nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2023‒12‒04
sixteen papers chosen by

  1. Pay, productivity and management By Nicholas Bloom; Scott W. Ohlmacher; Cristina J. Tello-Trillo; Melanie Wallskog
  2. Environmentally adjusted multifactor productivity: Accounting for renewable natural resources and ecosystem services By Miguel Cárdenas Rodríguez; Florian Mante; Ivan Haščič; Adelaida Rojas Lleras
  3. The role of environmental practices and innovation in total factor productivity convergence -Evidence from small-and medium-sized manufacturing enterprises in Vietnam By Thanh Tam Nguyen-Huu; Khac Minh Nguyen; Quoc Tran-Nam
  4. Regional productivity differences in the UK and France: From the micro to the macro By Bridget Kauma; Giordano Mion
  5. High-Speed Railways and Firms Total Factor Productivity: Evidence from a Quasi-Natural Experiment By Bottasso, Anna; Conti, Maurizio; Ferrara, Antonella Rita; Robbiano, Simone
  6. Acquisitions, management and efficiency in Rwanda's coffee industry By Rocco Macchiavello; Ameet Morjaria
  7. Long-run macroeconomic impact of climate change ontotal factor productivity - Evidences from Emerging Economies By Naveen Kumar; Dibyendu Maiti
  8. Committing to Grow: Privatizations and Firm Dynamics in East Germany By Ufuk Akcigit; Harun Alp; André Diegmann; Nicolas Serrano-Velarde
  9. Land Markets and Labor Productivity: Empirical Evidence from China By Zhang, Jian; Mishra, Ashok K.; Zhu, Peixin
  10. Tradability, Productivity, and Regional Disparities: theory and UK evidence By Anthony J. Venables; Patricia G.Rice
  11. Does Performance-based Public Funding Pay off? UK’s Research Excellence Framework (REF) and Research Productivity By Ajab Khan; Ali Sina Önder; Sercan Özcan
  12. Banking Profitability: How do the banking intermediary, secondary reserve, operational efficiency, and credit risk effect? By Herry Achmad Buchory
  13. The impact of intra- and inter-provincial geographic diversification on real estate firm performance: evidence from China By Yayi Wei
  14. Employment, labor productivity and environmental sustainability: Firm-level evidence from transition By Marjan Petreski; Stefan Tanevski; Irena Stojmenovska
  15. Impact of Environmental, Social and Governance (ESG) on the Performance of Listed Real Estate Firms By Badr Hayar; Jan Muckenhaupt; Bing Zhu
  16. Analysis of Decentralization in Governance and Financial Efficiency of Companies: Studying the Relationship in the Field of Decentralized Finance By Kirill Kolmykov

  1. By: Nicholas Bloom; Scott W. Ohlmacher; Cristina J. Tello-Trillo; Melanie Wallskog
    Abstract: Using confidential Census matched employer-employee earnings data we find that employees at more productive firms, and firms with more structured management practices, have substantially higher pay, both on average and across every percentile of the pay distribution. This pay-performance relationship is particularly strong amongst higher paid employees, with a doubling of firm productivity associated with 11% more pay for the highest-paid employee (likely the CEO) compared to 4.7% for the median worker. This pay-performance link holds in public and private firms, although it is almost twice as strong in public firms for the highest-paid employees. Top pay volatility is also strongly related to productivity and structured management, suggesting this performance-pay relationship arises from more aggressive monitoring and incentive practices for top earners.
    Keywords: productivity, management, employer-employee earnings, pay-performance
    Date: 2022–04–04
  2. By: Miguel Cárdenas Rodríguez; Florian Mante; Ivan Haščič; Adelaida Rojas Lleras
    Abstract: Multifactor productivity is a comprehensive measure of productivity where the underlying production function accounts for multiple factor inputs, traditionally labour and produced capital. While single-factor productivity is intuitively simple, such measure offers a biased picture of the economy because it attributes all variation in output growth to a single factor input (e.g. consumption of fossil fuels or material resources) while the role of other factors is ignored. Multifactor productivity aims at addressing this shortcoming, and as such it is a valuable component of the OECD set of Green Growth headline indicators. This paper presents further progress in measuring the EAMFP and related growth accounting indicators in 52 countries for 1996-2018. An important novelty is the inclusion of renewable natural resources such as land, timber and fisheries, and ecosystem services such as coastal and watershed protection. Exploratory results on accounting for renewable energy resources are also included.
    Keywords: air pollution, costs, ecosystem services, environmental accounting, exhaustible resources, forest, fossil fuels, greenhouse gases, income, indicators, land, minerals, multifactor productivity, natural capital, pollution, prices, production, renewable energy, renewable resources
    JEL: D24 O44 O47 Q2 Q3 Q5 Q52 Q53 Q56
    Date: 2023–11–20
  3. By: Thanh Tam Nguyen-Huu (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie); Khac Minh Nguyen; Quoc Tran-Nam
    Abstract: This research investigates the nexus between environmental compliance, innovation, and Total Factor Productivity convergence. We use two measures of environmental practices: the firm environmental standard certification and environmental treatment. As for innovation, it has three increasing-levels: no innovation, product or process innovation, and both types of innovation. Using a sample of Vietnamese small-and medium-sized manufacturing enterprises from 2007 to 2015, the environmental practices are not correlated with total factor productivity. By contrast, there is a strong correlation between innovation and environmental treatment. Factors contributing to the firm productivity growth rate, and consequently the speed of convergence, are innovation, firm size, and legal form.
    Abstract: Cette recherche examine le lien entre la conformité environnementale, l'innovation et la convergence de la productivité totale des facteurs. Nous utilisons deux mesures de pratiques environnementales : la norme de certification environnementale et le traitment environnemental. Quant à l'innovation, il s'agit d'une variable qualitative ayant trois modalités croissantes : aucune innovation, innovation de produit ou de procédé et deux types d'innovation. En utilisant une base de données des petites et moyennes entreprises manufacturières vietnamiennes entre 2007 et 2015, les pratiques environnementales ne sont pas corrélées avec la productivité totale des facteurs. En revanche, il existe une forte corrélation entre l'innovation et le traitement environnemental. Les facteurs qui contribuent au taux de croissance de la productivité des entreprises, et par conséquent à la vitesse de convergence, sont l'innovation, la taille de l'entreprise et la forme juridique.
    Keywords: Innovation TFP growth rate β-convergence Environmental practices, Innovation, TFP growth rate, β-convergence, Environmental practices
    Date: 2022–06–28
  4. By: Bridget Kauma; Giordano Mion
    Abstract: We propose a new data resource that attempts to overcome limitations of standard firm-level datasets for the UK (like the ARD/ABS) by building on administrative data covering the population of UK firms with at least one employee. We also construct a similar dataset for France and use both datasets to: 1) Provide some highlights of the data and an overall picture of the evolution of aggregate UK and French productivity and markups: 2) Analyse the spatial distribution of productivity in both countries at a fine level of detail - 228 Travel to Work Areas (TTWAs) for the UK and 297 Zones da'emploi (ZEs) for France - while focusing on the role of economic density. Our findings suggest that differences in firm productivity across regions are magnified in the aggregate by an increasing productivity return of density along the productivity distribution.
    Keywords: firm-level dataset, merging, BSD, FAME, VAT, FICUS, FARE, productivity, markups, UK, France, regional disparities, density
    Date: 2023–11–01
  5. By: Bottasso, Anna (University of Genoa); Conti, Maurizio (University of Genoa); Ferrara, Antonella Rita (University of Calabria); Robbiano, Simone (University of Eastern Piedmont)
    Abstract: The focus of this study is to assess the causal impact of the connection of a local area to a high-speed rail network (HSR) on firms' total factor productivity (TFP). The quasi-random location of the HSR station in the Italian city of Reggio Emilia is exploited in a Difference-in Differences (DiD) research design applied to a large sample of firms, observed over the period 2010-2018. The results suggest that the opening of the HSR station improved treated firms' TFP of about 5%; in particular, such effect is larger for firms closer to the HSR station and slightly increases over the sample period. We also find that the impact of the connection to the HSR station is heterogeneous across industries and depends on firms' size and past productivity. Overall results are robust to a large number of sensitivity checks and falsification tests.
    Keywords: transport infrastructure, Difference-in-Differences, total factor productivity
    JEL: C50 D24 L92 R30
    Date: 2023–11
  6. By: Rocco Macchiavello; Ameet Morjaria
    Abstract: Well-functioning markets allocate assets to owners that improve firms' management and performance. We study the effects of ownership changes on coffee mills in Rwanda - an industry in which managing relationships with farmers and seasonal workers is important and that has seen many ownership changes in recent years. We combine administrative data, a survey panel of mills and an original survey of acquirers that allows us to construct acquirer-specific and target-specific control groups. A difference-in-differences design reveals that ownership changes do not improve performance unless the mill is acquired by a foreign firm. Our preferred interpretation - supported by detailed survey evidence that considers alternative hypotheses - is that foreign firms successfully implement management changes in key operational areas. Upon acquisition, both domestic and foreign owned mills attempt to implement similar changes, but domestic firms face resistance from workers and farmers. Domestic owners have relationships with their local communities, which can create opportunities to establish new mills and acquire existing ones. However, these same relationships create pressure to maintain status-quo relational arrangements, which makes it harder to implement managerial changes.
    Keywords: management, performance, market reforms, coffee, Rwanda
    Date: 2022–07–21
  7. By: Naveen Kumar (Department of Economics, Delhi School of Economics); Dibyendu Maiti (Department of Economics, Delhi School of Economics)
    Abstract: Emerging economies (EMEs) often ignore effective mitigation strategies for climate risks to prioritise growth acceleration. This paper shows that EMEs cannot sustain their economic growth trajectory due to the adverse impact of climate change on total factor productivity (TFP). Using a standard growth model, it demonstrates how temperature rise and variation from growing industrial emissions reduce capital productivity along with the damage to ecosystem services and labour productivity, adversely impacting total factor productivity (TFP). A cross-sectional augmented auto-regressive distributed lag model (CS-ARDL), which addresses the issues of endogeneity and cross-sectional dependence with stochastic trends, has been applied to 21 EMEs over the period from 1990 to 2018 and reveals a strong negative impact of temperature rise on total factor productivity. Although EMEs have heterogeneous impacts across the countries depending upon their climatic zones and income levels, a one-degree increase in temperature, on average, decreases the TFP by approximately 3 per cent. It is much higher in the extreme climatic zones and less developed EMEs. JEL Code: O47, Q50, O44
    Keywords: TFP, Temperature Shocks, Panel CS-ARDL, Emerging markets
    Date: 2023–11
  8. By: Ufuk Akcigit; Harun Alp; André Diegmann; Nicolas Serrano-Velarde
    Abstract: This paper investigates a unique policy designed to maintain employment during the privatization of East German firms after the fall of the Iron Curtain. The policy required new owners of the firms to commit to employment targets, with penalties for non-compliance. Using a dynamic model, we highlight three channels through which employment targets impact firms: distorted employment decisions, increased productivity, and higher exit rates. Our empirical analysis, using a novel dataset and instrumental variable approach, confirms these findings. We estimate a 22% points higher annual employment growth rate, a 14% points higher annual productivity growth, and a 3.6% points higher probability of exit for firms with binding employment targets. Our calibrated model further demonstrates that without these targets, aggregate employment would have been 15% lower after 10 years. Additionally, an alternative policy of productivity investment subsidies proved costly and less effective in the short term.
    Keywords: Industrial policy, Privatizations; Productivity; Size-dependent regulations
    JEL: D22 D24 J08 L25
    Date: 2023–11–07
  9. By: Zhang, Jian (China University of Mining and Technology); Mishra, Ashok K. (Arizona State University); Zhu, Peixin (Nanjing Agricultural University)
    Abstract: This study investigates the impact of the land rental market (LRM) on labor productivity in rural China. Particular attention is given to farm and non-farm labor productivity. Using 2012 household-level data and a multinomial endogenous switching treatment regression (MESTR) technique, we find that rural households renting-in farmland increased labor productivity in the farm sector by about 55%, while labor productivity in the non-farm sector decreased by about 6%. We also find that rural households renting-out farmland had lower labor productivity in both the farm and non-farm sectors by 13% and 9%, respectively. More family labor transferred from the farm to the non-farm sector after renting-out land.
    Keywords: land rental market, labor productivity, farm sector, non-farm sector
    JEL: C31 J22 Q15 Q18
    Date: 2023–11
  10. By: Anthony J. Venables; Patricia G.Rice
    Abstract: Spatial variation in the productivity of different sectors is a determinant of sectoral location, with consequences for wages, rents and the cost-of-living in each area. This paper develops an analytical framework which shows how productivity advantage in a highly tradable sector translates into higher nominal wages, rents, and cost of living in an area; in contrast, high physical productivity in non-tradables may result in lower wages, rents and revenue productivity. The theory’s prediction that an area’s bias towards highly tradable activities is positively correlated with its earnings is confirmed by empirical analysis of earnings data for the ITL3 areas of GB. As suggested by the theory, two factors drive this effect. Approximately one-third is a direct result of sectoral composition – on average across GB, tradable sectors pay higher wages. The remaining two-thirds is an equilibrium effect, arising as a productivity advantage in tradables translates into higher local employment and factor prices. While our primary analysis is on recent data, we show that our approach also captures the impact of the structural change that occurred in Britain during the 1970s and 1980s on regional earnings disparities.
    Date: 2023–01–09
  11. By: Ajab Khan (University of Portsmouth); Ali Sina Önder (University of Portsmouth); Sercan Özcan (University of Portsmouth)
    Abstract: It is important to understand whether and in what ways performance-based public funds enhance universities’ research output. Using a synthetic difference-in-differences analysis and propensity score methods to compare research productivity differences between UK universities’ Economics and Business fields and their synthetic counterparts in the US during the REF period in contrast to the pre-REF period, we find a significant and consistent increase in peer-reviewed journal publications of UK universities since the introduction of REF in 2009. We further show that publication output per author declined as a result of increased collaboration while overall citations increased. Our findings further suggest that REF may have played a pivotal role in elevating research excellence in elite institutions.
    Keywords: Public funding; Research Productivity; Research Excellence Frameworks (REFs)
    JEL: O38 I23 H52
    Date: 2023–11–16
  12. By: Herry Achmad Buchory ("Sekolah Tinggi Ilmu Ekonomi Ekuitas, Jln. PHH. Mustopa No. 31, 40124, Bandung, Indonesia " Author-2-Name: Author-2-Workplace-Name: 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 - A Bank is a financial institution that collects and distributes funds to the public to obtain Profitability. The Covid-19 pandemic has affected the economic sector, especially the banking sector. The intermediation function needs to run optimally, increasing investment in secondary reserves, decreasing operational efficiency, increasing credit risk, and reducing bank profitability. The research aimed to determine the effect of Banking Intermediation, Secondary Reserves, Operational Efficiency, and Credit Risk on Profitability at Regional Development Banks in Indonesia for the 2019 – 2022 period, partially and simultaneously. Banking Intermediation is measured by the ratio of credit to total third-party funds (Loan to Deposit Ratio/LDR), Secondary Reserve is measured by the percentage of securities held to third-party funds (TPF), Operational Efficiency is measured by the ratio of operating expenses to operating income (OEOI), Credit Risk is measured by Non-performing Loans (NPLs), and Profitability is measured by Return on Assets (ROA). Methodology – Descriptive and verification methods with a quantitative approach will be used in this study with secondary data from published financial reports from 22 Regional Development Banks in Indonesia. The data analysis technique used is multiple linear regression. Findings – The study's findings show that partially LDR has a positive and significant effect on ROA; Secondary reserve has a positive but not significant impact on ROA; OEOI and NPLs ratios have a negative and significant effect on ROA. While simultaneously, LDR, Secondary Reserve, OEOI Ratio, and NPLs substantially impact ROA. Novelty – Compared to previous studies, bank profitability is not only influenced by banking intermediation, operational efficiency, and credit risk but also by secondary reserves, although not significantly. Type of Paper - Empirical"
    Keywords: Banking Intermediation, Banking Profitability, Credit Risk, Operational Efficiency, Secondary Reserve.
    JEL: G21 G32
    Date: 2023–09–30
  13. By: Yayi Wei
    Abstract: There is an intense debate regarding the relationship between the firm performance and the degree of geographic diversification. Yet, the results are inconsistent. Learning from the literature of international business, we divide the overall geographic diversification into intra-provincial and inter-provincial diversification to obtain a clearer insight of this relationship. In this research, we manually collected data from listed Chinese real estate firms’ annual reports over 10 years. Using both the property-based and the sold-area-based measurement of geographic diversification level, we find that a more diversified strategy would lead to better firm performance when diversifying within a specific province. Meanwhile, firms would confront a firm value reduction at the first stage and then higher firm performance when diversifying across provinces. These findings add to the extant literature on the impact of geographic diversification on firm performance and shed light on the expanding strategy for real estate firms. The future work of this study is to examine the moderating effect of the geographic distance between firms’ headquarters and properties in each city on this relationship.
    Keywords: Firm Performance; Inter-provincial diversification; Intra-provincial diversification
    JEL: R3
    Date: 2023–01–01
  14. By: Marjan Petreski; Stefan Tanevski; Irena Stojmenovska
    Abstract: This paper examines how investment in environmentally sustainable practices impacts employment and labor productivity growth of firms in transition economies. The study considers labor skill composition and geographical differences, shedding light on sustainability dynamics. The empirical analysis relies on the World Bank-s Enterprise Survey 2019 for 24 transition economies, constructing an environmental sustainability index from various indicators through a Principal Components Analysis. To address endogeneity, a battery of fixed effects and instrumental variables are employed. Results reveal the relevance of environmental sustainability for both employment and labor productivity growth. However, the significance diminishes when addressing endogeneity comprehensively, alluding that any relation between environmentally sustainable practices and jobs growth is more complex and needs time to work. The decelerating job-creation effect of sustainability investments is however confirmed for the high-skill firms, while low-skill firms benefit from labor productivity gains spurred by such investment. Geographically, Central Europe sees more pronounced labor productivity impacts, possibly due to its higher development and sustainability-awareness levels as compared to Southeast Europe and the Commonwealth of Independent States.
    Date: 2023–10
  15. By: Badr Hayar; Jan Muckenhaupt; Bing Zhu
    Abstract: This paper investigates the relationship between ESG ratings and the operational, financial and market performance of Public Real Estate Companies (PRECs). By investigating a large sample of listed real estate firms from 2015 to 2021 in 35 countries, we find a positive relationship between overhead ESG metrics (and its sub-components) and firms’ market performance. Furthermore, we observe a negative relationship between ESG-Scores and the net operating income, general and administrative costs and financial costs. Our results remain robust after correcting for selection bias. Our results suggest that firms engaged in more socially responsible practices suffer from more financial costs and thus, have lower operational and financial performance. On the other hand, the stock market appreciates any decent investment in ESG, by overvaluing the corresponding companies.
    Keywords: Esg; Listed Real Estate; Performance; Public Real Estate Companies
    JEL: R3
    Date: 2023–01–01
  16. By: Kirill Kolmykov
    Abstract: Currently, the advantages of decentralization through blockchain technology in the financial sector are actively discussed. In this article, we investigate the decentralization in the governance of Decentralized Autonomous Organizations (DAO) using the Gini coefficient as an indicator of inequality among the token owners. This metric is analyzed in the context of Return on Investment (ROI) for companies in the decentralized finance (DeFi) sector. Our goal is to understand whether the level of "real" decentralization in blockchain-based governance affects financial efficiency, and to explore the benefits and possible limitations of such an approach. This analysis allows for a deeper understanding of the significance and impact of decentralization on the functioning and productivity of organizations in the DeFi sector, and to determine the extent to which this impact is positively or negatively reflected in their success and profitability. Additionally, the results of this analysis will provide a fuller understanding of the dynamics and potential of blockchain for organization governance.
    Date: 2023–11

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