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on Efficiency and Productivity |
| By: | Filip Premik; Dan Yu |
| Abstract: | We study how heterogeneity in capital inputs affects firm performance. Drawing on detailed data on municipal bus fleets in Poland, we exploit plausibly exogenous variation generated by public procurement and nationally coordinated sales behavior of bus manufacturers to identify the causal effects of variety in fleet composition across brands and other technical dimensions. More heterogeneous fleets exhibit lower vehicle utilization and, for a fixed level of output, require more units of capital and generate higher costs. Our results emphasize that the pro- ductive capacity of capital depends on its internal structure, not only on its aggregate quantity or value. |
| Keywords: | Heterogeneous capital, capital utilization, productivity, fleet composition, orga- nization of production |
| JEL: | D24 L23 L62 |
| Date: | 2026–02–18 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:paper_1773881272298_419 |
| By: | C.J. O’Donnell (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia) |
| Abstract: | This paper defines productivity as the ratio of an output quantity to an input quantity. Under this definition, a productivity index is the ratio of an output quantity index to an input quantity index. Coherent productivity comparisons across both time and space require quantity indexes that satisfy a small set of basic axioms. Quantity indexes satisfying these axioms are referred to as proper indexes. Such indexes can be constructed using a wide range of aggregator functions and weighting systems. There is no uniquely correct proper index. Coherent productivity comparisons require only that empirical aggregation choices preserve the axioms necessary for consistent quantity comparisons. Many index-number formulas widely used in applied work are designed for pairwise or one-dimensional comparisons (over time or across space) and generally fail to satisfy these axioms when comparisons extend across multiple periods or units. Because multi-period and multi-unit comparisons are ubiquitous in applied economics, the framework described in this paper has implications well beyond productivity analysis. The paper clarifies the conceptual foundations of productivity comparisons, reviews the principal classes of productivity measures used in practice, and explains why statistical agencies and applied researchers continue to rely on measures that are not proper. |
| Keywords: | measurement theory; multilateral comparisons; multitemporal comparisons |
| JEL: | C43 D24 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:qld:uqcepa:198 |
| By: | Irfan, Sharjeel; Siddiqui, Danish Ahmed |
| Abstract: | This research investigates the role of Procurement 4.0 (P4.0) in enhancing productivity in remanufacturing operations and advancing circular economy (CE) performance within Pakistan's manufacturing sector, drawing on the Resource-Based View (RBV) theory to frame the analysis. This study examines how P4.0 which is measured by procurement strategies, planning, and performance review can enhance circular economy. We proposed P4.0 factors increase Productivity in remanufacturing operations, thereby enhancing circular economy. We also contend that these relationships are moderated by organizational resources, namely talent, managerial capability, and technological infrastructure. Meaning that the successful deployment of these digital tools can enhance the effect of P4.0 on remanufacturing operations, and the onward effect on circular economy. The study employs a quantitative approach, applying Partial Least Squares Structural Equation Modelling (PLS-SEM) to analyse survey data from manufacturing firms, thereby validating the above-mentioned relationships. The results of the structural model assessment confirmed that all hypothesized relationships (H1-H8) were statistically significant. For the direct effects, Procurement 4.0 (P4.0) Strategy has a positive impact on productivity, suggesting that adopting digital procurement strategies enhances remanufacturing performance. P4.0 Planning exerts the strongest effect among others. Similarly, P4.0 Review positively influences productivity. Finally, H8 demonstrated a very strong effect of Productivity on Circular Economy (CE) Performance. With regard to moderating effects, the results also provide strong support for the role of Talent, Technological Capability, and Management Support as amplifiers of the direct relationships. For Talent, H4a-H4c demonstrated significant moderation between P4.0 Strategy, Planning, and Review on productivity, while H7a confirmed that Talent strengthens the link between productivity and CE performance. For Technological Capability, H5a-H5c indicated significant moderating roles across strategy, planning, and review on productivity, while H7b showed a positive moderation between productivity and CE performance. Finally, for Management Support, H6a-H6c reported significant moderating effects on the relationships between P4.0 practices and productivity (β = 0.074-0.089, p |
| Keywords: | Procurement 4.0, Industry 4.0, Remanufacturing Operations, Circular Economy (CE), Resource Based View (RBV), Sustainable Supply Chain, Technological Resources, Digital Procurement Strategy |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341053 |
| By: | Leandro Prados de la Escosura (Universidad Carlos III de Madrid) |
| Abstract: | Recent research confirms that per capita income in early modern Spain improved only marginally overall, while also revealing sustained growth through much of the sixteenth and eighteenth centuries, alongside a continued decline from the late sixteenth to the mid-seventeenth centuries. These phases shaped Spain's relative position within Western Europe and contributed to the Reversal of Fortune. This paper finds that labour productivity, proxied by output per working-age population, improved during the first three-quarters of the sixteenth century, then declined until the mid-seventeenth century, and that the subsequent recovery never reached the levels of the 1570s. What caused these episodes of growth and decline: changes in resource endowments or in the efficiency of their use? Phases of labour productivity growth were often driven by factor intensity, but efficiency losses underpinned periods of stagnation or decline, which contradicts the stylised view that factor intensity is the main driver of labour productivity in a pre-industrial economy. Compared with Great Britain, Spain showed an inverse, divergent pattern, moving from similar levels to less than half of Britain's by 1800. Efficiency was the main driver of the widening gap. Ingenuity appears, therefore, to be the driving force behind the Reversal of Fortune. |
| Keywords: | output per working-age population, dual TFP, efficiency, factor intensity, Reversal of Fortune, Spain, Britain |
| JEL: | E24 J24 N13 O47 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:hes:wpaper:0302 |
| By: | Giordano Mion; Joana Silva |
| Abstract: | We examine how firms adjust production and technology in response to exogenous trade shocks. We develop a model that distinguishes revenue TFP from quantity TFP and embeds skill upgrading in technology choices. Firms respond to trade shocks by adjusting their quantity-quality trade-off and skill composition. These decisions impact firms’ quantity and revenue TFP, marginal costs, prices, and markups. Using detailed worker-firm-product data from Brazil, we show how trade shocks, instrumented by exogenous changes in exchange rates, GDP, and tariffs, affect margins. Results suggest fundamentally different firm responses to export and import changes: exports primarily induce upgrading in skills and product quality, whereas imports drive stronger efficiency and quantity-productivity gains. |
| Keywords: | exports, imports, shocks, skill upgrading, quality, technology, quantity TFP, revenue TFP, markups |
| JEL: | F61 F14 D24 L11 L25 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12702 |
| By: | John C. Williams |
| Abstract: | Remarks at the Reykjavík Economic Conference, Reykjavík, Iceland. |
| Keywords: | productivity growth; monetary policy; real interest rates; inflation |
| Date: | 2026–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsp:103325 |
| By: | Dany Bahar (Center for International Development at Harvard University); Shreyas Gadgin Matha; Ricardo Hausmann (Harvard's Growth Lab); Santiago Segovia (Harvard's Growth Lab) |
| Abstract: | Japan remains one of the world’s most technologically sophisticated economies, yet its labor productivity has been stagnant for more than two decades. This paper investigates the apparent contradiction between Japan’s high R&D intensity and its weak productivity performance by examining the allocation, composition, and effectiveness of innovation across industries. Using industry-level data from the OECD, patent-level data linked across technology and industry classifications, and a set of nine technological taxonomies, we document that Japan disproportionately concentrates R&D in mid-technology manufacturing sectors—such as motor vehicles, electrical equipment, and chemicals—that generate relatively low productivity spillovers. High-technology sectors, including ICT, pharmaceuticals, scientific R&D, and advanced digital services, receive a significantly smaller share of investment and exhibit much higher productivity contributions in other countries. We further show that Japan’s indirect, tax-based system of R&D support reinforces this equilibrium by favoring large incumbents and under-supporting SMEs. We conclude by assessing the potential of Japan’s new 17-sector strategy to reorient the innovation system toward frontier technologies. |
| Keywords: | Japan, innovation, industrial policy |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:glh:wpfacu:269 |
| By: | Merve Betul Gokce; Enver Sait Kurtaran; Zeynep Yilmaz |
| Abstract: | This paper examines how extreme heat affects firm-level labor productivity using comprehensive administrative data covering all registered non-financial firms in Türkiye from 2009 to 2023.Türkiye offers an informative setting as a middle-income economy characterized by high climate exposure, substantial regional heterogeneity, and uneven capacity to adapt. We link firm records to high-resolution district-level weather data and estimate panel models that exploit within-firm variation in annual heat exposure. We find that extreme heat significantly reduces productivity. Ten additional days per year with maximum temperatures above 35°C are associated with a 0.4 percent decline in labor productivity; at 37–38°C, the effect rises to 0.7 percent. The effects are heterogeneous: low-technology manufacturing, customer-facing services, micro firms, and financially constrained firms are most vulnerable, while high-technology firms and large enterprises show little or no impact. We distinguish between supply- and demand-side mechanisms using complementary data on worker attendance, electricity consumption, commercial traffic, firm sales, and tourism arrivals. On the supply side, extreme heat reduces days worked, increases absenteeism, raises electricity costs, and disrupts goods transport. On the demand side, hot days reduce tourist arrivals and depress sales in accommodation and food services. |
| Keywords: | Temperature, Labor productivity, Firm performance, Developing economies |
| JEL: | Q54 D22 J24 O13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:tcb:wpaper:2611 |
| By: | Enghin Atalay; Ali Hortacsu; Nicole Kimmel; Chad Syverson |
| Abstract: | How do investments in innovation translate into future productivity growth? Empirically answering this question is challenging. R&D spending is an observed input into the innovation process, but mapping it to productivity growth requires assumptions about the depreciation of R&D capital, gestation lags, and how well such expenditures capture true innovative effort (Hall, 2007). Patents, an alternative measure, capture successful innovations but vary widely in novelty (Kelly et al., 2021) and economic value (Kogan et al., 2017). Firms may forgo patenting to preserve secrecy, while others patent strategically to protect existing products even when their underlying innovations are marginal. |
| Keywords: | productivity measurement; innovation |
| JEL: | D24 E31 O31 O47 |
| Date: | 2026–04–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpwp:103326 |
| By: | Björn Thor Arnarson; Magnus Tolum Buus; Andreas Moxnes; Jakob Roland Munch; Chong Xiang |
| Abstract: | We study how firm growth reorganizes the division of labor across firms in global value chains. Using a novel dataset linking cross-border firm-to-firm transactions to matched employer–employee data, we show that demand shocks increase trade between firms while reducing occupational similarity, implying greater specialization. We develop and estimate a model of task outsourcing in which firms expand by reallocating tasks to suppliers. The model matches the data and implies endogenous scale economies. Eliminating outsourcing reduces average labor productivity by 25 percent and increases input costs by 10 percent, highlighting the central role of specialization in shaping firm performance. |
| Keywords: | supply chains, global value chains, outsourcing, scale economies, labor specialization, labor productivity, production networks |
| JEL: | F10 F12 F16 D24 L11 L25 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12710 |
| By: | Giulia Fontanelli (Department of Economics and Management, University of Ferrara) |
| Abstract: | This paper investigates the relationship between eco-innovation and firm performance among SMEs operating in Emilia-Romagna using data from the ECOSISTER Project, Spoke 5 – Circular Economy (C.E.) and Blue Economy. Particular attention is devoted to the role of C.E. Investment Intensity and C.E. Human Capital (HC) as complementary dimensions of sustainability-oriented transformation. The findings suggest that firms progressively integrate eco-innovation, C.E. investments, and specialised HC within their development strategies, highlighting their relevance for competitiveness and economic performance. The study contributes to the literature on innovation, sustainability, and C.E. transitions. |
| Keywords: | Eco-Innovation; Circular Economy; Firm Performance; Human Capital; Circular Economy Investments |
| JEL: | O31 O32 Q55 Q56 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:srt:wpaper:1126 |
| By: | Mimosa Distefano; Helene Donnat; Henry G. Overman; Krishan Shah |
| Abstract: | We study productivity disparities across metropolitan and non-metropolitan areas in Great Britain. Spatial disparities in productivity are large and persistent. Using a development accounting framework, we show that differences in area size and in the spatial distribution of human and business capital are key explanatory factors. A combination of area size and human capital explains 30 percent of the productivity variance, increasing to 43 to 57 percent once we add measures of business capital stocks. Applying our framework to a case study of Greater Manchester, we show that large increases in both types of capital are needed to narrow productivity disparities with London, illustrating the scale of the challenge for policies aimed at reducing spatial inequality. |
| Date: | 2026–05–28 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2189 |
| By: | Roman G. Smirnov |
| Abstract: | Standard dynamical systems approaches to economic modeling, such as those deriving the Cobb-Douglas and CES production functions from exponential growth trajectories, typically rely on integer-order differential equations. While effective, these models assume that economic output depends solely on the instantaneous state of capital and labor, effectively ignoring the long-term ``memory effects'' inherent in policy, infrastructure, and technological adoption. This paper extends the exponential framework by introducing the Caputo fractional derivative into the underlying dynamical systems governing factor inputs. By replacing standard growth rates with fractional-order counterparts of order $0 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.20152 |
| By: | C.J. O’Donnell (School of Economics and Centre for Efficiency and Productivity Analysis (CEPA) at The University of Queensland, Australia) |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:qld:uqcepa:199 |
| By: | Hanna Onyshchenko (Bank of England); Andriy Tsapin (National Bank of Ukraine); Vitaliia Yaremko (Trinity College Dublin) |
| Abstract: | This paper examines the effect of military occupation on firm performance during Russia's full‐scale invasion of Ukraine. Combining official data on territorial control with firm‐level balance‐sheet data from Orbis, we exploit quasi‐random variation in occupation status across postal areas in 2022‐2023 using an event‐study design. We document strongly asymmetric effects by occupation duration: firms in short‐term occupied areas experienced a temporary and largely insignificant decline in sales and employment followed by recovery after liberation, whereas firms under prolonged occupation suffered large, persistent losses in sales and employment. Capital dynamics do not differ significantly between occupied and never‐occupied firms, suggesting that occupation operates primarily through channels other than direct capital destruction. Heterogeneity across sectors and firm characteristics is consistent with local demand shortages, supply‐chain disruptions, and institutional uncertainty as the main transmission channels. Overall, these findings highlight that prolonged military occupation entails lasting and sizable economic losses that compound over time, with little evidence of recovery until liberation. |
| Keywords: | military occupation, firm performance, local economic activity, event study, war, Ukraine |
| JEL: | D22 F51 L25 P48 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep1126 |