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on Efficiency and Productivity |
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Issue of 2011‒10‒09
eighteen papers chosen by |
| By: | Cristina Bernini (Department and Faculty of Statistics, University of Bologna, Italy); Paola Brighi (Department of Management, Faculty of Economics-Rimini, University of Bologna, Italy; The Rimini Centre for Economic Analysis (RCEA), Italy) |
| Abstract: | During the last decades banks have progressively moved towards centralized and hierarchical organizational structures. Therefore, the investigation of the determinants of bank efficiency and relationships with the functional distance between the bank head-quarter and operational units have become increasingly important. This paper extends the literature on bank efficiency examining the impact of different bank business models on the efficiency of the Italian banks, distinguished by size and type over the period 2006-2009. Using a stochastic frontier approach, the intertemporal relationships between bank efficiency and some key variables, as distance and income diversification (used as proxies of different organizational banking models) are investigated. Results suggest that organizational structure significantly affects cost efficiency, being different between bank groups. |
| Keywords: | relationship lending; bank groups; credit risk; stochastic frontiers; panel data |
| JEL: | G21 L11 L25 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:41_11&r=eff |
| By: | Michael Hinton (The Rimini Centre for Economic Analysis (RCEA); Ryerson University) |
| Abstract: | Is it possible that generations of Canadian economists and historians have got it wrong and Canadian manufacturing before WWI was fairly efficient? Yes, because they do not pay enough attention to the measurement of efficiency. New cliometric evidence supporting the revisionist side of this question is presented on total factor productivity and five other measures of efficiency for the Canadian cotton textile industry, 1870-1910, an industry long thought to be grossly inefficient, which shows the industry performed strongly relative to the U.S. cotton textile industry and other cotton textile industries elsewhere in the world. |
| Keywords: | Manufacturing, Nineteenth Century. Canada. Cotton Textiles, Efficiency, Total Factor Productivity |
| JEL: | D24 L67 N60 N61 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:44_11&r=eff |
| By: | James Njeru |
| Abstract: | This study examined the factors influencing technical efficiency in wheat farming in Kenya using a stochastic frontier production function in which technical inefficiency effects were assumed to be functions of both socioeconomic characteristics of the farmer and farm-specific characteristics. The paper used random sampling to interview 160 farmers comprising 97 large-scale farmers and 63 small-scale farmers. The results revealed existence of significant levels of technical inefficiencies in wheatproduction, especially among the large-scale farmers. The study found that the magnitude of technical efficiency varied from one farmer to another and ranged from 48.9% to 95.1%, with a mean of 87.2%. This implied that farmers lost close to 13% of the potential output to technical inefficiencies. There was variation depending on the size of farm with small-scale farmers attaining higher technical efficiency than the large-scale farmers. The main factors that influenced the degree of inefficiency were education levels, access to credit, and ownership of the capital equipment. Higher levels of education (12 years and above or secondary and above) significantly reduced inefficiency as did access to credit facilities and owning the farm equipment. The study recommended that farmers be educated on the use of better techniques such as use of certified seeds and application of recommended levels of fertilizer. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:aer:rpaper:rp_206&r=eff |
| By: | Joachim Wagner (Institute of Economics, Leuphana University of Lüneburg, Germany) |
| Abstract: | This paper contributes to the literature on international firm activities and firm performance by providing the first evidence on the link of productivity and both exports and foreign direct investment (fdi) in services firms from a highly developed country. It uses unique new data from Germany - one of the leading actors on the world market for services - that merge information from regular surveys and from a one-time special purpose survey performed by the Statistical Offices. Descriptive statistics, parametric and non-parametric statistical tests and regression analyses (with and without explicitly taking differences along the conditional productivity distribution and firms with extreme values, or outliers, into account) indicate that the productivity pecking order found in numerous studies using data for firms from manufacturing industries – where the firms with the highest productivity engage in fdi while the least productive firms serve the home market only and the productivity of exporting firms is in between – does not exist among firms from services industries. In line with the theoretical model and the empirical results for software firms from India provided by Bhattacharya, Patnaik and Shah (2010) there is evidence that firms with fdi are less productive than firms that export. |
| Keywords: | Exports, foreign direct investments, productivity, services firms |
| JEL: | F14 F21 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:215&r=eff |
| By: | Nikolaj Malchow-Møller (University of Southern Denmark and CEBR); Jakob R. Munch (University of Copenhagen and CEBR); Jan Rose Skaksen (Copenhagen Business School and CEBR) |
| Abstract: | While most countries welcome (and some even subsidise) high-skilled immigrants, there is very limited evidence of their importance for domestic firms. To guide our empirical analysis, we first set up a simple theoretical model to show how foreign experts may impact on the productivity and wages of domestic firms. Using matched worker-firm data from Denmark and a difference-in-differences matching approach, we then find that firms that hire foreign experts - defined as employees eligible for reduced taxation under the Danish "Tax scheme for foreign researchers and key employees" both become more productive (pay higher wages) and increase their exports of goods and services. |
| Keywords: | Foreign experts, export, immigrants, productivity, difference-in-differences matching |
| JEL: | F22 J24 J31 J61 L2 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2011014&r=eff |
| By: | Olesen, Ole Bent (Department of Business and Economics); Petersen, Niels Christian (Department of Health Economics) |
| Abstract: | Recently there has been some discussion in the literature concerning the nature of scale properties in the Data Envelopment Model (DEA). It has been argued that DEA may not be able to provide reliable estimates of the optimal scale size. We argue in this paper that DEA is well suited to estimate optimal scale size, if DEA is augmented with two additional maintained hypotheses which imply that the DEA-frontier is consistent with smooth curves along rays in input and in output space that obey the Regular Ultra Passum (RUP) law (Frisch 1965). A necessary condition for a smooth curve passing through all vertices to obey the RUP-law is presented. If this condition is satisfied then upper and lower bounds for the marginal product at each vertex are presented. It is shown that any set of feasible marginal products will correspond to a smooth curve passing through all points with a monotonic decreasing scale elasticity. The proof is constructive in the sense that an estimator of the curve is provided with the desired properties. A typical DEA based return to scale analysis simply reports whether or not a DMU is at the optimal scale based on point estimates of scale efficiency. A contribution of this paper is that we provide a method which allows us to determine in what interval optimal scale is located. |
| Keywords: | DEA; efficiency |
| JEL: | C00 C40 C60 |
| Date: | 2011–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sdueko:2011_004&r=eff |
| By: | Gita Gopinath; Brent Neiman |
| Abstract: | The authors empirically characterize the mechanics of trade adjustment during the Argentine crisis using detailed firm-level customs data covering the universe of import transactions made during 1996-2008. Their main findings are as follows: First, the extensive margin defined as the entry and exit of firms or of products (at the country level) plays a small role during the crisis. Second, the sub-extensive margin defined as the churning of inputs within firms plays a sizeable role in aggregate adjustment. This implies that the true increase in input costs exceeds that imputed from conventional price indices. Third, the relative importance of these margins and of overall trade adjustment varies with firm size. Motivated by these facts, we build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and round-about production to evaluate the channels through which a collapse in imports affects TFP (total factor productivity) in manufacturing. Measured aggregate productivity in the sector depends on within-firm adjustments to the varieties imported as well as the joint distribution of each firm's technology and the share of imports in its total spending on inputs. We simulate an imported input cost shock and show that these mechanisms can deliver quantitatively significant declines in manufacturing TFP. |
| Keywords: | International trade - Argentina |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:11-9&r=eff |
| By: | Göbel, Christian; Zwick, Thomas |
| Abstract: | In most industrialised countries, the workforce is ageing rapidly. If ageing workforces affect sectors differently, the total impact of ageing will depend on the industrial structure of an economy. This paper measures the impact of changes in the age structure of establishments on productivity using representative linked employeremployee panel data. We argue that establishment age-productivity profiles might differ for various reasons. For example, the importance of physical strength and possibilities to compensate deficits in skills differ between sectors. We investigate differences in the age-productivity profiles between the (metal) manufacturing and services sectors. However, in our preferred specification that controls for several potential sources of estimation biases, we find no significant differences in the ageproductivity profiles between these sectors. -- |
| Keywords: | Ageing workforce,age,productivity,linked employer employee data,sectors |
| JEL: | J11 J14 J21 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:11058&r=eff |
| By: | Giorgio Fazio; Davide Piacentino (-) |
| Abstract: | Empirical convergence analysis is typically envisaged from a macro aggregate perspective. However, researchers have recently highlighted how investigating convergence at the disaggregate level may yield interesting insights into the convergence debate. In this paper, we suggest an approach that allows exploiting large micro panels to test for convergence. Compared to the traditional convergence analysis, this approach allows obtaining beta- and sigma-like convergence parameters for both the micro and the macro level of interest. We provide a practical example that analyses productivity convergence across firms and provinces using a large sample of Italian firms. |
| Keywords: | Convergence, Multilevel Models, Italian Firms. |
| JEL: | C33 D20 O47 |
| Date: | 2011–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:prt:dpaper:9_2011&r=eff |
| By: | Francesca Cornaglia; Naomi E. Feldman |
| Abstract: | The effect of marriage on productivity and, consequently, wages has been long debated in economics. A primary explanation for the impact of marriage on wages has been through its impact on productivity, however, there has been no direct evidence for this. In this paper, we aim to fill this gap by directly measuring the impact of marriage on productivity using a sample of professional baseball players from 1871 - 2007. Our results show that only lower ability men see an increase in productivity, though this result is sensitive to the empirical specification and weakly significant. In addition, despite the lack of any effect on productivity, high ability married players earn roughly 16 - 20 percent more than their single counterparts. We discuss possible reasons why employers may favor married men. |
| Keywords: | Productivity, wage gap, marriage, and baseball |
| JEL: | J31 J44 J70 |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1081&r=eff |
| By: | Adam Mugume |
| Abstract: | By using the non-structural models of competitive behaviour—the Panzar-Rosse model—the study measures competition and emphasizes the competitive conduct of banks without using explicit information about the structure of the market. Estimations indicate monopolistic competition, competition being weaker in 1995–1999 compared with 2000–2005. Moreover, the relationship between competition, measuring conduct, and concentration measuring the market structure, is negative and statistically significant; which could suggest that a few large banks can restrict competition. Overall, the results suggest that while competition in the Ugandan banking sector falls within a range of estimates for comparator markets, it tends to be on the weaker side. The structural approach to model competition includes the structure-conductperformance(SCP) paradigm and the efficiency hypothesis. Using the SCP framework, we investigate whether a highly concentrated market causes collusive behaviour among larger banks resulting in superior market performance; whereas under the efficiency hypothesis we test whether it is the efficiency of larger banks that makes for enhanced performance. Using Granger causation test, we establish that the efficiency Granger causes concentration and using instrumental variable approach, the study establishes that market power and concentration as measured by market share and Herfindahl index, respectively, positively affect bank profitability. In addition, bank efficiency also affects bank profitability. Other factors that affect bank profitability include operational costs, taxation and core capital requirement. A major policy implication derived from this analysis is that the Ugandan banking system has been subject to deep structural transformation since the early 1990s. Advances in information technology, liberalization of international capital movement, consolidation and privatization have permitted economies of scale in the production and distribution of services and increased risk diversification. These forces have led to lower costs and, undoubtedly, higher efficiency. However, to ensure that lower costs are passed through to households and firms, greater efficiency must be accompanied by a similar strengthening in the competitive environment in the banking sector. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:aer:rpaper:rp_203&r=eff |
| By: | Ahmadu U. Sanda |
| Abstract: | This study examined the relationship between board independence and firm financial performance, using data of varying sample size (ranging from 89 firms for regression to 205 firms for descriptive analysis) obtained from the Nigerian Stock Exchange for the period 1996 through 2004. The key results were that share ownership was highly concentrated inNigeria, and this structure tended to engender board structureswith close family affiliations in which the chief executive officers (CEOs) were activemembers of audit committees.While family affiliation of board members was found to support firm growth, we found evidence that audit committee membership of chief executives hurt firm performance. We also found that foreign chief executives performed better than their local counterparts. These results suggested the need for Nigerian firms to adopt better corporate governance mechanisms in order to make the boards of directors more independent, avoid unnecessary intervention of CEOs in important committees, and in that way aid financial performance. |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:aer:rpaper:rp_213&r=eff |
| By: | Cioclea, Alexandra Ema |
| Abstract: | Performance evaluation plays a central role in improving public service quality and increasing efficiency and accountability in the public sector. New Public Management recommends performance evaluation as a tool for rationalizing public budgeting, promoting better reporting systems and developing internal diagnosis systems. This paper aims to analyze the characteristics of performance evaluation and to highlight its influences in public organizations. The study is based on review and analysis of academic research, government documents and personal perspectives. The paper argues that managerial practices and tools for defining and evaluating performance can be used for cultivating the “achievement culture” in public sector organizations. |
| Keywords: | Public management; performance; evaluation; indicators |
| JEL: | D73 H11 |
| Date: | 2011–09–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33642&r=eff |
| By: | FUKAO Kyoji; IKEUCHI Kenta; KIM YoungGak; KWON Hyeog Ug |
| Abstract: | Using a Melitz-style model of heterogeneous firms, Baldwin and Okubo (2006) recently presented a theoretical model in which self-sorting occurs and more productive factories choose to locate in more productive areas. The model suggests that firm-specific factors and regional factors affect each other through the endogeneity of location decisions. However, to date there have been few studies empirically testing this issue. Against this background, our aim is to examine the relationship between firms and location-specific factors in location decisions using factory-level panel data from Japan's Census of Manufactures. We begin by estimating how much of the differences in factories' TFP levels can be explained by both firm and location effects. The estimation results show that both effects have a significant impact on the productivity level of a factory, and that the firm effects are more important than the location effects. We also find a statistically significant negative correlation between firm effects and location effects, and investigate what causes this relationship. One potential explanation is that more productive firms may tend to set up new factories in less productive locations such as rural areas, where factor prices such as land prices and wage rates are usually low, in order to benefit from low factor prices. To examine this issue, we estimate a mixed logit model of location choice. The results indicate that more productive firms indeed tend to set up new factories in low-productivity locations, which is consistent with our hypothesis. |
| Date: | 2011–09 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:11068&r=eff |
| By: | Sangho KIM (Department of International Trade, Honam University, Gwangju 506-714, KOREA); Donghyun PARK (Economics and Research Department, Asian Development Bank, 6 ADB Avenue, Mandaluyong City, Metro Manila, PHILIPPINES 1550) |
| Abstract: | The central objective of our paper is to empirically examine the relationship between the ownership structure of firms and their export performance using data from Korea. Due to growing globalization, export performance has become a highly influential determinant of firm performance. While a large and growing empirical literature investigates the relationship between the ownership structure and overall performance of firms, there are almost no studies which delve into the issue of whether the concentration of ownership has a positive or negative effect on export performance. The primary contribution of our study is to help remedy this serious gap in the empirical literature on ownership and performance. Our empirical results indicate that firms with more concentrated ownership are more likely to be exporters and export more. |
| Keywords: | Exports, ownership structure, logit analysis, Tobit regression, Korea |
| JEL: | F10 G30 D80 |
| Date: | 2011–01 |
| URL: | http://d.repec.org/n?u=RePEc:nan:wpaper:1101&r=eff |
| By: | Humphreys, Brad (University of Alberta, Department of Economics); Paul, Rodney (Syracure University); Weinbach, Andrew (Coastal Carolina University) |
| Abstract: | Previous research on CEO turnover indicates that a number of factors, including age, firm performance, and expected firm performance affect CEO turnover. Measurement of expected performance in these studies is typically based on investment analysts’ forecasts of earnings; these expectations potentially suffer from a number of problems, including the tendency for CEOs to “manage” analysts’ expectations. We examine the relationship between performance expectations and CEO turnover using data from NCAA Division I-A college football using a market-determined measure of expected performance, winning percentage against point spreads; this expected performance measure does not suffer from many of the problems that plague analysts’ earnings forecasts. We find that performance expectations, actual expectations, and tenure affect CEO turnover in NCAA Division I-A college football, based on performance data from 102 Division I-A football programs over the period 1980-2004. |
| Keywords: | CEO turnover; performance expectations; betting markets |
| JEL: | D84 J44 J63 |
| Date: | 2011–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:albaec:2011_014&r=eff |
| By: | Mukherjee, Soumyatanu |
| Abstract: | This paper has made an attempt to show that in a developing economy, agriculture and Special Economic Zones (SEZ) can go simultaneously without affecting one another if appropriate subsidy policy is designed by the government. We have considered increasing returns brought about by external economies of scale in the SEZ-led industrial sector with the help of Dixit-Stiglitz (1977) type of production function where resource used to produce each variety of the SEZ-good is itself produced using constant returns to scale (CRS) technology and CRS is also present in the agricultural sector. |
| Keywords: | Special Economic Zones; Increasing Returns; External Economies of Scale; Constant Returns to Scale; Dixit-Stiglitz type Production Function |
| JEL: | F16 J43 F13 C65 Q17 F12 J33 |
| Date: | 2011–09–29 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:33785&r=eff |
| By: | Claude Ménard (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); R. Maria Saleth (Madras Institute of Development Studies - Madras Institute of Development Studies) |
| Abstract: | This chapter aims to provide some answers using both theoretical considerations as well as practical illustrations at the sub sectoral levels of urban water supply and irrigation as well as at the water sector as a whole. It examines different possibilities to deal with governance issues appropriately using several criteria, particularly feasibility, performance efficiency, transparency of the process, and accountability of decision makers. It also derives certain guidelines and principles that can be used to enhance the effectiveness of water governance in sub sectoral and the general water sector context. |
| Keywords: | Institutions; governance; water sector; efficiency; organization |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:halshs-00624250&r=eff |