nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2024‒03‒25
nineteen papers chosen by

  1. Assessment of Technical Efficiency in the Moroccan Public Hospital Network: Using the DEA Method By Youssef Er-Rays; Meriem M'dioud
  2. Determinants of Efficiency of Commercial Banks in India after Global Crises By K. Ravirajan; K. R. Shanmugam
  3. Efficiency of Commercial Banks in India after Global Financial Crisis By K. Ravirajan; K. R. Shanmugam
  4. Do large firms generate positive productivity spillovers? By Mary Amiti; Cedric Duprez; Jozef Konings; John Van Reenen
  5. The impact of the COVID-19 pandemic and policy support on productivity By Lalinsky, Tibor; Anyfantaki, Sofia; Benkovskis, Konstantins; Bergeaud, Antonin; Bun, Maurice; Bunel, Simon; Colciago, Andrea; De Mulder, Jan; Lopez, Beatriz Gonzalez; Jarvis, Valerie; Krasnopjorovs, Olegs; Lebastard, Laura; Lopez-Garcia, Paloma; Martins, Fernando; Meinen, Philipp; Meriküll, Jaanika; Parker, Miles; Serafini, Roberta; Szörfi, Béla; Vanhala, Juuso; Volk, Matjaz; Anastasatou, Marianthi; Fantino, Davide; Havel, Jiri; Khametshin, Dmitry; Kolaiti, Tetie; Raos, Josip; Šelebaj, Domagoj; Vaňko, Milan
  6. Complementary Inputs and Industrial Development: Can Lower Electricity Prices Improve Energy Efficiency? By Gregor Singer
  7. Evaluating the Financial Factors Influencing Maternal, Newborn, and Child Health in Africa By Youssef Er-Rays; Meriem M'dioud
  8. The Heterogeneous Productivity Effects of Generative AI By David H. Kreitmeir; Paul A. Raschky
  9. Digitalisation and productivity By Bunel, Simon; Bijnens, Gert; Botelho, Vasco; Falck, Elisabeth; Labhard, Vincent; Lamo, Ana; Röhe, Oke; Schroth, Joachim; Sellner, Richard; Strobel, Johannes; Anghel, Brindusa
  10. Behind the numbers: exploring caste inequities in entrepreneurial success By Rajesh Raj Natarajan; Kunal Sen
  11. The Effect of Technology on Financial Performance of Indian Banks By K. Ravirajan; K. R. Shanmugam
  12. Demographic aging and long-run economic growth in Germany By Ochsner, Christian; Other, Lars; Thiel, Esther; Zuber, Christopher
  13. Local Government Splits and Economic Activities : Micro-Level Evidence from Indonesia By Asyahid, Esa A.
  14. Managerial Contribution to Firm Success: Evidence from Professional Football Leagues By Kaori Narita; Benjamin Holmes; Ian McHale
  15. Generative AI at Work By Brynjolfsson, Erik; Li, Danielle; Raymond, Lindsey R.
  16. The Horizon effect: A counterfactual analysis of EU research & innovation grants By Mitra, Alessio; Niakaros, Konstantinos
  17. Baumol's Cost Disease in Acute vs. Long-term Care - Do the Differences Loom Large? By Kaan Celebi; Jochen Hartwig; Anna Pauliina Sandqvist
  18. Globalization and Profitability of US Firms: The Role of Intangibles By Bullipe R. Chintha; Ravi Jagannathan; Sri S. Sridhar
  19. Privatiza\c{c}\~ao de aeroportos: motiva\c{c}\~oes, regula\c{c}\~ao e efici\^encia operacional By Igor R. S. Brito; Alessandro V. M. Oliveira

  1. By: Youssef Er-Rays; Meriem M'dioud
    Abstract: Background: The public hospital network in Morocco plays a crucial role in providing healthcare services. However, this network faces challenges in terms of technical efficiency in healthcare management. Objectives: This study aimed to assess the technical efficiency of the public hospital network in Morocco. Methods: This article compares the efficiency of 77 public hospital networks from 2017 to 2020. Data were collected from the Directorate of Planning and Financial Resources (DPFR) of the Health Ministry Marocco. The Data Envelopment Analysis (DEA) method was employed, using three inputs (Hospital, Physician and Paramedical) and four outputs (Functional capacity, Hospitalization days and Admission). Additionally, the Malmquist index (MI) is utilized to analyse the factors of production, and peer modelling is incorporated to address hospital inefficiency. Results: The average technical efficiency of public hospital networks under the CRS hypothesis from 2017 to 2020 is 0.697 (71% of DMUs have a score lower than 1), indicating that these networks need to minimize their inputs by approximately 30.3%. The Malmquist index reveals a decline in productivity gain from 2017/2018 (score of 0.980) followed by improvement in 2018/2019 (score of 1.163). In terms of peer modelling, 72.7% of the DMUs should emulate the most effective DMUs beginning in 2020, whereas the lowest score was observed in 2019. Conclusion: These findings highlight the need for the public hospital network in Morocco to enhance the effective and efficient utilization of inputs, such as the number of hospitals and medical and paramedical staff, to produce the same outputs, including the number of surgical procedures, hospitalization days, admissions, and functional capacity.
    Date: 2024–02
  2. By: K. Ravirajan (Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India)); K. R. Shanmugam (Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai)
    Abstract: This study contributes to the bank efficiency literature by estimating the technical efficiency, pure efficiency and scale efficiency of banks in four different ownership groups in India from 2008-09 to 2019-20 utilizing the DEA method and three alternative approaches to choose inputs and outputs of banks-intermediation approach, value added approach and operating approach. It also uses the tobit estimation procedure to identify the factors determining the variations in the technical efficiency of banks. Results indicate a high degree of inefficiency of several banks during the study period and there is a greater scope for improving their performances. There exists sizable scale inefficiency and banks are likely to lose sizable output. The results also indicate that banks with larger capital adequacy ratio or young banks or larger banks or more profitable banks are more efficient. Foreign banks and nationalized banks are more efficient than private domestic banks. We hope that the findings of this study will be useful to international agencies and other stakeholders in evaluating and improving the performance of Indian banks.
    Keywords: Technical Efficiency, Pure and Scale Efficiency, Data Envelopment Analysis, Non-Performing Assets, Indian Commercial Banks, Emerging Market
    JEL: G2 G21 G28 E58 C6
    Date: 2023–11
  3. By: K. Ravirajan (Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India)); K. R. Shanmugam (Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai)
    Abstract: While the global financial crisis had a cascading effect on all economies and financial sectors of countries, the Indian economy and its finances, particularly its banking system, due to its stringent regulatory and prudent policies. However, in the post crisis period, the scenario changed in the Indian banking because of the mounting pile of bad loans. The main purpose of the study is to estimate the bank specific efficiency utilizing the technical efficiency effect model in the stochastic frontier approach for panel data during the post global financial crisis period, 2009-2018 and find out the factors causing variations in efficiency of Indian banks. Results indicate that despite the consolidation of information technology efforts, the efficiency of the Indian banking industry deteriorated during the post global financial crisis period. This may be due to the mounting pile of non-performing assets. Interestingly, the public banks seem to be more efficient than their private counterparts. The results also indicate that banks with larger capital adequacy ratio or older banks or banks with more branches are less inefficient in generating interest income.
    Keywords: stochastic frontier, technical efficiency effect, panel data, Indian banks, financial crisis
    JEL: D24 G21 G34 G28
    Date: 2023–11
  4. By: Mary Amiti; Cedric Duprez; Jozef Konings; John Van Reenen
    Abstract: The potentially negative effects of market concentration on consumers and workers has received much attention, but Mary Amiti, Cédric Duprez, Jozef Konings and John Van Reenen find that big firms can also promote productivity in the wider economy. Analysing data from Belgium, they find that being global is not necessary for such benefits, with large domestic firms generating spillovers of the same magnitude as multinationals.
    Keywords: productivity, fdi, spillovers
    Date: 2024–02–20
  5. By: Lalinsky, Tibor; Anyfantaki, Sofia; Benkovskis, Konstantins; Bergeaud, Antonin; Bun, Maurice; Bunel, Simon; Colciago, Andrea; De Mulder, Jan; Lopez, Beatriz Gonzalez; Jarvis, Valerie; Krasnopjorovs, Olegs; Lebastard, Laura; Lopez-Garcia, Paloma; Martins, Fernando; Meinen, Philipp; Meriküll, Jaanika; Parker, Miles; Serafini, Roberta; Szörfi, Béla; Vanhala, Juuso; Volk, Matjaz; Anastasatou, Marianthi; Fantino, Davide; Havel, Jiri; Khametshin, Dmitry; Kolaiti, Tetie; Raos, Josip; Šelebaj, Domagoj; Vaňko, Milan
    Abstract: This paper studies the short-term and long-term consequences of the COVID-19 pandemic for productivity in Europe. Aggregate and sectoral evidence is complemented by firm-level data-based findings obtained from a large micro-distributed exercise. Productivity trends during the COVID-19 pandemic differed from past trends. Labour productivity per hour worked temporarily increased, while productivity per employee declined across sectors given the widespread use of job retention schemes. The extensive margin of productivity growth was muted to some degree by the policy support granted to firms. Firm entries declined while firm exits increased much less than during previous crises. The pandemic had a significant impact on the intensive margin of productivity growth and led to a temporary drop in within-firm productivity per employee and increased reallocation. Job reallocation was productivity-enhancing but subdued compared to the Great Recession. As confirmed by a granular data analysis of the distribution of employment subsidies and loan guarantees and moratoria, job reallocation and also debt distribution and“zombie firm” prevalence were not significantly affected by the COVID-19 policy support. The pandemic and related lockdowns accelerated changes in consumer preferences and working habits with potential long-term effects. Generous government support muted the surge in unemployment and reduced permanent scarring effects. JEL Classification: D22, H25, J38, O47
    Keywords: adjustment of firms, COVID-19, cross-country analysis, Europe, government support, labour productivity, micro-distributed exercise, productivity-enhancing reallocation
    Date: 2024–02
  6. By: Gregor Singer
    Abstract: The transition from traditional labor intensive to modern capital intensive production is a key factor for industrial development. Using half a million observations from Indian manufacturing plants, I analyze the effects of a secular decrease in industrial electricity prices through the lens of a model with technology choices and complementarities between electricity and capital inputs. Using instrumental variables, I show how lower industrial electricity prices can increase both labor productivity and electricity productivity. Apart from positive effects on firm economic and environmental performance, cost-price pass through significantly benefitted consumers, and the productivity improvements limited increases in carbon emissions.
    Keywords: industrial development, energy efficiency, electricity productivity, labor productivity, electricity prices, coal prices, incidence, climate policy
    JEL: Q41 D24 D22 O14
    Date: 2024
  7. By: Youssef Er-Rays; Meriem M'dioud
    Abstract: The study investigated the impact of healthcare system efficiency on the delivery of maternal, newborn, and child services in Africa. Data Envelopment Analysis and Tobit regression were employed to assess the efficiency of 46 healthcare systems across the continent, utilizing the Variable Returns to Scale model with Input orientation to evaluate technical efficiency. The Tobit method was utilized to explore factors contributing to inefficiency, with inputs variables including hospital, physician, and paramedical staff, and outputs variables encompassing maternal, newborn, and child admissions, cesarean interventions, functional competency, and hospitalization days. Results revealed that only 26% of countries exhibited efficiency, highlighting a significant proportion of 74% with inefficiencies. Financial determinants such as current health expenditures, comprehensive coverage index, and current health expenditure per capita were found to have a negative impact on the efficiency of maternal-child services. These findings underscore a marginal deficiency in technical efficiency within Africa's healthcare systems, emphasizing the necessity for policymakers to reassess the roles of both human resources and financial dimensions in enhancing healthcare system performance.
    Date: 2024–02
  8. By: David H. Kreitmeir (Department of Economics and SoDa Labs, Monash University); Paul A. Raschky (Department of Economics and SoDa Labs, Monash University)
    Abstract: We analyse the individual productivity effects of Italy's ban on ChatGPT, a generative pretrained transformer chatbot. We compile data on the daily coding output quantity and quality of over 36, 000 GitHub users in Italy and other European countries and combine these data with the sudden announcement of the ban in a difference-in-differences framework. Among the affected users in Italy, we find a short-term increase in output quantity and quality for less experienced users and a decrease in productivity on more routine tasks for experienced users.
    Keywords: artificial intelligence, productivity
    JEL: D8 J24 O33
    Date: 2024–03
  9. By: Bunel, Simon; Bijnens, Gert; Botelho, Vasco; Falck, Elisabeth; Labhard, Vincent; Lamo, Ana; Röhe, Oke; Schroth, Joachim; Sellner, Richard; Strobel, Johannes; Anghel, Brindusa
    Abstract: The productivity-enhancing effects of digitalisation have generated increased interest in the promotion of digital technologies. This report provides different estimations for euro area countries of the impact of digital uptake on productivity at firm level, showing that the adoption of digital technologies could lead to an increase in firms’ productivity in the medium term. However, not all firms and sectors experience significant productivity gains from digital adoption, and not all digital technologies deliver significant productivity gains. The report highlights possible factors behind the low productivity benefits of digitalisation in euro area countries. For example, a lack of strong institutions and governance structures may help to explain why digital diffusion is slower than expected, why it is slower in some countries than others and why the expected productivity benefits from digitalisation have not been fully achieved by now. Furthermore, the report suggests that the full benefits of the digital revolution will be reaped by properly supplying skills to firms and also by investing in computerised information in low-productivity firms. JEL Classification: D24, E24, E22, J24, O33, O38, C67
    Keywords: complementary investments, digitalisation, human capital, institutions, productivity
    Date: 2024–02
  10. By: Rajesh Raj Natarajan; Kunal Sen
    Abstract: The documented under-representation of marginalized groups in business ownership and the labour market is a concerning issue. This study explores how caste disparities in small-firm entrepreneurship impact on firm performance in India, focusing on the informal sector. Our examination shows a significant productivity gap between firms owned by disadvantaged castes and others, including Other Backward Classes and Forward Castes, across the productivity distribution.
    Keywords: Caste, Productivity gap, Informal sector, Firms, Discrimination, India
    Date: 2024
  11. By: K. Ravirajan (Research Scholar (Corresponding Author), Madras School of Economics, Gandhi Mandapam Road, Chennai-600 025 (India)); K. R. Shanmugam (Director and Professor, Madras School of Economics, Gandhi Mandapam Road, Chennai)
    Abstract: This study empirically analyses the effect of technology on the financial performance of 50 Indian banks during 2011-12 to 2019-20. It considers three technology indicators – average amount of debit card transaction at ATM, average amount of debit card transaction at POS and average amount of NEFT transactions and three performance indicators – return on assets, return on equity and net interest margins of banks and uses them to construct the composite technology index and the composite performance index respectively. It regresses the performance indicators individually and also the composite performance index on technology indicators/technology index along with other explanatory variables and estimates these equations using the standard panel data methodology. As these regression results provide the average effect of technology indicators and technology index on banking performance, it also allows the technology index to interact with bank dummies to observe bank specific effects of technology in the alternative specification of equations. The estimation results indicate that the NEFT has a negative and significant effect on the performance index, but it has a positive and significant effect on both return on assets and return on equity. Surprisingly, both average amounts of debit card transactions at ATM and POS do not influence all performance indicators and the performance index. Thus, the technology impact is mixed based on the performance indicator and the NEFT is the dominant technology indicator in determining the profitability of banks. Results from the estimation of an alternative specification of the model indicate that the technology index has a significant negative effect on the performance index of 42 banks. However, it has a significant positive effect on both return on assets and return on equity in almost all banks, but it does not play a role in determining the net interest margin of banks. We hope that these results are useful to policymakers and other researchers to take appropriate strategies to improve the performance of the banking industry in India.
    Keywords: Technology Index, The Performance Index of Banks, Panel Data Methods, Indian Commercial Banks.
    JEL: G21 G28 L25 L86 O31 O33
    Date: 2023–11
  12. By: Ochsner, Christian; Other, Lars; Thiel, Esther; Zuber, Christopher
    Abstract: We study the long-run interaction between Germany's economic growth trajectory and demographic aging. Using a comprehensive dataset, we leverage the classical production function approach to estimate potential output growth between 1970 and 2070. We account for the inherent uncertainty in our projections using Bayesian estimation techniques. Overall, Germany's potential output growth up to 2070 will be low if current economic trends persist. In particular, the diminishing labor volume, coupled with sluggish total factor productivity and investment trend growth, contributes to the decline. Our results highlight the significance of demographic factors in shaping economic trajectories and the critical need for policy interventions to mitigate adverse effects. Our analysis can serve as valuable inputs for formulating long-term economic policies.
    Keywords: demographic aging, production function, potential output, Germany, long-run forecast, economic growth
    JEL: E13 E17 E23
    Date: 2024
  13. By: Asyahid, Esa A. (Warwick University)
    Abstract: Although local government splits have been widely implemented in developing countries, there is limited empirical evidence on their effects on economic activities. This study investigates the impacts of district splits on household business activities using a rich household-level panel dataset that spans over 20 years and covers an episode of massive district splits in Indonesia. Using a difference-in-differences approach, I found that district splits do not improve non-farm business revenue growth. Instead, they drive more businesses to exit from the industry. On the other hand, district splits improve farm business revenue growth and entry into this industry. However, the growth effect is not driven by productivity improvement as expected, but solely the result of land input expansion, which is likely acquired in unsustainable ways. Additionally, district splits decrease out-migration, aligning with the Tiebout sorting model. Taken together, these findings add another argument for the need to reevaluate the current practices and regulations on local government splits.
    Keywords: D13 ; D73 ; H77 JEL classifications: local government splitting ; Indonesia ; household business ; difference-indifference
    Date: 2024
  14. By: Kaori Narita; Benjamin Holmes; Ian McHale
    Abstract: Previous research in economics and management finds significant heterogeneity across senior managers in their contribution to organisational success. It remains, however, challenging to disentangle the impact of managers from that of other inputs, such as labour, due to limited data availability in many general organisations. In contrast, individual workers (players)’ performance and their characteristics are publicly available in professional football leagues. Therefore, this study employs data from the industry to estimate individual managers’ contributions to field performance, given the resources at hand. To measure a club’s output, we adopt expected goals, which are less influenced by randomness than conventional measures. Controlling for players’ quality based on their historical performance as well as a club’s financial strengths, we yet find significant impacts of managerial inputs. In addition, we compare our estimated manager coefficients with a more naive measure of managerial performance, such as winning percentage. This highlights the importance of taking into account the differences in resources that a manager has at his disposal as well as the randomness of the outcome when evaluating a manager’s performance.
    Keywords: firm performance, managers, football, performance evaluation, leadership
    JEL: M54 Z22 L25
    Date: 2022–11
  15. By: Brynjolfsson, Erik (Stanford U); Li, Danielle (MIT); Raymond, Lindsey R. (MIT)
    Abstract: New AI tools have the potential to change the way workers perform and learn, but little is known about their impacts on the job. In this paper, we study the staggered introduction of a generative AI-based conversational assistant using data from 5, 179 customer support agents. Access to the tool increases productivity, as measured by issues resolved per hour, by 14% on average, including a 34% improvement for novice and low-skilled workers but with minimal impact on experienced and highly skilled workers. We provide suggestive evidence that the AI model disseminates the best practices of more able workers and helps newer workers move down the experience curve. In addition, we find that AI assistance improves customer sentiment, increases employee retention, and may lead to worker learning. Our results suggest that access to generative AI can increase productivity, with large heterogeneity in effects across workers.
    JEL: D8 J24 M15 M51 O33
    Date: 2023–11
  16. By: Mitra, Alessio; Niakaros, Konstantinos
    Abstract: This paper evaluates the causal impact of the Horizon 2020 Framework Programme for Research and Innovation on financial firm-level outcomes using a Difference-in-Differences (DiD) approach. We use administrative data from CORDA and financial data from ORBIS spanning from 2010 to 2022, for a sample of approximately 40 thousand unique private companies that applied for Horizon 2020 funding. The findings suggest that firms receiving Horizon 2020 grants exhibit an average increase of 20% in employment and about 30% in total assets and revenues, compared to comparable companies in the control group, in the years after receiving their first grant. Positive effects persist even after 2.5 years, which is the average duration of a project in our sample. Companies in the “Information and communication” and “Professional, scientific and technical activities” NACE sectors are driving the results, while other sectors show insignificant effects.
    Keywords: Horizon 2020, Difference-in-Differences, European Union, Innovation policy
    JEL: G38 L52 O38 D22
    Date: 2023
  17. By: Kaan Celebi (Chemnitz University of Technology); Jochen Hartwig (Chemnitz University of Technology, KOF Swiss Economic Institute, ETH Zurich, Hans Böckler Stiftung, Forum for Macroeconomics and Macroeconomic Policies, Düsseldorf); Anna Pauliina Sandqvist (Deloitte GmbH Wirtschaftsprüfungsgesellschaft, Munich)
    Abstract: Baumol's (1967) model of ‘unbalanced growth’ yields a supply-side explanation for the ‘cost explosion’ in health care. Applying a testing strategy suggested by Hartwig (2008), a sprawling literature affirms that the ‘Baumol effect’ has both a statistically and economically significant impact on health care expenditure growth. Skeptics maintain, however, that the proliferation of hi-tech medicine in acute care is clearly at odds with the assumption underlying Baumol's model that productivity-enhancing machinery and equipment is only installed in the ‘progressive’ (i.e. manufacturing) sector of the economy. They argue that Baumol's cost disease may affect long-term care, but not acute care. Our aim in this paper is to test whether Baumol's cost disease affects long-term care and acute care differently. Our testing strategy consists in combining Extreme Bounds Analysis (EBA) with an outlier-robust MM estimator. Using panel data for 23 OECD countries, our results provide robust and statistically significant evidence that expenditures on both acute care and long-term care are driven by Baumol's cost disease, even though the effect on long-term care expenditures is more pronounced.
    Keywords: Health care expenditure, Baumol's cost disease, Extreme Bounds Analysis, MM estimator, OECD panel
    JEL: C12 C23 I10
    Date: 2024–02
  18. By: Bullipe R. Chintha; Ravi Jagannathan; Sri S. Sridhar
    Abstract: China's admission into the WTO in 2001 heralded a new era of globalization, increasing both import competition in domestic markets and foreign opportunities for US firms. In the aggregate, the average annual profitability of US public firms during the post globalization period (2003-2019) increased by 11.5% of the corresponding pre-globalization period (1984-2002) profitability. This increase in overall aggregate profitability was primarily driven by foreign profitability increasing by 47.4% for firms in the S&P 500 index, which are larger and have more intangible assets created by R&D and SG&A expenditures. In contrast, following globalization, the average aggregate domestic profitability of US firms remained flat, and firms employed more capital to generate sales. Firms with higher intangible assets benefited more from globalization.
    JEL: F20 F30 G0 G12 G30 L1 L25
    Date: 2024–03
  19. By: Igor R. S. Brito; Alessandro V. M. Oliveira
    Abstract: In this study, we will address some topics related to the privatization of airports in the scientific literature, in an attempt to provide an answer to the following question: does the privatization of airports bring positive results? Firstly, we turn our attention to the motivations leading to privatization, considering the two main parties involved, the government and the private sector. After all, the success of such a decision will be relative to the reasons that justify it. In a second moment, we will consider the regulatory issue, whose influence on the airport's financial performance is consolidated in the literature. In the third part, we address the main documented results of privatization, with special attention to productive efficiency, whose improvement is the most popular motivation for privatization.
    Date: 2024–02

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