|
on Efficiency and Productivity |
| By: | Cândida Ferreira |
| Abstract: | This study uses Data Envelopment Analysis to analyse the evolution of the efficiency of the European Union banking sector with different concepts and measures of bank efficiency, as well as the results provided by the Malmquist index to measure different efficiency changes, and the total productivity changes considering a panel of 784 relevant banks from all the 27 European Union countries, between 2006 and 2021. Banks are assumed to produce three outputs: loans, other earning assets, and non-earning assets using three inputs: interest expenses, non-interest expenses, and equity, overall, the findings of the paper point to the existence of inefficiencies which are mainly justified by non-optimal combinations of the considered inputs and outputs, and not by the scale of the production. The results obtained also reveal that the EU banks included in the sample have room to improve their choices of the combinations of inputs to produce the desired outputs at minimum costs. The values of the computed Malmquist index indicate overall progress, except during the period of the global financial crisis, and to some extent also between the years 2015-2017, corresponding to a turbulent period of the EU banking sector with the advancements of the European Banking Union and two relevant initiatives: the European Banking Supervision and the Single Resolution Mechanism. |
| Keywords: | Data Envelopment Analysis; European Union banking sector; bank efficiency; Malmquist index. |
| JEL: | C33 D53 F36 G21 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03542024 |
| By: | Francesca Ghinami (Gran Sasso Science Institute) |
| Abstract: | This study investigates the spatial heterogeneity that factors misallocation reveals in nine EU-member countries (Germany, France, Austria, Italy, Spain, Portugal, Czech Republic, Slovenia and Poland) during the years 2011-2020. Misallocation, as in the degree of efficiency with which inputs are allocated across firms, is increasingly regarded as one main source of aggregate productivity differences across countries. Nevertheless, its within-country spatial and regional dimensions are still largely overlooked, notwithstanding numerous reasons for allocative efficiency to vary across different administrative units. This article aims at filling this gap by firstly performing an exploratory analysis of allocative efficiencies at different levels of territorial aggregation (NUTS0-3). Secondly, it provides evidence for the across-regions disparities in allocative efficiency to account for large shares of aggregate misallocation for all the examined European countries. Finally, it investigates and finds support for the hypothesis that variations in local institutional quality may help explaining regional differences in allocative efficiencies |
| Keywords: | Total factor productivity, Misallocation, Regional disparities, Institutional Quality |
| JEL: | D24 L25 O47 |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp43 |
| By: | Otaviano Canuto |
| Abstract: | The Brazilian economy is stuck in a so-called middle-income trap—growth that stalled long before Brazil caught up with the living standards of the highly industrialized countries. After exhibiting a stellar performance in the decades before the 1980s, the economy has since been unable to sustain growth for long periods. The predicament can be summarized using a medical analogy: Brazil has been suffering from both productivity anemia and public sector bloat. On the one hand, it hasn’t enjoyed the sort of productivity growth expected of economies at this stage of development— the harvesting of easy efficiency gains ranging from improved business organization to rapid diffusion of imported technology. On the other hand, the appetite for expanding public spending has become increasingly incompatible with limited productivity gains, particularly since the spending has not delivered on the accompanying hopes for socioeconomic mobility. * A preliminary version of this text appeared at Milken Institute Review, October 23, 2023 |
| Date: | 2023–10 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:pbecon:pb_40_23 |
| By: | Giulia Iannone (Gran Sasso Science Institute); Andrea Ascani (Gran Sasso Science Institute); Alessandra Faggian (Gran Sasso Science Institute); Alexandra Tsvetkova (OECD Trento Centre for Local Development) |
| Abstract: | There is an increasing need for today’s economies to be both productive and resilient, but the interplay between these two fundamental factors for economic growth has been neglected in the literature. This paper aims at filling this gap by adopting an evolutionary framework for the joint study of productivity and resilience and proposes a regional taxonomy based on characteristics of the industrial structure. Data on European regions at the NUTS2 level are used first to classify regions as productive and/or resilient and then to analyze how certain regional features, in particular related and unrelated variety, relate to a combined measure of productivity and resilience. Results show that the spatial distribution of productive and resilient regions follows a core– periphery pattern and that related and unrelated variety have significant but heterogeneous effects on regions’ economic performance. |
| Keywords: | productivity, regional resilience, industrial structure, relatedness |
| JEL: | B52 O4 R1 |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp44 |
| By: | Lena Abou El-Komboz; Thomas A. Fackler; Moritz Goldbeck; Thomas Fackler |
| Abstract: | Software engineering is prototypical of knowledge work in the digital economy and exhibits strong geographic concentration, with Silicon Valley as the epitome of a tech cluster. We investigate productivity effects of knowledge worker agglomeration. To overcome existing measurement challenges, we track individual contributions in software engineering projects between 2015 and 2021 on GitHub, the by far largest online code repository platform. Our findings demonstrate individual productivity increases by 2.8 percent with a ten percent increase in cluster size, the share of the software engineering community in a technology field located in the same city. Instrumental variable and dynamic estimation results suggest these productivity effects are causal. Productivity gains from cluster size growth are strongest for clusters hosting between 0.67 and 13.5% of a community. We observe a disproportionate activity increase in high-quality, large, and leisure projects and for co-located teams. Overall, software engineers benefit from productivity spillovers due to physical proximity to a large number of peers in their field. |
| Keywords: | high-skilled labor, geography, innovation, peer effects, collaboration |
| JEL: | D62 J24 O33 O36 R32 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11277 |
| By: | Lise Clain-Chamosset-Yvrard (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique); Xavier Raurich (Facultat d'Economia i Empresa [Barcelona] - UB - Universitat de Barcelona); Thomas Seegmuller (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Entrepreneurship, growth and total factor productivity are larger when asset prices are high and decline during financial crises. We explain these facts using a growth model with financial bubbles in which individuals have heterogeneous wages and returns on productive investment. Heterogeneity separates individuals between savers and entrepreneurs. Savers buy financial assets, which are deposits or a financial bubble. Entrepreneurs incur in a start-up cost and borrow to invest in productive capital. The bubble provides liquidities to credit-constrained entrepreneurs. These liquidities increase investment, growth and entrepreneurship. Finally, the bubble may increase productivity when the return of each entrepreneur's investment is positively correlated with her previous income. |
| Keywords: | Bubble, Entrepreneurship, Growth, Productivity |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04718292 |
| By: | MORIKAWA Masayuki |
| Abstract: | With the rapid diffusion of artificial intelligence (AI), its effects on economic growth and the labor market have attracted the attention of researchers. However, the lack of statistical data on the use of AI has restricted empirical research. Based on original surveys, this study provides an overview of the use of AI and other automation technologies in Japan, the characteristics of firms and workers who use AI, and their views on the impact of AI. According to the results, first, the number of firms using AI 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 between their use and workers’ education is weakly negative, suggesting that the impact on the labor market is different for each technology. Second, AI-using firms have higher productivity, wages, and medium-term growth expectations. Third, AI-using firms expect that while it will increase productivity and wages, it may decrease their employment. Fourth, at the worker level, more-educated workers are more likely to use AI, suggesting that AI and education are complementary. Currently, AI may favor high-skill workers in the labor market. Fifth, workers who use AI evaluate their work productivity to have increased by approximately 20% on average, suggesting that AI could potentially have a fairly large productivity enhancing effect. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:24074 |
| By: | João Ferreira do Amaral |
| Abstract: | The purpose of this paper is to study the relations between the concept of technical progress of a certain type (technological wave with technical progress embodied in innovative capital) and the concept of surplus-value of the stock of equipment. For that purpose we define an income function instead of a production function. |
| Keywords: | economic growth; digital revolution; technological progress; innovation. |
| JEL: | E10 E11 E22 N10 O30 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03482024 |
| By: | Chung, Richard Yiu-Ming (Saint Francis University, Hongkong); DeVaro, Jed (California State University, East Bay); Fung, Scott (California State University) |
| Abstract: | Research Question/ Issue: Do large, within-firm executive pay differences hurt firm performance? Prior literature shows mixed results concerning the sign of the relationship between executive pay disparity and firm performance. This study evaluates that literature, clarifies what tournament theory predicts about the relationship, identifies methodological pitfalls and how to address them, and guides future scholarship in this area of considerable importance to firms and policy makers. Research Findings/ Insights: We estimate the relationship using improved methodology and find evidence of an inverted-U shaped relationship between the executive pay spread and firm performance. However, the peak of this inverted U occurs at such a high level of the executive pay spread that it is practically irrelevant in most firms. The inverted U is found using a market-based measure of firm performance, but not a returns-based measure (i.e., ROA). Theoretical/Academic Implications: This study addresses the theoretical and empirical limitations of the prior literature, thereby providing more credible estimates of the relationship between pay disparity and firm performance. Tournament theory offers a unified framework that can explain an inverted-U-shaped relationship between the executive pay spread and firm performance. Practitioner/Policy Implications: Our results should reduce public concerns that CEOs increase their own compensation to exorbitant levels, to the detriment of firm performance. |
| Keywords: | executive compensation, vertical pay disparity, firm performance, tournament theory, market structure |
| JEL: | G32 G39 J31 M12 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17346 |
| By: | Robert Z. Lawrence (Peterson Institute for International Economics) |
| Abstract: | President Joseph R. Biden Jr. made the goal of his economic policies to "build back better." He emphasized helping workers without college degrees in order "to grow the economy from the bottom up and the middle out." The emphasis on a manufacturing renaissance is reflected in the special incentives for US manufacturing in President Biden's programs: the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act. Lawrence finds little evidence of a renaissance in US manufacturing as of July 2024: US manufacturing employment was barely above its pre-COVID levels. Manufacturing output has grown more slowly than GDP since the pandemic, and productivity in manufacturing has not increased since 2017. Moreover, the Bureau of Labor Statistics projects that over the next decade, manufacturing employment will decline and manufacturing output will grow more slowly than GDP. However, Lawrence says, additional manufacturing employment growth could be in the pipeline because of investment projects that have been announced but not yet completed. Lawrence estimates the additional manufacturing employment potential of announcements compiled by the White House as of mid-2024, finding that these projects could boost demand for 1.7 million manufacturing workers--a growth of 13.3 percent above 2022 manufacturing employment levels. It should be noted, however, that these are not estimates of net overall manufacturing employment growth. Some of the increased demand will be offset by losses of fossil fuel–related jobs displaced by the investments as well as declines in manufacturing employment for other reasons. Moreover, the impact of all the projects is just over 1 percent of overall US employment and in most states far too small to significantly change the opportunities for most non-college-educated workers and disadvantaged communities. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iie:pbrief:pb24-12 |
| By: | Martin Schnauss; Laura Archer-Svoboda |
| Abstract: | The imperative for energy efficiency in real estate investments has been amplified by growing environmental awareness and economic factors. The escalation of energy costs has led to a critical re-evaluation of energy efficiency and the need for property upgrades, particularly in Switzerland. Here, a significant portion of residential real estate is managed by real estate funds, pension funds, and other financial institutions, which are under increasing pressure from investors and regulators to improve the environmental sustainability of their portfolios. In addition, newly enacted regulations imposing rent caps on properties that have not undergone energy-efficient renovations pose a risk to future rental income streams. This context underscores the critical need for improved methods of measurement and accountability. Our presentation addresses the formulation of modern, transparent and data-centric strategies for valuing Swiss real estate assets, with a focus on energy efficiency, combating obsolescence and projecting future market values. Our research highlights ways to assess and manage changing environmental and regulatory requirements. |
| Keywords: | Energy Efficiency; Rating; sustainability |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-201 |