise of common ownership have transformed OECD countries financial markets in the last decades. The paper investigates the potential consequences of these transformations on firm’s productivity, using granular data on firms financial and ownership structure as well as a variety of econometric methods. The analysis suggests that the rise of institutional investors is overall not a major concern from a productivity standpoint: firms displaying higher institutional ownership tend to have higher productivity levels and growth rates compared to their peers, though the positive relationship tends to vanish when institutional investors’ time horizon is short. Moreover, inter-industry common ownership is related to higher firm-level productivity and this positive relation is stronger for firms operating in intangible-intensive and digital sectors, potentially hinting to an easing of vertical relationships and/or technological spillovers when firms operating in different sectors are owned by the same equity holders. On the contrary, the correlation with intra-industry common ownership appears negative, though not always significantly, potentially due to lower competition.
    Keywords: common ownership, institutional ownership, productivity
    JEL: D22 D24 G32
    Date: 2023–08–04
  12. By: Laure Latruffe (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Andreas Niedermayr (Institute of Agricultural and Forestry Economics, Department of Economics and Social Sciences, University of Natural Resources and Life Sciences, Vienna, Austria); Yann Desjeux (BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); K. Herve Dakpo (UMR PSAE - Paris-Saclay Applied Economics - AgroParisTech - Université Paris-Saclay - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, ETH Zürich - Eidgenössische Technische Hochschule - Swiss Federal Institute of Technology [Zürich]); Kassoum Ayouba (VAS - VetAgro Sup - Institut national d'enseignement supérieur et de recherche en alimentation, santé animale, sciences agronomiques et de l'environnement, CESAER - Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Dijon - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Lena Schaller (Institute of Agricultural and Forestry Economics, Department of Economics and Social Sciences, University of Natural Resources and Life Sciences, Vienna, Austria); Jochen Kantelhardt (Institute of Agricultural and Forestry Economics, Department of Economics and Social Sciences, University of Natural Resources and Life Sciences, Vienna, Austria); Yan Jin (Center for Agro-food Economics and Development (CREDA-UPC-IRTA), Technical University of Catalonia, Castelldefels, Spain); Kevin Kilcline (Mellows Campus, Teagasc Rural Economy and Development Centre, Athenry, Co. Galway, Ireland); Mary Ryan (Mellows Campus, Teagasc Rural Economy and Development Centre, Athenry, Co. Galway, Ireland); Cathal O’donoghue (NUI Galway - National University of Ireland [Galway])
    Abstract: In order to tackle climate change and biodiversity loss, the European Union (EU) promotes extensive farming. However, identifying such farms across countries and assessing their performance for policy purposes remains challenging. This paper combines a latent class stochastic frontier model (LCSFM) with a novel nested metafrontier approach. The resulting model enables the identification of intensive and extensive farms across countries, estimation of farm efficiency and identification of different technology gaps. Based on Farm Accountancy Data Network data of French, Irish and Austrian dairy farms, we find poorer environmental but better economic performance of intensive farms, compared to extensive farms. The largest productivity differences stem from technology gaps and not from inefficiency. The approach enables a more nuanced analysis of sources of inefficiency to assist policy design for future green payments in the EU.
    Keywords: efficiency, dairy farms, latent class stochastic frontier, nested metafrontiers, European Union
    Date: 2023–07–05
  13. By: Anders Rønn-Nielsen (Center for Statistics, Department of Finance, Copenhagen Business School); Dorte Kronborg (Center for Statistics, Department of Finance, Copenhagen Business School); Mette Asmild (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: Permutation techniques, where one recompute the test statistic over permutations of data, have a long history in statistics and have become increasingly useful as the availability of computational power has increased. Until now, no permutation tests for examining returns to scale assumptions, nor for test of common production possibility sets, when analysing productivity have been available. We develop three novel tests based on permutations of the observations. The first is a test for constant returns to scale. The other two are, respectively, tests for frontier differences and for whether the production possibility sets are nested. All tests are based on data envelopment analysis (DEA) estimates of effciencies and are easily implementable. We show that our suggested permutations of the observations satisfy the necessary randomisation assumptions, and hereby that the sizes of the proposed tests are controlled. The advantages of permutation tests are that they are reliable even for relatively small samples and their size can generally be controlled upwards. We further add a lower bound showing that the proposed tests are very close to being exact. Finally, we show that our tests are consistent and illustrate the rate of convergence in simulation studies.
    Keywords: Permutation tests, Returns to scale, Comparison of production frontiers, Data envelopment analysis (DEA), Size, Consistency.
    JEL: C12 C13 C15 C18 D24 C67
    Date: 2022–08
  14. By: Sara Calligaris; Flavio Calvino; Rudy Verlhac; Martin Reinhard
    Abstract: The impact of productivity on employment remains uncertain, particularly in light of growing concerns regarding potential negative effects of technological progress on labour demand. This report uses harmonised and comparable data from 13 countries spanning the last two decades to comprehensively analyse how productivity growth affects employment dynamics at various levels of aggregation. The study's findings highlight a positive correlation between productivity growth and employment as well as wage growth, both at the firm level and on a broader scale. This outcome arises from counteracting mechanisms and heterogeneous dynamics across different groups of firms. The findings have relevant policy implications: productivity is not just an isolated key economic objective, but well-designed and complementary policies can also help convert technological and organisational change into higher employment and wage growth.
    JEL: J23 O30 O33
    Date: 2023–08–09
  15. By: Peter Eppinger; Hong Ma
    Abstract: Seminal theories of the firm posit that firm ownership is allocated to minimize contractual inefficiencies. Yet, it remains unclear how much the optimal ownership choice affects firm performance in practice. This paper provides a first quantification of the gains from optimal ownership within multinational firms, by exploiting a major liberalization of China’s policy restrictions on foreign ownership. The liberalization allowed previously restricted firms to become fully foreign owned. We find that these reoptimized ownership choices raise firm output by 40% and productivity by 7.5% on average. An extended property-rights theory of the multinational firm rationalizes these effects and their heterogeneity.
    Keywords: multinational firms, ownership, integration, firm performance, property-rights theory, China
    JEL: D23 F21 F23 L22 L23
    Date: 2023
  16. By: Desiree M. Kunene (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Renee van Eyden (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Petre Caraiani (Institute for Economic Forecasting, Romanian Academy, Romania; Bucharest University of Economic Studies, Romania); Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)
    Abstract: In this study, we investigate the predictive impact of climate risk (as measured by average temperature changes and temperature realised volatility) on total factor productivity (TFP) growth in 23 economies over the period 1880 to 2020 while controlling for real GDP per capita growth. Standard full-sample Granger causality tests offer little evidence of a causal impact of climate change on productivity outcomes. This may be attributed to nonlinearity and structural breaks in the relationship between climate risk and TFP growth, as evidenced by the BDS (1996) test results for nonlinearity and the Bai-Perron (1998, 2003) multiple breakpoint test results. Furthermore, Rossi-Wang (2019) time-varying VAR-based Granger causality tests, which are robust in the presence of instabilities and structural changes, indicate that for a large number of countries, we observe a significant causal impact of climate change on TFP growth in the post-World War II period, with increased significance in the causal impact for the majority of countries in the post-1980 period.
    Keywords: Total factor productivity growth, climate change, temperature realised volatility, average temperature change, time-varying Granger causality
    JEL: Q54 E23 C32
    Date: 2023–07

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