nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2023‒10‒09
eight papers chosen by

  1. Resource Misallocation in the Presence of R&D Spillovers By Li, Kun; Azacis, Helmuts; Luintel, Kul B
  2. Cost efficiency of renewable district heating systems: the case of Austria By Mahlberg, Bernhard; Frank-Stocker, Andrea; Koller, Wolfgang; Ramerstorfer, Christian
  3. Can Measurement Error Explain Slow Productivity Growth in Construction? By Daniel Garcia; Raven S. Molloy
  4. Respective healthcare system performances taking into account environmental quality: what are the re-rankings for OECD countries? By Armel Ngami; Bruno Ventelou
  5. Declining business dynamism in Europe: The role of shocks, market power, and technology By Biondi, Filippo; Inferrera, Sergio; Mertens, Matthias; Miranda, Javier
  6. Economic, Environmental, and Energy Equity Convergence: Evidence of a Multi-Speed Europe? By Llorca, Manuel; Rodriguez-Alvarez, Ana
  7. Could Innovation and Productivity Drive Growth in African Countries? Lessons from Korea By Shahid Yusuf
  8. The Impact of High Temperatures on Performance in Work-Related Activities By Picchio, Matteo; van Ours, Jan C.

  1. By: Li, Kun (Cardiff Business School); Azacis, Helmuts (Cardiff Business School); Luintel, Kul B (Cardiff Business School)
    Abstract: We study resource misallocation by explicitly modelling R&D input and knowledge spillovers. The effects of R&D and spillovers on firm-level productivity are extensively studied in applied work, but not in the context of resource misallocation. We establish that, in the presence of spillovers, efficient resource allocation requires that more productive firms face higher R&D input prices. Analysing UK firm-level data, we find that the output gains from correcting misallocation are greatly overestimated when spillovers are ignored. Output losses due to capital distortions dominate those from labour and R&D inputs. Adopting a wrong R&D policy could lead to significant output losses.
    Keywords: resource misallocation, productivity, R&D spillover, the UK manufacturing firms
    JEL: D24 D61 O30 O47
    Date: 2023–09
  2. By: Mahlberg, Bernhard; Frank-Stocker, Andrea; Koller, Wolfgang; Ramerstorfer, Christian
    Abstract: Heat generation based on conventional fossil fuels is considered to be the cause of a significant proportion of greenhouse gas emissions. Achieving the climate protection goals therefore requires a transition to renewable energy sources such as biomass. Establishing renewable district heating (DH) systems is considered as an important cornerstone of a decarbonized energy system. This study estimates the cost efficiency of biomass-based DH systems. It expands the benchmarking currently used in Austria which relies on simple key performance indicators by a new type of multi-variate approach based on efficiency estimates from Data Envelopment Analysis (DEA). The performance indicator calculated in this way considers all essential factors of production simultaneously and estimates the cost saving potentials of each individual system examined. By decomposing cost efficiency into a technical and allocative component, the causes of inefficiency are revealed. A subsequent regression analysis examines how system-specific technical, structural features and the regional environmental conditions of the respective systems influence their performance. Finally, the results of the regression analysis are used to calculate the managerial inefficiency purged of the influence of structural peculiarities and operating environment. This part of the overall inefficiency is caused by the operator's decisions and can therefore be reduced by changing the operator's behaviour. The applicability of the approach developed here is shown empirically using a sample of biomass-based DH systems from Austria.
    Keywords: sustainable heat generation; energy transition; biomass; climate protection; Data Envelopment Analysis
    JEL: D24 Q41 Q42
    Date: 2023–09–14
  3. By: Daniel Garcia; Raven S. Molloy
    Abstract: Of all major industries, construction is the only one to have registered negative average productivity growth since 1987. One might suspect measurement error to have biased growth downward since the deflators for this sector, which are used to translate nominal construction spending into the real quantity of structures, have risen much faster than those for other sectors. We find evidence of an upward bias in these deflators related to unobserved improvements in structure quality, but the magnitude is not large enough to alter the view that construction-sector productivity growth has been weak. We also find only small contributions from other potential sources of measurement error. We conclude that productivity growth may well have been quite low in construction, even if it has not been as low as implied by official statistics.
    Keywords: housing and real estate; productivity
    Date: 2023–07
  4. By: Armel Ngami (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); Bruno Ventelou (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)
    Abstract: Background Efficiency analyses have been widely used in the literature to rank countries regarding their health system performances. However, little place has been given to the environmental aspect: two countries with the same characteristics could experience completely different healthcare system outcomes just because they do not face the same environmental quality situation, which is a major determinant of the health of inhabitants. Methods Using a stochastic frontier model, this paper analyses the effect of environmental quality on health system outcomes in OECD countries, measured by life expectancy at birth. Results We show that the healthcare system performance ranking of OECD countries changes significantly, depending on whether the environmental index is taken into account. Conclusions These findings, once again, underline the critical importance of the environment when addressing population health issues. In general, our results can be aligned with the messages of the One Health approach literature.
    Keywords: Health, Healthcare system efficiency, Health production function, Environment, Stochastic frontier analysis, Panel data
    Date: 2023–06–19
  5. By: Biondi, Filippo; Inferrera, Sergio; Mertens, Matthias; Miranda, Javier
    Abstract: We study the changing patterns of business dynamism in Europe after 2000 using novel micro-aggregated data that we collect for 19 European countries. In all of them, we document a decline in job reallocation rates that concerns most economic sectors. This is mainly driven by dynamics within sectors, size classes, and age classes rather than by compositional changes. Large and mature firms show the strongest decline in job reallocation rates. Simultaneously, the shares of employment and sales of young firms decline. Consistent with US evidence, firms' employment changes have become less responsive to productivity. However, the dispersion of firms' productivity shocks has decreased too. To enhance our understanding of these patterns, we derive a firm-level framework that relates changes in firms' productivity, market power, and technology to job reallocation and firms' responsiveness.
    Keywords: business dynamism, European cross-country data, market power, productivity, responsiveness of labor demand
    JEL: D24 J21 J23 J42 L11 L25
    Date: 2023
  6. By: Llorca, Manuel (Department of Economics, Copenhagen Business School); Rodriguez-Alvarez, Ana (University of Oviedo)
    Abstract: The European Union has committed to make Europe the first climate-neutral continent by 2050. Reaching this objective implies massive changes in the economies of the region. The biggest challenge of this green transition is to make sure that it happens without sacrificing economic progress and guaranteeing justice and inclusiveness. This pledge requires that every country be capable of addressing the trade-offs between the targets while remaining committed towards the common decarbonisation goal. This paper analyses the success with which European countries are carrying out the energy transition. We propose an enhanced hyperbolic distance function and a stochastic frontier analysis approach to model the joint attainment of economic development, environmental sustainability, and energy equity. We apply our model to an unbalanced panel dataset of 29 European countries for the period 2005-2018. Our estimates show that the average performance of the European economies has improved throughout the studied period. However, the patterns of progress have been different, showing the non-EU-15 countries a steeper evolution than the EU-15 countries. Our results also highlight the pivotal role of a sustainable economic development with clean energies for both slashing CO2 emissions and fostering energy equity. Moreover, we find sigma convergence, being this slightly higher for the EU-15 countries. Additionally, we obtain absolute and conditional beta convergence for both non-EU-15 and EU- 15 countries. Finally, we show that a higher share of renewable energy sources helps countries that are lagging behind to reach their optimal level of performance.
    Keywords: Economic development; Environmental sustainability; Energy equity; Enhanced hyperbolic distance function; Stochastic frontier analysis
    JEL: C50 L50 L90 Q40 Q50
    Date: 2023–09–20
  7. By: Shahid Yusuf (Center for Global Development; Growth Dialogue)
    Abstract: The Korean model of development that flowered in the final third of the twentieth century remains a fertile source of lessons for countries in sub-Saharan Africa attempting to achieve sustainably high rates of growth. Korea relied on two principal drivers. One was a high level of investment in manufacturing activities and infrastructure and a second was steady gains in factor productivity aided first by rapid technology assimilation and complemented in the 1980s and 1990s by own research and innovation. Because gross capital formation in African economies is likely to stabilize at levels well below those attained by Korea, and the services sector accounts for a larger share of African GDP, factor productivity will need to contribute more to growth than investment. For that reason, Korea’s nurturing of science, technology, and innovation capabilities, which has helped stimulate productivity, can be a source of lessons. The purpose of this paper is to underscore the role of productivity, to show how Korea built the technological capabilities underpinning productivity gains, and to extract relevant pointers for African countries that will depend more on services than on manufactures to propel their development and exports.
    Date: 2023–03–07
  8. By: Picchio, Matteo (Università Politecnica delle Marche, Ancona); van Ours, Jan C. (Erasmus University Rotterdam)
    Abstract: High temperatures can have a negative effect on work-related activities. Labor productivity may go down because mental health or physical health is worse when it is too warm. Workers may experience difficulties concentrating or they have to reduce effort in order to cope with heat. We investigate how temperature affects performance of male professional tennis players. We use data about outdoor singles matches from 2003 until 2021. Our identification strategy relies on the plausible exogeneity of short-term daily temperature variations in a given tournament from the average temperature over the same tournament. We find that performance significantly decreases with ambient temperature. The magnitude of the temperature effect is age-specific and skill-specific. Older and less-skilled players suffer more from high temperatures than younger and more skilled players do. The effect of temperature on performance is smaller when there is more at stake. Our findings also suggest that there is adaptation to high temperatures: the effects are smaller if the heat lasts for several days.
    Keywords: climate change, temperatures, tennis; performance, productivity
    JEL: J24 J81 Q51 Q54
    Date: 2023–09

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