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on Efficiency and Productivity |
| By: | Bruno Merlevede; Annelies Van Maele (-) |
| Abstract: | This paper documents how the composition of value added per worker in Europe is distributed over manufacturing, services, and other industries based on a large panel of firmlevel data. We show that a non-negligible part of value added is accounted for by services industries. We then explore how micro-data at the firm level can be used to analyse this important component of aggregate productivity growth. We further discuss and explore using our data whether semi-parametric estimators of total factor productivity that are commonly found in the literature and typically tailored towards manufacturing are fit for analysing firms services sectors. |
| Keywords: | Productivity slowdown, firm-level data, services industries |
| JEL: | E24 J24 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:rug:rugwps:25/1109 |
| By: | Esteban Ferro; Davide Salvatore Mare; Faruk Miguel Liriano; Fausto Andres Patino Pena; Rodriguez Quezada, Maria Gabriela; Federica Zeni |
| Abstract: | This paper examines the impact of implementing a carbon tax on aggregate total factor productivity in the Dominican Republic through the resource allocation channel. It incorporates energy inputs—electricity and fuel—into firms’ production functions, allowing predictions of potential changes in resource allocation due to the carbon tax. The theoretical implications of the model indicate that the carbon tax has a heterogeneous effect on firms’ input choices, contingent on the level of firms’ existing input market distortions. Moreover, the model suggests that in economies in which more productive firms are less distorted, the carbon tax can decrease aggregate total factor productivity. In contrast, when more productive firms are more distorted, the carbon tax can increase or decrease aggregate total factor productivity. Utilizing detailed firm-level data from 2009 to 2018, covering up to 118, 000 firms, this paper finds that a carbon tax is more effective when levied on fuels rather than electricity. For the majority of sectors in the sample, the paper finds that existing distortions in energy consumption are positively correlated with firm-level productivity. Moreover, the quantitative results show that the introduction of the carbon tax shifts the burden of market distortions from high productivity firms to low productivity ones, generating aggregate total factor productivity gains for most sectors in the Dominican Republic. Overall, this study underscores the importance of considering existing input market distortions when analyzing the impact of environmental taxes. |
| Date: | 2024–10–04 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10944 |
| By: | Nilsson, Pia (Research Institute of Industrial Economics (IFN)); Andersson, Hans (The Swedish University of Agricultural Sciences); Heldt, Tobias (Center for Tourism and Leisure Research, Dalarna University) |
| Abstract: | Using matched employer–employee data, this paper provides evidence from an industry that is gaining attention due to its contributions to rural and regional growth and preservation of permanent grasslands. The equine industry exemplifies a rural industry where specialized knowledge is central to the experiences, products and services provided, but where there is little evidence of the productivity gains associated with skilled labour. We apply control function and IV methods for estimating a long-run production function (2010-2022) that accounts for simultaneity bias and adjustment frictions in rural labour markets. Several variables are used to measure firms’ access to skilled labour, such as the employment share with specialized training in horse breeding and hippology, the accumulated stock of occupation-specific experience for all workers belonging to a firm and firms’ access to a local pool of skilled labour. Results show that occupation-specific training is associated with an average productivity premium of 11% across firms in the industry. Examinations of intra-industry heterogeneity reveals large differences and it is only firms specializing in horse racing that can obtain productivity advantages by increasing the share of workers with specialized skills. The results of this paper have implications for policy and the investment decisions made by firms. |
| Keywords: | Human capital; Skills; Firm productivity; Rural Economics |
| JEL: | D22 D24 J24 Q10 |
| Date: | 2025–02–21 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1522 |
| By: | Mohammad Amin; Nesma Ali |
| Abstract: | It is often argued that small firms are more flexible than large firms. As a result, small firms perform better in volatile markets compared to large firms. The present paper explores this idea for a representative sample of private hotels in Malaysia. Specifically, the paper estimates the impact of volatility in occupancy rates on the pure technical efficiency of small versus large hotels. A slack-based non-radial efficiency measure obtained from the data envelopment analysis methodology is used. The empirical results confirm that smaller hotels are better at dealing with volatility than large hotels are. That is, there is a positive and significant impact of higher volatility on the efficiency of relatively small hotels, a negative and significant impact on the efficiency of larger hotels, and no significant impact on the efficiency of the average hotel. Higher women’s ownership also helps hotels to deal with volatility. The paper discusses the policy implications of the findings. |
| Date: | 2024–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10953 |
| By: | Oyun Erdene Adilbish; Mr. Diego A. Cerdeiro; Mr. Romain A Duval; Mr. Gee Hee Hong; Luca Mazzone; Lorenzo Rotunno; Hasan H Toprak; Maryam Vaziri |
| Abstract: | Europe faces a well-known productivity malaise, with a large and widening aggregate productivity gap relative to the U.S. In this paper, we provide a novel diagnosis of the firm-level roots of Europe’s productivity growth slowdown through an analysis of data covering the universe of firms in Europe and the U.S over their life cycles. Compared to their U.S. counterparts, we identify critical performance gaps among both Europe’s frontier firms and young high-growth firms. Our firm-level analyses reveal that smaller markets and limited market-based financing are key bottlenecks for frontier European firms, while skill shortages and insufficient risk capital, such as venture capital, hinder the formation and subsequent growth of young firms in Europe. These findings suggest that removing remaining intra-Europe barriers to accelerate factor and product markets integration, alongside national reforms to facilitate swifter resource reallocation and enhance human capital, could help revive Europe’s productivity growth. |
| Keywords: | Firm-level productivity; business dynamism. |
| Date: | 2025–02–14 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/040 |
| By: | Abreha, Kaleb; Rafael Amaral Ornelas; Gabriel Roberto Zaourak |
| Abstract: | This paper examines whether labor productivity converged across Brazil’s states (“departments”) between 2002 and 2018. The results show strong evidence of unconditional convergence in which states with lower levels of initial labor productivity experienced substantially faster labor productivity growth. The convergence rate was faster over 2002–10 compared to 2010–18 period and particularly strong in agriculture, extractives, and manufacturing. These findings of the regional convergence are robust to controlling for state and industry fixed effects, states’ initial poverty rates, human capital, tax collection per capita, and infrastructure. Given the high disparity in labor productivity across Brazil’s states, such regional convergence has the potential to raise aggregate productivity and per capita income. |
| Date: | 2024–09–10 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10904 |
| By: | Rouvinen, Petri; Pajarinen, Mika; Ali-Yrkkö, Jyrki |
| Abstract: | Abstract We analyze value added, productivity, and tangible and intangible investments in the retail and wholesale trade sectors (hereafter, ”trade”) in four countries: Finland, Sweden, Germany, and the United States. Trade’s value added in Finland is relatively similar to that in Sweden. Labor productivity in the Finnish sector is higher than in Germany, but lower than in Sweden and the United States. Over the past five years, trade has been a bright spot in Finland’s productivity growth. Furthermore, the sector’s tangible and intangible investments show encouraging signs. We make two striking observations. First, as compared to its Finnish counterparts, the Swedish trade sector has invested significantly more in data and software as well as in innovative activity. Second, in Finland, over half of trade’s productivity growth stems from improved organization within and between firms, i.e., from total factor productivity. These observations suggest that while Finnish trade has reacted to major external changes, such as the rise of e-commerce, it has been more passive than its Swedish counterpart in capitalizing on emerging opportunities. In our view, Finland’s innovation policy needs to broaden its interpretation of intangible investments beyond R&D and to become more sector-agnostic. These changes would also support the future development of trade. |
| Keywords: | Retail trade, Wholesale trade, Productivity, Intangible capital, Investments |
| JEL: | D24 E22 L81 |
| Date: | 2025–02–19 |
| URL: | https://d.repec.org/n?u=RePEc:rif:briefs:152 |
| By: | Peter H. Egger; Yulong Wang |
| Abstract: | This paper develops a novel method to estimate firm-specific market-entry thresholds in international economics, allowing fixed costs to vary across firms alongside productivity. Our framework models market entry as an interaction between productivity and observable fixed-cost measures, extending traditional single-threshold models to ones with set-valued thresholds. Applying this approach to Chinese firm data, we estimate export-market entry thresholds as functions of domestic sales and surrogate variables for fixed costs. The results reveal substantial heterogeneity and threshold contours, challenging conventional single-threshold-point assumptions. These findings offer new insights into firm behavior and provide a foundation for further theoretical and empirical advancements in trade research. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.03406 |
| By: | Bouscasse, Paul; Nakamura, Emi; Steinsson, Jón |
| Abstract: | Abstract: We estimate productivity growth in England from 1250 to 1870. Real wages over this period were heavily influenced by plague-induced swings in the population. Our estimates account for these Malthusian dynamics. We find that productivity growth was zero before 1600. Productivity growth began in 1600—almost a century before the Glorious Revolution. Thus, the onset of productivity growth preceded the bourgeois institutional reforms of seventeenth-century England. We estimate productivity growth of 2% per decade between 1600 and 1800, increasing to 5% per decade between 1810 and 1860. Much of the increase in output growth during the Industrial Revolution is explained by structural change—the falling importance of land in production—rather than faster productivity growth. Stagnant real wages in the eighteenth and early nineteenth centuries—Engels’ Pause—is explained by rapid population growth putting downward pressure on real wages. Yet feedback from population growth to real wages is sufficiently weak to permit sustained deviations from the “iron law of wages” prior to the Industrial Revolution. |
| Keywords: | Economics, Applied Economics, Econometrics, Generic health relevance, Decent Work and Economic Growth, Applied economics, Economic theory |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:econwp:qt6821m6jp |
| By: | Joonkyo Hong; Davide Luparello |
| Abstract: | In this study, we evaluate the reproducibility and replicability of Scott Orr's (Journal of Political Economy 2022, 130(11): 2771-2828) 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 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. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.19354 |
| By: | Veloso, Fernando; Gabriel Roberto Zaourak |
| Abstract: | Productivity growth in Brazil has not kept pace with developed and emerging economies, despite progress in achieving macroeconomic stability and implementing reforms in product and input markets. This paper reviews the literature on reforms and growth in Brazil to understand the factors that have hindered productivity growth. The paper discusses the impact of competitive distortions on productivity, the effect of structural change on productivity growth, and the evidence on misallocation and growth dynamics. Additionally, the paper analyzes the direct and indirect effects of several reforms, such as trade liberalization and formalization policies. Based on the main lessons from this review, the paper proposes a potential reform agenda to improve improve productivity in Brazil in the coming years and narrow the income gap with developed countries. |
| Date: | 2024–09–04 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10897 |
| By: | Matthew Fisher-Post |
| Abstract: | Since 1950, agricultural productivity has been increasing even as labourers leave agriculture. However, while average productivity of the sector has been converging, within-sector inequality has been increasing. Agricultural income inequality is still less than overall income inequality, but it measures significantly higher when we use higher-quality and more comprehensive survey data. This means not only to observe the entirety of household farm income, but also to measure the magnitude of capital income and corporate profits in the sector. |
| Keywords: | Agriculture, Structural change, Inequality |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-5 |
| By: | John Bonney; Luigi Pistaferri; Alessandra Voena |
| Abstract: | Using multiple administrative data sources from Norway, we examine how firm performance changes after entrepreneurs become parents. Female-owned businesses experience a substantial decline in profits, steadily decreasing to 30% below baseline ten years post-childbirth. In contrast, male-owned businesses show no decline, often growing in revenues and costs after childbirth. The profit decline for female-owned firms is most pronounced among highly capable entrepreneurs, women who are majority owners, and those with working spouses. Entrepreneurial effort is key to performance, and our findings suggest that time demands from childbirth and childcare are a significant determinant of the decline in firm profits. |
| JEL: | J13 J16 L25 L26 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33448 |
| By: | Poltoratskaia, Viktoriia; Quintero, Maria Fernanda; Fazekas, Mihaly; Marc Tobias Schiffbauer |
| Abstract: | Although green public procurement has been established as a desirable policy goal across the globe, especially in the European Union, its scope and impacts remain severely understudied. This paper provides insights into the prevalence and structure of green public procurement in Bulgaria, which is a sustainability laggard within the European Union and hence a least likely champion of green public procurement. The paper also estimates the impacts of green procurement on traditional procurement and economic outcomes: competition, corruption risks, and overall productivity. Using novel data and more comprehensive methods than previous studies, the analysis finds that green public procurement amounted to about 10 to 20 percent of total public procurement spending in Bulgaria in 2011–19. Most descriptors and requirements of green public procurement are found in titles, technical requirements, and product descriptions. Green criteria in award criteria texts, which are mainly used for flagging green public procurement in the literature, have been marginal in comparison. Green public procurement is estimated to improve competition for government contracts among firms, for example by increasing the prevalence of market entrants by 3 to 7 percentage points. Green public procurement contracts are also less prone to corruption risks. For example, they are 0.6 to 1.5 percentage points less likely to receive a single bidder. Finally, green public procurement enhances the efficiency of resource allocation in the economy by helping to channel public resources to more productive firms, for example to those that have 14 percent higher labor productivity. This effect is at least in part explained by the positive interaction between green public procurement and the lower risk of corruption. The findings strengthen the case for pursuing green public procurement goals as they offer synergies with traditional public procurement goals. |
| Date: | 2024–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10987 |
| By: | Astudillo-Estévez, Pablo; Bacilieri, Andrea |
| Abstract: | There is a large consensus on the fundamental role of firm-level supply chain networks in macroeconomics. However, data on supply chains at the fine-grained, firm level are scarce and frequently incomplete. For listed firms, some commercial datasets exist but only contain information about the existence of a trade relationship between two companies, not the value of the monetary transaction. We use a recently developed maximum entropy method to reconstruct the values of the transactions based on information about their existence and aggregate information disclosed by firms in financial statements. We test the method on the administrative dataset of Ecuador and reconstruct a commercial dataset (FactSet). We test the method's performance on the weights, the technical and allocation coecients (microscale quantities), two measures of firms' systemic importance and GDP volatility. The method reconstructs the distribution of microscale quantities reasonably well but shows diverging results for the measures of firms' systemic importance. Due to the network structure of supply chains and the sampling process of firms and links, quantities relying on the number of customers firms have (out-degrees) are harder to reconstruct. We also reconstruct the input-output table of globally listed firms and merge it with a global input-output table at the sector level (the WIOD). Differences in accounting standards between national accounts and firms' financial statements significantly reduce the quality of the reconstruction. |
| Keywords: | Network reconstruction, supply chain, production network, input-output table, maximum entropy, missing information |
| JEL: | C80 D57 E32 L14 F12 |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:amz:wpaper:2023-05 |
| By: | Jesica Torres Coronado; Parro, Francisco |
| Abstract: | This paper develops a tractable general equilibrium model to quantify the aggregate productivity gains from adjusting the public sector premium and the size of the public sector to their optimal levels. In the framework, the optimal size of the public sector is contingent on the efficiency level of public goods in increasing the productivity of the private sector. The model also incorporates an endogenous decision between market and non-market activities for women. The model is calibrated using data from the Arab Republic of Egypt, a country that exhibits a disproportionate share of workers, and women especially, in the public sector. The findings show that, under a conservative value for the efficiency of the public sector, aligning the public sector premium with its optimal level, thus lowering the share of employment in the public sector, results in aggregate efficiency gains of 12 percent for output per worker and 8 percent for total factor productivity. For lower values of the elasticity of private output to public goods, the productivity gains are almost twice as large. The optimal premium is positive for women and approaches zero for men, preventing a shift of mid-high-level skilled women from the public sector to non-market activities and also a contraction of the male entrepreneurial sector. Notably, a reduced female public sector premium fosters greater female labor force participation in market activities through an expansion of the female entrepreneurial sector, which increases the demand for production labor and drives wages up. |
| Date: | 2024–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10963 |
| By: | Bruno Merlevede (-) |
| Abstract: | This paper builds a large pan-European panel dataset of firm-level senior management gender composition. We focus the dataset on firms in the business economy that file unconsolidated accounts and report both total assets and strict positive employment throughout their existence. We have management information for 9 million firms for the period 2005-2020 resulting in 60 million firm-year observations. Overall 40% of observations concerns firms with at least one female manager and 60% are led only by male managers. For (predominantly micro) firms with a single manager that account for 53.5% of observations, we find that only 23% are female-managed. 59.5% of firms with two or more managers have at least one female manager. Across countries between 14% and 66% of observations refer to firms where at least half of the managers are female, across industries variation is more limited and ranges between 20% and 53%. We find that within tight countryindustry- year cells women-led SMEs are smaller and less productive and show lower leverage. Real performance differences are sustained in an event study analysis of switching firms, financial performance differences are not. Female-managed firms show lower short and medium-run growth rates. These effects are small and remain unchanged (also in magnitude) when controlling for leverage. Female-managed firms do not differ in terms of exporting behaviour and responses to import shocks. We find indications that female-managed firms show lower future growth in very uncertain environments, but higher growth in environments characterized by low uncertainty. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:rug:rugwps:25/1110 |
| By: | Adriana Kugler |
| Date: | 2025–02–07 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgsq:99525 |