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on Efficiency and Productivity |
| By: | Marc Aliana (Department of Applied Economics, Universitat Autònoma de Barcelona, Spain); Diego Prior (Department of Business, Universitat Autònoma de Barcelona, Spain); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | This paper presents a novel approach to measuring cross-country productivity growth by introducing a revised Malmquist Productivity Index designed to overcome the limitations of traditional methods. The proposed index mitigates the impact of outliers and incorporates key environmental factors, which can influence productivity comparisons across countries. This research: (i) analyses the productivity growth of 95 countries over two distinct periods, refining the original Malmquist index by combining the order-m methodology with a conditional approach; (ii) compares traditional and conditional Malmquist models to assess the differential effects of environmental variables on productivity estimates; and (iii) introduces a novel decomposition of the Malmquist index, the Environmental Variables Index Factor (EVIF), which quantifies the bias introduced by environmental factors. This study identifies that the exclusion of environmental variables systematically biases all components of the Malmquist index, including efficiency change and technological change. The findings indicate that the conditional model produces unbiased cross-country productivity estimates, particularly during periods of significant volatility in environmental factors. |
| Keywords: | Environmental variables, Malmquist indices, Order-m, Outliers, Productivity |
| JEL: | C14 D24 O47 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:jau:wpaper:2025/01 |
| By: | Bridget Kauma; Giordano Mion |
| Abstract: | We propose a new data resource that attempts to overcome limitations of standard firm-level datasets for the UK (like the ARD/ABS) by building on administrative data covering the population of UK firms with at least one employee. We also construct a similar dataset for France and use both datasets to: 1) Provide some highlights of the data and an overall picture of the evolution of aggregate UK and French productivity and markups: 2) Analyse the spatial distribution of productivity in both countries at a fine level of detail – 228 Travel to Work Areas (TTWAs) for the UK and 297 Zones d‘emploi (ZEs) for France – while focusing on the role of economic density. Our findings suggest that differences in firm productivity across regions are magnified in the aggregate by an increasing productivity return of density along the productivity distribution. |
| Keywords: | firm-level dataset, merging, BSD, FAME, VAT, FICUS, FARE, productivity, markups, UK, France, regional disparities, density |
| JEL: | R12 D24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11543 |
| By: | Marianna Endresz (Magyar Nemzeti Bank (Central Bank of Hungary)); Peter Gabriel (Magyar Nemzeti Bank (Central Bank of Hungary)) |
| Abstract: | This paper estimates the impact of acquisitions on various firm-level performance measures of Hungarian firms. Using difference-in-differences estimation with matching, we show that the performance of the acquirer improves significantly following an acquisition. By controlling for the – typically weaker – efficiency of the target, we also estimate the overall efficiency gain. Our results indicate that acquisitions are powerful tools to improve efficiency in the Hungarian economy. The estimated impacts are heterogeneous. Efficiency gains are higher if the acquirer is smaller and less efficient prior to the acquisition, highlighting that improving scale efficiency is an important motive for acquisitions. Furthermore, if the acquirer and target companies had business links beforehand, the productivity gain is twice as large. Acquisitions made during recessions are also different in some ways. Firms make fewer acquisitions, although the number of potential target companies increases. Because acquirers become more selective, the efficiency gains remain sizeable even in the unfavourable business environment. |
| Keywords: | mergers, acquisitions, efficiency, productivity, matching |
| JEL: | C22 D22 D24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:mnb:wpaper:2024/3 |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11487 |
| By: | Shakeel, Jovera; Attique, Iman; Nadir, Munazza |
| Abstract: | According to the Ministry of Finance, more than 40 percent of Pakistan’s GDP is attributed to the informal sector. Nearly 75 percent of Pakistan’s working-age population is employed in the informal sector, according to the Labour Force Survey (2020-2021). The widespread persistence of the informal sector has several manifestations in the country’s agricultural economy. This study analyses the impact of the informal economy on agricultural productivity in Pakistan by applying Stochastic Frontier and Principal Component Analysis models using the Pakistan Standards of Living Measurement (PSLM) farm-level data collected in 2014, 2016, and 2019. It is the first regionally and nationally representative study of the informal economy’s impact on agricultural indicators using the country’s largest dataset. These findings show, as prior literature has suggested, that farms utilizing formal economic relations, including better working employment contracts, more access to proper credit resources, and better irrigation systems, produce higher yields than farms that operate within informal structures. In addition, crop diversification and resource allocation were found to be significant in raising the efficiency of agriculture. But there is also a geographical dimension to productivity - some of the agro-climatic regions are lagging consistently implying a case for focused attention. |
| Keywords: | Agricultural Productivity, Farm Efficiency, Cropping Patterns, Agro-climatic Zones, Crop Diversification, Informal Economy, Stochastic Frontier Analysis, Resource Allocation |
| JEL: | C13 Q10 Q12 Q15 |
| Date: | 2024–09–16 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122828 |
| By: | Dan Andrews; Balázs Égert; Christine de La Maisonneuve; Balazs Egert |
| Abstract: | The productivity slowdown in many OECD countries over the last decades coincided with a significant deceleration in human capital growth. We show that nearly one-sixth of this productivity slowdown can be attributed to a decline in human capital growth, mainly driven by the decline in the quality of human capital, as measured by PISA scores. An analytical framework used to understand this decline considers education policies, the until recently largely unregulated use of digital devices in classrooms and the impact of the COVID-19 pandemic. The results highlight the negative effects of smartphone and social media usage on student performance and suggest that responsible internet use programs and education policy reforms could mitigate these effects. The paper also shows that public policies can help countries deploy more efficiently their human capital to enhance productivity. Without policy intervention, continued declines in PISA scores could reduce long-term MFP growth by nearly 3%. Combining education reforms with structural reforms could mitigate these effects and boost long-term MFP by about 1.5%. Therefore, efficient deployment and reallocation of human capital are crucial for sustaining productivity growth. |
| Keywords: | productivity slowdown, human capital, PISA scores, digital device, public policies, OECD |
| JEL: | E24 I20 I25 I26 I28 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11545 |
| By: | Tranos, Emmanouil; Kitsos, Tasos; Wolf, Levi John (University of Bristol) |
| Abstract: | The discussion about the productivity gains from digital technologies is almost as old as digital technologies themselves. From early futuristic approaches to the various forms of the productivity paradox, there are still open questions regarding if and how the internet can lead to positive economic effects as well as their spatial heterogeneity. The usual caveat to unpack this relationship is data about internet usage that is detailed enough to be linked both to economic outputs and places. We develop a multilevel modelling framework and combine firm-level microdata with novel internet speed microdata illustrating how connectivity has been experienced by end-users. Although it is not possible to directly observe the online activities of individuals, these data allow us to approximate business usage. Additionally, we can distinguish between upload and download speeds, which is important as these channels can support different internet functions (e.g. video streaming vs. synchronous communications). We then observe firms, their productivity, and other firm characteristics and estimate the firm productivity effects of broadband speeds after accounting for spatial effects and platial characteristics, which are also associated with the underpinning digital divides. We find that increases in a place's internet speeds can lead to higher firm productivity whilst the opposite holds for instability of internet speeds. These results vary by sector and firm characteristics. Our results have significant policy implications, highlighting the economic impact of high-speed internet infrastructure planning decisions and presenting policymakers with a clear efficiency vs. equity trade-off. |
| Date: | 2024–12–02 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:va375 |
| By: | Navaretti, Giorgio Barba; Rosso, Anna |
| Abstract: | This paper examines whether access to the capital market of convertible and nonconvertible bonds affects total factor productivity (TFP) for the population of Italian joint stock manufacturing companies, based in highly segmented local financial markets, between 2007 and 2017. The hypothesis, well grounded in the literature, is that long-term capital favors investment in intangibles and other risky assets necessary for productivity growth. To identify this effect, we exploit the exogenous shock of the Italian banking deregulation of the mid-1990s as an instrument for firm-level access to capital, interacted with distance from logistic networks. These reforms changed the distribution of the type of branches at the local level, increasing the share of joint stock banks, which have high connections to international capital markets. This geographical reallocation of banking activities ultimately affected firms' financial structure, favouring their access to capital, even when based in peripheral financial areas. Firms which issued instruments of market debt achieved higher levels of productivity and a higher probability to reach top percentiles of productivity distribution. |
| Keywords: | access to capital markets; bank deregulation; logistic networks dynamics; productivity |
| JEL: | J1 |
| Date: | 2023–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126435 |
| By: | Nicola Gagliardi |
| Abstract: | This PhD thesis includes three original microeconomic analyses that investigate critical factors influencing workers’ wages and firm productivity, and underpinning relevant megatrends poised to reshape economic systems and lifestyles worldwide for decades to come. Specifically, the thesis explores the following dimensions: firms’ relative positioning within Global Value Chains (GVCs), organizational tenure (i.e. the length of employment in a given firm), and the economic implications of global warming. The first two analyses focus on the Belgian labor market, while the third adopts a broader European perspective. Based on matched employer-employee data relative to the Belgian manufacturing industry for the period 2002-2010 combined with a unique indicator of firm-level upstreamness (i.e. the steps before the production of a firm meets final demand), Chapter 1 shows that workers earn significantly higher wages when employed in more upstream firms. However, the benefits from upstreamness are found to be unequally shared among workers, both along the wage distribution and when considering the gender dimension of the workforce. Using rich longitudinal matched employer-employee data on Belgian firms over the period 2005-2016, Chapter 2 point to positive, but decreasing, returns to tenure. The study also finds that the impact differs widely across several firm dimensions (e.g. task routineness, job complexity, capital intensity). Using longitudinal firm-level balance-sheet data from private sector firms in 14 European countries over the period 2013-2020, combined with detailed weather data, including temperature, Chapter 3 reveals that global warming significantly and negatively impacts firms’ Total Factor Productivity (TFP). Labor productivity also declines markedly as temperatures rise, while capital productivity remains unaffected – indicating that TFP is primarily affected through the labor input channel. Such impacts appear to persist across geographical, sectoral, and firm-specific dimensions. |
| Keywords: | Global Value Chains; Firm Productivity; Wages; Gender Wage Gap; Organizational Tenure; Climate Change; Global Warming |
| Date: | 2025–01–14 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/386761 |
| By: | Flavio Calvino; Luca Fontanelli |
| Abstract: | In this work we characterise French firms using artificial intelligence (AI) and explore the link between AI use and productivity. We distinguish AI users that source AI from external providers (AI buyers) from those developing their own AI systems (AI developers). AI buyers tend to be larger than other firms, but this relation is explained by ICT-related variables. Conversely, AI developers are larger and younger beyond ICT. Other digital technologies, digital skills and infrastructure play a key role for AI use, with AI developers leveraging more specialised ICT human capital than AI buyers. Overall, AI users tend to be more productive, however this is related to the self-selection of more productive and digital-intensive firms into AI use. This is not the case for AI developers, for which the positive link between AI use and productivity remains evident beyond selection. |
| Keywords: | technology diffusion, artificial intelligence, digitalisation, productivity |
| JEL: | D20 J24 O14 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11466 |
| By: | Conteduca, Francesco Paolo; Panon, Ludovic |
| Abstract: | Industries are not fully geographically concentrated, so that natural disasters can affect the degree of competition in the industry, forcing firms to adapt, and have aggregate consequences. Using administrative data, we show that natural disasters in Italy lead to a persistent decline in markups of affected manufacturing firms, particularly large ones. We implement an oligopolistic competition model with idiosyncratic shocks directly on the firm-level data and quantify how markup adjustments shape aggregate productivity and welfare. Our findings suggest that markup adjustments may have mitigated the impact of the 2012 Italian earthquake on aggregate productivity by approximately 30%. |
| Keywords: | Natural Disasters; Markups; Oligopolistic Competition; Aggregate Productivity; Misallocation; Firm Heterogeneity |
| JEL: | D22 D43 O47 Q54 |
| Date: | 2024–12–17 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123008 |
| By: | Joshua Angrist; Marc Diederichs |
| Abstract: | Elite economics PhD programs aim to train graduate students for a lifetime of academic research. This paper asks how advising affects graduate students' post-PhD research productivity. Advising is highly concentrated: at the eight highly-selective schools in our study, a minority of advisors do most of the advising work. We quantify advisor attributes such as an advisor's own research output and aspects of the advising relationship like coauthoring and research field affinity that might contribute to student research success. Students advised by research-active, prolific advisors tend to publish more, while coauthoring has no effect. Student-advisor research affinity also predicts student success. But a school-level aggregate production function provides much weaker evidence of causal effects, suggesting that successful advisors attract students likely to succeed-without necessarily boosting their students' chances of success. Evidence for causal effects is strongest for a measure of advisors' own research output. Aggregate student research output appears to scale linearly with graduate student enrollment, with no evidence of negative class-size effects. An analysis of gender differences in research output shows male and female graduate students to be equally productive in the first few years post-PhD, but female productivity peaks sooner than male productivity. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.01533 |
| By: | Voraprapa Nakavachara; Tanapong Potipiti; Thanee Chaiwat |
| Abstract: | Generative AI technologies such as ChatGPT, Gemini, and MidJourney have made remarkable progress in recent years. Recent literature has documented ChatGPT’s positive impact on productivity in areas where it has strong expertise—attributable to extensive training datasets—such as the English language and Python/SQL programming. However, the literature is still limited regarding ChatGPT’s performance in areas where its capabilities could still be further enhanced. In this paper, we asked participants to perform writing analysis tasks in a non-English language (specifically, Thai) and math & data analysis tasks using a less frequently used programming package (specifically Stata). The findings suggest that, on average, participants performed better using ChatGPT in terms of scores and time taken to complete the tasks. However, a detailed examination reveals that 34% of participants saw no improvement in writing analysis tasks, and 42% did not improve in math & data analysis tasks when employing ChatGPT. Further investigation indicated that higher-ability participants, as proxied by their econometrics grades, were the ones who performed worse in writing analysis tasks when using ChatGPT. We also found evidence that participants with better digital skills performed better with ChatGPT. This research provides insights on the impact of generative AI. Thus, relevant parties can make informed decisions regarding appropriate strategies, policies, and educational systems. It also highlights the critical role of human skills in addressing and complementing the limitations of AI. |
| Keywords: | ChatGPT; Generative AI; Large Language Models; Labor Productivity |
| JEL: | A20 D24 J24 O33 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:pui:dpaper:229 |
| By: | Avendano, Rolando (Asian Development Bank); Tani, Massimiliano (University of New South Wales); Tolin, Lovely C. (Asian Development Bank) |
| Abstract: | In this paper, we examine whether, and if so how, an economy's deliberate policy choices of regional cooperation and integration influence underlying determinants of economic growth. Building on models of growth and innovation, we analyze the role of regional integration on labor productivity and firms' probability to innovate using data from a panel of 170 economies and 60, 000 firms over a period of two decades. Our results suggest that regionalism, as captured by metrics of regional cooperation and integration, can positively contribute to labor productivity and innovation, in addition to known factors of production. |
| Keywords: | regional integration, productivity, innovation, Asia |
| JEL: | F02 F15 O4 O30 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17495 |
| By: | Berlingieri, Giuseppe; Calligaris, Sara; Criscuolo, Chiara; Verlhac, Rudy |
| Abstract: | Using a unique microaggregated data set on firm-level productivity in 13 countries from 1995 to 2014, this article provides new evidence on technology- and knowledge-diffusion barriers for laggard firms. We show that, although the least productive firms benefit from a catch-up effect, their speed of catchup is lower in digital- and skill-intensive industries. This is especially true in countries with high skill mismatch, high financing frictions, and low absorptive capacity. These barriers to diffusion, combined with the rising importance of tacit knowledge and intangibles, could help explain the productivity growth slowdown observed in the last decades. |
| JEL: | J1 F3 G3 |
| Date: | 2024–11–19 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126229 |
| By: | Elsenberger, Sebastian |
| Abstract: | This thesis examines, quantifies, and ranks the influence of various factors of activity, structure, and intensity on passenger transport energy consumption to assess the progression of energy efficiency. For this purpose, four logarithmic mean Divisia index (LMDI) decomposition analyses are conducted employing continuous data from 2000 to 2016, one each for the land passenger transport sector and one for the LDV sector. In particular, the question of to what extent gross efficiency gains can be attributed to technical efficiency improvements versus behavioral factors is answered. The analyses on land passenger transport solely feature gross energy intensity, whereas the subsequent analyses on LDV energy consumption further decompose gross efficiency into fuel share, average occupancy, and technical energy intensity. Beyond that, population factors are introduced to obtain results normalized per capita. The results of the full decomposition analyses highlight that technical energy efficiency enhancements are always substantially offset by behavioral factors, such as passenger activity per capita or LDV average occupancy. What is more, modal split is of the least significance even though it holds an enormous energy savings potential. However, passenger transport energy consumption per capita decreases throughout all scenarios. Ultimately, a successful policy response must address behavioral and personal utility factors since measures exclusively focused on technical energy efficiency improvements are likely to induce rebound effects. |
| Keywords: | Energy Efficiency; Decomposition Analysis; LMDI; Energy Efficiency Indicators; Rebound Effect; Transport Policy; Fuel Switching; Energy Economics; Energy Policy; Germany; Netherlands; Factor Decomposition |
| JEL: | C82 R4 R49 |
| Date: | 2023–07–28 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122147 |
| By: | David Kitulazzi; Frank K. Ametefe; Samuel Azasu; Patricia Gabaldon Quiñonones |
| Abstract: | This study investigates the impact or relationship of board composition on the performance of JSE-listed real estate firms. The study explored Panel data analysis to estimate the impact of board composition elements on the performance of JSE-listed real estate firms in South Africa using sustainability data sourced from Bloomberg. The study considered board composition elements, board size, proportions on non-executive directors, independent directors and females on boards. Three main areas were explored: financial performance, market value, and sustainability. The return on assets and return on equity measured firm financial performance; firm value was measured by Tobin’s Q; and sustainability measured by the Bloomberg environmental and social sustainability scores. The findings indicate that female directors on board positively and significantly impact financial and sustainability performance but not firm value. Board size was found to negatively and significantly impact financial performance but positively and insignificantly impact firm value and sustainability. The proportion of non-executive directors did not significantly impact any of the performance metrics examined. The proportion of independent directors on boards negatively impacts financial performance and positively impacts sustainability. Companies should emphasise the qualifications, experience and skills female board members bring to boards. CEOs and other corporate executives should not directly participate in appointing non-executive and independent board members. This would ensure that they can better play the monitoring role required. Firms should also critically consider the number of board members required for effective decision-making and monitoring. |
| Keywords: | board composition; Firm Performance; JSE-listed real estate firms; sustainability |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:afr:wpaper:afres2024-012 |
| By: | Amanda Dahlstrand; Dávid László; Helena Schweiger; Oriana Bandiera; Andrea Prat; Raffaella Sadun |
| Abstract: | Firms are key to economic development, and CEOs are key to firm productivity. Are firms in countries at varying stages of development led by the right CEOs, and if not, why? We develop a parsimonious measure of CEO time use that allows us to differentiate CEOs into “leaders” and “managers” in a survey of 4, 800 manufacturing firms across 42 countries, with income per capita ranging from USD 4, 000 to 45, 000. We find that poorer countries have fewer leaders and relate this to training opportunities. Even when suitable leaders are available, they often do not lead the firms that would benefit the most, resulting in mismatches that can cause up to a 20% loss in productivity for the mismatched firms. The findings imply that policies that address the causes of mismatch could significantly enhance growth without additional resources. |
| JEL: | J24 M12 O47 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33324 |
| By: | ., Kaustubh; Ghosh, Taniya |
| Abstract: | The paper investigates the causes of rising inequality among Indian states in terms of per capita State Domestic Product (GDP) in recent decades by examining the convergence/divergence between 20 major Indian states from 2000 to 2019. The paper adds to the existing literature by including the newly created states of Jharkhand, Chhattisgarh, and Uttarakhand in the sample. The paper, like previous research, finds 'conditional' convergence between states per capita GDP; however, the literature cannot determine whether this is due solely to different steady states caused by state-specific characteristics or to differences in productivity growth rates. According to our findings, differences in productivity growth rates, as well as different steady states, are the drivers of states' increasing per capita GDP inequality. Factors such as population growth rate, bank credit/GDP ratio, and shares of agriculture and industry in the GDP explain the differences in steady states between states, which drive the disparity in per capita GDP between states. Therefore, to reduce inequality, the states with low per capita GDP may benefit from rebalancing these variables. Furthermore, we must also investigate the causes of variations in productivity growth rates to address growing regional inequality. |
| Keywords: | Solow Model, Conditional Convergence, Beta-convergence, Stochastic convergence, Unit Root, Fixed Effect |
| JEL: | O10 O47 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122775 |
| By: | A. Kerem Coşar; Sophie Osotimehin; Latchezar Popov |
| Abstract: | We quantify the aggregate, regional and sectoral impacts of transportation productivity growth on the US economy over the period 1947-2017. Using a multi-region, multi-sector model that explicitly captures produced transportation services as a key input to interregional trade, we find that the calibrated change in transportation productivity had a sizable impact on aggregate welfare, magnified by a factor of 2.3 compared to its sectoral share in GDP. The amplification mechanism results from the complementarity between transport services and tradable goods, interacting with sectoral and spatial linkages. The geographical implications are highly uneven, with the West and Southwest benefiting the most from market access improvements while the Northeast experiences a decline. Sectoral impacts are largest in transportation-intensive activities like agriculture, mining and heavy manufacturing. Our results demonstrate the outsized and heterogeneous impact of the transportation sector in shaping US economic activity through specialization and spatial transformation. |
| JEL: | E23 O18 R13 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33248 |