nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2023‒12‒11
thirteen papers chosen by

  1. Fiscal rules and their influence on public sector efficiency By López-Herrera, Carmen; Cordero, José M.; Pedraja-Chaparro, Francisco; Polo, Cristina
  2. Management and misallocation in Mexico By Nicholas Bloom; Leonardo Iacovone; Mariana Pereira-Lopez; John Van Reenen
  3. Short-run Johansen frontier-based industry models: methodological refinements and empirical illustration on fisheries By Kristiaan Kerstens; Jafar Sadeghi; Ignace van de Woestyne; John Walden
  4. Tax Structure and Public Sector Efficiency: New Evidence for Developing Countries By Lucas Menescal; José Alves
  5. Digitalization: the edge of first movers By Cátia Cerqueira; Fernando Alexandre; Miguel Portela
  6. Widening or closing the gap? The relationship between artificial intelligence, firm-level productivity and regional clusters By Nils Grashof; Alexander Kopka
  7. There are different shades of green: heterogeneous environmental innovations and their effects on firm performance By Gianluca Biggi; Andrea Mina; Federico Tamagni
  8. Committing to grow: Privatizations and firm dynamics in East Germany By Akcigit, Ufuk; Alp, Harun; Diegmann, André; Serrano-Velarde, Nicolas
  9. Construction productivity and global inequality By Saumik Paul; Kunal Sen
  10. Firms and inequality By Jan De Loecker; Tim Obermeier; John Van Reenen
  11. Retail externalities and productivity: Evindence from Turkish shopping malls By Niels Kuiper; Mark Van Duijn; Arno Van der Vlist
  12. FDI and superstar spillovers: evidence from firm-to-firm transactions By Mary Amiti; Cedric Duprez; Jozef Konings; John Van Reenen
  13. Specific costs and gross margins: estimation practices By Dominique Desbois

  1. By: López-Herrera, Carmen; Cordero, José M.; Pedraja-Chaparro, Francisco; Polo, Cristina
    Abstract: This paper explores the possible link between the presence and stringency of fiscal rules and the overall efficiency levels of the public sector for a sample of 50 economies from different geographical regions around the world. In particular, we are interested in analyzing this possible relationship in the years following the period of fiscal consolidation that most countries experienced after the 2008 financial crisis. To do this, we rely on a nonparametric conditional approach that allows the consideration of two alternative composite indicators representing fiscal rule strength level as a potential conditional factor that might affect the estimation of efficiency scores reflecting public sector performance. Our results suggest that the influence of fiscal rules on public sector efficiency scores is significant and negative, especially when the system of fiscal rules has not reached an advanced stage of development.
    Keywords: Fiscal rules, Efficiency, Public expenditure; DEA; Nonparametric conditional approach
    JEL: C44 E62 H40 H61
    Date: 2023–10–31
  2. By: Nicholas Bloom; Leonardo Iacovone; Mariana Pereira-Lopez; John Van Reenen
    Abstract: We argue that greater misallocation is a key driver of the worse management practices in Mexico compared to the US. These management practices are strongly associated with higher productivity, growth, trade, and innovation. One indicator of greater misallocation in Mexico is the weaker size-management relationship compared to the US, particularly in the highly distorted Mexican service sector. Second, the size-management relationship is weaker in smaller markets, measured by distance to the US for manufacturing firms and population density for service firms. Third, municipalities with weaker institutions, measured by contract enforcement, crime, and corruption, have a weaker size-management relation. These results are consistent with frictions lowering aggregate management quality and productivity.
    Keywords: misallocation, management, performance, services, manufacturing, Mexico
    Date: 2022–01–25
  3. By: Kristiaan Kerstens (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique); Jafar Sadeghi (IÉSEG School Of Management [Puteaux]); Ignace van de Woestyne (KU Leuven - Catholic University of Leuven - Katholieke Universiteit Leuven); John Walden
    Abstract: This contribution focuses on extending the current state of the art in a central resource allocation planning model known under the name of the short-run Johansen industry model in three ways. First, we correct a long-standing issue of the correct choice of weight variables on the capacity distribution by guaranteeing that these weights determine production combinations that belong to the production technology on which the plant capacity estimates are based in the first place. Second, we exploit the gap between average practice and best practice models by introducing an efficiency improvement imperative that allows for partial technical inefficiency when planning. Third, instead of only considering output-oriented plant capacity, we allow for alternative plant capacity concepts. In particular, we introduce an input-oriented plant capacity concept, and an alternative attainable output-oriented plant capacity concept that corrects a major empirical issue in the traditional output-oriented plant capacity notion. These methodological refinements are illustrated with a data set on U.S. fishing vessels by developing a planning model to curb overfishing.
    Date: 2023–10–02
  4. By: Lucas Menescal; José Alves
    Abstract: This study examines the effects of the tax structure composition for public sector efficiency in a sample of 41 developing countries for the period between 1997-2019. We start by calculating Public Sector Performance (PSP) composite indicators and use them as outputs to compute data envelopment analysis (DEA) efficiency scores under different orientation setups. After using a general-to-specific approach to identify the most determinant variables, we analyze the relevance of different taxes for public efficiency in a panel regression specification. We find that tax effects are significantly different depending on the orientation of DEA scores. Notably, we observe that taxation presents stronger detrimental effects to input-oriented scores in comparison to output-oriented, and that Opportunity PSP indicators seem more affected by property taxes and working contributions, while Musgravian PSP indicators are more closely related to individual and corporate income taxes. Our results allow us to provide policy implications regarding better tax structures to improve efficiency on the provision of public goods and services.
    Keywords: public sector performance, government efficiency, tax structure, data envelopment analysis, developing countries, panel data
    JEL: C14 C23 H11 H21 H50
    Date: 2023
  5. By: Cátia Cerqueira (NIPE/Center for Research in Economics and Management, University of Minho, Portugal); Fernando Alexandre (NIPE/Center for Research in Economics and Management, University of Minho, Portugal); Miguel Portela (NIPE/Center for Research in Economics and Management, University of Minho, Portugal; and IZA, Bonn)
    Abstract: This paper examines firms’ characteristics and the impact on firm performance of being a first mover in the adoption of cloud computing and big data digital technologies, relative to followers and non-adopters. Our results show that firms with higher levels of education both for managers and workers, and shorter managerial tenure are more likely to be digital adopters. First movers in the adoption of big data show distinct characteristics from followers, namely they are younger and have a larger share of higher education workers. Regarding the impact on firm performance, we find that first movers in cloud computing experience significant performance gains, namely in gross value added and productivity, compared to non-adopters, but no gains relative to followers. Interestingly, first movers in big data exhibit a productivity edge over followers and non-adopters. Furthermore, we find that higher levels of education and shorter managerial tenure amplify the positive effects of big data adoption on firm performance.
    Keywords: cloud computing, big data, management, digitalization, productivity, ICT
    JEL: D24 M10 E22 E23 J24 O33 L20
    Date: 2023
  6. By: Nils Grashof; Alexander Kopka
    Abstract: Artificial intelligence (AI) is seen as a key technology for economic growth. However, the impact of AI on firm productivity has been under researched – particularly through the lens of inequality and clusters. Based on a unique sample of German firms, filling at least one patent between 2013 and 2019, we find evidence for a positive influence of AI on firm productivity. Moreover, our analysis shows that while AI knowledge does not contribute to productivity divergences in general, it increases the productivity gap between laggard and all other firms. Nevertheless, this effect is reduced through the localisation in clusters.
    Keywords: Artificial intelligence, Inequality, Productivity, Clusters, Patents, Firm-level
    JEL: O18 O30 R10
    Date: 2023–11
  7. By: Gianluca Biggi; Andrea Mina; Federico Tamagni
    Abstract: Using a firm-level dataset from the Spanish Technological Innovation Panel (2003-2016), this study explores the characteristics of environmentally innovative firms and quantifies the effects of pursuing different types of environmental innovation strategies (resource-saving, pollution-reducing, and regulation-driven innovations) on sales, employment, and productivity dynamics. The results indicate, first, that environmental innovations tend to be highly correlated with firms’ technological capabilities, although to varying degrees across types of environmental innovation, whereas structural characteristics are less significant. Second, we observe heterogeneous effects of different types of environmental innovation on performance outcomes. We find no evidence that any type of environmental innovation fosters sales growth while pollution-reducing and regulation-driven innovations boost employment growth. Moreover, both resource-saving and pollution-reducing innovations bring about productivity advantage.
    Keywords: Environmental Innovation; Green Investments, Resource-saving, Pollution-reduction, Envi- ronmental compliance; Firm performance.
    Date: 2023–11–20
  8. By: Akcigit, Ufuk; Alp, Harun; Diegmann, André; Serrano-Velarde, Nicolas
    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
  9. By: Saumik Paul; Kunal Sen
    Abstract: Two well established stylized facts of economic development are a strong correlation between investment and income, and large differences in investment rates across countries. Construction is the largest component of investment. This paper examines the implications of heterogeneity in construction productivity on cross-country income disparity. We estimate the 10:1 spread in construction productivity among 145 countries in 2005 as a factor of 61.7-fold.
    Keywords: Productivity, Construction industries, Construction sector, Input–output, Economic linkages, Income inequality
    Date: 2023
  10. By: Jan De Loecker; Tim Obermeier; John Van Reenen
    Abstract: In the last few decades, dramatic changes have been documented in the US business landscape. These include rising productivity and pay dispersion between firms, higher aggregate markups (of price over variable costs), growing dominance of big companies ("superstar firms"), a fall in the labour share of GDP and a decline in business dynamism. We review the existing literature and present a new analysis using comprehensive firm level panel data, to show that qualitatively, these trends are also apparent in the UK. This similarity suggests that common trends in technology (or globalisation) have been the driving force behind these changes, rather than country-specific institutions (such as weaker US antitrust enforcement). Since (at least) the mid-1990s, there has been a large increase in UK firm-level inequality (especially in the upper tails) of productivity, wages, markups, and labour shares. Of course, inequality between firms is much less of a concern than inequality between people. However, it can signal economic problems, such as a slowdown in the diffusion of ideas between leading and laggard firms and can foster higher wage inequality. Indeed, there has been little aggregate UK productivity growth since the Global Financial Crisis, and this has been a serious drag on median and mean real wages. We suggest a simple theoretical framework for understanding some of these trends and quantitatively analyse why, despite increasing markups, the, the UK labour share has not fallen as sharply as that in the US. Finally, we suggest some policy options in response to these worrying trends, include modernising competition rules to deal with the growth of superstar firms and strengthening worker bargaining power.
    Keywords: firms inequality, financial crisis
    Date: 2022–03–09
  11. By: Niels Kuiper; Mark Van Duijn; Arno Van der Vlist
    Abstract: We measure the impact of retail externalities on the productivity of stores in shopping malls. We focus on (1) retail externalities generated by anchor stores, and (2) retail externalities generated by competing stores. We identify these retail externalities using variations in the composition of stores within shopping malls over time. We use monthly sales data from 1, 170 stores that were located in 9 Turkish shopping malls over 2013-2016. We find evidence for anchor and competition externalities within shopping malls. Both externalities show distance decay effects within the shopping malls. We also find considerable heterogeneity in the impact of the two retail externalities and their distance decay effects across stores from different product categories.
    Keywords: Productivity; Retail Externalities; Sales; Shopping malls
    JEL: R3
    Date: 2023–01–01
  12. By: Mary Amiti; Cedric Duprez; Jozef Konings; John Van Reenen
    Abstract: Using firm-to-firm transactions, we show that starting to supply a "superstar" firm (large domestic firms, exporters and multinationals) boosts productivity by 8% in the medium-run. Placebos on starting relationships with smaller firms and novel identification strategies support a causal interpretation of "superstar spillovers". Consistent with a model of technology transfer, we find falls in markups and bigger treatment effects from technology-intensive superstars. We also show that the increase in new buyers is particularly strong within the superstar firm's network, a "dating agency" effect. This suggests an important role for raising productivity through superstars' supply chains regardless of their multinational status.
    Keywords: productivity, FDI, spillovers
    Date: 2023–04–21
  13. By: Dominique Desbois (AgroParisTech)
    Abstract: This paper presents the extension to the analysis of interval data of a statistical processing chain for the dual estimation of specific cost and gross margin distributions.
    Keywords: Interval data analysis, conditional quantile estimates, Farm accounting data network
    Date: 2023–11–02

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