nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2023‒11‒20
nine papers chosen by

  1. Do carbon taxes affect economic and environmental efficiency? The case of British Columbia’s manufacturing plants By Kumbhakar, Subal C.; Badunenko, Oleg; Willox, Michael
  2. Production Function Estimation with Multi-Destination Firms By Geoffrey Barrows; Hélène Ollivier; Ariell Reshef
  3. European Funds and Firm Performance: Evidence from a Natural Experiment By Mesquita, José; Pereira dos Santos, João; Tavares, José
  4. Making the invisible hand visible: Managers and the allocation of workers to jobs By Virginia Minni
  5. The intellectual spoils of war? Defense R&D, productivity, and international spillovers By Moretti, Enrico; Steinwender, Claudia; Van Reenen, John
  6. The Dynamics of Automation Adoption: Firm-Level Heterogeneity and Aggregate Employment Effects By Laura Bisio; Angelo Cuzzola; Marco Grazzi; Daniele Moschella
  7. The Impact of Industrial Opt-Out from Utility Sponsored Energy Efficiency Programs By Gale Boyd; Matthew Doolin; Yu Ma; Jennifer Weiss
  8. Allocation of Female Talent and Cross-Country Productivity Differences By Lee, Munseob
  9. The Effects of Mandatory Profit-Sharing on Workers and Firms: Evidence from France By Elio Nimier-David; David Sraer; David Thesmar

  1. By: Kumbhakar, Subal C.; Badunenko, Oleg; Willox, Michael
    Abstract: This paper evaluates the impact of British Columbia’s carbon tax on manufacturers’ economic and environmental performance in a unified modeling framework that allows for making critical distinctions between efficiency, technical change, and total factor productivity as performance measures. In contrast to most papers that examine environmental policy impacts on either the economy or the environment, our approach combines a by-production model within a stochastic frontier framework to evaluate the tax’s impacts on both economic and environmental efficiency. Our findings suggest that a 1.0% increase in the carbon tax improved manufacturers’ efficiency in producing desirable output (real sales of manufactured goods) by 0.5%. In addition, the same 1.0% increase in the carbon tax improved manufacturers’ environmental efficiency for greenhouse gas (GHGs) and carbon monoxide (CO) emissions by the same amount, 0.2%. However, the carbon tax led to lower environmental efficiency for emissions of nitrogen oxides (NOx), -0.3%. In addition, our use of a rich plant-level dataset reveals considerable heterogeneity in manufacturers’ efficiency responses to the tax. Finally, we suggest that lower efficiency levels for undesirable outputs than desirable outputs indicate that the relative cost of adjusting production processes to improve efficiency favors economic efficiency over environmental efficiency
    Keywords: Efficiency; Carbon tax; Stochastic frontier model; By-production model
    JEL: D24 Q51 Q58
    Date: 2022–12
  2. By: Geoffrey Barrows; Hélène Ollivier; Ariell Reshef
    Abstract: We develop a procedure to estimate production functions, elasticities of demand, and productivity when firms endogenously select into multiple destination markets where they compete imperfectly, and when researchers observe output denominated only in value. We show that ignoring the multi-destination dimension (i.e., exporting) yields biased and inconsistent inference. Our estimator extends the two-stage procedure of Gandhi et al. (2020) to this setting, which allows for cross-market complementarities. In Monte Carlo simulations, we show that our estimator is consistent and performs well in finite samples. Using French manufacturing data, we find average total returns to scale greater than 1, average returns to variable inputs less than 1, price elasticities of demand between -21.5 and -3.4, and learning-by-exporting effects between 0 and 4% per year. Alternative estimation procedures yield unrealistic estimates of returns to scale, demand elasticities, or both.
    Keywords: production function, learning by exporting, trade, productivity
    JEL: F12 F63 D24
    Date: 2023
  3. By: Mesquita, José (Universidade Nova de Lisboa); Pereira dos Santos, João (Queen Mary University of London); Tavares, José (Universidade Nova de Lisboa)
    Abstract: This paper analyses the impact of European Union (EU) funds on the performance of private firms. In particular, we examine a quasi-natural experiment consisting of a redrawing of administrative areas that expanded regional eligibility and led to a sudden increase in accessibility to EU grants for firms located in 33 Portuguese municipalities. Using a comprehensive linked employer-employee administrative dataset that covers the universe of private firms between 2003 and 2010, our difference-in-differences estimates uncover a significant and positive causal effect of increased eligibility on firms' sales, labour productivity, and average wages, while employment is not significantly altered. While firms' sales in the non-tradable sectors are positively impacted, firms' sales in more competitive, tradable, sectors remain unaffected by increased access to EU funds.
    Keywords: grants, regional policy, private firm, municipalities, Portugal
    JEL: C21 R10
    Date: 2023–10
  4. By: Virginia Minni
    Abstract: Why do managers matter for firm performance? This paper provides evidence of the critical role of managers in matching workers to jobs within the firm using the universe of personnel records from a large multinational firm. The data covers 200, 000 white-collar workers and 30, 000 managers over 10 years in 100 countries. I identify good managers as the top 30% by their speed of promotion and leverage exogenous variation induced by the rotation of managers across teams. I find that good managers cause workers to reallocate within the firm through lateral and vertical transfers. This leads to large and persistent gains in workers' career progression and productivity. Seven years after the manager transition, workers earn 30% more and perform better on objective performance measures. In terms of aggregate firm productivity, doubling the share of good managers would increase output per worker by 61% at the establishment level. My results imply that the visible hands of managers match workers' specific skills to specialized jobs, leading to an improvement in the productivity of existing workers that outlasts the managers' time at the firm.
    Keywords: managers, career trajectories, internal labor markets, productivity
    Date: 2023–10–05
  5. By: Moretti, Enrico; Steinwender, Claudia; Van Reenen, John
    Abstract: We examine the impact of government funding for R&D—and defense-related R&D in particular—on privately conducted R&D, and its ultimate effect on productivity growth. We estimate longitudinal models that relate privately funded R&D to lagged government-funded R&D using industry-country level data from OECD countries and firm level data from France. To deal with the potentially endogenous allocation of government R&D funds we use changes in predicted defense R&D as an instrumental variable. In many OECD countries, expenditures for defense-related R&D represent by far the most important form of public subsidies for innovation. In both datasets, we uncover evidence of “crowding in” rather than “crowding out, ” as increases in government-funded R&D for an industry or a firm result in significant increases in private sector R&D in that industry or firm. On average, a 10% increase in government-financed R&D generates a 5% to 6% additional increase in privately funded R&D. We also find evidence of international spillovers, as increases in government-funded R&D in a particular industry and country raise private R&D in the same industry in other countries. Finally, we find that increases in private R&D induced by increases in defense R&D result in productivity gains.
    JEL: J1
    Date: 2023–02–06
  6. By: Laura Bisio; Angelo Cuzzola; Marco Grazzi; Daniele Moschella
    Abstract: We investigate the impact of investment in automation-related goods on adopting and non- adopting firms in the Italian economy during 2011-2019. We integrate datasets on trade activities, firms’, and workers’ characteristics for the population of Italian importing firms and estimate the effects on adopters’ outcomes within a difference-indifferences design exploiting import lumpiness in product categories linked to automation and AI technologies. We find a positive average adoption effect on the adopters’ employment and on the value-added and average wage, whereas sales and productivity increase after an initial drop with a net positive effect five years after adoption. Crucially, the employment effect is heterogeneous across firms: a positive scale effect is predominant among small firms, whereas a negative displacement effect is predominant among medium and large firms. We complete the framework with a 5-digit sector-level analysis showing that adopting automation technologies has an overall negative effect on aggregate employment.
    Keywords: automation, employment, firm heterogeneity, imports, technology adoption
    JEL: D24 J23 L25 O33
    Date: 2023
  7. By: Gale Boyd; Matthew Doolin; Yu Ma; Jennifer Weiss
    Abstract: Industry accounts for one-third of energy consumption in the US. Studies suggest that energy efficiency opportunities represent a potential energy resource for regulated utilities and have resulted in rate of return regulated demand-side management (DSM) and energy efficiency (EE) programs. However, many large customers are allowed to self-direct or opt-out. In the Carolinas (NC and SC), over half of industrial and large commercial customers have selected to opt out. Although these customers claim they invest in EE improvements when it is economic and cost-effective to do so, there is no mechanism to validate whether they actually achieved energy savings. This project examines the industrial energy efficiency between the program participants and non participants in the Carolinas by utilizing the non-public Census of Manufacturing data and the public list of firms that have chosen to opt out. We compare the relative energy efficiency between the stay-in and opt-out plants. The t-test results suggest opt-out plants are less efficient. However, the opt-out decisions are not random; large plants or plants belonging to large firms are more likely to opt out, possibly because they have more information and resources. We conduct a propensity score matching method to account for factors that could affect the opt-out decisions. We find that the opt-out plants perform at least as well or slightly better than the stay-in plants. The relative performance of the opt-out firms suggest that they may not need utility program resources to obtain similar levels of efficiency from the stay-in group.
    Keywords: Demand-side management, energy efficiency, energy policy
    Date: 2023–10
  8. By: Lee, Munseob (University of California, San Diego)
    Abstract: The disparities in cross-country labor productivity are greater in agriculture than in other industries. I propose that the misallocation of female talent across sectors distorts productivity. I formalize the theory by using a general equilibrium Roy model with gender-specific frictions. If female workers experience higher frictions in nonagricultural sectors, then female workers who are better skilled at non-agricultural jobs may select into agricultural sector. From a sample of 66 countries, I find that low-income countries have higher frictions in non-agricultural industries. By setting frictions to US levels, agricultural labor productivity increases by 4.3-7.6 percent, nonagricultural labor productivity decreases by 0.7-1.4 percent, and GDP per capita increases by 0.8-1.5 percent.
    Keywords: misallocation, gender, occupational choice, productivity
    JEL: O11 O13 O47
    Date: 2023–10
  9. By: Elio Nimier-David; David Sraer; David Thesmar
    Abstract: Since 1967, all French firms with more than 100 employees are required to share a fraction of their excess-profits with their employees. Through this scheme, firms with excess-profits distribute on average 10.5% of their pre-tax income to workers. In 1990, the eligibility threshold was reduced to 50 employees. We exploit this regulatory change to identify the effects of mandated profit-sharing on firms and their employees. The cost of mandated profit-sharing for firms is evident in the significant bunching at the 100 employee threshold observed prior to the reform, which completely disappears post-reform. Using a difference-in-difference strategy, we find that, at the firm-level, mandated profit-sharing (a) increases labor share by 1.8 percentage points, (b) reduces the profit share by 1.4 percentage points, and (c) does not affect investment nor productivity. At the employee level, mandated profit-sharing increases low-skill workers' total compensation and leaves high-skill workers total compensation unchanged. Overall, mandated profit-sharing redistributes excess-profits to lower-skill workers in the firm, without generating significant distortions or productivity effects.
    JEL: G3 H20 J01 J30
    Date: 2023–10

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