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on Efficiency and Productivity |
| By: | António Afonso; José Alves; Najat Bazah |
| Abstract: | We examine the relationship between public sector efficiency and government spending, to assess public resource management across the 27 European Union countries. Specifically, we analyze the growth of public expenditure in relation to outcomes across various public sector performance (PSP) indicators. We compute government spending efficiency using Data Envelopment Analysis (DEA) to subsequently assess the relationship between efficiency and the growth rate of public expenditure. Our findings suggest that higher efficiency can be achieved without proportionally increasing public spending, both in total expenditure and in specific areas such as social protection, economic affairs, education, healthcare, and public services. Indeed, with overall output efficiency scores between 0.77 and 0.87, with the same level of inputs, output could increase around 13%-23%. Additionally, public spending tends to rise during recessions, while it decreases with higher levels of human capital and redistribution indicators. Finally, more efficient countries tend to coalesce around Austria, Croatia, Denmark, France, Greece, Hungary, Poland, and Sweden. |
| Keywords: | Public Sector Performance Indicators; Efficiency; Public expenditure; Functions of the Government; Data Envelopment Analysis |
| JEL: | C33 C61 E62 H11 H50 O47 P43 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03572024 |
| By: | Hambur Wang |
| Abstract: | The effectiveness of farmer loan policies is crucial for the high-quality development of agriculture and the orderly advancement of the rural revitalization strategy. Exploring the impact of farmers' borrowing behavior on agricultural production technical efficiency holds significant practical value. This paper utilizes data from the 2020 China Family Panel Studies (CFPS) and applies Stochastic Frontier Analysis (SFA) along with the Tobit model for empirical analysis. The study finds that farmers' borrowing behavior positively influences agricultural production technical efficiency, with this effect being especially pronounced among low-income farmers. Additionally, the paper further examines household characteristics, such as household head age, gender, educational level, and the proportion of women in the family, in relation to agricultural production technical efficiency. The findings provide policy recommendations for optimizing rural financial service systems and enhancing agricultural production technical efficiency. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.00500 |
| By: | Hong, Joonkyo; Luparello, Davide |
| Abstract: | In this study, we evaluate the reproducibility and replicability of Scott Orr's (2022) innovative approach for identifying within-plant productivity differences across product lines. Orr's methodology allows the estimation of plant-product level productivity, contingent upon a well-behaved pre-estimated demand system, which requires the use of carefully chosen instrumental variables (IVs) for output prices. Using Orr's STATA replication package, we successfully replicate all primary estimates with the ASI Indian plant-level panel data from 2000 to 2007. Additionally, applying Orr's replication codes to a sample from 2011 to 2020 reveals that the suggested IVs do not perform as expected. |
| Keywords: | Replication, Robustness, Productivity |
| JEL: | D22 D24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:i4rdps:181 |
| By: | Alexander Klein; Christopher M. Meissner |
| Abstract: | We study the relationship between tariffs and labor productivity in US manufacturing between 1870 and 1909. Using highly dis-aggregated tariff data, state-industry data for the manufacturing sector, and an instrumental variable strategy, results show that tariffs reduced labor productivity. Tariffs also generally reduced the average size of establishments within an industry but raised output prices, value-added, gross output, employment, and the number of establishments. We also find evidence of heterogeneity in the association between tariffs and value added, gross output, employment, and establishments across groups of industries. We conclude that tariffs may have reduced labor productivity in manufacturing by weakening import competition and by inducing entry of smaller, less productive domestic firms. Our research also reveals that lobbying by powerful and productive industries may have been at play. The era’s high tariffs are unlikely to have helped the US become a globally competitive manufacturer. |
| JEL: | F13 F15 N11 O14 O47 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33100 |
| By: | Chang, Pao-li (School of Economics, Singapore Management University); MAKIOKA, Ryo (School of Economics and Business, Hokkaido University); Ng, Bo Lin (School of Economics, Singapore Management University); Yang, Zhenlin (School of Economics, Singapore Management University) |
| Abstract: | This paper proposes a three-stage efficient GMM estimation algorithm for estimating firm-level production functions given spatial dependence across firms due to supplier-customer relationships, sharing of input markets, or knowledge spillover. The procedure builds on Ackerberg, Caves and Frazer (2015) and Wooldridge (2009), but in addition, allows the productivity process to depend on the lagged output levels and lagged input usages of related firms, and spatially correlated productivity shocks across firms, where the set of related firms can differ across the three dimensions of spatial dependence. We establish the asymptotic properties of the proposed estimator, and conduct Monte Carlo simulations to validate these properties. The proposed estimator is consistent under DGPs with or without spatial dependence, and with strong/weak or positive/negative spatial dependence. In contrast, the conventional estimators lead to biased estimates of the production function parameters if the underlying DGPs have spatial dependence structure, and the magnitudes of the bias increase with the strength of spatial dependence in the underlying DGPs. We apply the proposed estimation algorithm to a Japanese firm-to-firm dataset of 14, 178 firms during the period 2009–2018. We find significant and positive spatial coefficients in the Japanese firm-level productivity process via all three channels proposed above. |
| Keywords: | productivity estimation; spatial dependence; supplier-customer network; factor market pooling; knowledge spillover |
| JEL: | C31 D24 |
| Date: | 2024–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:ris:smuesw:2024_010 |
| By: | Chafwehé, Boris (Bank of England); Colciago, Andrea (University of Milan-Bicocca); Priftis, Romanos (European Central Bank) |
| Abstract: | This paper introduces a New Keynesian multi-sector industry model that integrates firm heterogeneity, entry, and exit dynamics, while considering energy production from both fossil fuels and renewables. We investigate the effects of a sustained increase in fossil fuel prices on sectoral size, labour productivity, and inflation. A hike in the price of fossil resources results in higher energy prices. Due to ex-ante heterogeneity in energy intensity in production, the profitability of sectors is impacted asymmetrically. As production costs rise, less efficient firms leave the market, while new entrants must display higher idiosyncratic productivity. While this process enhances average labour productivity, it also results in a lasting decrease in the entry of new firms. A central bank with a strong anti-inflationary stance can circumvent the energy price increase and mitigate its inflationary effects by curbing rising production costs. This policy entails a higher impact cost in terms of output and lower average productivity, but leads to a faster recovery in business dynamism. Thus, our results suggest that monetary policy faces a trade-off between stabilising aggregate activity and business dynamism. |
| Keywords: | Energy; productivity; firm entry and exit; monetary policy |
| JEL: | E62 L16 O33 Q43 |
| Date: | 2024–08–16 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1091 |
| By: | Elisa Fusco; Giuseppe Arbia; Francesco Vidoli; Vincenzo Nardelli |
| Abstract: | In the literature on stochastic frontier models until the early 2000s, the joint consideration of spatial and temporal dimensions was often inadequately addressed, if not completely neglected. However, from an evolutionary economics perspective, the production process of the decision-making units constantly changes over both dimensions: it is not stable over time due to managerial enhancements and/or internal or external shocks, and is influenced by the nearest territorial neighbours. This paper proposes an extension of the Fusco and Vidoli [2013] SEM-like approach, which globally accounts for spatial and temporal effects in the term of inefficiency. In particular, coherently with the stochastic panel frontier literature, two different versions of the model are proposed: the time-invariant and the time-varying spatial stochastic frontier models. In order to evaluate the inferential properties of the proposed estimators, we first run Monte Carlo experiments and we then present the results of an application to a set of commonly referenced data, demonstrating robustness and stability of estimates across all scenarios. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2410.20915 |
| By: | Saowaruj RATTANAKHAMFU (Thailand Development Research Institute (TDRI)); Naparit CHANTAWASINKUL (Thailand Development Research Institute (TDRI)); Nuttawut LAKSANAPANYAKUL (Thailand Development Research Institute (TDRI)); Nuttawut Warakorn AWUTPANYAKUL (Thailand Development Research Institute (TDRI)); Nuttawut Natcha YONGPHIPHATWONG (Thailand Development Research Institute (TDRI)) |
| Abstract: | This study investigates the relationship between urban density and productivity, specifically wages adjusted for provincial price differences, in four major cities of Thailand: Bangkok, Chiang Mai, Khon Kaen, and Songkla. Utilising the ArcGIS survey of Khon Thai 4.0 data, which measures urban density as the number of inhabitants per grid cell area, we employ the two-stage least squares estimation technique to address endogeneity concerns. Our findings demonstrate that higher urban density leads to an 8.9% increase in individual hourly wages at the 5% significance level. This supports the notion that densely populated urban areas foster enhanced productivity through agglomeration economies and knowledge spillovers. Furthermore, we observe the expected impacts of education, age, and gender on wages. Higher education is associated with an 8.2% increase in wages, highlighting its influence on labour productivity. Age exhibits an inverted U-shaped relationship, indicating that experience and skill development lead to higher wages up to a certain threshold. Male workers earn approximately 5.83% more than their female counterparts, revealing a gender wage gap. Moreover, our analysis reveals contrasting effects of higher urban density on skilled and unskilled workers. Skilled workers experience a significant 15.2% increase in wages, whereas the impact on unskilled workers remains modest at around 1.8%. Additionally, education significantly contributes to higher wages for both skilled and unskilled workers. This study provides valuable policy implications for promoting labour productivity and addressing urban development challenges in Thailand. |
| Keywords: | Urban development; Urban density; Labour productivity; Wage differentials |
| JEL: | J24 J31 O15 R11 R12 |
| Date: | 2024–06–18 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2024-12 |
| By: | Pencavel, John H. (Stanford University) |
| Abstract: | Why have the real (consumption) wages of U.S. workers risen since the nineteenth century? Some economists answer that increases in real wages have followed increases in labor productivity over time. In this paper, this hypothesized association is confronted with annual observations of changes in the wages and changes in the labor productivity of U.S. manufacturing production workers from the end of the 19th century to the beginning of the 21st century. Correlates with changes in real wages in addition to productivity are considered including statutory legislation, trade unionism, and the state of the business cycle. |
| Keywords: | real wages, labor productivity, trade unions, legislation, monopsony |
| JEL: | J31 N31 N32 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17326 |
| By: | OECD |
| Abstract: | Non-OECD economies are using seven times more grants per unit of steelmaking capacity for their steel industry than OECD countries in 2021, and increased tenfold the amount of grants per unit of capacity while tripling amounts of below-market borrowings from 2005 to 2021. Identical subsidies can have very different impacts on recipient firms’ performance and capacity depending on whether they operate in an OECD country or not: grants provided to steel firms in non-OECD economies are associated with large capacity expansions, with each additional USD 1 million in grants correlated with capacity increases of about 7 000 to 11 000 metric tonnes, whereas no significant impact was found for OECD countries. This may be due to different subsidisation programme frameworks and different degrees of enforceability of subsidy use. This emphasises the need for dialogue in global fora on best practices on subsidy frameworks to address the most distortive subsidies urgently. |
| Keywords: | Excess capacity, Financial records, Firm-level database, Government programme, Government support, Steel, Subsidies |
| Date: | 2024–11–12 |
| URL: | https://d.repec.org/n?u=RePEc:oec:stiaac:167-en |