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on Efficiency and Productivity |
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Issue of 2024‒06‒17
twenty papers chosen by |
| By: | Lin Shao; Rongsheng Tang |
| Abstract: | This paper evaluates the contribution of cross-sector allocative efficiency to the productivity slowdown in the US during the 1970s and 2000s. We extend the framework of Oberfield (2013) to derive sufficient statistics for allocative efficiency and decompose aggregate productivity growth in a multi-sector economy with or without input-output linkages. We find approximately two-thirds of the productivity slowdown can be explained by the lack of improvement in allocative efficiency. Furthermore, data shows that increased sector-level volatility is associated with the deterioration of allocative efficiency. |
| Keywords: | productivity slowdown, allocative efficiency, volatility, adjustment costs |
| JEL: | O47 E23 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1185&r= |
| By: | Pardey, Philip G.; Alston, Julian M. |
| Abstract: | Has the golden age of U.S. agricultural productivity growth ended? We analyze the detailed patterns of productivity growth spanning a century of profound changes in American agriculture. We document a substantial slowing of U.S. farm productivity growth, following a late mid-century surge—20 years after the surge and slowdown in U.S. industrial productivity growth. We posit and empirically probe three related explanations for this farm productivity surge-slowdown: the time path of agricultural R&D-driven knowledge stocks; a big wave of technological progress associated with great clusters of inventions; and dynamic aspects of the structural transformation of agriculture, largely completed by 1980. |
| Keywords: | Productivity Analysis, Research and Development/Tech Change/Emerging Technologies |
| Date: | 2024–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:umaesp:342428&r= |
| By: | Pierluigi Angelino; Dirk Czarnitzki; Astrid Volckaert |
| Abstract: | The Flemish government launched its Spearhead Cluster (SHC) policy in 2017. The aim is to boost strategic sectors by setting up cluster initiatives which coordinate collaborative R&D initiatives. In this paper, we analyze whether becoming a member of such a cluster initiative has an impact on the Total Factor Productivity (TFP) of the firm. We exploit firm-level data between 2013 and 2020 to estimate TFP and apply a difference-in-differences approach to assess the programs’ treatment effects. We find that becoming a member of a cluster has an average positive impact on firmlevel TFP of between 1 to 4.4 percent, depending on the econometric specification. These results are the first to provide an insight into the impact of the Flemish SHC policy on productivity. |
| Keywords: | cluster associations, cluster policy, innovation policy, total factor productivity, conditional difference-in-difference |
| Date: | 2024–05–22 |
| URL: | http://d.repec.org/n?u=RePEc:ete:vivwps:741800&r= |
| By: | Paula Bustos; Juanma Castro-Vincenzi; Joan Monràs; Jacopo Ponticelli |
| Keywords: | agricultural productivity, skill-biased technical change, productivity, labor mobility, genetically engineered soy, Brazil |
| JEL: | F16 J43 O13 O14 O33 O41 |
| Date: | 2023–09 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1888&r= |
| By: | Ariel Ortiz-Bobea; Robert G. Chambers; Yurou He; David B. Lobell |
| Abstract: | Increasing agricultural productivity is a gradual process with significant time lags between research and development (R&D) investment and the resulting gains. We estimate the response of US agricultural Total Factor Productivity (TFP) to both R&D investment and weather, and quantify the public R&D spending required to offset the emerging impacts of climate change. We find that offsetting the climate-induced productivity slowdown by 2050 alone requires a sustained public R&D spending growth of 5.2-7.8% per year over 2021-2050. This amounts to an additional $208-$434B investment over this period. These are substantial requirements comparable to the public R&D spending growth that followed the two World Wars. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.08159&r= |
| By: | Tendai Gwatidzo |
| Abstract: | Using data on South Africas commercial banks in the period 20052018, this paper investigates the impact of bank regulation on bank performance. The study uses a fixed effects model to run the regression model as well as the data envelopment analysis approach to estimate efficiency scores. We find a number of interesting results. First, we find a negative relationship between capital stringency and bank performance, suggesting that increased capital requirements force banks to increase their reserves, adversely affecting their performance. Second, we find a positive relationship between activity restrictions and bank performance, indicating that this kind of regulation, which may well be good for the public, as argued by the public interest view of regulation, is also good for the regulated banks. Third, we find a negative and significant relationship between supervisory power and bank performance. Fourth, we find a positive and significant relationship between the market discipline index and bank performance, suggesting that by creating environments characterised by high market discipline, the regulatory regime enhances the ability and incentives of private investors to efficiently monitor banks. This ensures better management of banks, ultimately increasing profitability. Overall, the study finds that regulation matters for bank performance. |
| Date: | 2024–06–03 |
| URL: | https://d.repec.org/n?u=RePEc:rbz:wpaper:11064&r= |
| By: | Alex Rivadeneira |
| Abstract: | In this paper, I digitize economic census data to study unconditional convergence in manufacturing labor productivity across Mexican states from 1988 to 2018. I document its existence in three-digit industries at a rate of convergence of 1.22% per year. However, this result does not hold at the aggregate level: I find no unconditional convergence in manufacturing wide labor productivity across states. Shift-sharing analysis reveals that the primary reason is the lack of labor reallocation towards more productive industries and the underperformance of some of the largest ones. Unconditional convergence at all levels only occurred during 19881998. Afterward, the convergence process broke down and was only observed at disaggregated levels. I provide evidence that one possible cause of this breakdown is the so-called "China shock". Additionally, I show that the convergence process, when it happened, tended to exhibit a catching-down feature, where past leaders have seen their labor productivity decline. |
| Keywords: | growth, convergence, manufacturing, Mexico |
| JEL: | O40 O14 O54 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1186&r= |
| By: | Kenny, Sean |
| Abstract: | This paper constructs annual GDP estimates for Ireland (1924-47) to join the first complete official aggregates. The new series is deployed to revisit Ireland's economic performance in the post-independence decades. Ireland's economy grew at 1.5 per cent per annum and average living standards improved by 40 per cent. The bulk of this was due to labour productivity improvements stemming from workers moving out of agriculture. Starting in 1924 captures the civil war recovery and paints a more positive picture of the 1920s, while the traditional narrative of a "mild" Great Depression is upheld. The 1930s recovery was aided by strong contributions from services and industry, while the economy contracted by 7 per cent during the early "Emergency". Though supporting O'Rourke's view that Irish growth was not unique against European peers, the new data provide evidence of stronger convergence against UK regions. Industry contributed most to growth during the period, growing at 3.6 per cent per annum. The equivalent rate for services was 1.3 per cent, though it contributed substantially during recovery periods. Agricultural output hardly changed due to its post-war contraction. This paper joins a growing number of studies that suggest that Ireland was poorer at independence than previously believed. |
| Keywords: | Historical National Accounts, interwar period, Ireland, GDP, comparative growth, regional GDP, productivity |
| JEL: | N1 N14 O4 O47 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:qucehw:295737&r= |
| By: | Honma, Satoshi; Ushifusa, Yoshiaki; Taghizadeh-Hesary, Farhad; Okamura, Soyoka; Vandercammee, Lilu |
| Abstract: | This study measured the environmental and energy efficiency of 47 regions in Japan for the period 2005–2017, which was before and after the Great East Japan Earthquake (GEJE) in March 2011, using the slacks-based measure data envelopment analysis model. Our model had comprehensive inputs and outputs: seven inputs (labor, capital, coal, oil, gas, renewables, and electricity), one desirable output (gross regional product), and four undesirable outputs (CO2, SOx, NOx, and dust). In our results, before GEJE, the mean environmental efficiency deteriorated from 0.529 in 2005, 0.518 in 2008, 0.501 in 2011, and 0.464 in 2014 but improved to 0.527 in 2017. Iwate, Miyagi, and Fukushima in the Tohoku region were severely damaged by the earthquake, but these areas were inefficient even before the disaster. Tokyo's environmental efficiency deteriorated from unity in 2005 and 2008 to 0.839 in 2008 and 0.698 in 2011 and then improved back to unity in 2017. We also presented potential reduction ratios for energy and undesirable outputs. To examine the determinants of efficiency, we regressed the efficiency on influencing factors using the panel Tobit model. Gross regional product per capita and tertiary industry share were positively correlated with environmental efficiency. This implies that the development of the service sector is more helpful for transitioning to a sustainable society compared with other sectors. |
| Keywords: | Environmental efficiency; Data envelopment analysis; Fukushima nuclear disaster; Japan |
| JEL: | Q0 Q4 Q53 Q54 |
| Date: | 2024–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120945&r= |
| By: | Mahmood Mehdiloo (Department of Mathematics and Applications, University of Mohaghegh Ardabili, Ardabil, Iran); Jafar Sadeghi (Edwards School of Business, University of Saskatchewan, Saskatoon, Canada); Kristiaan Kerstens (Univ. Lille, CNRS, IESEG School of Management, UMR 9221 - LEM - Lille Économie Management, Lille F-59000, France) |
| Abstract: | We contrast two distinct axiomatic approaches to model metatechnologies. The traditional bottom up approach revolves around axioms characterizing group technologies. In contrast, our innovative top down approach introduces a new set of axioms that directly identify the metatechnology itself. These new axioms lead to discover new algebraic statements of two metatechnologies: in particular, one metatachnology maintaining a new within-group convexity axiom, and another one without it that is essentially nonconvex. Through these metatechnology specific axioms, we derive novel minimum extrapolation results for these two metatechnologies. We adopt a directional economic inefficiency concept as a general measurement framework and its additive decomposition into technical and allocative components. We develop single-stage linear programs for the measurement of directional economic and technical inefficiencies within these two metatechnologies. Our key results are illustrated using a numerical illustration. We manage to establish links between this new top down approach and some key findings from the existing bottom up metatechnology literature. |
| Keywords: | Data envelopment analysis; Metatechnology; Axiomatic approach; Convexity; Directional economic efficiency |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:ies:wpaper:e202412&r= |
| By: | Maya M. Durvasula; Sabri Eyuboglu; David M. Ritzwoller |
| Abstract: | Across fields, the quantity of research has increased substantially, without an attendant increase in output. We argue that, in medicine, this indicator of declining productivity reflects a compositional shift toward low-capital, low-productivity research. Using a fine-tuned, open-source large language model, we construct a novel census of capital-intensive, high-productivity medical investment -- clinical trials. Since 2010, the annual quantity of clinical trials has been constant. By contrast, the quantity of other forms of clinical research has increased substantially. Within clinical trials, there is substantial heterogeneity in productivity. The distribution of this heterogeneity is stable over time. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.08030&r= |
| By: | Asai, Kentaro; Lopes, Marta C.; Tondini, Alessandro |
| Abstract: | This paper examines how legislative reductions in working hours impact firms’ employment, output, and productivity. We exploit a Portuguese reform that reduced standard hours from 44 to 40 hours in 1996. Our findings indicate that the reform had adverse effects on the employment and output of affected firms. These effects can be attributed to a mechanical increase in hourly labor cost induced by the restriction imposed on firms to reduce monthly salaries along with hours. Treated firms adjusted their employment by reducing hiring. Furthermore, treated firms significantly improved hourly labor productivity, and there is some evidence suggesting an intensified use of capital. Firms that reduced working hours through collective agreements prior to the reform were able to increase productivity without adverse effects on employment and output. Together, these results show that working hour reductions can decrease employment for affected firms while simultaneously inducing a more efficient use of labor. |
| Keywords: | Working hours, Wages, Labor demand, Productivity |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:cpm:docweb:2405&r= |
| By: | Satoshi Nakano; Kazuhiko Nishimura |
| Abstract: | The characteristics inherent in a Domar aggregation, when all sectoral productions embody a common nonneutral elasticity of substitution, is examined. There, the general equilibrium propagation of productivity changes entails structural transformation that brings nonlinearities in their aggregation into price indices. We show that negative singularity, such that a finite productivity decrease induces an infinitely large price, is possible in an inelastic economy, while positive singularity, such that a finite productivity increase induces a zero price, is possible in an elastic economy. Regarding the aggregate outputs, two independent productivity changes will have synergism in an elastic economy, whereas negative synergism will be prevalent in an inelastic economy. Neither issue is of concern in a Cobb-Douglas economy where the elasticity of substitution is everywhere neutral. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.18137&r= |
| By: | Hanqiao Zhang; Joy D. Xiuyao Yang |
| Abstract: | The COVID-19 pandemic has disrupted traditional academic collaboration patterns, prompting a unique opportunity to analyze the influence of peer effects and coauthorship dynamics on research output. Using a novel dataset, this paper endeavors to make a first cut at investigating the role of peer effects on the productivity of economics scholars, measured by the number of publications, in both pre-pandemic and pandemic times. Results show that peer effect is significant for the pre-pandemic time but not for the pandemic time. The findings contribute to our understanding of how research collaboration influences knowledge production and may help guide policies aimed at fostering collaboration and enhancing research productivity in the academic community. |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2404.18980&r= |
| By: | José Alves; Francisco Baptista; José Carlos Coelho |
| Abstract: | A panel data analysis was conducted for European Union (EU) countries spanning from 1995 to 2019 to gain insights into the impact of labor share on economic growth. The primary objective was to ascertain whether labor share actually remains less influential than capital share on economic growth, or if the changing landscape over the years necessitates a policy adjustment for optimizing economic growth. Notably, wage share exhibits a positive influence on economic growth when it experiences positive growth and when is higher than growth of total factor productivity. These results challenge conventional wisdom and suggest that economic policies may need to adapt to the evolving dynamics of labor share and its impact on growth. |
| Keywords: | economic growth; labor share; total factor productivity; first-differences Generalized Method of Moments. |
| JEL: | E24 O47 C23 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp03192024&r= |
| By: | Rude, Johanna; Weber, Lukas |
| Abstract: | Expenditures on healthcare and employment in the healthcare sector have been steadily increasing across OECD countries for many years. This shift of expenditure and employment towards a consistently found to be less productive sector has often been associated with the idea of Baumol’s (1967) cost disease. This paper investigates if diagnosing the healthcare sector with suffering from a cost disease is an apt description of the observed reallocation. The novel feature of the paper is to introduce a microeconomic foundation to the theoretical analysis of the healthcare sector. We show analytically in a model that the demand side is very important in determining equilibrium quantities and prices. Even if there is unequal technological progress in the two sectors, the unchanged demand of households dictates that the output level of the two sectors remains constant. This leads to the prima facie unintuitive result of factor allocation towards the less productive sector, in this case, healthcare. We show that this is the case under innocuous assumptions if goods are complements. We supplement the new theoretical results by testing implications from the model empirically. Specifically, we use household-level data to estimate the elasticity of substitution between healthcare consumption and all other consumption. We find robust evidence for the complementarity of healthcare consumption and all other consumption. |
| Keywords: | Healthcare Reallocation |
| JEL: | E20 E21 E22 E23 E24 E25 E27 I1 |
| Date: | 2024–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120873&r= |
| By: | Fix, Blair |
| Abstract: | When it comes to our sustainability problems, striving for greater resource efficiency seems like an obvious solution. For example, if you buy a new car that’s twice as efficient as your old one, it should cut your gasoline use in half. And if your new computer is four times more efficient than your last one, it should cut your computer’s electric bill fourfold. In short, boosting efficiency seems like a straightforward way to reduce your use of natural resources. And for you personally, efficiency gains may do exactly that. But collectively, efficiency seems to have the opposite effect As technology gets more efficient, we tend to consume more resources. This backfire effect is known as the ‘Jevons paradox’, and it occurs for a simple reason. At a social level, efficiency is not a tool for conservation; it’s a catalyst for technological sprawl. Here’s how it works. As technology gets more efficient, it cheapens the service that it provides. And when services get cheaper, we tend to use more of them. Hence, efficiency ends up catalyzing greater consumption. Take the evolution of computers as an example. The first computers were room-sized machines that gulped power while doing snail-paced calculations. In contrast, modern computers deliver about a trillion times more computation for the same energy input. Now, in principle, we could have taken this trillion-fold efficiency improvement and reduced our computational energy budget by the same amount. But we didn’t. Instead, we took these efficiency gains and invested them in technological sprawl. We took more efficient computer chips and put them in everything — phones, TVs, cars, fridges, light bulbs, toasters … not to mention data centers. So rather than spur conservation, more efficient computers catalyzed the consumption of more energy. In this regard, computers are not alone. As you’ll see, efficiency backfire seems to be the rule rather than the exception. Far from delivering a cure for our sustainability woes, efficiency gains appear to be a root driver of the over-consumption disease. |
| Keywords: | efficiency, energy, Jevons Paradox |
| JEL: | P00 Q4 B1 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:295211&r= |
| By: | ANTONIOLI Federico (European Commission - JRC); CIAIAN Pavel (European Commission - JRC); BALDONI Edoardo (European Commission - JRC) |
| Abstract: | Relying on the EU FADN dataset for the period 2004-2020, the reports quantitatively estimates the impact of Geographical Indications (GIs) on the economic, environmental and social performances of GI vineyard farms. The empirical analyses employed the combined matching and difference-in-differences estimation technique, which allows several important sources of bias to be addressed, such as self-selection bias, time-invariant and time-variant systematic differences across farms and functional form misspecification. The estimated results suggest that GIs improve economic performance of vineyard farms. GIs also have some positive impact on social dimension by stimulating higher farm wages, while have statistically insignificant impact on farm employment. In contrast, GIs are found to have rather small impact on environmental performance of farms potentially leading to some reduction of energy use, while having no impact on plant protection use of vineyard farms. |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc135467&r= |
| By: | Daron Acemoglu; Simon Johnson |
| Abstract: | David Ricardo initially believed machinery would help workers but revised his opinion, likely based on the impact of automation in the textile industry. Despite cotton textiles becoming one of the largest sectors in the British economy, real wages for cotton weavers did not rise for decades. As E.P. Thompson emphasized, automation forced workers into unhealthy factories with close surveillance and little autonomy. Automation can increase wages, but only when accompanied by new tasks that raise the marginal productivity of labor and/or when there is sufficient additional hiring in complementary sectors. Wages are unlikely to rise when workers cannot push for their share of productivity growth. Today, artificial intelligence may boost average productivity, but it also may replace many workers while degrading job quality for those who remain employed. As in Ricardo’s time, the impact of automation on workers today is more complex than an automatic linkage from higher productivity to better wages. |
| JEL: | B12 J23 O14 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:32416&r= |
| By: | Bachtal, Yassien Nico |
| Abstract: | The world of work, particularly the physical organization of work, is undergoing a profound transformation process. The causes of this transformation process are technological innovations, organizational changes, and the increasing pluralization of employee requirements. Even though this transformation process of the physical organization of work began several years ago, the COVID-19 pandemic has significantly increased its speed. As a measure to contain the COVID-19 pandemic, working from home enabled office workers worldwide to gain experience with this workplace. Work from home describes regular working from home, which is made possible using information and communication technologies. This gives employees a direct comparison between working in the office and working from home and allows them to choose their place of work more purposefully depending on their work activities. The widespread introduction of work from home influences life and work on several levels. At an individual level, the question arises as to which employees are generally suitable for working from home. At the level of the working environment, there needs to be more knowledge about the extent to which work from home influences the digital equipment of residential properties. Furthermore, it remains unclear how the interaction between the employee (person) and the working environment (environment) in work from home affects individual work success (fit). This dissertation explores these research questions with the help of a total of five research articles. The first article classifies work from home in a hybrid working environment and uses an international comparison between the United States and Germany. Hybrid working is defined by the distribution of working hours between the office, work from home, and third places of work, and describes a combination of these places of work. The article shows that WFH is a high priority for many employees in a hybrid working environment. While working hours in the office are almost identical in both countries at around one-third, it is clear that third places of work (e.g., coworking spaces) are more important for employees in the United States than Germany. The article shows that this divergence is primarily cultural. Overall, this article shows that employees internationally attach great importance to WFH in a hybrid working environment. The second article addresses the importance of work from home in a hybrid work environment and examines in a preliminary study which aspects enable successful work from home. The results of the article show correlative relationships between spatial, personal, and work-related characteristics on the one hand, and satisfaction and productivity on the other. Consequently, successful work at home is only possible if all three dimensions are met. This article indicates that only around 25 % of employees who can work from home are successful there. The third research article takes up the results of the second study. The aim is to take a closer look at these 25 % of employees who successfully work from home. The results make it clear that more experienced employees who live in well-equipped residential properties and have a high degree of work autonomy can work successfully from home. Career starters, who often live in properties that are not suitable for work from home, are less successful in working from home. The fourth article is specifically dedicated to examining the influence of real estate characteristics on satisfaction and productivity in work from home. Furthermore, the relative importance of real estate characteristics is compared with organizational and socio-psychological characteristics. It is shown that real estate characteristics highly influence satisfaction and productivity in work from home. Compared to organizational and socio-psychological characteristics, real estate characteristics are the most important. The fifth research article delves into the factors that impact the purchase intention of smart homes, shedding light on the heightened inclination towards technology, notably spurred by the COVID-19 pandemic and the surge in remote work. This study investigates the intricate interplay between these aspects, unravelling the nuanced role that the increased affinity for technology, especially in the context of the widespread shift to remote work, plays in shaping consumer attitudes toward smart home adoption. The social environment primarily influences the intention to buy smart homes. However, the results also make it clear that the increased affinity for technology improves attitudes toward such residential properties, leading to a higher purchase intention. With these findings, this dissertation expands research on work from home. Work from home offers potential for both companies and society. At the same time, the dissertation also shows the risks associated with working from home. These potentials can only be realized by taking an individual view of an organization’s workforce and combining the office, work from home, and third places. The dissertation offers a theoretical-conceptual classification in the current state of research and supported by the results, provides implications for practice to meet the challenges in the transformation process of the physical organization of work. |
| Date: | 2024–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:dar:wpaper:144916&r= |