nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2024‒01‒08
sixteen papers chosen by

  1. Statistical Inference for Hicks–Moorsteen Productivity Indices By Simar, Léopold; Zelenyuk, Valentin; Zhao, Shirong
  2. Russell and Slack-Based Measures of Efficiency: A Unifying Framework By Léopold Simar; Valentin Zelenyuk; Shirong Zhao
  3. Gender diversity in senior management and firm productivity: Evidence from nine OECD countries By OECD
  4. Resilience in farm technical efficiency and enabling factors: Insights from panel farm enterprise surveys in Kazakhstan and Uzbekistan By Takeshima, Hiroyuki; Djanibekov, Nodir; Abduvalieva, Nilufar; Mirkasimov, Bakhrom; Akramov, Kamiljon
  5. The link between product and process innovations and productivity for Colombian manufacturing By Andrés Mauricio Gómez-Sánchez; Juan A. Máñez-Castillejo; Juan A. Juan A. Sanchis-Llopis
  6. Quantifying the effect of policies to promote educational performance on macroeconomic productivity By Balázs Égert; Christine de la Maisonneuve; David Turner
  7. Nonlinear Propagation of Sectoral Productivity Shocks with Variable Elasticities of Substitution By Paul, Saumik; Raju, Dhushyanth
  8. Holy Cows and Spilt Milk - The Impact of Religious Conflict on Firm-Level Productivity By Jeanet Bentzen; Nina Boberg-Fazlic; Paul Sharp; Christian Volmar Skovsgaard; Christian Vedel
  9. System Relevance and Firm Performance Due to COVID-19 By Böhm, Michael Johannes; Qendrai, Pamela
  10. An efficiency analysis of Spanish airports By Adrian Nerja
  11. Business Finland COVID-19 Support Funding – What Was Achieved, and at What Cost? By Hirvonen, Johannes; Kässi, Otto; Ropponen, Olli
  12. Turning technological relatedness into industrial strategy: The productivity effects of Smart Specialisation in Europe By Giacomo Lo Conte; Andrea Mina; Silvia Rocchetta
  13. European SMEs and Resource Efficiency Measures: Firm Characteristics and Contextual Factors By Guglielmo Maria Caporale; Cristiana Donati; Nicola Spagnolo
  14. Sectoral Total Factor Productivity In Pakistan By Naseem Faraz; Omer Siddique; Asim Saeed
  15. Female Board Representation and Corporate Performance: A Review and New Estimates for Australia By Bayly, Nicholas; Breunig, Robert; Wokker, Chris
  16. Deregulation and Efficiency in Slot-Constrained Airports By Pierre Picard; Alessandro Tampieri; Xi Wan

  1. By: Simar, Léopold (Université catholique de Louvain, LIDAM/ISBA, Belgium); Zelenyuk, Valentin; Zhao, Shirong
    Abstract: The statistical framework for the Malmquist productivity index (MPI) is now welldeveloped and emphasizes the importance of developing such a framework for its alternatives. We try to fill this gap in the literature for another popular measure, known as Hicks–Moorsteen Productivity Index (HMPI). Unlike MPI, the HMPI has a total factor productivity interpretation in the sense of measuring productivity as the ratio of aggregated outputs to aggregated inputs and has other useful advantages over MPI. In this work, we develop a novel framework for statistical inference for HMPI in various contexts: when its components are known or when they are replaced with nonparametric envelopment estimators. This will be done for a particular firm’s HMPI as well as for the simple mean (unweighted) HMPI and the aggregate (weighted) HMPI. Our results further enrich the recent theoretical developments of nonparametric envelopment estimators for the various efficiency and productivity measures. We examine the performance of these theoretical results for the unweighted and weighted mean of HMPI using Monte-Carlo simulations and also provide an empirical illustration.
    Keywords: Hicks–Moorsteen Productivity Index ; Data Envelopment Analysis ; Aggregate ; Central Limit Theorem
    JEL: C12 C14 C43 C67
    Date: 2023–10–04
  2. By: Léopold Simar (Institut de Statistique, Biostatistique et Sciences Actuarielles, Université Catholique de Louvain, Voie du Roman Pays 20, B1348 Louvain-la-Neuve, Belgium); Valentin Zelenyuk (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia); Shirong Zhao (School of Finance, Dongbei University of Finance and Economics, Dalian, Liaoning 116025)
    Abstract: We propose a unifying framework for the slack-based measurement of technical efficiency that also embraces Russell efficiency and many other important approaches of efficiency measures as special cases in this unified framework.
    Keywords: Russell Efficiency, Slack-Based Efficiency, Non-parametric Efficiency Estimators, Data Envelopment Analysis
    JEL: C14 L24 L25
    Date: 2023–11
  3. By: OECD
    Abstract: This paper investigates the link between gender diversity in senior management and firm-level productivity. For this purpose, it constructs a novel cross-country dataset with information on firms’ senior management group and other firm characteristics, covering both publicly listed and unlisted firms in manufacturing and non-financial market services across nine OECD countries. The main result from the analysis is that productivity gains from increasing gender diversity in senior management are highest among firms with low initial diversity. Increasing the female share to the sample average of 20% in firms with initially lower shares would increase aggregate productivity by around 0.6%. This suggests that improving women’s access to senior management positions matters not only for equity but could yield significant productivity gains.
    Keywords: gender siversity, senior management, total factor productivity
    JEL: M14 O47 J16
    Date: 2023–12–13
  4. By: Takeshima, Hiroyuki; Djanibekov, Nodir; Abduvalieva, Nilufar; Mirkasimov, Bakhrom; Akramov, Kamiljon
    Abstract: Economic resilience within the agrifood system is becoming increasingly crucial for assuring sustainable development. This is particularly so in regions with volatile and fragile environments, including Central Asia. Evidence remains scarce regarding what factors can enhance the economic resilience of agents within the agrifood system, including the resilience of productivity and technical efficiency. We partly fill this knowledge gap using the unique panel datasets of farm enterprises in Uzbekistan and southern Kazakhstan, collected in 2019 and 2022, during which these enterprises experienced significant economic shocks in input prices. Using novel methods that combine Inverse Probability Weighting and panel stochastic frontier analyses models, we show that farmers who received more agricultural training and who had been granted greater autonomy in their production decisions in 2018 experienced greater resilience in technical efficiency despite the need to reduce the use of chemical fertilizer and oil/diesel in response to their price surges. Our findings suggest that providing critical public goods like information (related to training) and enabling environment (related to decision-making autonomy) can potentially enhance the resilience in the technical efficiency of farm enterprises. Furthermore, with chemical fertilizer and oil/diesel being potentially environmentally harmful inputs, these farmers also indirectly demonstrated resilience toward environmental sustainability.
    Keywords: UZBEKISTAN; KAZAKHSTAN; CENTRAL ASIA; ASIA; resilience; agrifood systems; sustainable development; farms; shocks; agricultural training; inputs; prices; access to information; inverse probability weighting; panel stochastic frontier analyses
    Date: 2023
  5. By: Andrés Mauricio Gómez-Sánchez (Facultad de Ciencias Contables, Económicas y Administrativas, Universidad del Cauca, Colombia); Juan A. Máñez-Castillejo (Department of Applied Economics II, Universidad de Valencia and ERICES, Spain); Juan A. Juan A. Sanchis-Llopis (Department of Applied Economics II, Universidad de Valencia and ERICES, Spain)
    Abstract: This paper investigates the impact of two innovating strategies (product and process) on total factor productivity (TFP) growth and the dynamic linkages between these strategies, for Colombia. In a first stage, we explore through panel data discrete choice models whether the ex-ante more productive firms are those that introduce innovations. In a second stage, we test whether the introduction of innovations boosts productivity growth. In this second stage, we use matching techniques. In a final stage, we explore the firm’s joint decision to innovate in process and/or product through a bivariate probit model. Data from the Annual Manufacturing Survey and the Technological Development and Innovation Survey, for 2007-2016, are used for Colombian manufacturing firms. Our results suggest that the most productive firms self- select into the introduction of innovations (both process and product). Further, these innovations render positive returns in terms of productivity growth only one period forward regardless of the type of innovation. In addition, we also find a strong persistence of process and product innovation over time, and cross effects between these two strategies, as product innovations are boosted by process innovation and vice versa.
    Keywords: product innovation, process innovation, productivity, self-selection/returns into/from innovation
    JEL: O3 D24 L6
    Date: 2023–12
  6. By: Balázs Égert; Christine de la Maisonneuve; David Turner
    Abstract: This paper evaluates the link between educational policies and i) student performance and ii) macroeconomic measures of productivity. The analysis has two stages. First, using the 2015 and 2018 PISA databases, it quantifies the relationship between student test scores and the characteristics of students taking the tests, their school environment and national educational systems. Second, assuming that these relationships reflect the effect of different characteristics/policies on student test performance, the second stage converts the latter into an estimated effect on macroeconomic measures of productivity using a new measure of human capital as an intermediary variable. This new measure of human capital, devised in previous OECD work, combines student test scores and mean years of schooling with estimated elasticities that suggest the former is more important. The analysis shows a positive association between spending on education and student test scores, but only for levels of student expenditure below the OECD median, suggesting scope for currently low-spending countries to raise student performance with potential gains to long-run productivity. Boosting participation in early childhood education as well as improving teacher quality is found to generate large aggregate productivity gains. There are significant, but smaller, macroeconomic gains for many countries from limiting grade repetition and ability grouping across all subjects as well as increasing the accountability of schools. Finally, the results provide evidence for income inequality having a major influence on productivity through a human capital channel.
    Keywords: education policies, human capital, OECD, PISA, productivity, student test scores
    JEL: E24 I20 I25 I26 I28
    Date: 2023–12–22
  7. By: Paul, Saumik (Newcastle University); Raju, Dhushyanth (World Bank)
    Abstract: This paper examines the nonlinear propagation of sectoral productivity shocks in a general equilibrium framework with intersectoral linkages characterized by allowing elasticities of substitution in sectoral outputs and sectoral productivities to vary across sector pairs. Evidence based on a sample of 38 countries and 35 sectors shows stronger roles of certain sectors in the aggregate propagation of sectoral productivity shocks with variable elasticities than with constant elasticities. The results of sectoral productivity shocks on cross-country income convergence between 2005 and 2011 are robust across the two types of elasticities in terms of the direction of change, but not the magnitude.
    Keywords: nonlinear propagation of productivity shock, Morishima elasticity of substitution, intersectoral linkages
    JEL: D24 F15 F43 N10 O47 D57 Q54
    Date: 2023–11
  8. By: Jeanet Bentzen (University of Copenhagen, CAGE, CEPR); Nina Boberg-Fazlic (TU Dortmund University); Paul Sharp (University of Southern Denmark, CAGE, CEPR); Christian Volmar Skovsgaard (University of Southern Denmark); Christian Vedel (University of Southern Denmark)
    Abstract: We consider the impact of non-violent religious conflict on firm-level productivity. We zoom in on a Protestant and otherwise very homogeneous country: early twentieth century Denmark. We exploit variation due to the emergence of pietist movements who fought for the hearts and minds of Danes. In the countryside, much of the religious debate concerned whether or not creameries - the main catalyst of the industrial revolution in Denmark - should be closed on Sundays in accordance with the Third Commandment. We construct a rich microlevel dataset for 964 creameries and combine this with various measures of the intensity of the religious conflict. Exploiting variation in preaching by a prominent religious figure, we provide plausibly causal evidence that religious conflict hampered firm-level productivity. Examining the mechanism, we proceed to demonstrate that the reduction in productivity is due to the religious conflict rather than whether or not the factory produced on Sundays.
    Keywords: Dairying, Denmark, productivity, religiosity
    JEL: N33 N34 O12 O13 Z12
    Date: 2023–12
  9. By: Böhm, Michael Johannes (TU Dortmund); Qendrai, Pamela (IZA)
    Abstract: We study the impact of COVID-19 on firm performance. Using financial accounts of a large number of German firms, we document that industry affiliation is an important economic dimension of the crisis. Motivated by this fact, we analyze an important industry-specific regulation, system relevance, which allows businesses to remain open in times of lockdown and other restrictions. A difference-in-differences estimation strategy shows that relative revenues of system-relevant firms increase by 6-9 percent and profits by 17-25 percent due to COVID. Controlling for channels that are arguably not driven by the system-relevance regulation, the impact on revenues decreases but remains significant. Overall, results indicate that regulations affecting the ability to operate as well as industry-level shocks play important roles for firm performance during a pandemic-induced crisis.
    Keywords: firm performance, industry shocks, system relevance, COVID-19
    JEL: H12 L25
    Date: 2023–11
  10. By: Adrian Nerja
    Abstract: Privatization and commercialization of airports in recent years are drawing a different picture in the aeronautical industry. Airport benchmarking shows the accommodation and performance of airports in the evolution of the market and the new requirements that they have to face. AENA manages a wide and heterogeneous network of airports. There are 46 airports divided into three categories and with particularities due to their geographical location or the competitive environment where they are located. This paper analyzes the technical efficiency and its determinants of the 39 commercial airports of the AENA network between the years 2011-2014. To do this, two benchmarking techniques, SFA and DEA, are used, with a two-stage analysis. The average efficiency of the network is between 75-79\%. The results with the two techniques are similar with a correlation of 0.67. With regard to the commercial part of the network, AENA has a high margin for improvement because it is below the world and European average. AENA must focus on the development of the commercial area and the introduction of competition within the network to improve the technical efficiency of regional airports mainly.
    Date: 2023–11
  11. By: Hirvonen, Johannes; Kässi, Otto; Ropponen, Olli
    Abstract: Abstract This paper examines the labour market impacts of Finland’s initial COVID-19 subsidy program, designed to mitigate the economic fallout of the pandemic. Utilising a novel and comprehensive dataset and a judge-leniency instrumental variables design, we analyse the effects of these subsidies at both the firm and worker levels. Our findings reveal nuanced effects: the program increased the wage sum in the treated firms and decreased the risk of unemployment. On the other hand, the subsidies reduced labour productivity in treated firms, potentially hindering creative destruction. At the worker level, subsidised employees fared better in subsequent years than their non-subsidised counterparts, with slight increases in annual salaries and a higher likelihood of being employed. However, these workers were more likely to be employed in lower-productivity firms. See also Etla Working Paper No 111 Jobs, Workers, and Firms: Dissecting the Labour Market Effects of Finland’s COVID-19 Subsidy Program.
    Keywords: Business Finland COVID-19 business development support, Crisis subsidies, COVID-19, Productivity, Unemployment
    JEL: H25 H32 E24
    Date: 2023–12–18
  12. By: Giacomo Lo Conte; Andrea Mina; Silvia Rocchetta
    Abstract: In this paper we explore the impact of place-based innovation policy in Europe. We focus on the effects of Smart Specialisation strategies on the labour productivity of regional economies. We design an analytical framework that takes into account the entrepreneurial discovery process through which the policy is implemented, and connect the technological relatedness of regions with their specialisation choices. We use an IV estimation approach capable of handling endogeneity problems, and apply it to an extensive dataset of 102 NUTS2 regions extracted from the European Commission Smart Specialisation Portal. The results show that Smart Specialisation strategies increase labour productivity as long as the priorities are set in sectors related to pre-existing technological capabilities, indicating the fundamental importance of path-dependency in diversification choices. The findings deepen our understanding of regional development and innovation strategies, and have relevant implications for the implementation of appropriate policy instruments.
    Keywords: Related diversification; Specialization; Regional policy; Innovation policy; Place-based Policies
    JEL: O33 R11
    Date: 2023–12
  13. By: Guglielmo Maria Caporale; Cristiana Donati; Nicola Spagnolo
    Abstract: This paper investigates how access to finance and skilled workforce endowments affect the propensity of European small and medium sized enterprises (SMEs) to adopt different types of resource efficiency measures (REMs), possibly simultaneously. For this purpose, a Multinomial Logit model is estimated using data from the 2017 Flash Eurobarometer survey covering a large sample of European firms. The analysis is carried out first for the whole sample and then for clusters based on two contextual factors measured by the Ease of Access to Loans Index (EAL) and the European Skill Index (ESI). The findings suggest that the two firm characteristics considered lead to the adoption of more than one REM simultaneously. Moreover, the propensity to implement them is stronger in the case of firms located in countries with easier access to financial resources, whilst the workforce skill-set appears to be a less important factor in this context.
    Keywords: resource efficiency measures, financing, SMEs, workforce skills
    JEL: G32 O16 Q40
    Date: 2023
  14. By: Naseem Faraz (Pakistan Institute of Development Economics); Omer Siddique (Pakistan Institute of Development Economics); Asim Saeed (Ministry of Planning, Development and Special Initiatives Islamabad)
    Abstract: Arguably, productivity is one of the key building blocks for global competitiveness. Evidence suggests that total factor productivity growth is positively correlated with GDP growth. As Pakistan continues to search for high and sustainable export-led growth, it is crucial to keep sight of the most critical denominator of the objective: productivity – its significance in the recipe for growth remains unmatched. We are well aware of the challenges faced by Pakistan; economists have spoken at length about the twin deficits and elevated debt levels, whose roots probably intertwine with the country’s productivity structure. Reasons for Pakistan’s boom and bust cycles would surely identify low productivity as one of the culprits of the inconsistent growth path besides highlighting it as one of the causes for the country’s myriad engagements with the International Monetary Fund (IMF). Perhaps the national desire to maintain a consistent and stable macroeconomic environment may only be possible if the “business model†of the economy is structurally appropriate to grow and generate resources to maintain manageable debt levels and keep current and fiscal account balances in check.
    Date: 2023
  15. By: Bayly, Nicholas (Australian National University); Breunig, Robert (Australian National University); Wokker, Chris (Australian National University)
    Abstract: Despite a conventional wisdom that female board members positively impact firm performance, a thorough examination of the research to date reveals no consensus that female board members have either a positive or negative effect on firm performance. We build the largest dataset of Australian board appointments assembled to date. We use our data to demonstrate how difficult it is to replicate existing research, with one example from Australia and one from the US. Using event studies and regression analyses we demonstrate that there is little evidence that female board representation affects firm financial performance.
    Keywords: firm performance, board of directors, gender representation, female directors
    JEL: J16 N20 G32
    Date: 2023–11
  16. By: Pierre Picard (DEM, Université du Luxembourg); Alessandro Tampieri (University of Florence. IT); Xi Wan (Nanjing Audit University, CN)
    Abstract: We investigate the presence of inefficiency in slot allocation when a coordinator al- locates slots on destination markets served by monopoly and duopoly airlines, and the number of available peak-time slots is constrained by airport capacity. When an airport maintains regulated per-passenger fees, we observe the emergence of allocative inefficiency. Conversely, in scenarios where an airport has the autonomy to set fees, we find that, in line with empirical evidence, fee deregulation resolves these allocative inefficiencies by increasing per-passenger fees. However, the improvement in allocation efficiency may be counterbalanced by the rise in fees, potentially impacting overall welfare.
    Keywords: Slot allocation, Endogenous fee, Airport capacity.
    JEL: R41 H21 H23
    Date: 2023

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