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on Efficiency and Productivity |
| By: | Gagliardi, Nicola; Grinza, Elena; Rycx, François |
| 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, Longitudinal firm-level data |
| JEL: | D24 J24 Q54 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1485 |
| By: | Pikka, Aleksi |
| Abstract: | Abstract This paper studies the productivity effects of intangible assets using 9th vintage of the CompNet dataset. Descriptive work shows that there is dispersion in usage of intangibles; some firms invest heavily into intangible assets and many firms do not invest at all. In addition, preliminary evidence, using the joint distributions provided by CompNet, implies that intangible assets increase the productivity of the firms that already belong to the 90th productivity percentile. Furthermore, I estimate the output elasticity of intangible assets by a Cobb Douglas production function using data at the 2-digit industry (NACE rev 2) level of aggregation and find output elasticity of intangibles to be approximately between 0.08–0.10. A special emphasis is placed on development of intangibles in Finland. I find that concentration in intangibles, measured by the Herfindahl-Hirschman index, has increased in the past few years and that intangible assets are concentrated in ICT and manufacturing macro-sectors. In addition, I estimate a Cobb Douglas production function using only data from Finland and find that while output elasticity on intangible assets is approximately 0.05, the coefficient is not statistically significant, and hence, the evidence is inconclusive. |
| Keywords: | Intangible capital, Productivity |
| JEL: | E22 J24 O52 |
| Date: | 2024–09–09 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:119 |
| By: | Van Reenen, John; Yang, Xuyi |
| Abstract: | We examine the growth and level of UK productivity compared to France, Germany and the United States. There has been a marked slowdown in labour productivity growth: comparing the dozen years before and after the Global Financial Crisis. The average annual growth of the UK’s real value added per hour in the market economy has fallen from 2.5 per cent to 0.5 per cent. Just over half of this two percentage point slowdown is due to slower TFP growth, which is broadly similar in magnitude across countries. Britain experienced a much larger slowdown in the growth of capital intensity than other countries and it is this (alongside a smaller contribution from slow skills growth) which accounts for the particularly severe ‘productivity puzzle’. The level of UK labour productivity is also low compared to peers, especially the United States. In 2019, lower tangible and intangible capital intensity accounted for about half of this gap. These findings suggest that UK policy should focus on the problem of chronic under-investment. |
| JEL: | N0 |
| Date: | 2024–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124590 |
| By: | Anastasia Litina (Department of Economics, University of Macedonia); Luca J. Uberti (Department of Economics (DEMS) at the University of Milano-Bicocca.); Skerdilajda Zanaj (DEM, University of Luxembourg) |
| Abstract: | In an era where gender norms vary widely and quite frequently hint to gender inequality in the labor market, previous studies have shown that higher gender diversity is associated with better economic outcomes. Using a novel dataset that provides granular data at the firm level, we test this hypothesis in the context of gold mining companies. We concentrate on a relatively overlooked aspect, namely cost efficiency, and study whether a larger number of women directors is associated with more efficient use of a company’s resources. We use a stochastic frontier methodology to estimate the cost-efficiency of gold mines for a representative sample of global mining companies. Using fixed-effects and instrumental-variable regressions, we find that an increase in female representation on the parent company’s board translates into significant efficiency gains for the mining operations controlled by the parent company. Specifically, a one standard-deviation increase in the share of female directors increases cost-efficiency by 12 percent of a standard deviation of our main efficiency index. This finding is robust to using alternative instruments for female representation, alternative stochastic-frontier methodologies, and different specifications of the main estimating equation. Interestingly, the efficiency gains induced by female directors do not necessarily improve the overall performance of the company as measured by accounting profitability. Yet, cost efficiency is associated with higher cost-sustainability and long-term viability of a firm, thereby rendering it more resilient. This hints that the underlying mechanism is consistent with evidence that suggests that women directors exert a higher monitoring and audit effort than their male counterparts. Our results provide additional evidence of a distinctly female style in corporate leadership and shed light to different aspects of a firm’s productivity. Understanding differences in styles of leadership, allows policy makers to implement more inclusive policies in the labor market and firms to endorse diversity in leadership. This ultimately can lead to more inclusive norms in the labor market. |
| Keywords: | Gender; Boards of directors; Cost efficiency; Stochastic Frontier Analysis; Mining |
| JEL: | D22 D24 G39 M14 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:mcd:mcddps:2024_09 |
| By: | Bettiol, Marco; Capestro, Mauro; Di Maria, Eleonora; Ganau, Roberto |
| Abstract: | Does Industry 4.0 technology adoption push firms’ labor productivity? We contribute to the literature debate—mainly focused on robotics and large firms—by analyzing adopters’ labor productivity returns when micro, small, and medium enterprises (MSME) are concerned. We employ original survey data on Italian MSMEs’ adoption investments related to a multiplicity of technologies and rely on a difference-in-differences estimation strategy. Results highlight that Industry 4.0 technology adoption leads to a 7% increase in labor productivity. However, this effect decreases over time and is highly heterogeneous with respect to the type, the number, and the variety of technologies adopted. We also identify potential channels explaining the labor productivity returns of technology adoption: cost-related efficiency, new knowledge creation, and greater integration/collaboration both within the firm and with suppliers. |
| Keywords: | Industry 4.0; Italy; labor productivity; MSME; technology adoption |
| JEL: | R14 J01 J1 |
| Date: | 2024–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124545 |
| By: | Federico Fabio Frattini (Fondazione Eni Enrico Mattei); Francesco Vona (University of Milan and Fondazione Eni Enrico Mattei); Filippo Bontadini (Luiss University and SPRU – University of Sussex) |
| Abstract: | What are the consequences of green industrialization on the labour market and industry dynamics? This paper tackles and quantifies this question by employing observable and reliable data on green manufacturing production for an extensive set of EU countries and 4-digit manufacturing industries for over a decade. First, at a descriptive level, this paper documents that potentially green industries outperform the others in terms of employment, average wages, value added and productivity, net of controlling for other drivers of the labour market and industry dynamics. Second, employing a shiftshare instrument to purge the analysis from possible endogeneity within green potential industries, this paper finds that an expansion of green production implies an increase in employment and value added. In contrast, average wages and labour productivity remain unchanged. These results hold in the short and long term, are heterogeneous depending on the countries considered, and are amplified by existing industry specialization and by accounting for input-output linkages. |
| Keywords: | Green transition, Employment, Manufacturing, Shift-share |
| JEL: | J21 J31 L6 O14 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2024.23 |
| By: | Zhanli Li |
| Abstract: | This paper explores the relationship between ESG rating disagreement and total factor productivity (TFP) based on data from Chinese domestic ESG rating agencies and financial data of A-share listed companies in China from 2015 to 2022. On one hand, the empirical results show that ESG rating disagreement reduces corporate TFP, a conclusion that is validated through multiple robustness tests. The mechanism analysis reveals an interaction effect between green innovation and ESG rating disagreement. Specifically, in firms without ESG rating disagreement, green innovation promotes the improvement of TFP; however, in firms with disagreement, although ESG rating disagreement may drive green innovation, this does not lead to an increase in TFP. Furthermore, ESG rating disagreement lower corporate TFP by increasing financing constraints. The heterogeneity analysis indicates that this effect is more pronounced in non-state-owned, asset-intensive, and low-pollution enterprises. On the other hand, XGBoost regression demonstrates that ESG rating disagreement play a significant role in predicting TFP, with SHAP values showing that the main effects are more evident in firms with larger ESG rating disagreement. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.13895 |
| By: | de la Fonteijne, Marcel R. |
| Abstract: | The use of a homogeneous not degree 1 CES production function in a simple economic model under conditions of maximum profit leads to an inconsistency. This paper identifies the root of this problem and provides a solution. Building on this, we propose an improved formulation of the Modern Universal Growth Theory, without focusing on all the difference with Solow, Harrod, Hicks, Uzawa and others, eliminating the errors and limitations inherent in earlier models like those developed by Solow in the 1960s. We conclude that approximate 40 % of the existing theory on economic growth is now rendered invalid. |
| Keywords: | Technical Progress; Growth Model; Maximum Profit Condition; Production Functions; General Technological Progress; Capital-Labor mix; Elasticity of Substitution; Normalized CES Functions, inconsistency; homogeneous CES production function; Total Factor Productivity; DSGE Model; Solow Model; Hicks; Harrod |
| JEL: | E00 E20 E23 E24 |
| Date: | 2024–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121867 |
| By: | Tomáš Slačík |
| Abstract: | This report revisits the growth and convergence performance of the 11 EU member states in Central, East and Southeast Europe (EU-CEE11) over the past few decades, examining the underlying drivers, structural changes and the outlook. The review aims to assess the sustainability of the current economic model and identify areas for economic policy to focus on boosting growth. The findings show that convergence has significantly slowed since the global financial crisis, with value added growth declining in virtually all industries. This slowdown is attributed to structural rather than cyclical factors, with total factor productivity (TFP) being the main driver as well as the primary culprit behind the deceleration. Since medium-term growth projections for the region are not optimistic, the EU-CEE11 countries must make substantial efforts to improve their economic models. Key areas to focus on include energy, underutilised labour and improving human capital. While still very competitive, the manufacturing sector needs to move towards higher value added activities. |
| Keywords: | growth, convergence, growth model, EU-CEE11 |
| JEL: | E61 F15 F43 O47 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:wii:rpaper:rr:475 |
| By: | Carsten Creutzburg (Chair for Economic Policy, University of Hamburg) |
| Abstract: | This study is the first to investigate the superstar effect on professional men’s tennis players’ situational performance, employing novel serve and return ratings. We innovate by examining the impact of superstars on the performance of both higher-ranked (HR) and lower-ranked (LR) players. We provide evidence that HR players deliberately increase/decrease their performance in (non)dominant match situations based on their rank and the timing of facing a superstar in subsequent matches. Similarly, there are differences in the extent of performance shifts induced by superstars among different rank groups for LR players; however, the differences do not extend to different within-match situations. |
| Keywords: | Superstar effect, tournaments, professionals, productivity |
| JEL: | J44 L83 Z21 Z22 |
| Date: | 2024–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:hce:wpaper:079 |
| By: | Jonathan Fuhr; Dominik Papies |
| Abstract: | Estimating causal effect using machine learning (ML) algorithms can help to relax functional form assumptions if used within appropriate frameworks. However, most of these frameworks assume settings with cross-sectional data, whereas researchers often have access to panel data, which in traditional methods helps to deal with unobserved heterogeneity between units. In this paper, we explore how we can adapt double/debiased machine learning (DML) (Chernozhukov et al., 2018) for panel data in the presence of unobserved heterogeneity. This adaptation is challenging because DML's cross-fitting procedure assumes independent data and the unobserved heterogeneity is not necessarily additively separable in settings with nonlinear observed confounding. We assess the performance of several intuitively appealing estimators in a variety of simulations. While we find violations of the cross-fitting assumptions to be largely inconsequential for the accuracy of the effect estimates, many of the considered methods fail to adequately account for the presence of unobserved heterogeneity. However, we find that using predictive models based on the correlated random effects approach (Mundlak, 1978) within DML leads to accurate coefficient estimates across settings, given a sample size that is large relative to the number of observed confounders. We also show that the influence of the unobserved heterogeneity on the observed confounders plays a significant role for the performance of most alternative methods. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.01266 |
| By: | Emilia Soldani; Orsetta Causa; Maxime Nguyen; Tomasz Kozluk |
| Abstract: | Over the past decades, productivity growth and technology diffusion have slowed down, and business dynamism has declined in many advanced and emerging economies. Meanwhile, inequalities in economic outcomes, such as in income and wealth, and in opportunities, such as access to quality education and training, are pervasive. By hampering social mobility and the efficient allocation of talents, inequality of opportunities may trigger slower growth and even higher inequalities in outcomes. Policies to boost growth and make it more inclusive should focus on (i) ensuring broad access to quality education, from childhood onwards, and upskilling throughout working lives; (ii) addressing labour market insecurity and informality and improving job quality; (iii) curbing market power in products and labour markets to boost business dynamism; (iv) enhancing the efficiency and progressivity of taxes and transfer systems; and (v) fostering international cooperation, for instance in trade and taxation. |
| Keywords: | economic growth, inequality, productivity |
| JEL: | H10 H2 I28 I38 J38 J48 K2 L1 L5 O38 O4 |
| Date: | 2024–09–05 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1819-en |