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on Efficiency and Productivity |
| By: | Mathilde Esposito (Aix Marseille Univ, CNRS, AMSE, Marseille, France) |
| Abstract: | In the literature on secular stagnation, demographic aging is widely blamed for lowering the IS curve of aggregate demand and therefore the natural interest rate. However, very little is said about the impact of workforce aging on long-term aggregate supply, or so-called potential GDP. To fill this gap, this study delves into the effects of workforce aging on two key components of the remarkably sluggish potential GDP growth of developed countries: hours worked and labour productivity. First, using a novel macro-accounting decomposition of EU-KLEMS data, we find that old-labour input has the highest contribution to growth, through both increased hours worked and shifts in labour composition in the EU, US and Japan. Second, we use panel stochastic frontier models highlighting that, however, old workers have an adverse effect on labour productivity growth frontier—though increasing technical efficiency, i.e., reducing the distance to this frontier. |
| Keywords: | Demographic Aging; Potential Growth; Labour Input; Stochastic Frontier Analysis; Labour Productivity and EU-KLEMS |
| JEL: | J11 J21 J24 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2425 |
| By: | Tancredi Salamone |
| Abstract: | In this paper, I introduce new estimates of Anglo-Italian labour productivity levels in manufacturing during the late 1930s. The relatively high level of detail of the industrial censuses of the two countries, allows to retrieve also input data, enabling the use of the more sophisticated double deflation method. This approach treats outputs and inputs separately, thereby considering the input-output structure of the compared countries. These estimates, in turn, allow me to extend the analysis to other countries for which similar comparisons with the UK have already been made. I also provide preliminary estimates of labor productivity on a per-hour basis. The results point to a significant productivity gap at the aggregate level, with intersectoral heterogeneity being the prevailing pattern. Notably, Italian performance stands out favorably in textiles and, to a lesser extent, in iron and steel production and the chemical sector. Ultimately, these estimates, while affirming the substantial gap highlighted in other studies, actually propose an upward revision of the Italian productivity level. |
| Keywords: | Productivity, Italy, UK, Manufacturing, Fascism |
| Date: | 2025–01–28 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/02 |
| By: | Gerth, Florian; Briggs, Chad M.; Diaz, John Francis T. |
| Abstract: | This paper investigates the dynamics of entering and exiting firms in determining the long-lasting drop in aggregate Total Factor Productivity (TFP) following the Great Recession in the UK. We decompose the growth rate of UK industry productivity over the 2006-2014 period into four components; the within, the between, the entry, and the exit effect employing the Diewert and Fox (2010) method using the FAME micro-level dataset. The main factor driving the aggregate TFP decline is the within effect, which is the productivity decline within surviving firms. However, the entry and exit effects also significantly contribute to the long-lasting drop in aggregate TFP. First, exiting firms tend to have higher than average TFP. Second, newly entering firms tend to have lower than average TFP. And third, newly entering firms fail to increase their TFP levels over time, thereby depressing the within effect. |
| Keywords: | Great Recession; Firm Dynamics; United Kingdom; Total Factor Productivity; Credit Rationing |
| JEL: | D24 E13 E32 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123325 |
| By: | Wong, Sara; Petreski, Marjan |
| Abstract: | This paper investigates the effects of competition laws and regulations on manufacturing firms productivity in Latin American countries (LACs), addressing a gap in existing research. Leveraging firm-level panel data from the World Bank Enterprise Surveys across 14 LAC economies and competition law indicators from the Comparative Competition Law initiative, the study employs total factor productivity (TFP) measures to analyze the effects of competition laws on manufacturing productivity through key mediators: firm size, distance to the frontier, and broader institutional arrangements. Utilizing various empirical methodologies that address potential biases, the findings reveal a nuanced relationship between competition law stringency, enforcement practices, and productivity outcomes across different industries and countries. Results reveal heterogeneous effects of competition law and enforcement on productivity, with certain aspects showing a positive relationship with productivity, particularly when controlling for firm size, while stronger enforcement measures weaken the positive association between competition law and productivity, potentially due to increased compliance costs and legal uncertainty. The study suggests a need for policymakers to strike a balance between regulatory stringency and enforcement in competition to avoid stifling innovation and hindering productivity growth, particularly in industries nearing technological frontiers. Accounting for industry-specific factors are essential for fostering fair competition and market efficiency without unduly burdening businesses. |
| Keywords: | Competition law and regulations;Firm productivity;Enforcement |
| JEL: | K21 L11 O54 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13963 |
| By: | Gilles Dufrénot (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Mathilde Esposito (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Eva Moreno-Galbis (Aix Marseille Univ, CNRS, AMSE, Marseille, France) |
| Abstract: | Low fertility rates, mortality outstripping the birth rate and population contraction characterize a new demographic transition (the so-called "fifth stage"). This paper seeks to evaluate how this phenomenon has impacted the Japanese economic structure and overall productivity. We test two key mechanisms that have been at play since the mid-2000s: i) a growing complementarity between goods and services consumption, and ii) the substitution of older workers engaged in routine tasks with technological capital. According to Autor and Dorn’s (2013) model, this should promote the concentration of low-skilled workers in the service sector, and aggravate productivity gaps between industry and services. Using stochastic frontier models and EU-KLEMS data, we compute industry-by-industry TFP growth frontiers in order to check if theoretical predictions match with Japanese reality. |
| Keywords: | emographic transition, productivity, technological change, economic structure, Japan. |
| JEL: | J11 J14 O47 O53 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2426 |
| By: | Guillaume Bazot (Aix Marseille University, CNRS, AMSE); David Guerreiro (LED, University Paris 8) |
| Keywords: | labor share, task displacement, automation, labor rents, capital rents, markup, rate of return on capital, productivity |
| JEL: | E2 E4 J3 N12 O4 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:aim:wpaimx:2503 |
| By: | Deniz Igan; Tom Rosewall; Phurichai Rungcharoenkitkul |
| Abstract: | Productivity growth is a key variable of interest for central banks. It influences inflation and is the most important determinant of long-run growth in real income. Recently, subdued productivity growth in many countries (with the notable exception of the United States) has raised concerns about the underlying drivers across countries. What explains subdued productivity growth? Why is the United States different? Do the recent patterns reflect conjunctural factors that should fade over time or do they indicate structural forces that would prevail in the coming years? |
| Date: | 2024–10–03 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:93 |
| By: | Bertoni, Marco (University of Padova); Meli, Francesca (University of Padova); Rocco, Lorenzo (University of Padova) |
| Abstract: | We estimate the effect of sleep on labor productivity addressing the two main challenges in time use research: the unavoidable substitutions among activities implied by the time budget constraint and the endogeneity of the allocation of time. We use complete time diary data to identify the relative effect of sleep vs. non-work activities among employees working the same number of hours, and account for the endogeneity of time use choices by leveraging longitudinal information on productivity in a value-added specification. We show that, when work hours are held constant, substituting sleep with other non-work activities does not affect labor productivity. |
| Keywords: | sleep, time use, productivity |
| JEL: | J22 J24 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17618 |
| By: | Zhang, Yuqian |
| Abstract: | This paper investigates the multifaceted dynamics of economic growth in India and Singapore over a span of 50 years, utilizing the Solow and Romer models to decompose growth into its core components: total factor productivity (TFP), capital, and labor. Through a detailed growth accounting methodology, we analyze how these elements contribute distinctly to the GDP trajectories of these two contrasting economies. Our analysis reveals that while both labor expansion and capital accumulation play pivotal roles in short-term growth, it is the enhancement of TFP that emerges as the crucial determinant of sustainable economic progress over the long term. In Singapore, a developed economy characterized by its status as one of the Asian Tigers, TFP and labor productivity have been the primary drivers of its more consistent and long-term growth. Conversely, Indias growth has been more influenced by capital accumulation, particularly following economic liberalizations that spurred foreign investment and industrial diversification. The findings underscore the importance of TFP growth in both developing and mature economies, highlighting its significance in policy formulation aimed at stimulating economic development. This study not only charts a historical analysis of growth patterns but also aligns them with theoretical underpinnings that suggest pathways for future economic strategies in similar emerging and developed markets. |
| Keywords: | Solow growth model; growth accounting; TFP growth; Romer model |
| JEL: | O47 O53 O40 C82 E23 |
| Date: | 2024–12–23 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127021 |
| By: | Jan Schymik; Matthias Meier; Alexander Schramm; Alexander Schwemmer |
| Abstract: | This paper studies how managerial pay shapes the allocation of capital within firms. We leverage quasi-experimental variation in the composition of managerial pay between cash bonuses and equity compensation. We find that a relative increase in cash bonuses leads firms to reallocate capital toward less durable investment projects. To rationalize the empirical evidence, we develop a quantitative model with agency frictions. In the model, a relative increase in cash bonuses strengthens managerial short-termism, which shifts the investment composition toward less durable projects. The observed change in managerial pay exacerbates within-firm capital misallocation and leads to a sizeable contraction in output. |
| Keywords: | Investment, Firms, Managerial Pay, Capital Misallocation. |
| JEL: | D25 E22 E32 G31 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_637 |
| By: | Abdelati El Arfaoui (UMI - جامعة مولاي إسماعيل = Université Moulay Ismaïl); Nouredine Marchoud (UMI - جامعة مولاي إسماعيل = Université Moulay Ismaïl) |
| Abstract: | Companies are currently focusing on activities that increasingly benefit stakeholders, within the framework of corporate responsibility (CSR). Moreover, environmental, social and governance (ESG) aspects are the main dimensions of corporate responsibility practices and efforts.Companies engage in ESG activities in order to signal their compliance to the market, but also to improve their financial returns. However, the link between ESG performance and financial performance is not yet well established. Our analysis seeks to synthesise the literature on the following theme: ESG performance and its impact on financial performance. We therefore seek to better understand the relationship between the financial performance of companies and CSR activities (in terms of ESG performance).In other words, can the allocation of company resources to environmental, social and governance (ESG) aspects be a source of improved financial performance for the benefit of the company and its stakeholders? As part of a systematic literature review and in order to shed light on this question, we analysed the content of 63 articles identified as dealingwith the relationship between ESG performance and financial performance. This analysis shows that although most of the studies carried out indicate a positive relationship, others have concluded the existence of negative or even mixed relationships. It therefore confirms the need for more in-depth research into this relationship and the variables that may influence it. |
| Abstract: | Actuellement les entreprises se donnent aux activités qui profitent de plus en plus aux parties prenantes, dans le cadre de la responsabilité des entreprises (RSE). Et les aspects environnementaux, sociaux et de gouvernance (ESG) sont les principales dimensions des pratiques et des efforts de responsabilité des entreprises. Les entreprises s'engagent dans des activités ESG afin de signaler leur conformité sur le marché, mais aussi pour améliorer leurs rendements financiers. Cependant, le lien entre performance ESG et performance financière n'est pas encore bien déterminée. Notre analyse cherche à synthétiser la littérature sur le thème suivant : la performance ESG est son impact sur la performance financière. Et donc chercher à mieux cerner la relation ente la performance financière des entreprises et les activités de RSE (sous l'aspect de la performance ESG).En d'autres termes, l'allocation des ressources de l'entreprise aux aspects environnementaux, sociaux et de gouvernance (ESG) peut-elle être une source d'amélioration de la performance financière au profit de l'entreprise et de ses parties prenantes ? Dans le cadre d'une revue de littérature systématique et afin d'apporter un éclairage sur cette question, nous avons analysé le contenu de 63 articles identifiés traitant la relation entre la performance ESG et la performance financière. Cette analyse montre que même si la plupart des études menées indiquent une relation positive, d'autre ont conclus l'existence de relations négatives voir mitigées. Elle confirme donc la nécessité de recherches plus approfondies concernant cette relation ainsi que les variables qui peuvent l'influencer. |
| Keywords: | Sustainable development, corporate social responsibility, ESG performance, financial performance, Développement durable, Responsabilité sociale des entreprises, performance ESG, performance financière |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04864136 |