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on Efficiency and Productivity |
| By: | Nicola Gagliardi; Elena Grinza; François Rycx |
| Abstract: | In this paper, we investigate the impact of rising temperatures on firm productivity using longitudinal firm-level balance-sheet data from private sector firms in 14 European countries, combined with detailed weather data, including temperature. We begin by estimating firms’ total factor productivity (TFP) using control-function techniques. We then apply multiple-way fixed-effects regressions to assess how higher temperature anomalies affect firm productivity – measured via TFP, labor productivity, and capital productivity. Our findings reveal that global warming significantly and negatively impacts firms’ TFP, with the most adverse effects occurring at higher anomaly levels. Labor productivity declines markedly as temperatures rise, while capital productivity remains unaffected – indicating that TFP is primarily affected through the labor input channel. Our moderating analyses show that firms involved in outdoor activities, such as agriculture and construction, are more adversely impacted by increased warming. Manufacturing, capital-intensive, and blue-collar-intensive firms, compatible with assembly-line production settings, also experience significant productivity declines. Geographically, the negative impact is most pronounced in temperate and mediterranean climate areas, calling for widespread adaptation solutions to climate change across Europe. |
| Keywords: | Climate change; Global warming; Firm productivity; Total factor productivity (TFP); Semiparametric methods to estimate production functions |
| JEL: | D24 J24 Q54 |
| Date: | 2024–08–22 |
| URL: | https://d.repec.org/n?u=RePEc:sol:wpaper:2013/377135 |
| By: | Adebisi, Luke O.; Omotesho, Abayomi O.; Adebisi, Oluwaremilekun A. |
| Abstract: | Prior use of the stochastic frontier model and subsequent measurement of performance of the agricultural produce sector, which relies on the presumption that the underlying technology is the same for all the different agricultural systems is not adequate as heterogeneity does exist in most agricultural production environments and failure to account for this, is likely to result in biased production frontier and efficiency. This study contributed to the existing knowledge, estimating technical efficiency and the technological gap in Nigerian Small Ruminant farms using the stochastic meta-frontier approach. For this study, we classified the farms based on the different production technologies adopted. The result of the analysis shows that farms differ in performance and technology use with the farms engaging both orthodox and traditional animal healthcare technologies having the highest efficiency. Furthermore, the results prove support for specific agricultural policies targeted at increasing the performance of indigenous technology in the livestock industry for better productivity and the prosperity of Nigeria. |
| Keywords: | Livestock Production/Industries |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344262 |
| By: | Mons Chan; Guangbin Hong; Joachim Hubmer; Serdar Ozkan; Sergio Salgado |
| Abstract: | Do larger firms have more productive technologies or are their technologies more scalable, or both? We use administrative data on Canadian and US firms to estimate flexible nonparametric production functions. Our estimation results in a joint distribution of output elasticities of capital, labor, and intermediate inputs---therefore, returns to scale (RTS)---along with total factor productivity (TFP). We find significant heterogeneity in both RTS and TFP across firms. Larger firms operate technologies with higher RTS, both across and within industries. Higher RTS for large firms are entirely driven by higher intermediate input elasticities. Descriptively, these align with higher intermediate input revenue shares. We then incorporate RTS heterogeneity into an otherwise standard incomplete markets model with endogenous entrepreneurship that matches the observed heterogeneity in TFP and RTS. In this model, we find that the efficiency losses of financial frictions are more than twice as large relative to the conventional calibration that loads all heterogeneity on TFP and imposes a common RTS parameter. |
| Keywords: | production function heterogeneity; returns to scale; misallocation |
| JEL: | E22 L11 |
| Date: | 2024–07–11 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedlwp:98702 |
| By: | Gillespie, Jeffrey; Njuki, Eric; Terán, Angel |
| Abstract: | The milk production segment of the U.S. dairy industry has experienced significant change over the past two decades. Various USDA data sources allow for analysis of how dairy farms have changed in structure and production costs. This study uses USDA’s Agricultural Resource Management Survey (ARMS) dairy version data from 2000, 2005, 2010, 2016, and 2021 (and other USDA data) to examine changes in farm structure, production costs, and technology adoption and to compare dairy farms by size and production region over the past two decades. Methods used to analyze the data include the difference in means tests and stochastic frontier analysis. Dairy farm numbers have decreased, while milk production has increased; increases in the use of some advanced farm technology have occurred; larger farms benefit from economies of scale and are the greater users of advanced technologies and production systems; and there are regional differences in farm structure and cost of production. |
| Keywords: | Dairy Farming, Dairy Production/Industries, Demand and Price Analysis, Farm Management, Labor and Human Capital, Production Economics, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:uersrr:344571 |
| By: | Amankwah, Akuffo |
| Abstract: | This paper uses two waves of nationally representative household-level panel data to examine the welfare effects of agricultural productivity in rural Tanzania. Four measures of productivity and ten indicators of welfare, including multidimensional welfare, are considered. Econometric procedures that take into account potential endogeneity resulting from omitted variables bias are employed. The results show welfare-enhancing effects of agricultural productivity, though the elasticities are marginal, requiring potentially large productivity growth for substantial welfare impact. The analysis of the linkage between productivity growth and welfare transition shows that households that experience growth in productivity are more likely to make welfare-enhancing transitions. Policies that allow for expanding households access to durable goods and agricultural capital, investment in irrigation and erosion control facilities, improving households access to agricultural extension services with the needed know-how, as well as ensuring favorable biophysical environment, are vital for sustained productivity growth. |
| Keywords: | Agricultural and Food Policy, Food Security and Poverty, International Development |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344252 |
| By: | Mu, Yali |
| Abstract: | This paper employs an analytical framework combining a time-varying Vector Error Correction Model (VECM) with panel stochastic frontier models to assess and benchmark the efficiency of pork markets across 30 provincial capitals in China from 2000 to 2017. The time-varying VECM reveals that between 20% and 40% of any deviation from long-run equilibrium in market pairs is corrected within one month, highlighting the responsiveness and adjustment processes within the pork markets. Concurrently, panel stochastic frontier models estimate the efficiency of market integration across different provincial capitals, capturing spatial and temporal variations in market efficiency. Key findings indicate significant spatial and temporal variations in the speed at which markets correct deviations from equilibrium. The efficiency frontiers decline with increasing distances between markets, underscoring the influence of spatial factors such as logistics and transportation on price transmission efficiency across regions. Over the studied period, the estimated frontiers for market integration exhibit a downward shift, suggesting challenges in overall market efficiency regarding price transmission. The results also reveal that there is a fixed level of inefficiency that cannot be explained by the covariates we included in the models. |
| Keywords: | Marketing |
| Date: | 2024–08–07 |
| URL: | https://d.repec.org/n?u=RePEc:ags:cfcp15:344294 |
| By: | Filippo Bontadini; Francesco Filippucci; Cecilia Jona-Lasinio; Giuseppe Nicoletti; Alessandro Saia |
| Abstract: | The paper presents novel indicators to measure financial sector digitalisation that cover 21 OECD countries over the 1995-2018 period, showing a significant increase in digital penetration though at different speeds and intensities across countries. The indicators are used to study the impact of financial sector digitalisation on economic activity, highlighting significant positive effects on the productivity of downstream industries. A 10% increase in financial sector digitalisation is associated with a 0.1 percentage point increase in productivity growth for the average industry, with a stronger impact in intangible-intensive industries. Digitalisation in finance is also associated with an easing of credit constraints, particularly benefiting intangible-intensive industries and SMEs, via an improvement in credit allocation and market conditions. Results suggest that policy actions aimed at supporting digital infrastructure, promoting competition in communications, fostering finance innovation, and encouraging high-level skill formation (especially in STEM fields) could sustain and enhance productivity growth through financial sector digitalisation. |
| Keywords: | Credit Allocation, Financial Sector Digitalisation, Intangibles, Productivity |
| JEL: | G00 O33 G38 |
| Date: | 2024–08–09 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1818-en |
| By: | Mikhail Mamonov; Christopher Parmeter; Artem Prokhorov |
| Abstract: | We study the impact of exchange rate volatility on cost efficiency and market structure in a cross-section of banks that have non-trivial exposures to foreign currency (FX) operations. We use unique data on quarterly revaluations of FX assets and liabilities (Revals) that Russian banks were reporting between 2004 Q1 and 2020 Q2. {\it First}, we document that Revals constitute the largest part of the banks' total costs, 26.5\% on average, with considerable variation across banks. {\it Second}, we find that stochastic estimates of cost efficiency are both severely downward biased -- by 30\% on average -- and generally not rank preserving when Revals are ignored, except for the tails, as our nonparametric copulas reveal. To ensure generalizability to other emerging market economies, we suggest a two-stage approach that does not rely on Revals but is able to shrink the downward bias in cost efficiency estimates by two-thirds. {\it Third}, we show that Revals are triggered by the mismatch in the banks' FX operations, which, in turn, is driven by household FX deposits and the instability of Ruble's exchange rate. {\it Fourth}, we find that the failure to account for Revals leads to the erroneous conclusion that the credit market is inefficient, which is driven by the upper quartile of the banks' distribution by total assets. Revals have considerable negative implications for financial stability which can be attenuated by the cross-border diversification of bank assets. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.05688 |
| By: | Le, V.D.; Pham, L.T. |
| Abstract: | The paper is aimed at measuring the risk attitude of maize farmers and testing the relationship between farmers' risk attitudes and optimal use of inputs in production. The experimental method of Eckel and Grossman (2002) associated with the constant partial risk utility function was employed to measure the farmers’ risk attitude. Then, allocative efficiency coefficients were calculated from the output elasticities of inputs estimated from the Cobb-Douglas production function associated with the profit-maximizing condition in using inputs. The data was collected from a survey of 130 farm households located in large and concentrated maize production areas in the Mekong Delta. It is found that the majority of farmers are found to be risk-averse, accounting for 69.05%. Generally, the more risk averse the farmers are, the less purchased inputs are used in production. Then, most of farmers are not able to maximize profits. |
| Keywords: | Crop Production/Industries, Production Economics, Risk and Uncertainty |
| Date: | 2024–04–28 |
| URL: | https://d.repec.org/n?u=RePEc:ags:asea24:344440 |