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on Efficiency and Productivity |
| By: | Jan Thomas Schäfer (Chair for Industrial Organization, Regulation and Antitrust, Department of Economics, Justus Liebig University Giessen) |
| Abstract: | The level of government support significantly influences the performance of European railways. However, prior analyses have largely focused on the sector as a whole, neglecting the distribution of public budget contributions between the upstream infrastructure manager and downstream service providers. This study employs a two-stage procedure involving Data Envelopment Analysis (DEA) and a second-stage regression analysis to evaluate railway efficiency and analyze the relationship between funding structures and performance. Using a dataset covering eight European countries from 2001 to 2022, the results indicate that railways achieve higher efficiency when the upstream infrastructure manager receives a larger share of government funds, while downstream subsidies are relatively limited. Moreover, total operating contributions consistently enhance efficiency, whereas the impact of investment grants varies depending on the specification. These findings underscore the importance of balanced funding strategies that prioritize upstream contributions to foster competition and promote efficient use of public resources. |
| Keywords: | Railway efficiency, Public contributions, Data Envelopment Analysis, Government support, Europe |
| Date: | 2025–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:mar:magkse:202517 |
| By: | Alexander Amundsen; Sophia Chen; Pierre Guérin; Sinem Kiliç Çelik; Masahiro Nishida |
| Abstract: | Medium-term growth prospects of Caribbean countries have weakened in recent years. We examine these trends by providing new estimates of potential GDP growth for the region. Our findings reveal a broad-based decline over time, driven by declining contributions from human capital and total factor productivity. Linking these factors to firm-level data, we identify significant scope for aggregate productivity gains through the efficient reallocation of resources between firms and the removal of firm-level structural obstacles. Addressing issues such as the cost and access to finance, workforce education, tax administration, and business licensing and permits are associated with higher aggregate welfare. |
| Keywords: | Potential Growth; Allocative Efficiency; Firm-level Analysis; Caribbean |
| Date: | 2025–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/157 |
| By: | Venkat Ram Reddy Ganuthula; Ramesh Kuruva |
| Abstract: | This study explores the structural and performance impacts of artificial intelligence (AI) adoption on Indias knowledge intensive startups, spanning information technology, financial technology, health technology, and educational technology, founded between 2016 and 2025. Using a natural experiment framework with the founding year as an exogenous treatment proxy, it examines firm size, revenue productivity, valuation efficiency, and capital utilization across pre AI and AI era cohorts. Findings reveal larger structures and lower efficiency in AI era firms, supported by a dataset of 914 cleaned firms. The study offers insights into AIs transformative role, suggesting that while AI era firms attract higher funding and achieve higher absolute valuations, their per employee productivity and efficiency ratios are lower, potentially indicating earlystage investments in technology that have yet to yield proportional returns. This informs global entrepreneurial strategies while highlighting the need for longitudinal research on sustainability. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.19775 |
| By: | André Luiz Ferreira (Universidade Federal do Pará); André Luis Squarize Chagas (Departmento de Economia, FEA-USP); Carlos Roberto Azzoni (Departmento de Economia, FEA-USP) |
| Abstract: | This paper develops a spatial stochastic frontier framework for panel data that jointly accounts for spatial dependence and heteroskedastic technical inefficiency. Inefficiency and noise components are parameterized using scaling functions, while spatial dependence is modeled through both a spatial lag (SF-SLM) and a spatial Durbin specification (SF-SDM). Maximum likelihood estimation is implemented by explicitly incorporating the spatial autoregressive process into the log-likelihood function. A key innovation of this study is the use of the spatial multiplier to decompose estimated technical inefficiency into three components: (i) own inefficiency, (ii) spill-in effects (feedback of a unit’s inefficiency on itself through spatial interactions), and (iii) spillover effects (inefficiency transmitted from neighboring regions). This approach extends the stochastic frontier literature by showing that inefficiency is not purely local but can propagate across space. The method is applied to the Brazilian food manufacturing industry (2007–2018). Likelihood ratio tests confirm that spatial models outperform the nonspatial specification, with SF-SDM providing the best fit and more stable inefficiency estimates. Results reveal that, for an average region, approximately 9% of inefficiency is due to spillovers from neighbors, while 0.2% is explained by spill-in effects. Ignoring spatial structure would therefore overestimate region-specific inefficiency and underestimate the role of interregional linkages. The proposed framework offers a flexible tool for analyzing productive efficiency in spatially interconnected settings and provides new insights for regional policy and future research. |
| Keywords: | Spatial stochastic frontier; Maximum likelihood estimator; Technical inefficiency; spatial spillover |
| JEL: | C23 C51 R12 R15 L66 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:021487 |
| By: | Tatsuru Kikuchi |
| Abstract: | This paper investigates how executive demographics particularly age and gender influence artificial intelligence (AI) investment decisions and subsequent firm productivity using comprehensive data from over 500 Japanese enterprises spanning from 2018 to 2023. Our central research question addresses the role of executive characteristics in technology adoption, finding that CEO age and technical background significantly predict AI investment propensity. Employing these demographic characteristics as instrumental variables to address endogeneity concerns, we identify a statistically significant 2.4% increase in total factor productivity attributable to AI investment adoption. Our novel mechanism decomposition framework reveals that productivity gains operate through three distinct channels: cost reduction (40% of total effect), revenue enhancement (35%), and innovation acceleration (25%). The results demonstrate that younger executives (below 50 years) are 23% more likely to adopt AI technologies, while firm size significantly moderates this relationship. Aggregate projections suggest potential GDP impacts of 1.15 trillion JPY from widespread AI adoption across the Japanese economy. These findings provide crucial empirical guidance for understanding the human factors driving digital transformation and inform both corporate governance and public policy regarding AI investment incentives. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2508.03757 |
| By: | Sarah Fritz; Catherine van der List |
| Abstract: | We study the effects of place-based policies on aggregate productivity using administrative data on projects co-financed by the EU in Italy linked to balance sheet data. We exploit quasi-experimental variation in funding for a large place-based policy stemming from measurement error in regional GDP estimates. Results show that the policy likely decreases productivity. Decompositions reveal that aggregate declines are driven by reallocation of labor to low-productivity firms. Mechanism analysis using firm-level event studies reveals that negative reallocation effects are caused by high-productivity firms taking up the funds and subsequently becoming more liquidity constrained, leading to slowdowns in employment growth. |
| Keywords: | place-based policy, productivity, EU cohesion policy |
| JEL: | R11 R58 J23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12031 |
| By: | Wan, Lu; Zhou, Yanxi; Wang, Ying; Zhao, Tiantian |
| Abstract: | Following the “dual carbon” goals in 2021, which emphasize achieving the carbon peak by 2030 and carbon neutral by 2060, China introduced a “dual circulation” strategy to connect domestic and international trade. Leveraging the quantile regression model, this study examines the impact of green total factor productivity, trade penetration, foreign direct investment, and sustainable finance on carbon emissions (CO2). Furthermore, a mediating model is established from another perspective to discover the mechanism, respectively, testing how trade, foreign direct investment, and sustainable finance affect carbon emissions via green total factor productivity. The findings indicate that green total factor productivity exerts an inverted “U-shaped” effect on carbon emissions within a certain threshold of the total CO2 volume. While the relationship between the green total factor productivity and CO2 becomes a significant “U-shaped” when the total CO2 goes beyond a certain level. Meanwhile, foreign direct investment penetration and sustainable finance contribute positively to carbon emissions reduction, whereas trade penetration notably increases carbon emissions. Transition mechanisms with international cooperation, trade penetration, foreign direct investment penetration, and sustainable finance also affect CO2 through the green total factor productivity channel. As suggested, China should tailor its low-carbon transition strategies, drawing on global insights and considering its unique national development. Broadly, efficiency in the production process and low-carbon transition are preferred (i.e. improved green total factor productivity), which will balance economic development and environmental protection. The adoption and promotion of a consistent framework for sustainable finance are crucial, as they help enterprises in developing countries access more global sustainable finance. This study also notes that participating more in international trade that embodies low-carbon concepts and introducing green foreign direct investment helps developing countries improve resource efficiency and productivity. |
| Keywords: | carbon peak; correlation; green total factor productivity; sustainable finance; trade penetration |
| JEL: | F3 G3 |
| Date: | 2025–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129148 |
| By: | De Sanctis, Alessandro; Kapp, Daniel; Vinci, Francesca; Wojciechowski, Robert |
| Abstract: | This study evaluates the effectiveness of EU Cohesion Policy as an investment programme, employing a novel dataset that links firm-level data from Orbis with project-level information from the Kohesio database. It focuses on two key questions: (1) Which firms receive EU funding? (2) How does receiving EU funding affect firm performance? By applying a logit model and a local projection difference-in-differences approach, we provide new insights into the allocation mechanisms of EU Cohesion Policy funds and their firm-level impact. Our findings show that funding tends to be allocated to firms that already perform relatively well, and that firms receiving EU funding experience a persistent productivity increase of approximately 3% after 4 years, with smaller and more financially constrained firms experiencing relatively greater improvements. Moreover, funding targeting “SME investment” tends to enhance firm performance disproportionately more than other categories, whereas projects directed the “green transition” appear comparatively less beneficial. JEL Classification: E22, D24, H54, O38, O52 |
| Keywords: | corporate investment, European Structural and Investment Funds, fiscal policy, place-based policy, productivity |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253099 |
| By: | Choudhury, Prithwiraj; Khanna, Tarun; Makridis, Christos A.; Schirmann, Kyle |
| Keywords: | hybrid work; remote work; work-from-home; field experiment; productivity; employee engagement |
| JEL: | J23 J24 O10 O33 |
| Date: | 2025–02–09 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128764 |
| By: | Gianluca Cafiso; Marco Ferdinando Martorana |
| Abstract: | We investigate the extent to which crime, and the inability to effectively suppress it, affect the performance of local banks in terms of credit extension, asset quality, and profitability. The analysis focuses on cooperative banks in Italy, typically small institutions with strong ties to their local communities, over the period 2013–2023. The findings suggest that both crime and judicial inefficiency, even when considered separately and after controlling for banks’ operational efficiency, significantly influence credit extension and the incidence of non-performing loans. While their impact on overall profitability appears limited, non-interest income is significantly reduced. |
| Keywords: | cooperative banks, crime, judicial inefficiency, loans, profitability |
| JEL: | G21 E51 K42 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12025 |
| By: | Jonathan Hambur (Reserve Bank of Australia); Owen Freestone (Competition Taskforce Division, Australian Treasury) |
| Abstract: | There is substantial evidence that the degree of competition in the Australian economy has declined over the decade or so leading up to the COVID-19 pandemic. This has the potential to weigh on productivity, and in turn incomes, and so the welfare of the Australian people. In this paper we calibrate the general equilibrium model from Edmond, Midrigan and Xu (2023) to Australian microdata to answer the following question: If the degree of competition in the Australian economy had not declined from mid-2000s levels, how much higher would aggregate productivity and GDP be due to resources being better allocated across firms throughout the economy? The answer, according to this model, is 1–3 per cent. The model also suggests even larger economic costs once we account for other channels through which rising mark-ups affect the economy, though these are less precisely estimated. |
| Keywords: | competition; productivity |
| JEL: | D24 D61 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:rba:rbardp:rdp2025-05 |
| By: | Belinda Azenui; Sandile Hlatshwayo; Michael Spence |
| Abstract: | The U.S. economy has undergone profound structural transformations in recent decades. This descriptive study analyzes tradable and nontradable sectoral trends, with our findings demonstrating that the share of tradable sector employment and, within it, manufacturing employment, leveled off in the decade following the GFC after declining for several decades. Still, by 2023, the nontradable sector accounted for a large majority of employment and real value added. At the same time, the tradable sector exhibited robust productivity growth of nearly 3 percent, juxtaposed against far lower 0.7 percent growth in nontradable sectors. This marked divergence raises concerns regarding inequality and the sustainability of economic growth. |
| Keywords: | structural change; productivity; tradable; nontradable |
| Date: | 2025–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/156 |
| By: | Zenghelis, Dimitri; Serin, Esin; Stern, Nicholas; Sivropoulos Valero, Anna; Van Reenen, John; Ward, Bob |
| Abstract: | The UK faces large-scale investment needs across both the public and private sector. There is mounting evidence that targeted and temporary borrowing to invest in sustainable technologies and infrastructure would prove cost-effective and beneficial to living standards and economic competitiveness by increasing productivity and economic growth. This report sets out the need for long-lasting institutional and policy frameworks that can induce investment in a broad range of assets in the UK. These assets drive technological, institutional and behavioural innovation. The authors show that the transition to a sustainable, inclusive and resilient economy is a genuine opportunity for the UK to drive innovation and competitiveness and rekindle productivity growth. This requires a coherent, credible and targeted set of policies to raise living standards, manage disruption and unlock new, intelligent and sustainable forms of growth. The report is intended to guide policymakers to manage a structural transition, by taking advantage of the opportunity associated with the sustainable, intelligent and resilient economy while minimising the disruption and the risks associated with assets being left redundant and devalued in the economy of the 21st century. It makes the case for a strategic approach, noting that inaction is a choice that raises the cost of capital, reduces competitiveness and favours inefficient and unproductive economic activity. |
| Keywords: | infrastucture; innovation; investment; productivity; sustainable growth; UK |
| JEL: | N0 R14 J01 |
| Date: | 2024–01–22 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129172 |