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on Efficiency and Productivity |
| By: | Kyoji FUKAO; YoungGak KIM; Hyeog Ug KWON |
| 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. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26007 |
| By: | Mauro Caselli; Arpita Chatterjee; Shengyu Li |
| Abstract: | This paper introduces a method for estimating productivity and quality at the firm-product level using a transformation function framework. We use firm optimization conditions to establish a one-to-one mapping between observed data and unobserved productivity and quality. We do not need to impute firm-product input shares and can avoid imposing productivity evolution processes. The method is scalable to numerous products and can address the bias caused by unobserved heterogeneous intermediate input prices. We apply the method to a set of Mexican manufacturing industries and examine the roles of across-firm and within-firm technological spillovers, accounting for the trade-off between productivity and quality. Our quantitative analysis shows that an exogenous, product-specific technological improvement generates substantial gains in welfare, amplified by both within-firm and across-firm spillovers by approximately 17 percent and 5 percent, respectively. Moreover, within-firm resource reallocation toward the most productive products accounts for 60 percent of the resulting firm-level productivity gains. |
| Keywords: | Productivity; Technology; Industrial organization |
| JEL: | D24 L11 L15 O33 |
| Date: | 2026–01–12 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:102364 |
| By: | Steenkamp, Daan; Fourie, Jurgens |
| Abstract: | We show that national total factor productivity estimates mask significant heterogeneity across industries. Our estimates imply that there has been broad-based decline in productivity since the global financial crisis, particularly for mining, manufacturing and construction. While we highlight challenges to measuring productivity in South Africa, we show that our estimates are broadly similar to estimates from other international agencies. Over the long term, productivity is a key determinant of a country's per capita income. South Africa's poor productivity performance since 1990 is therefore very concerning. Our estimates have profound policy implications, highlighting the impact that electricity and logistical constraints, rising regulatory compliance costs, policy uncertainty and municipal mismanagement. |
| Keywords: | productivity, TFP, production functions |
| JEL: | D24 O47 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esrepo:335705 |
| By: | Kyoji FUKAO; YoungGak KIM; Hyeog Ug KWON |
| Abstract: | This paper re-examines the effects of minimum wage increases on firm productivity and business dynamism in Japan using microdata from the Economic Census (2012, 2016, and 2021). Using the Foster–Haltiwanger–Krizan (2001) decomposition, we first document a sharp slowdown in both labor productivity and total factor productivity (TFP) growth after 2015. The decline is mainly driven by a substantial weakening of within-firm productivity improvements, while reallocation effects—captured by covariance terms reflecting the expansion of more productive firms—remain consistently positive and sizable throughout the period. This suggests that competitive reallocation mechanisms continued to operate even as aggregate productivity growth weakened. At the prefectural level, minimum wage growth is generally positively correlated with labor productivity and TFP growth. However, the underlying mechanisms differ markedly across periods. During the moderate increase phase (2011–2015), minimum wage growth is associated with more substantial entry effects and weaker exit effects, whereas during the rapid increase phase combined with the COVID-19 shock (2015–2020), entry effects weaken and exit effects become more pronounced, indicating a nonlinear relationship between minimum wage policy and business dynamism. Firm-level panel regressions show limited evidence for a statistically significant and robust productivity-enhancing effect of minimum wage increases. Instead, firms primarily adjust through changes in input composition, including shifts in employment types, reductions in temporary employment, and capital adjustments–labor ratios. Instrumental variable estimations exploiting economically connected commuting areas across prefectural borders to address endogeneity concerns yield similar conclusions, with small and unstable direct effects on productivity. Overall, the findings suggest that minimum wage increases in Japan mainly induce firms to adapt through organizational and input reallocation rather than through immediate improvements in technical efficiency. The impact of minimum wage policy critically depends on the pace of increases and macroeconomic conditions, underscoring the importance of complementary productivity-enhancing policies if minimum wage hikes are to contribute to sustained productivity growth. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rdpsjp:26003 |
| By: | Nguyen, Hang T. T. |
| Abstract: | This paper investigates the relationship between corporate income tax rates (CITR) and firm-level productivity growth using AMADEUS data of 304, 410 observations from 79, 842 European firms from 2006 to 2019. The results imply a robust non-linear relationship: higher CITRs are positively associated with productivity growth for high-productivity firms near the technological frontier and negatively associated with the productivity catch-up of less productive firms. Heterogeneity tests suggest a stronger productivity response to tax rate changes of small and medium-sized enterprises (SMEs) and domestic firms, while I do not find a significant productivity response to tax rate changes for large and multinational firms. The main findings are robust across various productivity estimation methods and model specifications and challenge the conventional view that higher business tax rates have a linear and negative effect on productivity growth. The paper contributes to the ongoing debate about the role of corporate taxation in shaping economic competitiveness and long-term growth. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arqudp:335901 |
| By: | Aldasoro, Iñaki; Gambacorta, Leonardo; Pal, Rozalia; Revoltella, Debora; Weiss, Christoph; Wolski, Marcin |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:eibwps:335876 |
| By: | Otaviano Canuto |
| Abstract: | This report addresses the business environment in Brazil as one of the determinants responsible for the weak evolution of productivity in recent decades. After addressing this productivity performance, we define what constitutes the business environment, using as a reference the three ways in which the World Bank has been addressing the subject. Next, we highlight how the business environment affects productivity in a country. Finally, we review some recent reforms in in the country's business environment and available evidence on their likely effects on productivity. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:rp16_25 |
| By: | Amira El-Shal (Cairo University); Eman Moustafa (African Export-Import Bank) |
| Abstract: | This study examines the relationships between gender, research and development (R&D), innovation, and productivity in Egyptian firms, leveraging panel data from 2013, 2016, and 2020. We explore whether female-led firms exhibit differences in productivity and innovation compared to their male-led counterparts. Going beyond most prior investigations, we allow for endogenous selection in innovation by incorporating instrumental variables within generalized structural equation models. Contrary to earlier findings, our results reveal that female-led firms are more likely to invest in R&D and innovate. Moreover, we show that female-led firms are as productive as male-led firms, challenging any notion of lower productivity among female-headed firms. In examining the links between R&D, innovation, and productivity, we determine that innovative and younger firms are more productive. Additionally, factors such as R&D expenditure, younger age, foreign technology adoption, and formal training provision increase the likelihood of innovation. Finally, firms adopting foreign technology and those with access to finance are more likely to invest in R&D. |
| Date: | 2024–10–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1744 |
| By: | Tomohiko INUI; YoungGak KIM; Hyeog Ug KWON |
| Abstract: | This paper examines how artificial intelligence (AI) development is related to firm productivity and business dynamism in Japan. Using firm-level panel data from the Basic Survey of Japanese Business Structure and Activities matched with the Institute of Intellectual Property (IIP) patent database, we use AI-related patent applications as a proxy for AI development and analyze its association with productivity, firm organization, and industry-level reallocation. The empirical analysis combines fixed-effects estimation, event-study methods, and inverse probability weighting to address potential endogeneity. We find that firms engaging in AI development tend to exhibit higher productivity in the medium to long run, while displaying distinctive dynamics around the timing of AI development. In particular, productivity temporarily declines around the onset of AI development and subsequently improves. This pattern is consistent with adjustment costs associated with the adoption of new general-purpose technologies, but it is also compatible with endogenous selection into AI development, and therefore, the analysis does not make strong causal claims. Importantly, the association between AI development and productivity is heterogeneous across firms. The positive relationship is more pronounced among firms with higher initial productivity levels and larger firm size, while it is weaker among smaller and lower-productivity firms, highlighting the role of complementary assets such as skilled labor and organizational capabilities. We further show that AI development is associated with changes in firm organization and labor composition. While total employment does not decline significantly, the share of high-skilled workers increases, and the number of subsidiaries tends to decrease. At the industry level, greater AI development is associated with stronger reallocation toward more productive firms, linking AI development to business dynamism in the Japanese economy. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rdpsjp:26004 |
| By: | Constantin Chilarescu |
| Abstract: | We examine the new production function developed by Chilarescu, and prove that under certain restrictions, the values of the elasticity can also be less than one. We will also prove that under certain restrictions on the parameters, the production function satisfies the Inada conditions. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2601.14893 |
| By: | Tseliso Isaiah Ramoeletsi (Westford University College, Scotland, UK) |
| Abstract: | This study investigates the impact of Environmental, Social, and Governance (ESG) disclosure on the financial performance of firms listed on selected Southern African stock exchanges. A quantitative, comparative research design was employed using panel data covering 2018 to 2024. The sample comprised 72 randomly selected companies—10 each from the Johannesburg Stock Exchange (JSE), Zimbabwe Stock Exchange (ZSE), Botswana Stock Exchange (BSE), Dar es Salaam Stock Exchange (DSE), Malawi Stock Exchange (MalSE), Lusaka Securities Exchange (LuSE), and Stock Exchange of Mauritius (SEM), and two from the Eswatini Stock Exchange (ESE)—resulting in 504 firm-year observations. ESG disclosures were assessed using a structured 30-item index based on GRI, SASB, and TCFD frameworks, scored on a 0–2 Likert scale. Corporate financial performance was measured using a Composite Financial Performance (CFP) indicator, derived by standardizing and averaging Return on Assets (ROA) and Return on Equity (ROE). Data analysis included descriptive statistics, Pearson correlation, and panel regression. Findings indicate moderate ESG disclosure levels, with governance reporting being the most consistent. However, ESG scores exhibited no significant positive relationship with CFP, and environmental disclosures were negatively associated with financial performance, suggesting potential short-term cost implications. Traditional financial variables such as debt-to-equity ratio remained strong predictors of profitability. These results suggest that ESG practices among firms on Southern African stock exchanges are still evolving and may be driven more by compliance than strategic integration, limiting immediate financial benefits. |
| Keywords: | ESG disclosure, financial performance, SADC, panel data, responsible investment |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:smo:raiswp:0566 |
| By: | Bojan Mladenović (Faculty of Economics and Business, University of Belgrade, Serbia Business Development Manager, Magroni DOO Skopje, North Macedonia) |
| Abstract: | This paper examines the shape of the long-run average cost (LRAC) curve, a central concept in production economics and strategic management. While traditional neoclassical theory suggests a U-shaped curve, with costs declining and then rising due to diseconomies of scale, a significant body of empirical research points toward an L-shaped curve, where costs decline to the minimum efficient scale (MES) and then stabilise. Drawing on both theoretical and empirical perspectives, this paper applies a case study of a bottled water manufacturer in North Macedonia. Using production and cost data collected over a ten-year period, the study tests whether the LRAC follows the U-shaped or L-shaped pattern. The results show that after a phase of declining costs, the firm reached a zone of constant returns to scale, supporting the L-shaped hypothesis. The findings contribute to the debate on cost curve theory and provide managerial implications for capacity planning and efficiency. |
| Keywords: | Long-run average cost curve, Economies of scale, Bottled water industry, Cost efficiency, Case study |
| JEL: | M41 D24 L67 |
| Date: | 2025–12–15 |
| URL: | https://d.repec.org/n?u=RePEc:aoh:conpro:2025:i:6:p:231-240 |
| By: | Huiyu Li; Julien Sauvagnat; Tom Schmitz |
| Abstract: | Using administrative data from France, we document that within the same detailed occupation, industry, and commuting zone, workers who work from home earn on average 12% higher hourly wages than fully on-site workers. Approximately half of this wage premium is accounted for by observable worker characteristics (such as education, gender, and age) and firm characteristics (such as size and productivity). The remaining 6% wage premium largely reflects selection: workers who work from home after the COVID-19 pandemic already earned higher wages before the pandemic. |
| Keywords: | wage premium |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:102384 |
| By: | Daron Acemoglu (MIT, Department of Economics); Ufuk Akcigit (University of Chicago - Department of Economics); Simon Johnson (MIT, Sloan School of Management) |
| Abstract: | This chapter presents a tractable framework for the study of technology adoption and diffusion in the context of economic development. Firms in countries behind the world technology frontier can rapidly adopt new techniques from the world frontier. Lower absorptive capacity (because of weak education systems, poor management practices, or barriers to technology adoption), institutional distortions, mismatch between frontier technologies and the needs of firms in the country (i.e., “inappropriate technology†), and credit market frictions slow down technology adoption and cause the economy in question to have a greater distance to the frontier and thus lower income per capita—although the long-run growth rate of the country still remains equal to that of the frontier. This framework is extended to study the choice between innovation and imitation, as well as the role of selection for higher-productivity and higher-absorptive capacity firms during the process of economic development. We illustrate the main comparative statics of our framework with a number of correlations based on cross-country and firm-level data. The tractability of the framework makes it amenable to a range of additional extensions. |
| Keywords: | technology adoption, innovation, income gap, institutions, economic growth, development, productivity |
| JEL: | O1 O3 O4 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfi:wpaper:2026-12 |
| By: | Sheheryar Banuri (School of Economics, University of East Anglia and Hughes Hall, University of Cambridge (UK)); Christa Brunnschweiler (Department of Economics, Norwegian University of Science and Technology and CESifo); Deanna Karapetyan (Financial Conduct Authority (UK)) |
| Abstract: | This paper investigates why firms engage in costly environmental and ethical practices, focusing on whether consumer responses depend on firms’ intentions or outcomes. Existing literature links ESG practices to positive performance and stakeholder rewards, but most evidence is observational and cannot disentangle intentionality from outcomes. Using a controlled experiment, we examine consumer reactions when firms choose between a “clean†technology (avoiding harm at a cost) and a “dirty†technology (higher returns with negative externalities). Two treatments isolate intentionality: Random Choice versus Willful Choice. After observing the firm’s choice and the resulting externality, consumers can respond by transferring (taking away) resources to the firm in a give-or-take Dictator Game. We find a pronounced asymmetry in how intentions matter. Consumers punish firms whenever a negative externality is incurred, regardless of intentionality, indicating that punitive responses are largely outcome-driven. By contrast, when harm is avoided, intentions play a central role: firms that deliberately choose to prevent a negative externality are treated with significantly greater leniency than firms for which absence of harm arises randomly, reflected in positive transfers on average. These findings highlight that intentionality affects punitive responses and helps explain why firms may voluntarily adopt costly ethical practices when choices are observable. |
| Keywords: | Intentionality; Harm Avoidance; Consumer Responses; ESG; Environmental Externalities |
| JEL: | D03 D64 L21 C91 |
| Date: | 2026–01–29 |
| URL: | https://d.repec.org/n?u=RePEc:nst:samfok:20526 |
| By: | Fatma M. Utku-Ismihan; Mustafa Ismihan (Eastern Mediterranean University) |
| Abstract: | Building a strong knowledge-based economy is essential for sustained and successful longrun economic growth. However, this presents its own set of challenges, particularly for countries with endemic instability, recurrent crises, and associated low and volatile productivity and growth rates. In this context, this paper draws from the Turkish experience to investigate the role of macroeconomic instability and knowledge on productivity and growth from 1960 to 2022 by developing an augmented production function model. Chronic macroeconomic instability arising from unsound macroeconomic policies has remained a major factor causing persistent inefficiencies in Türkiye, therefore adversely affecting its productivity and output levels. Such economic policies are often associated with weak institutions—such as political institutions that fail to limit the actions of politicians— along with prevalent corruption and a significant level of political instability. The main empirical results indicate that while knowledge accumulation in Türkiye is a critical driver of productivity and growth, the Turkish economy is also persistently and unfavorably affected by chronic macroeconomic instability fueled by recurring unsound policies and deep institutional problems. |
| Date: | 2024–10–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1740 |
| By: | Denise Duffy; Joseph G. Haubrich; Christopher Healy |
| Abstract: | Local commercial real estate conditions are positively correlated with the health of regional banks (assets between $10 billion and $100 billion), as measured by the composite confidential supervisory rating. Among other variables, return on assets is positively correlated with our proxy of bank health, but size and capital ratio are negatively correlated. Among the different components of the rating, the management rating has the most influence on the composite rating. |
| Keywords: | Regional Banks; CAMELS ratings; commercial real estate |
| JEL: | G21 G28 R30 |
| Date: | 2026–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:102379 |
| By: | Wided Mattoussi (University of TunisAuthor-Name: Younes Ben Zaied; EDC Paris Business School, Paris); Omar Al Tabaa (Leeds University Business School); Foued Mattoussi (University of Jendouba) |
| Abstract: | Foreign Direct Investment (FDI) can inject technology and knowledge into host- country economies, potentially influencing their firms' R&D investments and export capacities; as a result, these firms may engage in R&D (exports), potentially shaping the interaction between the two strategies. This paper investigates whether and when these strategies are complementary and reinforce each other, or whether they are substitutes, and should not be jointly pursued, as well as how combining the two strategies may lead to synergies positively affecting growth. The analysis was conducted on four clusters of firms using panel data of Tunisian manufacturing firms over the period 2016-2018. The first and second clusters include any exporting firms (differentiating exporters from non-exporters) without and with foreign participation, respectively. The third and fourth clusters are made up of fully exporting firms without and with foreign involvement, respectively. The findings suggest that R&D and exports positively reinforce each other in a dynamic virtuous circle to boost exports for firms with no foreign participation, whereas substitutability effects emerge for R&D activity, primarily for firms with foreign participation. The findings are also consistent with complementarities between the two activities in boosting the growth of fully exporting firms with foreign ownership.Length: 55 |
| Date: | 2024–12–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1770 |
| By: | Sonia Bhalotra (Institute for Fiscal Studies); Letícia Nunes (Institute of Education and Research (Insper), São Paulo); Rudi Rocha (São Paulo School of Business Administration) |
| Date: | 2026–01–28 |
| URL: | https://d.repec.org/n?u=RePEc:ifs:ifsewp:26/10 |