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on Efficiency and Productivity |
| By: | FUKAO, Kyoji; KIM, YoungGak; KWON, Hyeog Ug |
| Abstract: | This study examines the dynamics of total factor productivity (TFP) by firm size to clarify the recent drivers of productivity growth in the Japanese economy, utilizing firm-level financial data from Teikoku Databank (TDB) spanning the years 1999 to 2020. In particular, we examine Japan’s distinctive “negative exit effect” by differentiating among various types of firm exit, including bankruptcy, closure, dissolution, and mergers. Our analysis shows that while within-firm productivity improvements at large firms played a dominant role in driving productivity growth through the 2000s, reallocation effects have become increasingly important since the 2010s. Notably, a substantial share of high-productivity firms exited the market through mergers, accounting for nearly half of the overall negative exit effect. Furthermore, while TFP among acquiring firms tends to stagnate in the short term after mergers, their labor productivity shows a significant and sustained increase, likely driven by capital deepening. These findings provide new insights into the shifting drivers of productivity growth in Japan—from within-firm productivity growth to market-driven resource reallocation—as well as into firm-size heterogeneity and the role of mergers in shaping productivity dynamics. |
| Keywords: | productivity dynamics, firm size heterogeneity, negative exit effect, mergers and acquisitions, resource reallocation, total factor productivity, SMEs, Japan |
| JEL: | O47 D24 L25 O53 G34 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:hit:tdbcdp:e-2025-03 |
| By: | Bijnens, Gert; Konings, Jozef; Putseys, Aaron |
| Abstract: | This paper identifies a firm-level Productivity J-curve induced by intangible investments. Using novel microdata on business-to-business transactions for Belgian firms, we construct a comprehensive measure of intangible investment covering software, R&D, design, training, and organizational capital. Our analysis shows that returns on intangibles substantially exceed those of traditional production factors, highlighting their central role in value creation. However, because intangible expenditures are rarely capitalized and are often recorded as intermediate inputs, they are not properly accounted for in conventional measures of total factor productivity (TFP). This misclassification creates systematic mismeasurement, whereby inputs are overstated relative to output in the short run, leading to an underestimation of TFP. Exploiting the lumpy nature of intangible expenditures within a difference-in-differences event-study framework, we document that such mismeasurement results in a persistent underestimation of TFP, by about 3% over a seven-year horizon. Given average measured TFP growth of 1% annually, this represents a substantial distortion. The bias is strongest among small, young, and low- capital intensive firms, reflecting slower absorption of intangible assets. By clarifying how intangible capital and emerging technologies such as AI systematically distort measured productivity, our findings provide new empirical insights into the productivity slowdown and the role of mismeasurement in modern economies. |
| Keywords: | Productivity |
| JEL: | E01 E22 E23 O32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:335205 |
| By: | López, Axsell |
| Abstract: | This study assesses the relative technical efficiency of investment projects financed by the Central American Bank for Economic Integration (CABEI) over the period 2010-2024, evaluating their capacity to transform financial resources into development outcomes. A two-stage approach is applied, combining Data Envelopment Analysis (DEA) with bias correction via bootstrap and a censored regression model to examine efficiency determinants. The results indicate an average technical efficiency of 35%, with substantial heterogeneity across projects, countries, and sectors. The benchmarking analysis identifies a limited set of projects defining the efficient frontier. Moreover, efficiency is associated with both microeconomic factors related to project design and implementation and macroeconomic conditions in recipient countries. |
| Keywords: | Data Envelopment Analysis, CABEI, Technical Efficiency, Investment Projects, Tobit. |
| JEL: | C13 C14 C61 H43 O22 O54 |
| Date: | 2026–01–21 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127812 |
| By: | Iñaki Aldasoro; Leonardo Gambacorta; Rozalia Pal; Debora Revoltella; Christoph Weiss; Marcin Wolski |
| Abstract: | This paper provides new evidence on how the adoption of artificial intelligence (AI) affects productivity and employment in Europe. Using matched EIBIS-ORBIS data on more than 12, 000 non-financial firms in the European Union (EU) and United States (US), we instrument the adoption of AI by EU firms by assigning the adoption rates of US peers to isolate exogenous technological exposure. Our results show that AI adoption increases the level of labor productivity by 4%. Productivity gains are due to capital deepening, as we find no adverse effects on firm-level employment. This suggests that AI increases worker output rather than replacing labor in the short run, though longer-term effects remain uncertain. However, productivity benefits of AI adoption are unevenly distributed and concentrate in medium and large firms. Moreover, AI-adopting firms are more innovative and their workers earn higher wages. Our analysis also highlights the critical role of complementary investments in software and data or workforce training to fully unlock the productivity gains of AI adoption. |
| Keywords: | artificial intelligence, firm productivity, Europe, digital transformation |
| JEL: | D22 J24 L25 O33 O47 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1325 |
| By: | Jan De Loecker; Catherine Fuss; Nathan Quiller-Doust; Leonard Treuren |
| Abstract: | We separately observe variable input expenditure and expenditure on fixed inputs in novel firm-level data covering the Belgian manufacturing sector over the last decades. This permits a deeper investigation of two potential drivers of the globally observed widening gap between firms’ revenue and variable input expenditure: technology and market power. Across the board, cost structures have become less reliant on variable input expenditure over time, while expenditure on fixed inputs or overhead costs has increased in prominence. We relate these changes in firms’ cost structures to performance measures and document that markups and gross profit rates increase substantially as the role of variable costs in production diminishes. Profit rates net of fixed input expenditure also increase, but by substantially less than gross profit rates. Our results suggest that technological change can explain a considerable portion of the widening gap between revenue and variable input expenditure, but that markups increase by more than necessary to break even, and that this phenomenon operates remarkably similarly across different firms and industries. |
| Keywords: | STG/23/026#57790427 |
| Date: | 2024–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:ete:ceswps:779663 |
| By: | Ellis, Peyton |
| Keywords: | International Development |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:361004 |
| By: | Peter Spencer |
| Abstract: | This paper constructs new measures of effective labour input in the UK economy. Unlike previous studies, which focus on the aggregate effect of labour quality on output, it analyses the contributions of factors such as human capital and industrial structure separately. Using data from the ONS and HMRC, numbers of employees and hours worked are weighted by labour costs, used as an indicator of their marginal productivity. The results underline the importance of investment in training and education. They also show that the reallocation of employment towards lower-productivity industries has reduced labour productivity, while regional migration has increased it. This approach provides a useful framework for analyzing structural change in the labour market and for monitoring the effect of government policy. |
| Keywords: | Divisia index; Törnqvist index; labour quality; productivity measurement; labour composition; sectoral reallocation; United Kingdom; growth accounting; effective labour input. |
| JEL: | E24 J24 O47 C43 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:yor:yorken:26/02 |
| By: | Lettu, Sandra |
| Keywords: | Risk and Uncertainty |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360708 |
| By: | David Baqaee; Ariel Burstein |
| Abstract: | This paper quantifies aggregate productivity in general equilibrium economies where agents with heterogeneous preferences make discrete choices between locations and occupations. We show how the conventional tools of welfare economics, like cost-benefit analysis, can be extended to these settings. Following Debreu (1951), we measure the change in aggregate productivity as the maximum reduction in total factor productivity such that it is possible to make every household at least indifferent to their status quo allocation. Aggregate productivity rises if primary factors can be saved while keeping every household at least indifferent. We characterize this measure of efficiency in terms of compensated supply and demand curves. We show that, to a first-order approximation, the elasticity of aggregate productivity to productivity shocks is given by sales shares (regardless of preferences and technologies). We also provide second-order approximations in terms of elasticities of uncompensated supply and demand curves. We contrast our approach with some popular alternative measures of aggregate efficiency and welfare: real GDP, the cross-sectional average of utilities, and the sum of compensating variations, and show that these alternative measures have serious flaws. |
| JEL: | E0 F1 R0 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34703 |
| By: | Inam, Munib; Buck, Steven |
| Keywords: | Environmental Economics and Policy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:360795 |
| By: | Hadda, kilani; Mohamed, Ben AMAR |
| Abstract: | This study investigates the dynamic relationships between agricultural productivity, green energy adoption, governance quality, and environmental degradation in BRICS economies over the period 2002–2023. Using a Pooled Mean Group Autoregressive Distributed Lag (PMG-ARDL) approach, complemented by FMOLS and CCR robustness estimators, the results show that agricultural productivity significantly increases long-run environmental pollution, reflecting the environmental cost of agricultural intensification. In contrast, green energy adoption and governance quality exert strong and consistent pollution-mitigating effects, underscoring their central role in promoting environmental sustainability. Overall, the findings emphasize that long-run structural factors dominate environmental outcomes in emerging agricultural economies. The study provides policy-relevant insights for advancing low-carbon and sustainable agricultural development in BRICS countries. |
| Keywords: | Environmental pollution- Agricultural productivity- - Green innovation- PMG -BRICS |
| JEL: | Q18 Q28 Q47 |
| Date: | 2025–10–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127353 |
| By: | Powell, Alan A.; Rimmer, Maureen T. |
| Abstract: | The policy debate on global warming has raised the prospect of large taxes on Greenhouse pollutants leading to a very substantial rise in the price of energy. Models in which output is produced according to a technology in which capital (K), labour (L) and energy (E) are substitutable run into the difficulty of how to allow parsimoniously for the higher likely substitutability between K and E than between L and E. Nesting all three factors in a single CES aggregator function is unsatisfactory because of the constancy over pairs of factors of partial substitution elasticities. This paper is a variation on the CES theme. It presents a new composite three-input production function (based on CES and Leontief components) which allows the partial substitution elasticities between capital and labour, capital and energy, and between labour and energy, to differ but to remain individually constant. |
| Keywords: | Environmental Economics and Policy |
| URL: | https://d.repec.org/n?u=RePEc:ags:copspp:266360 |
| By: | Okunola, Akinbode |
| Keywords: | Production Economics |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea25:361084 |