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on Efficiency and Productivity |
| By: | Jacob T. Hess (Banco de España); Xufeng Wang (KU Leuven) |
| Abstract: | We study how revenue productivity (TFPR) and markups evolve after mergers across the economy. In financial-statement data, targets cease to exist as reporting entities after a deal, so tracking the merged firm requires constructing the combined acquirer-target unit before the merger. We formalize the biases that arise without this correction and implement it across 3, 759 horizontal mergers in Spain between 1997 and 2022. Revenue productivity rises by approximately 4% within eight years and markups by approximately 5% to 6%. The breakdown by industry reveals that revenue productivity gains are broad-based, while markup increases are concentrated. Most industries show modest markup effects of 3% or less, with the largest increases occurring in two industries accounting for a small share of deals, led by human health activities. We find that without the boundary correction, both estimated effects reverse sign. The results suggest that mergers tend to raise the revenue productivity of the combined firm across the board, consistent with operational improvements, while large markup increases are a feature of specific industries rather than a general consequence of consolidation. |
| Keywords: | mergers and acquisitions, revenue productivity (TFPR), markups, consolidation |
| JEL: | C23 D24 G34 L41 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2631e |
| By: | Wagner, Joachim (Leuphana University Lüneburg) |
| Abstract: | The use of artificial intelligence (AI) goes hand in hand with higher productivity, higher product quality, and lower trade costs. Therefore, it can be expected to be positively related to export activities. This paper uses firm-level data from 12 member countries of the Euro Area collected in 2025 to shed further light on this issue by investigating the link between the intensity of use of AI and the intensive margins of exports measured as the percentage share of exports in total sales. Applying a new machine-learning estimator, Kernel-Regularized Least Squares (KRLS), which does not impose any restrictive assumptions for the functional form of the relation between margin of exports, the intensity of use of AI and any control variables, we find that firms which use AI more intensively do export a higher share of total sales. AI intensity and export intensity are positively related. |
| Keywords: | artificial intelligence, exports, firm level data, SAFE Data, kernel-regularized least squares (KRLS) |
| JEL: | D22 F14 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18939 |
| By: | Omer Siddique (Pakistan Institute of Development Economics, Islamabad) |
| Abstract: | This policy viewpoint analyzes the main reasons for low productivity in Pakistan, along with proposing a set of actionable policy recommendations to address them. In Pakistan, economic growth has generally been driven by input accumulation rather than by improving productivity growth. Pakistan's TFP and GDP growth move together, and whenever TFP growth has increased, the GDP growth has also increased, and vice versa. As a result, Pakistan's export-oriented manufacturing has struggled to compete globally. With a growing labor force, which has reached over 83 million according to the latest Labour Force Survey (LFS 2024-25), the need to shift from growth based on input accumulation to skill-based productivity has increased manifold. Pakistan's productivity experience shows that episodes of economic liberalization and reform have generally been associated with stronger TFP growth. On the other hand, periods characterized by restrictive policies, such as import restrictions and exchange rate control, have coincided with weaker productivity performance (Siddique, 2022a; Siddique, 2022b). This makes a strong case for reducing misallocation of resources, which has resulted from a long history of incentive-based and protectionist policy regimes, and improving the competitive environment by removing distortionary policies to increase productivity growth. Improving productivity growth will help in making Pakistan's industrial sector dynamic, which will ultimately improve export competitiveness. Such a scenario will put the economy on the path of sustainable growth and development. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:pid:pviewp:2026:65 |
| By: | João Tovar Jalles |
| Abstract: | This paper critically reassesses the claim that Portugal constitutes a stable wage-led growth regime, as argued by Alcobia and Barradas (2023). Combining conceptual analysis, Portuguese time-series evidence and cross-country panel estimations for advanced economies and emerging market and developing economies, the paper shows that the relationship between labour-share growth and output growth is highly unstable and sensitive to specification choices, productivity dynamics, investment controls and external conditions. Once productivity, capital accumulation and competitiveness variables are incorporated, the estimated labour-share effect becomes economically weak and statistically fragile. Historical evidence further indicates that Portuguese growth episodes were more closely associated with productivity convergence, European integration, capital accumulation and external adjustment than with autonomous distributive expansions. The findings suggest that wageled and profit-led classifications should not be interpreted as stable policy-invariant structural characteristics of economies. Instead, the growth effects of distributive changes depend critically on productivity performance, openness, financial conditions and institutional context. |
| Keywords: | wage-led growth; labour share; productivity growth; Portugal; external competitivenesss. |
| JEL: | E12 E24 O11 O47 P16 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp04272026 |
| By: | Benedikt Heid (Universitat Jaume I); Kumuthini Sivathas (The University of Adelaide) |
| Abstract: | In the coming decades, Europe’s and China’s population will shrink, whereas other world regions will experience continuing population growth. Similarly, productivity growth will differ across developing and developed economies, leading to changes in future market sizes across countries. These changes will reshape countries’ attractiveness as partners in free trade agreements (FTAs), impacting the geopolitical influence of economies like the European Union (EU) and China. Standard methods for evaluating FTAs abstract from these changes in market sizes. We use population and productivity projections to evaluate the welfare effects of future trade agreements as a function of market size. We apply our method to a potential EU-China FTA. For the EU, we find that as the EU’s market size grows by 7.46% between 2025 and 2050, the welfare effect of a potential EU-China FTA increases by 23.8%. For China, a projected market size increase of 32.53% leads to a 13.3% decrease in the welfare effects of the FTA. We show that total factor productivity growth is a more relevant driver of welfare changes than population dynamics, suggesting that policy makers should prioritize future productivity growth when evaluating future trade agreements. |
| Keywords: | quantitative trade theory, trade predictions, population growth, productivity growth, EU-China trade. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:adl:wpaper:2024-04 |
| By: | Firmin Doko Tchatoka (The University of Adelaide); Magnus Söderberg (Griffith University); Mohammad Abbas Hakeem (The University of Adelaide) |
| Abstract: | Efficiency analysis is crucial for evaluating the performance of entities that provide essential and other homogenized services. The Jondow et al.’s (1982) estimator is widely used but has been criticized for biasing inefficiency toward its mean, distorting the distribution, and misrepresenting the conditional distribution of inefficiency, particularly in cross-sectional settings. Zeebari et al. (2023) propose a regularization approach that aligns sample and theoretical moments but it is primarily suited to cross-sectional data. This paper introduces a penalized mode estimator for unit inefficiency in panel data, accounting for heteroskedasticity in both inefficiency and idiosyncratic errors. A closed-form expression for this estimator is derived, and Monte Carlo simulations demonstrate its superior performance compared to existing methods. An empirical study of electricity providers in Australia, Canada, and New Zealand further underscores its advantages. |
| Keywords: | Inefficiency, JLMS estimator, Heteroskedasticity, Restricted mode estimator |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:adl:wpaper:2025-01 |
| By: | José María Guerrero Mata; Brendan Burchell |
| Abstract: | While debates surrounding reduced working hours and four-day working week models have expanded internationally, existing evidence remains concentrated in high-income countries and service-based sectors. Limited research has explored how working-time reduction operates within physically demanding industrial environments, particularly in Latin America, where long working hours and productivity concerns continue to shape organisational practices. This research examines the technical and social feasibility of phased working-time reduction within a Mexican industrial setting through a real-world intervention conducted in a precast concrete manufacturing plant in Monterrey. The study addresses this gap through a mixed-methods intervention implemented over three consecutive phases, gradually reducing the working week from 51 to 42 hours while maintaining operational continuity. Quantitative analysis combined objective operational indicators, including productivity, absenteeism and production costs, with repeated employee wellbeing surveys measuring stress, fatigue, recovery, sleep quality and work–life balance. Qualitative interviews further contextualised employees’ experiences. The findings suggest that phased working-time reduction can be implemented without negatively affecting operational performance. Despite substantial reductions in working hours, labour productivity per hour increased across the intervention phases, while absenteeism and production costs remained stable or decreased. Employees also reported better wellbeing, sleep quality and work–life balance without corresponding increases in perceived workload pressure. Rather than supporting the assumption that productivity depends primarily on extending working hours, the intervention suggests that organisational performance may also be linked to enhanced recovery, greater motivation and more sustainable forms of work organisation. |
| Keywords: | Working time reduction, labour productivity, employee wellbeing, work-life balance, blue-collar labour, Mexico, organisational change |
| JEL: | J22 J24 J28 J81 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:cbr:cbrwps:wp554 |
| By: | Irene Di Marzio (Bank of Italy); Sara Pinoli (Bank of Italy) |
| Abstract: | Mergers and acquisitions (M&As) play a key role in the restructuring of the business sector, with potential implications for economic growth, allocative efficiency, market power and the public interest. This paper uses data from the Chambers of Commerce and Moody's Orbis, documents M&A deals in Italy and other major European Union countries to describe the firms involved and examine the effects of M&As on firm performance. The main findings show that, over the past decade, approximately 6, 000 operations per year have been recorded in Italy, with the trend increasing over the last five years. M&As have primarily involved firms that are more technologically advanced, both in manufacturing and services, and have contributed to the consolidation of the production system. Within five years of the deal, employment in the consolidated firm is about 4 per cent lower than it would have been without the deal. This evidence is partly due to divestitures of business units, consistent with processes of productive reorganization. The impact of M&A transactions varies depending on the competitive environment: in less internationally exposed sectors, an increase in market power is also observed, whereas no significant effects are found in tradeable sectors. |
| Keywords: | mergers and acquisitions, firm performance, market power, competition |
| JEL: | G34 L25 L40 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:opques:qef_1045_26 |
| By: | Callum Jones (Federal Reserve Board); David López-Salido (Banco de España and CEPR); Thomas Philippon (New York University Stern School of Business, CEPR and NBER) |
| Abstract: | Growth theory is based on the assumption of exponential total factor productivity (TFP) growth, in other words, that the conditional expectation of the next TFP increment is proportional to the current level of TFP. In the United States, we find strong evidence that TFP growth is conditionally additive, not exponential. Even starting from low priors, Bayesian estimation selects the additive model over the exponential one. In addition, professional forecasts and international TFP series are consistent with the additive model but not with the exponential one. |
| Keywords: | growth theory, TFP, additive growth |
| JEL: | C10 E17 N0 O11 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:wpaper:2630e |
| By: | Hammed Oluwaseyi Musibau (Adelaide University); Joaquin Vespignani (University of Tasmania); Maria Belen Yanotti (University of Tasmania) |
| Abstract: | We investigate the impact of environmental performance on economic growth and assess the role of governance quality using a global dataset of 206 countries between 1995 and 2022. To address endogeneity concerns, we employ fixed effects estimation and Lewbel’s heteroskedasticity-based two stage least squares estimator, which is well suited for settings where external instruments are unavailable. The findings show that improvements in environmental performance, measured through greenhouse gas emissions per capita and emissions intensity, exert a positive and statistically significant effect on GDP per capita growth. This result is robust across alternative specifications, inequality-based heterogeneity analyses, and regional subsamples. |
| Keywords: | Environmental performance; Governance; Economic growth; Emissions; Global panel |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:adl:wpaper:2026-10 |
| By: | Giacomo Rodano (Bank of Italy) |
| Abstract: | Using administrative data on Italian firms and courts, this paper studies whether judicial inefficiency influences the likelihood and timing of bankruptcy filings. To address endogeneity, we instrument court efficiency with judge turnover. We find that inefficient courts significantly reduce the likelihood that financially distressed firms file for bankruptcy. Judicial inefficiency also substantially delays bankruptcy filing: firms remain insolvent longer and are more likely to enter bankruptcy after extended periods of economic distress, contributing to the persistence of insolvent and zombie firms, with adverse implications for resource reallocation. |
| Keywords: | judicial efficiency, insolvency proceedings, financial distress, zombie firms |
| JEL: | G33 K41 K22 D24 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:opques:qef_1035_26 |