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on Efficiency and Productivity |
| By: | Duran-Vanegas, Juan |
| Abstract: | This paper examines the relationship between artificial intelligence (AI) adoption and firm-level productivity growth in a middle-income economy. Combining data on AI use from the 2019 Colombian Enterprise ICT Survey with longitudinal manufacturing data, I estimate productivity growth differentials between adopters and non-adopters while accounting for pre-adoption characteristics and productivity trajectories using entropy balancing. AI adoption is associated with a 16 percent cumulative increase in labor productivity over 2016–2019, equivalent to roughly 5 percent annualized growth. These differentials appear to be driven by higher sales and value added rather than reductions in costs or employment, are similar among in-house and outsourced AI developments, and increase for firms with higher pre-existing technical capabilities. Finally, the analysis points to changes in organizational structure as a potential adjustment margin. AI adoption is associated with a small but significant decline in the share of administrative workers, suggesting a reallocation of tasks away from administrative functions. |
| Date: | 2026–04–17 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:64nmf_v1 |
| By: | Michał Gradzewicz (Narodowy Bank Polski; SGH Warsaw School of Economics) |
| Abstract: | This paper quantifies the magnitude and evolution of the efficiency of resource allocation in the Polish enterprise sector over 1993–2023 using a near-census of non-financial firms with 10+ employees. The baseline approach follows Hsieh and Klenow (2009) and shows that hypothetical elimination of within-industry inefficiencies generate sizeable and rising gains in productivity and value added, increasing from close to 40% of value added in the 1990s to roughly 70–75% in the early 2020s. Deteriorating allocation efficiency of resources is robust to changes in the identification scheme and to changes in the underlying model (accounting for wedges related to the use of materials or allowing for non-unit economies of scale and markups that vary across sectors). The efficiency of allocation worsens primarily in services and is due to entry and exit, rather than within-cohort dynamics. Firm-level regressions show that high-productive firms and middle-sized firms are disproportionately too small, that non-exporters and more profitable firms exhibit larger wedges, and that subsidies are conductive to better allocation of resources, while the same characteristics often have opposing effects on actual growth of firms’ value added. It implies that market forces and policies do not systematically steer firms toward efficient scales. Deteriorating allocation efficiency can also be a factor explaining the slowdown of productivity growth in the Polish economy since the 2000s. |
| Keywords: | allocation efficiency, productivity, misallocation, firm dynamics, markups, returns to scale, production function, Poland |
| JEL: | C23 D24 E23 E25 O47 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:nbp:nbpmis:385 |
| By: | Shi Hu; Simone Lenzu; David A. Rivers; Joris Tielens |
| Abstract: | We study the interconnection between the productivity and pricing effects of financial shocks. Combining administrative records on firm-level output prices and quantities with quasi-experimental variation in credit supply, we show that a tightening of credit conditions has a persistent, yet delayed, negative effect on firms’ long-run physical productivity growth (TFPQ) but also induces firms to change their pricing policies. Commonly used revenue-based productivity measures (TFPR)—which conflate price and productivity—offer biased predictions regarding the consequences of financial shocks for firms’ productivity growth, underestimating the long-run elasticity of physical productivity to credit supply by half. We also show that the pricing adjustments themselves have productivity implications. Firms use low pricing as a source of internal financing, allowing them to avoid cutting expenditures on productivity-enhancing activities, thereby softening the impact of financial shocks. We incorporate these forces into a quantitative model of firm dynamics to quantify the importance of productivity and pricing dynamics (and their interplay) in driving the scarring effects of financial crises on aggregate productivity and welfare. |
| Keywords: | productivity; pricing; financial constraints; innovation |
| JEL: | D22 D24 E31 E44 G01 |
| Date: | 2026–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:103064 |
| By: | Samuele Centorrino; Christopher F. Parmeter |
| Abstract: | Causal inference methods (instrumental variables, difference-in-differences, regression discontinuity, etc.) are primary tools used across many social science milieus. One area where their application has lagged however, is in the study of productivity and efficiency. A main reason for this is that the nature of the stochastic frontier model does not immediately lend itself to a causal framework when interest hinges on an error component of the model. This paper reviews the nascent literature on attempts to merge the stochastic frontier literature with causal inference methods. We discuss modeling approaches and empirical issues that are likely to be relevant for applied researchers in this area. This review shows how this model can be easily put within the confines of causal analysis, reviews existing work that has already made inroads in this area, addresses challenges that have yet to be met and discusses core findings. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.19693 |
| By: | Bick, Alexander (St. Louis Fed & CEPR); Blandin, Adam (Vanderbilt University); Deming, David (Harvard University); Fuchs-Schündeln, Nicola (WZB & Goethe University & CEPR); Jessen, Jonas (WZB & IAB) |
| Abstract: | This paper combines international evidence from worker and firm surveys conducted in 2025 and 2026 to document large gaps in AI adoption, both between the US and Europe and across European countries. Cross-country differences in worker demographics and firm composition account for an important share of these gaps. AI adoption, within and across countries, is also closely linked to firm personnel management practices and whether firms actively encourage AI use by workers. Micro-level evidence suggests that AI generates meaningful time savings for many workers. At the macro level, in recent years industries with higher AI adoption rates have experienced faster productivity growth. While we do not establish causality, this relationship is statistically significant and similar in magnitude in Europe and the US. We do not find clear evidence that industry-level AI adoption is associated with employment changes. We discuss limitations of existing data and outline priorities for future data collection to better assess the productivity and labor market effects of AI. |
| Keywords: | generative AI, technology adoption, labor productivity |
| JEL: | J24 M16 O14 O33 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18521 |
| By: | Antonio Abatemarco (University of Salerno); Giuseppina Autiero (University of Salerno); Claudia Avossa (University of Salerno) |
| Abstract: | Between-country GDP inequality in Europe declined markedly from the early 1990s to the eve of the global financial crisis, but this convergence has since stalled and partly reversed, pointing to a structural change in the macroeconomic forces shaping cross-country disparities. This paper investigates the contribution of macroeconomic factors to that evolution by decomposing between-country GDP inequality into expenditure-side components, income-side components, and demographic and productivity-related channels. Using annual OECD National Accounts data for 17 European countries over 1990–2024, we implement a non-parametric two-stage decomposition strategy that combines a counterfactual Shapley procedure with a Shorrocks factor decomposition. The estimation strategy we propose provides an exact accounting of inequality in terms of interpretable factor contributions, separates demographic effects from per-capita GDP dynamics, and is well suited to settings in which macro aggregates are jointly determined. Our findings show that the decline in inequality up to the late 2000s was largely driven by wage- and consumption-led convergence, underpinned by narrowing productivity gaps. Since the 2000s, however, growing dispersion in exports has increasingly acted as the main source of divergence, while profits have progressively replaced wages as the main income-side channel through which productivity differences translate into inequality. These results suggest that, in a changed macroeconomic environment, reducing between-country inequality requires not only policies that reconnect wage growth to productivity and sustain domestic demand, but also interventions on the profit side and greater coordination of external balances. |
| Keywords: | between-country inequality, GDP decomposition, Shapley value, functional income distribution, global imbalances |
| JEL: | D63 E01 O47 F32 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2026-693 |
| By: | Holtemöller, Oliver; Schult, Christoph; Solms, Anna |
| Abstract: | Many countries and regions remain below the level of economic activity of the world's most advanced economies. Some countries form growth clubs, some are stuck in the middle-income trap, and some stay on a very low level of economic activity. Although this situation is well documented on the country level, there is less evidence at the sub-national level within countries. We estimate county-level capital stocks and price indices and provide a comprehensive county-level data set for Germany. We find no evidence of convergence across all counties even if we condition on important drivers of long-term growth such as physical and human capital accumulation. Instead, we identify five convergence clubs, using endogenous clustering. We analyze differences in growth paths and describe the identified clusters based on variations in contributions of capital, labor, and total factor productivity to economic growth. Additionally, we examine the role of migration for regional development and find that net migration has in particular contributed to growth in richer regions. |
| Keywords: | convergence clubs, growth accounting, regional economic growth |
| JEL: | C23 O47 R11 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:340108 |
| By: | Toshihiro OKUBO; Alexander F. WAGNER; Kazuo YAMADA |
| Abstract: | Innovation is central to productivity growth, yet firms facing similar technological and policy environments differ in their R&D investment behavior. We examine whether persistent regional social norms help explain this variation. Using prefecture-level data from Japan, we measure regional conformism based on a 1941 military conscription examination and contemporary school education surveys, demonstrating that regional differences have persisted over time. Linking them to data on all Japanese manufacturing firms from 1995 to 2022, we find that firms in more conformist regions exhibit significantly lower R&D intensity even after controlling for cognitive ability, firm characteristics, and fixed effects. The relationship with patenting is weaker and less robust. To isolate the historical component of conformity, we instrument pre-war conformism using differences in domain-level educational curricula during the Edo-period (1603–1868). The IV results similarly indicate a significant negative effect on firms’ R&D intensity. Overall, the findings suggest that persistent regional social norms are most strongly related to firms’ innovation investment rather than realized innovation output. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26033 |
| By: | Robert Botha; Roy Havemann |
| Abstract: | Explores how private sector participation in water service provision could improve efficiency, service delivery, and infrastructure maintenance in South Africa's water sector. |
| Keywords: | water, private sector, service delivery, infrastructure, South Africa |
| JEL: | L95 Q25 H44 |
| Date: | 2025–08–27 |
| URL: | https://d.repec.org/n?u=RePEc:cxs:wpaper:202504 |