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on Efficiency and Productivity |
| By: | Stephen Ayerst; Duc Nguyen; Diego Restuccia |
| Abstract: | We examine micro and macro productivity differences across nations using cross-country firm-level data and a quantitative model of misallocation that integrates firms' operational (selection) and investment (technology) decisions. Empirically, less developed countries display greater distortions and wider dispersion in firm productivity, driven largely by the higher prevalence of low-productivity firms. Quantitatively, cross-country differences in measured distortions account for most of the observed micro-level patterns and over half of aggregate labor productivity gaps. Both selection and technology channels are essential to matching the data, while static misallocation also plays an important role, albeit smaller. |
| Keywords: | Firms, productivity, size, distortions, misallocation, selection, technology. |
| JEL: | O11 O14 O4 |
| Date: | 2025–10–30 |
| URL: | https://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-806 |
| By: | Fabio Bertolotti; Kyle Myers; Wei Yang Tham |
| Abstract: | We develop a method to estimate producers' productivity beliefs when output quantities and input prices are unobservable, and we use it to evaluate the market for science. Our model of researchers' labor supply shows how their willingness to pay for inputs reveals their productivity beliefs. We estimate the model's parameters using data from a nationally representative survey of researchers and find the distribution of productivity to be very skewed. Our counterfactuals indicate that a more efficient allocation of the current budget could be worth billions of dollars. There are substantial gains from developing new ways of identifying talented scientists. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.24916 |
| By: | Miklós Koren; Krisztina Orban; Bálint Szilágyi; Almos Telegdy; András Vereckei |
| Abstract: | How much do CEOs matter for firm performance? We estimate the causal effect of CEO quality on productivity using comprehensive administrative data covering the universe of Hungarian firms and CEOs from 1992--2022. We develop a production function framework that separates owner-controlled strategic decisions from CEO-controlled operational decisions. To address the severe measurement error in CEO fixed effects arising from short tenures, we introduce a placebo-controlled event study design: we compare actual CEO transitions to randomly assigned fake transitions in firms with stable leadership. The results reveal that a CEO better than the incumbent increases firm performance by 3% while a worse CEO decreases it by 2%. CEO changes contribute to the variance growth of productivity by 30% in the first 10 years of the firm's existence. The placebo-controlled methodology provides a general solution for estimating individual effects in short-panel settings. |
| Date: | 2025–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:ceu:econwp:2025_1 |
| By: | Xiaoning Wang; Chun Feng; Tianshu Sun |
| Abstract: | Labor mobility is a critical source of technology acquisition for firms. This paper examines how artificial intelligence (AI) knowledge is disseminated across firms through labor mobility and identifies the organizational conditions that facilitate productive spillovers. Using a comprehensive dataset of over 460 million job records from Revelio Labs (2010 to 2023), we construct an inter-firm mobility network of AI workers among over 16, 000 U.S. companies. Estimating a Cobb Douglas production function, we find that firms benefit substantially from the AI investments of other firms from which they hire AI talents, with productivity spillovers two to three times larger than those associated with traditional IT after accounting for labor scale. Importantly, these spillovers are contingent on organizational context: hiring from flatter and more lean startup method intensive firms generates significant productivity gains, whereas hiring from firms lacking these traits yields little benefit. Mechanism tests indicate that "flat and lean" organizations cultivate more versatile AI generalists who transfer richer knowledge across firms. These findings reveal that AI spillovers differ fundamentally from traditional IT spillovers: while IT spillovers primarily arise from scale and process standardization, AI spillovers critically depend on the experimental and integrative environments in which AI knowledge is produced. Together, these results underscore the importance of considering both labor mobility and organizational context in understanding the full impact of AI-driven productivity spillovers. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.02099 |
| By: | Luisa Alama (Universitat Jaume I and IIDL); Joan Crespo (Universitat de València); Miguel A. Márquez (Universidad de Extremadura); Emili Tortosa-Ausina (Universitat Jaume I, IIDL and Ivie) |
| 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: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:eec:wpaper:2510 |
| By: | Maré, David C. (Motu Economic and Public Policy Research Trust); Fabling, Richard (Independent Researcher) |
| 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: | ethnicity, productivity, earnings |
| JEL: | J15 J30 J42 J71 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18216 |
| By: | Jose Barrales-Ruiz (Faculty of Economics and Government, Universidad San Sebastian); Gyeongho Kim (Department of Economics, University of Utah); Ivan Mendieta-Munoz (Department of Economics, University of Utah) |
| Abstract: | This paper provides an empirical analysis of the dynamic determinants of US labor productivity growth by considering that the latter is an endogenous outcome, mainly influenced by changes in the size of the economy and relative labor costs. Specifically, we consider that changes in GDP, real wages, wages relative to the price of capital, and investment effect simultaneously the evolution of labor productivity growth. We focus on studying whether the response of the latter to these effects has been stable or time-varying by adopting a flexible hybrid time-varying parameter Bayesian vector autoregression with stochastic volatility empirical framework. This allows us identify whether none, some, or all lagged and contemporaneous coefficients in the equations in the model are constant or time-varying via model selection. We find: (i) evidence supporting the view of time-varying endogenous labor productivity growth dynamics; (ii) that the response of labor productivity growth to GDP growth has tended to increase over time; and (iii) that the response of labor productivity growth to real wage growth has tended to decrease over time. Our findings have important policy recommendations that can help to improve the future performance of labor productivity growth in the USA. |
| Keywords: | Labor productivity growth, induced technical change effect, Kaldor-Verdoorn effect, model selection, time-varying parameter vector autoregressions |
| JEL: | B50 C11 C32 C52 E12 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2515 |
| By: | Ifrim, Adrian; Kollmann, Robert; Pfeiffer, Philipp; Ratto, Marco; Roeger, Werner |
| Abstract: | The Euro Area faces persistently weak productivity growth alongside a sustained trade surplus and a trendless real exchange rate. This column shows that persistent productivity growth differentials relative to the rest of the world, are a key driver of Europe’s external surplus. Structural trade shifts, such as declining home bias and falling import prices, have offset the appreciation pressures from the productivity-growth gap. Weak domestic investment is partly driven by global forces, highlighting the limits of purely demand-based explanations and associated policy prescriptions. |
| Keywords: | Euro Area, Trade Balance, Real Exchange Rates, Productivity Growth Gap |
| JEL: | E2 E3 F3 F4 |
| Date: | 2025–09–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126077 |