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on Efficiency and Productivity |
| By: | Tomohiko INUI; YoungGak KIM |
| Abstract: | This study examines the stagnation of total factor productivity (TFP) in the Korean economy through the lens of the “Productivity J-curve†hypothesis. Despite Korea’s world-leading R&D intensity and active investment in ICT and software, TFP growth has slowed since the 2000s. Using firm-level data of Korean listed companies, the micro-level analysis reveals that R&D and software investments are consistently associated with unobserved and complementary intangible assets. At the macro level, the revised TFP growth rate—adjusted for such intangible investments—exceeds the conventional measure by about one percentage point per year after 2008, demonstrating a typical J-curve effect. These findings suggest that measurement challenges and time lags in intangible investment contribute to Korea’s productivity puzzle, highlighting the need for improved intangible asset statistics and policies that foster complementary investments in human, organizational, and digital capital. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rdpsjp:25028 |
| By: | Nazif Durmaz; Farhad Rassekh; Henry Thompson |
| Abstract: | The present paper estimates total factor productivity TFP for the United States with 74 years of data including primary energy as a factor of production along with fixed capital assets and the labor force. The inclusion of energy improves the empirics of the neoclassical production function. In differences of natural logs, energy doubles the explanatory power and reduces residual correlation as well as heteroscedasticity. In addition, energy reduces the mean and variance of the Solow residual leading to a slower cumulative effect. In the growth accounting literature, to calculate TFP, the weight of 0.3 is commonly assigned to capital and 0.7 to labor. Our estimation suggests that these weights should be adjusted to make room for an energy weight of 0.07. |
| Keywords: | Economic Growth, TFP, Energy |
| JEL: | D24 E23 O47 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:abn:wpaper:auwp2025-10 |
| By: | Lu Fang; Zhe Yuan; Kaifu Zhang; Dante Donati; Miklos Sarvary |
| Abstract: | We quantify the impact of Generative Artificial Intelligence (GenAI) on firm productivity through a series of large-scale randomized field experiments involving millions of users and products at a leading cross-border online retail platform. Over six months in 2023-2024, GenAI-based enhancements were integrated into seven consumer-facing business workflows. We find that GenAI adoption significantly increases sales, with treatment effects ranging from 0% to 16.3%, depending on GenAI’s marginal contribution relative to existing firm practices. Because inputs and prices were held constant across experimental arms, these gains map directly into total factor productivity improvements. Across the four GenAI applications with positive effects, the implied annual incremental value is approximately $5 per consumer—an economically meaningful impact given the retailer’s scale and the early stage of GenAI adoption. The primary mechanism operates through higher conversion rates, consistent with GenAI reducing frictions in the marketplace and improving consumer experience. We also document substantial heterogeneity: smaller and newer sellers, as well as less experienced consumers, exhibit disproportionately larger gains. Our findings provide novel, large-scale causal evidence on the productivity effects of GenAI in online retail, highlighting both its immediate value and broader potential. |
| Keywords: | field experiments, generative AI, productivity, retail platforms, consumer experience |
| JEL: | C93 D24 L81 M31 O3 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12201 |
| By: | Luisa Alamá-Sabater (Department of Economics and IIDL, Universitat Jaume I, Castellón, Spain); Joan Crespo (Department of Economic Structure, Universidad de Valencia, Spain); Miguel Ángel Márquez (Department of Economics, Universidad de Extremadura, Spain); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | We empirically evaluate how the efficiency of Spanish public universities impacts regional economic performance in Spain during the period 2010–2019. Efficiency is measured using activity analysis methods that attempt to capture reflect how universities perform in their respective missions—namely, teaching, research, and knowledge transfer. We analyse the geography of higher education by examining efficiency at the provincial (NUTS3) and regional (NUTS2) levels, as well as for groups of regions (NUTS1). Our results offer several key insights. First, we find that geography plays a differential role primarily when knowledge transfer activities are considered, while geographical patterns are similar for teaching and research activities. Second, the impact of universities’ efficiency on regional economic activity varies across different outcome measures. While provinces with more efficient public university systems show higher labor productivity and capital intensity levels, there is no significant relationship with per capita income. The spatial analysis indicates that efficiency gains generate indirect and positive spillovers, particularly for capital intensity, suggesting that improvements in university performance can benefit broader regional areas. Additionally, institutional quality, measured through regional government performance indicators, reinforces these effects. Our findings suggest that policies aimed at enhancing university efficiency should prioritise the research mission. Among the three university missions, research has the greatest impact on improving productive processes and is the most effective in fostering regional economic development. |
| Keywords: | bias-corrected efficiency; capital intensity; higher education institutions; regional growth; productivity |
| JEL: | C61 J24 R11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:jau:wpaper:2025/09 |
| By: | Ryan Macdonald; Josip Lesica; Jenny Watt; Rupert Allen |
| Abstract: | The unit labour cost is often used as a broad measure of international price competitiveness. It deviates from the inflation rate when the real wage rate and labour productivity grow at different paces. Since the COVID-19 pandemic, Canada has experienced an acceleration of unit labour cost growth and a significant upward deviation from the inflation rate, while this has not happened in the United States. This article decomposes unit labour cost growth in the Canadian business sector into its sources and finds that Canada’s negative labour productivity growth since the pandemic has been the key driver of the accelerated unit labour cost growth. Additionally, the large and widening gap in unit labour cost growth between Canada and the United States since the pandemic is entirely attributable to the labour productivity growth gap between the two countries. |
| Keywords: | Unit Labour Cost, Labour Productivity, Consumer Price Index, Inflation |
| JEL: | J23 M21 |
| Date: | 2025–04–23 |
| URL: | https://d.repec.org/n?u=RePEc:stc:stcp8e:202500400004e |
| By: | Maré David (Motu Economic and Public Policy Research); Richard Fabling (Motu Economic and Public Policy Research) |
| Abstract: | We estimate relative wage discrimination for ethnic and migrant groups in New Zealand, using linked employer-employee and firm-level productivity data, and comparing each group’s contribution to output with their share of their firm’s wage bill. We find that wage discrimination is relatively favourable for European migrants and Asian/MELAA employees, and relatively unfavourable for M?ori, Pacific, and NZ-born European employees, with variation across NZ-born, recent migrants, and longer-term migrants. We present pooled and firm-fixed effects estimates of discrimination, highlighting distinct within-firm and between-firm patterns. |
| Keywords: | Earnings; productivity; M?ori; ethnicity |
| JEL: | J30 J15 J71 J42 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:mtu:wpaper:25_08 |
| By: | Eiji Goto; Jan P.A.M. Jacobs; Simon van Norden |
| Abstract: | We investigate the causes of changing productivity growth trend perceptions using a novel state-space framework for statistically efficient estimation of growth trends in the presence of data revision. Uncertainty around contemporary US productivity growth trends has been exacerbated by data revisions that typically occur several years after the initial data release, as well as by publication lags. However, the largest source of revisions in perceived trends comes from future realizations of productivity growth. This underlines the importance of estimation uncertainty in estimates of trend productivity growth. Nous étudions les causes des changements dans les perceptions relatives aux tendances de croissance de la productivité en utilisant un cadre d’espace d’état novateur, permettant une estimation statistiquement efficiente des tendances de croissance en présence de révisions des données. L’incertitude entourant les tendances contemporaines de la croissance de la productivité aux États-Unis a été amplifiée par les révisions des données, qui interviennent généralement plusieurs années après leur première publication, ainsi que par les délais de diffusion. Toutefois, la principale source de révisions des tendances perçues provient des réalisations futures de la croissance de la productivité. Cela souligne l’importance de l’incertitude d’estimation dans les évaluations de la tendance de la productivité. |
| Keywords: | productivity, real-time data, news, trend-cycle decomposition, productivité, données en temps réel, nouvelles économiques, décomposition tendance-cycle |
| JEL: | C32 C51 E6 E24 O47 |
| Date: | 2025–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:cir:cirwor:2025s-29 |
| By: | Florian Englmaier (LMU Munich); Jose E. Galdon-Sanchez (Universidad Publica de Navarra); Ricard Gil (IESE Business School); Michael Kaiser (E.CA Economics); Helene Strandt (LMU Munich) |
| Abstract: | This paper empirically examines how management practices affect firm productivity over the business cycle. Using plant-level high-dimensional human resource policies survey data collected in Spain in 2006, we employ unsupervised machine learning to describe clusters of management practices (“management styles”). We establish a positive correlation between a management style associated with structured management and performance prior to the 2008 financial crisis. Interestingly, this correlation turns negative during the financial crisis and positive again in the economic recovery post-2013. Our evidence suggests firms with more structured management are more likely to have practices fostering culture and intangible investments such that they focus in long-run profitability, prioritizing innovation over cost reduction, while having higher adjustment costs in the short-run through higher share of fixed assets and lower employee turnover. |
| Keywords: | management practices; culture; unsupervised machine learning; productivity; great recession; |
| JEL: | M12 D22 C38 |
| Date: | 2025–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:548 |
| By: | Ting-Wei Lai; Shin-Kun Peng; Raymond G. Riezman; Ping Wang |
| Abstract: | We examine global trends in productivity and sectoral dominance across countries and industries, asking whether changes are driven by productivity catch-up or shifts in factor endowments. To address this, we develop a general-equilibrium, multi-country, multi-sector model with a global production network based on international input--output linkages. The model incorporates country-specific technologies, factor endowments (skilled and unskilled labor and capital), and tariffs. Calibrating the model to international data from 1996 to 2007, we find that in high-income countries productivity changes are mainly driven by technology, while in middle-income countries capital is most crucial. We then assess whether these changes explain structural transformation in global output shares. For most industries where one group of countries overtakes another, the primary cause is the change in capital and skilled labor, rather than factor-induced productivity improvements. Overall, factor endowment shifts play the central role in explaining changes in sectoral dominance across countries and industries. |
| JEL: | E23 F11 F62 O11 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34393 |
| By: | José Alves; José Carlos Coelho; Bernardete Moreira |
| Abstract: | This article assesses the potential effects of the macroeconomic rates of return of private and public investment on wage share for 16 OECD countries from 1980 to 2022. Using the macroeconomic rates of return of investments and the wage share at factor cost and at market price, it was possible to conclude that the first has a positive effect on the wage share. Moreover, the total factor productivity negatively affects the wage share when it comes to private investment, while its influence is positive in the case of public investment. The results were also analyzed according to whether countries presented the total factor productivity of capital above or below the average. This analysis highlights the inverse pattern of the human capital index on wage share, both with respect to the type of investment and to the capital productivity observed across countries. |
| Keywords: | macroeconomic rates of return; public investment; private investment; wage share. |
| JEL: | E22 E24 C23 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03962025 |
| By: | Jesus Felipe; John McCombie; Aashish Mehta |
| Abstract: | For decades, the literature on the estimation of production functions has focused on the elimination of endogeneity biases through different estimation procedures to obtain the correct factor elasticities and other relevant parameters. Theoretical discussions of the problem correctly assume that production functions are relationships among physical inputs and output. However, in practice, they are most often estimated using deflated monetary values for output (value added or gross output) and capital. This introduces two additional problems--an errors-in-variables problem, and a tendency to recover the factor shares in value added instead of their elasticities. The latter problem derives from the fact that the series used are linked through the accounting identity that links value added to the sum of the wage bill and profits. Using simulated data from a cross-sectional Cobb-Douglas production function in physical terms from which we generate the corresponding series in monetary values, we show that the coefficients of labor and capital derived from the monetary series will be (a) biased relative to the elasticities by simultaneity and by the error that results from proxying physical output and capital with their monetary values; and (b) biased relative to the factor shares in value added as a result of a peculiar form of omitted variables bias. We show what these biases are and conclude that estimates of production functions obtained using monetary values are likely to be closer to the factor shares than to the factor elasticities. An alternative simulation that does not assume the existence of a physical production function confirms that estimates from the value data series will converge to the factor shares when cross-sectional variation in the factor prices is small. This is, again, the result of the fact that the estimated relationship is an approximation to the distributional accounting identity. |
| Keywords: | Endogeneity; Monetary Values; Physical Quantities; Production Functions |
| JEL: | C18 C81 C82 |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1036 |
| By: | Andrew T. Foerster; Andreas Hornstein; Pierre-Daniel G. Sarte; Mark W. Watson |
| Abstract: | We explore the evolving significance of different production sectors within the U.S. economy since World War II and provide methods for estimating and forecasting these shifts. Using a compositional accounting approach, we find that the well-documented transition from goods to services is primarily driven by two compositional changes: 1) the rise of Intellectual Property Products (IPP) as an input producer, replacing Durable Goods almost one-for-one in terms of input shares in virtually all sectors; and 2) a shift in consumer spending from Nondurable Goods to Services. A structural model replicating these shifts reveals that the rise of IPP at the expense of Durable Goods is largely explained by increases in the efficiency of IPP inputs used in production: input-biased technical change. Trend variations in sectoral total factor productivity, and their attendant effects on relative prices and income, are the main driver of evolving consumption patterns. Both reduced-form and structural forecasts project these trends to continue over the next two decades, albeit at lower rates, indicating a slower pace of structural change. |
| Keywords: | structural changes; forecasting; technical change |
| JEL: | E17 E23 E27 |
| Date: | 2025–10–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:101936 |
| By: | Pokrovskii, Vladimir |
| Abstract: | The theory of substitution is based on the assumption that not the quantity of capital (production equipment) does substitute labor, but rather its ability to substitute workers' efforts through equipment's operation. This is the true content of the substitution of labor by capital. To formulate a correct mechanism of substitution requires considering three factors of production: the amount of production equipment (capital K), human activity (labor L), and the substitutive capacity of equipment (substitutive work P). The technological properties of production equipment are characterized by the technological coefficients, indicating the amount of labor and energy required to operate a unit of equipment. The production function can assume various forms, none of which coincide with the popular Cobb-Douglas expression, which seems to be erroneous in its core. |
| Keywords: | capital, labor, technological coefficients, production function |
| JEL: | E0 O40 |
| Date: | 2025–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126004 |
| By: | Alexander Amundsen; Amélie Lafrance-Cooke; Danny Leung |
| Abstract: | Zombie firms are businesses that persistently perform poorly over time without exiting, and their prevalence has been rising over time across many advanced economies. They negatively affect economic growth as they tend to be unproductive and compete with other healthy firms for scarce resources. In Canada, while the share of zombie firms was falling leading up to the COVID-19 pandemic, they were becoming less productive over time, were negatively affecting healthy firms and were increasingly lowering aggregate productivity. In 2019, aggregate productivity would have been up to 5% higher had zombie firms exited (Amundsen et al., 2023). |
| Keywords: | zombie firms, COVID-19, business supports |
| JEL: | J23 M21 |
| Date: | 2025–01–22 |
| URL: | https://d.repec.org/n?u=RePEc:stc:stcp8e:202500100002e |
| By: | Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg |
| Abstract: | We study the impact of large, successful manufacturing plants on other local producers in China, focusing on “Million-Rouble Plants†built in the 1950s during a brief alliance with the U.S.S.R. The ephemeral geopolitical situation and the locations of allied and enemy airbases provide exogenous variation in plant siting. We find a boom-and-bust pattern: Counties hosting these plants were 80% more productive than control counties in 1982 but 20% less productive by 2010. This decline reflects the performance of local establishments, which exhibit low productivity, limited innovation, and high markup. Specialization hindered spillovers, preventing the emergence of new clusters and local entrepreneurship. |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/792 |
| By: | Grund, Christian (RWTH Aachen University); Nießen, Anna (RWTH Aachen University) |
| Abstract: | We explore the moderating role of job autonomy for the link between the use of performance appraisals and employees’ job satisfaction. Results based on German linked employer-employee panel data show that performance appraisals are linked to higher job satisfaction at moderate levels of job autonomy, whereas this positive relationship weakens at both low and high levels of autonomy. Moreover, the interplay between performance appraisals and job autonomy appears sensitive to broader institutional and contextual factors, such as the existence of employee representation, perceived job security, and design of the performance appraisals. Our findings highlight the complex role of job autonomy in shaping employee responses to performance management, underscoring the need for context-aware human resource practices. |
| Keywords: | job satisfaction, performance appraisals, job autonomy, German Linked Personnel Panel |
| JEL: | M12 M5 J28 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18191 |
| By: | Alfredo D'Angelo; Marco Grazzi; Le Li; Daniele Moschella |
| Abstract: | The termination of an exporter-importer (E-I) relationship could challenge the company's export process. What are the consequences on the company's export performance in the foreign country? What role does export experience play in this relationship? The paper explores the overlooked phenomenon of E-I relationship termination and provides robust empirical evidence that the event has negative consequences on the firm's export performance in the foreign country. Despite this unsurprising, yet previously untested finding, our study shows a second important remark i.e., if the exporting firm has prior export experience, it is then able to cope with the negative effect of the termination event. Moreover, we find that the positive effect of prior export experience is only present in the early years of exporting. The results are based on a large longitudinal sample of French firms exporting to foreign buyers in EU countries. Findings are discussed along an in-depth case study to enhance robustness and comprehensiveness. |
| Keywords: | Exporter-Importer (E-I) relationship termination; Critical event; Export experience; Export performance |
| Date: | 2025–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/34 |
| By: | Andrea Mina; Daniele Moschella; Julian Tiedtke |
| Abstract: | Institutions representing the workers' voice have long been a contentious topic in the economic literature. Against a backdrop of inconclusive evidence and limited use of credible identification strategies, we study the impact of the 2015 policy change that introduced mandatory board-level employee representation in firms with over 1, 000 employees in France. Using rich linked employer-employee data and two empirical strategies -a difference-in-differences and a difference-in-discontinuity approach- we examine how the reform affected firms and workers. Our results show a positive impact on job quality, with no evidence of adverse effects on firm performance, and heterogeneous effects between manufacturing and service sectors.Creation-Date: 2025-09-22 |
| Keywords: | Workers' Voice, Employee Representation, Job Quality, Corporate Governance, Difference-in-Discontinuity |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/29 |
| By: | Halkos, George; Zisiadou, Argyro |
| Abstract: | Monitoring national climate performance is fundamental for translating the Paris Agreement’s global objectives into actionable national policy. This study examines Greece’s progress through the lens of the Climate Change Performance Index (CCPI), an internationally recognized tool assessing mitigation efforts across four pillars: Greenhouse Gas (GHG) Emissions, Renewable Energy, Energy Use, and Climate Policy. Drawing on data from CCPI (2006–2025), IPCC assessments, and national policy documents, the analysis situates Greece’s climate trajectory within the broader frameworks of the Intergovernmental Panel on Climate Change (IPCC) and the United Nations Sustainable Development Goals (SDGs). Results indicate that Greece’s CCPI ranking improved from 35th in 2018 to 22nd in 2025, reflecting significant advances in renewable energy deployment and energy efficiency, yet persistent weaknesses in policy implementation and governance capacity. The country’s emissions have declined by approximately 38% since 2005, driven by a rapid lignite phase-out and expansion of solar and wind power. However, gaps remain in transport, buildings, and industrial decarbonization, limiting full alignment with a 1.5°C-compatible pathway. The findings highlight the interplay between technical progress and institutional performance, showing that Greece’s transition is constrained less by technological potential than by fragmented governance, delayed enforcement, and uneven adaptation capacity. Strengthening policy coherence, sectoral accountability, and just transition mechanisms is therefore essential for sustaining CCPI improvements and achieving IPCC- and SDG-consistent outcomes. The study concludes that integrating CCPI metrics into national climate governance can enhance transparency, accelerate policy delivery, and position Greece as a regional model for integrated climate action in the Eastern Mediterranean. |
| Keywords: | Climate Change Performance Index (CCPI); Greece; Climate Governance; Renewable Energy Transition; Sustainable Development Goals (SDGs). |
| JEL: | Q38 Q4 Q48 Q50 Q53 Q54 Q58 |
| Date: | 2025–10–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126476 |