nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2024‒04‒29
sixteen papers chosen by

  1. Misallocation and manufacturing TFP in Colombia By Camacho, Adriana; Conover, Emily; Scrimgeour, Dean
  2. Techies and Firm-Level Productivity By Harrigan, James; Reshef, Ariell; Toubal, Farid
  3. Bringing Trentino's productivity growth back on track: A comparison with OECD "peer" regions By OECD
  4. Corporate taxation and total factor productivity: Evidence on a non-linear relationship By Nguyen, Hang T. T.
  5. A Proposal to Improve Country-Level Data on Total Factor Productivity Growth By Mr. Andrew M. Warner
  6. Regional productivity differences in the UK and France - from the micro to the macro By Bridget Kauma; Giordano Mion
  7. The Effects of Digitalization on Production By Florentine Schwark; Andreas Tryphonides
  8. Do Managers Matter? Management Practices in post-COVID Northern Ireland By David Jordan; Sweta Pramanick; John D. Turner
  9. Anatomy of Technology and Tasks in the Establishment By Xavier Cirera; Diego A. Comin; Marcio Cruz
  10. Private equity financing & firm productivity By Paul Lavery; John Tsoukalas; Nick Wilson
  11. Beauty and Professional Success: A Meta-Analysis By Bortnikova, Kseniya; Havranek, Tomas; Irsova, Zuzana
  12. Good Dispersion, Bad Dispersion By Matthias Kehrig; Nicolas Vincent
  13. The fall and rebound of average establishment size in West Germany By Kovalenko, Tim; Sauerbier, Timo; Schröpf, Benedikt
  14. Use of Artificial Intelligence and Productivity of Japanese Firms and Workers (Japanese) By MORIKAWA Masayuki
  15. Teamwork and Spillover Effects in Performance Evaluations By Enzo Brox; Michael Lechner
  16. Digitalization Intensity and Extensive Margins of Exports in Manufacturing Firms from 27 EU Countries - Evidence from Kernel-Regularized Least Squares Regression By Joachim Wagner

  1. By: Camacho, Adriana; Conover, Emily; Scrimgeour, Dean
    Abstract: Following Hsieh and Klenow (2009) this paper studies productivity dispersion in Colombian industrial establishments using the Colombian Annual Manufacturing Survey (AMS) from 1982 to 1998. We consider how much a hypothetical removal of firm-level distortions would increase manufacturing productivity in Colombia and compare it with the United States. We find that such a reallocation would increase manufacturing Total Factor Productivity (TFP) in Colombia around 15% more than in the United States in our baseline calibration. We find that distortions have been increasing over time. Productivity gains are larger if we use Colombia’s higher estimated elasticity of output with respect to capital. Furthermore we show that TFP is positively correlated with exporting status, age, size, and location in the Oriental region and the capital of the country.
    Keywords: reallocating factors of production; Colombia; Total Factor Productivity; manufacturing; misallocation
    JEL: O47 D24
    Date: 2024–03–04
  2. By: Harrigan, James; Reshef, Ariell; Toubal, Farid
    Abstract: We study the impact of techies — engineers and other technically trained workers — on firm-level productivity. We first report new facts on the role of techies in the firm by leveraging French administrative data and unique surveys. Techies are STEM-skill intensive and are associated with innovation, as well as with technology adoption, management, and diffusion within firms. Using structural econometric methods, we estimate the causal effect of techies on firm-level Hicks-neutral productivity in both manufacturing and non-manufacturing industries. We find that techies raise firm-level productivity, and this effect goes beyond the employment of R\&D workers, extending to ICT and other techies. In non-manufacturing firms, the impact of techies on productivity operates mostly through ICT and other techies, not R\&D workers. Engineers have a greater effect on productivity than technicians.
    Keywords: productivity, R&D, ICT, techies, STEM skills
    Date: 2024–03
  3. By: OECD
    Abstract: The Autonomous Province of Trento (Trentino) is among the most productive regions in Europe, but over the past two decades its productivity growth has stagnated. As a result, the productivity gap of Trentino widened by over 20% compared to regions with the same productivity level in 2000. The benchmarking of productivity drivers in Trentino with those of “peer” regions points to several policy priorities, including: reviving productivity in tradeable sectors, also through increased internationalisation; increasing the share of the labour force with a tertiary education; and getting more out of public R&D while boosting private sector R&D.
    Keywords: drivers of productivity, international comparison, sectoral analysis, subnational productivity
    JEL: D24 J21 J24 L11 O3 O47 R11
    Date: 2024–04–16
  4. By: Nguyen, Hang T. T.
    Abstract: This paper presents an empirical analysis of the relationship between the corporate income tax (CIT) and the growth of total factor productivity (TFP) within European firms. Using data from the AMADEUS database over the 2005-2013 period, I measure the TFP of each firm using Wooldridge's (2009) methodology, alongside four alternative approaches introduced by Olley and Pakes (1996), Levinsohn and Petrin (2003), Ackerberg et al. (2015), and ordinary least squares (OLS) regression. The baseline investigation follows the TFP catch-up framework of Griffith et al. (2009). While my analysis corroborates prior findings indicating a negative relationship between CIT rates and the speed with which firms converge to the productivity frontier (productivity catch-up, Gemmell et al., 2018), it also uncovers a positive association between CIT rates and the average growth of productivity. Thus, the evidence reveals a non-linear relationship between corporate taxation and firms' productivity growth. Heterogeneity tests show that corporate income taxation is more relevant for the productivity growth of small-scale enterprises and domestic entities. These findings are robust to a variety of alternative specifications and tests.
    Date: 2024
  5. By: Mr. Andrew M. Warner
    Abstract: The assumption behind popular data on national capital stocks, and therefore total factor productivity, is that countries were in a steady state in the first year that investment data became available. This paper argues that this assumption is highly implausible and is necessarily responsible for implausible data on the ratio of capital to output and productivity growth. It is not credible that countries with similar incomes had huge differences in their capital stocks. This paper claims, with evidence, that implausible features of the data can be greatly reduced by using data on electricity usage or national stocks of road vehicles.
    Keywords: Productivity; Total Factor Productivity; Economic Growth
    Date: 2024–03–22
  6. By: Bridget Kauma (University of Sussex); Giordano Mion (ESSEC Business School)
    Keywords: Firm-level dataset, Merging, BSD, FAME, VAT, FICUS, FARE, Productivity, Markups, UK, France, regional disparities, density
    JEL: R12 D24
    Date: 2023–11
  7. By: Florentine Schwark; Andreas Tryphonides
    Abstract: How does digitalization transform the macroeconomic production function? Within an endogenous technology choice framework, we find that sectors with more digital capital exhibit a higher elasticity of substitution between value-added and intermediate inputs and within value-added, between capital and labor. The shift in the elasticity of substitution is consistent with a higher complementarity of input-specific productivities. We also find that digitalization contributes to Hicks-neutral technical change in value added. Not all types of digital capital have a significant impact on the production function.
    Keywords: Digitalization, Elasticity of substitution, Productivity, Endogenous technology choice, Technology frontier
    JEL: E23 E25 O33
    Date: 2024–03–27
  8. By: David Jordan (Queen's University Belfast); Sweta Pramanick (Queen's University Belfast); John D. Turner (Queen's University Belfast)
    Keywords: Management, Northern Ireland, productivity
  9. By: Xavier Cirera; Diego A. Comin; Marcio Cruz
    Abstract: We construct a grid that covers the key business functions of an establishment and the main technologies used in each of them. We populate this grid with data from over 20, 000 establishments in 15 countries. We use this dataset to document novel “facts” about how establishments use technology, the sourcing of business functions, the specialization of establishments from a task perspective, the measurement of technology, and the relationship between technology sophistication and productivity across establishments. We find that differences in technology sophistication account for 31% of cross-establishment dispersion in productivity and for more than half of the agricultural productivity gap.
    JEL: O33
    Date: 2024–03
  10. By: Paul Lavery (Adam Smith Business School, University of Glasgow); John Tsoukalas (The Productivity Institute, The University of Glasgow); Nick Wilson (Leeds University Business School)
    Keywords: Private equity buyouts; productivity; investment; firm growth
    JEL: F14 G01 G32 G34
    Date: 2024–01
  11. By: Bortnikova, Kseniya; Havranek, Tomas; Irsova, Zuzana
    Abstract: Common wisdom suggests that beauty helps in the labor market. We show that two factors combine to explain away the mean beauty premium reported in the literature. First, correcting for publication bias reduces the premium by at least a third. Second, controlling for cognitive ability negates the premium for all occupations except sex workers, a point further underscored by the similarity of the beauty effect on earnings and productivity. The second factor implies a positive link, perhaps genetic, between beauty and intelligence. We find little evidence of substantial attenuation bias that could offset publication and omitted-variable biases. The empirical literature is inconsistent with discrimination based solely on tastes for beauty. To obtain these results we collect 1, 159 estimates of the effect of beauty on earnings or productivity reported in 67 studies and codify 33 aspects that reflect estimation context, including the potential intensity of attenuation bias. We employ recently developed techniques to account for publication bias and model uncertainty.
    Keywords: Beauty premium, productivity, meta-analysis, model uncertainty, publication bias, p-hacking
    JEL: C83 J24 J31
    Date: 2024
  12. By: Matthias Kehrig; Nicolas Vincent
    Abstract: We document that most dispersion in marginal revenue products of inputs occurs across plants within firms rather than between firms. This is commonly thought to reflect misallocation: dispersion is “bad.” However, we show that eliminating frictions hampering internal capital markets in a multi-plant firm model may in fact increase productivity dispersion and raise output: dispersion can be “good.” This arises as firms optimally stagger investment activity across their plants over time to avoid raising costly external finance, instead relying on reallocating internal funds. The staggering in turn generates dispersion in marginal revenue products. We use U.S. Census data on multi-plant manufacturing firms to provide empirical evidence for the model mechanism and show a quantitatively important role for good dispersion. Since there is less scope for good dispersion in emerging economies, the difference in the degree of misallocation between emerging and developed economies looks more pronounced than previously thought.
    Keywords: Misallocation, Productivity Dispersion, Multi-Plant Firms, Internal Capital Markets.
    JEL: E2 G3 L2 O4
    Date: 2024–03
  13. By: Kovalenko, Tim; Sauerbier, Timo; Schröpf, Benedikt
    Abstract: In West Germany, the average size of establishments declined during the 1990s and started to increase again in the late 2000s, while the employer size wage premium followed the opposite trajectory. In this paper, we show that these two developments are interrelated. More precisely, our results suggest that variations in the employer size wage premiums induced establishments to vary their employment level, consistent with monopsony power on the labor market. Moreover, our regional analyses show that average establishment size correlates positively with GDP per capita. We rationalize these findings with a heterogeneous firms model with monopsonistic competition in the labor market, stemming from the household's love-of-variety preferences for employers. Both empirics and theory reveal that higher size wage premiums decrease average establishment size by downsizing incumbent establishments and triggering the entry of small establishments, thus also negatively affecting aggregate productivity.
    Keywords: Establishment Size, Size Wage Premium, Productivity, Labor MarketPower, Germany
    JEL: E24 J31 J42 L25
    Date: 2024
  14. By: MORIKAWA Masayuki
    Abstract: With the rapid expansion of the use of artificial intelligence (AI), its effects on economic growth and the labor market are attracting attention from researchers. However, the lack of statistical data on the actual use of AI has been a major obstacle to empirical research. Based on an original survey of firms and workers, this study provides an overview of the use of AI and other automation technologies in Japan, the characteristics of firms and workers who use these technologies, and their views on the effects of AI on productivity and employment. According to the results, first, the number of AI-using firms is increasing rapidly, and firms with a larger share of highly educated workers have a greater tendency to use AI. Robot-using firms are also increasing, but the relationship of their use to workers’ education is weak, suggesting that the impact on the labor market is different for each technology. Second, AI-using firms have higher productivity, higher average wages, and higher expected medium-term growth rates. Third, AI-using firms expect that while it will increase their own productivity and wages, it may decrease their employment. Fourth, even at the worker level, more educated workers are more likely to use AI, suggesting that AI and education are complementary at this stage. Fifth, workers who use AI evaluate their work productivity to have increased by about 20% on average, suggesting that AI could potentially have a fairly large productivity enhancing effect.
    Date: 2024–03
  15. By: Enzo Brox; Michael Lechner
    Abstract: This article shows how coworker performance affects individual performance evaluation in a teamwork setting at the workplace. We use high-quality data on football matches to measure an important component of individual performance, shooting performance, isolated from collaborative effects. Employing causal machine learning methods, we address the assortative matching of workers and estimate both average and heterogeneous effects. There is substantial evidence for spillover effects in performance evaluations. Coworker shooting performance, meaningfully impacts both, manager decisions and third-party expert evaluations of individual performance. Our results underscore the significant role coworkers play in shaping career advancements and highlight a complementary channel, to productivity gains and learning effects, how coworkers impact career advancement. We characterize the groups of workers that are most and least affected by spillover effects and show that spillover effects are reference point dependent. While positive deviations from a reference point create positive spillover effects, negative deviations are not harmful for coworkers.
    Date: 2024–03
  16. By: Joachim Wagner (Leuphana Universität Lüneburg, Institut für Volkswirtschaftslehre and Kiel Centre for Globalization)
    Abstract: The use of digital technologies like artificial intelligence, robotics, or smart devices can be expected to go hand in hand with higher productivity and lower trade costs, and, therefore, to be positively related to export activities. This paper uses firm level data for manufacturing enterprises from the 27 member countries of the European Union to shed further light on this issue by investigating the link between the digitalization intensity of a firm and extensive margins of exports. Applying a new machine-learning estimator, Kernel-Regularized Least Squares (KRLS), which does not impose any restrictive assumptions for the functional form of the relation between margins of exports, digitalization intensity, and any control variables, we find that firms which use more digital technologies do more often export, do more often export to various destinations all over the world, and do export to more different destinations
    Keywords: Digital technologies, exports, firm level data, Flash Eurobarometer 486, kernel-regularized least squares (KRLS)
    JEL: D22 F14
    Date: 2024–04

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