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on Efficiency and Productivity |
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Issue of 2013‒04‒20
seventeen papers chosen by |
| By: | Ab-Rahim, Rossazana; Kadri, Norlina; Ismail, Farhana |
| Abstract: | This study examines the efficiency performance of the full-fledged Islamic banks in Malaysia for the period of 2006 to 2011. The Malaysian Islamic banking industry has grown tremendously in terms of assets, deposits and total financing over the study period. Data Envelopment Analysis is employed in this study to measure the cost efficiency as well as the technical efficiency and its decompositions. The results show that, on average the main contributor of cost efficiency for Islamic domestic and foreign banks in Malaysia is allocative efficiency. In addition, the results find that Islamic foreign banks are more efficient than domestic banks with respect to pure technical efficiency and allocative efficiency. |
| Keywords: | Efficiency; Islamic banks; Malaysia |
| JEL: | D21 G21 |
| Date: | 2013–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46238&r=eff |
| By: | Xiaoyang Li |
| Abstract: | This paper investigates how takeovers create value. Using plant-level data, I show that acquirers increase targets’ productivity through more efficient use of capital and labor. Acquirers significantly reduce capital expenditures, wages, and employment in target plants, though output is unchanged. Acquirers improve targets’investment efficiency through better capital reallocation. Moreover, changes in productivity help explain the merging firms’ announcement returns. The combined announcement returns are driven by improvements in target’s productivity. Targets with greater productivity improvements receive higher premiums. These results provide some first empirical evidence on the relation between productivity and stock returns in the context of takeovers. |
| Keywords: | Takeovers, Announcement returns, Productivity, Investments, Wages, Employment |
| JEL: | G34 D24 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:13-18&r=eff |
| By: | Subhash C. Ray (University of Connecticut) |
| Abstract: | An economic measure of scale efficiency is the ratio of the minimum average cost to the average cost at the actual output level of a firm. It is easily measured by the ratio of the total cost of this output under the constant and variable returns to scale assumptions. This procedure does not identify the output level where the average cost reaches a minimum. This paper proposes a nonparametric method of measuring this output level using DEA. The relation between this efficient production scale, the short run physical capacity output, and the most productive scale size (MPSS) is also discussed. An empirical application using state level data from U.S. manufacturing is used to illustrate the procedure. |
| Keywords: | Efficient output, Most Productive Scale Size, Data Envelopment Analysis |
| JEL: | C61 L25 D24 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2013-09&r=eff |
| By: | Jose Miguel Albala-Bertrand (Queen Mary, University of London) |
| Abstract: | This paper deals with some structural indicators and their evolution, in China and regions, over the period 1981-2010. We first produce estimates of the optimal productivities of incremental capital and the optimal incremental income elasticity of capital by means of a linear programming exercise. We then produce an accounting growth decomposition to assess the changes in the contribution of capital productivity, capital intensity and labour participation to the growth rate of output per capita. Finally, we combine an accounting growth decomposition with a standard production function, growth accounting, decomposition to assess both the contribution of both capital productivity and capital intensity to total factor productivity (TFP). We also show in an appendix the difference in the TFP growth contribution when marginal elasticities are assumed variable over time and when scale returns are assumed increasing rather than constant. Our main conclusion is that capital intensity, rather than capital productivity or labour participation, has been the main growth contributor. But this does not mean that quantity in itself, rather than quality, is behind such growth, as total factor productivity, which is significantly more than engineering technical change, has been relatively important over the period. |
| Keywords: | Structural indicators, Incremental capital productivity, Growth decomposition, Optimal consistency method (OCM), Total factor productivity (TFP) |
| JEL: | O4 B4 E2 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:wp701&r=eff |
| By: | David A. Rivers (University of Western Ontario) |
| Abstract: | In an effort to explain the observed heterogeneity in the exporting decisions of rms, the empirical trade literature has concluded that exporting rms are more productive than non-exporting rms. In this paper, I show that the foundation for this conclusion is weak, given that the productivity estimates used in the literature suffer from several sources of potential bias. I apply a new method for estimating production functions to control for these sources of bias. Using data on manufacturing rms in Colombia, I find that, while the measures of productivity used in the literature imply that exporters are more productive, once I correct for the bias, there is no correlation between productivity and export status. This result is inconsistent with productivity being the main determinant of entry into export markets, and suggests the importance of other sources of heterogeneity in explaining rm-level exporting decisions. |
| Keywords: | none available |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:uwo:hcuwoc:20132&r=eff |
| By: | Gemmell, Norman; Kneller, Richard; McGowan, Danny; Sanz, Ismael; Sanz-Sanz, José F. |
| Abstract: | Firms that lie far behind the technological frontier have the most to gain from imitating the technology or management practices of others. That some firms converge relatively slowly to the productivity frontier suggests the existence of factors that cause them to underinvest in their productivity. In this paper we explore how far higher rates of corporate taxation affect firm productivity convergence by reducing the after tax returns to productivity enhancing investments for small firms. Using data for 11 European countries we find evidence for such an effect; productivity growth in small firms is slower the higher are corporate tax rates. Our results are robust to the use of instrumental variable and panel data techniques with quantitatively similar effects found from a natural experiment following the German tax reforms in 2001. |
| Keywords: | Productivity, taxation, convergence, |
| Date: | 2013–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwcpf:2705&r=eff |
| By: | Bertoni, Marco (University of Padova); Brunello, Giorgio (University of Padova); Rocco, Lorenzo (University of Padova) |
| Abstract: | We use data on international chess tournaments to study the relationship between age and mental productivity in a brain-intensive profession. We show that less talented players tend to leave the game in the earliest phases of their career. When the effects of age on productivity vary with unobserved ability, commonly used fixed effects estimators applied to raw data do not guarantee consistent estimates of age-productivity profiles. In our data, this method strongly over-estimates the productivity of older players. We apply fixed effects to first-differenced data and show that productivity peaks in the early forties and smoothly declines thereafter. Because of this, players aged 60 are 11 percent less productive than players in their early forties. |
| Keywords: | aging, productivity, mental ability |
| JEL: | D83 J14 J24 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7311&r=eff |
| By: | Esther Goya (Faculty of Economics, University of Barcelona); Esther Vayá (Faculty of Economics, University of Barcelona); Jordi Suriñach (Faculty of Economics, University of Barcelona) |
| Abstract: | This paper uses a structural model to analyse the impact of innovation activities, including intra- and inter-industry externalities, on the productivity of Spanish firms. To the best of our knowledge, no previous paper has examined spillover effects by adopting such an approach. Here, therefore, we seek to determine the extent to which the innovations carried out by others affect a firm’s productivity. Additionally, firm’s technology level is taken into account in order to ascertain whether there are any differences in this regard between high-tech and low-tech firms both in industrial and service sectors. The database used is the Technological Innovation Panel (PITEC) which includes 8,611 firms for the year 2009. We find that low-tech firms make the most of a range of factors, including funding and belonging to a group, to increase their investment in R&D. As expected, R&D intensity has a positive impact on the probability of achieving both product and, more especially, process innovations. Finally, innovation output has a positive impact on firm’s productivity, being greater in more advanced firms in the case of process innovations. Both intra- and inter-industry spillovers have a positive impact on firm’s productivity, but this varies with the firm’s level of technology. Thus, innovations made by firms from the same sector are more important for low-tech firms than they are for their high-tech counterparts, while innovations made by the rest of the sectors have a greater impact on high-tech firms. |
| Keywords: | Productivity, innovation, industry spillovers. JEL classification: D24, O33. |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:201207&r=eff |
| By: | Kaitila, Ville; McQuinn, John; Siedschlag, Iulia; Zhang, Xiaoheng |
| Abstract: | Abstract: This paper examines the causal link between foreign investment and firm performance in six small open economies in the European Union. Specifically, using micro data for manufacturing and services over the period 2001-2009, we analyse the effects of foreign mergers and acquisitions on labour productivity and employment growth up to five years after acquisition. Our results indicate that foreign investors tend to acquire larger firms in both manufacturing and services. Other characteristics of acquired firms differ across countries and between manufacturing and services. Taken together, our estimates suggest that foreign investment had stronger effects on firm performance in services in comparison to manufacturing. |
| Keywords: | multinational firms, productivity, employment, propensity score matching |
| JEL: | F16 F23 J24 |
| Date: | 2013–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:rif:report:6&r=eff |
| By: | Wixe, Sofia (Jönköping International Business School) |
| Abstract: | This paper analyses the role of spatial externalities in explaining the average labour productivity of Swedish manufacturing firms. The empirical findings support MAR and Porter externalities as well as general urbanization economies, but not Jacobs externalities. In addition, the matching between the firm and the regional labour force is found to be productivity-enhancing. However, firm-specific characteristics, including the characteristics of the employees, are not to be forgotten. Especially since externalities are commonly associated with knowledge spillovers, and it is through the employees that the external knowledge is absorbed and channelled to the firm as a whole. |
| Keywords: | Firm productivity; spatial externalities; manufacturing; Sweden |
| JEL: | D24 L25 L60 R32 |
| Date: | 2013–04–12 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0306&r=eff |
| By: | Golden, Lonnie |
| Keywords: | labour productivity, productivity, arrangement of working time, flexible hours of work, enterprise level, role of ILO, productivité du travail, productivité, aménagement du temps de travail, horaire de travail variable, niveau de l'entreprise, rôle de l'OIT, productividad del trabajo, productividad, ordenamiento del tiempo de trabajo, horario de trabajo variable, a nivel de la empresa, papel de la OIT |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ilo:ilowps:470847&r=eff |
| By: | Johannes Pöschl; Neil Foster |
| Abstract: | The paper addresses the link between productivity and labour mobility. The hypothesis tested is that technology is transmitted across industries through the movement of skilled workers embodying human capital. The embodied knowledge is then diffused within the new environment creating spillovers and leading to productivity improvements. The empirical analysis is based on household survey and industry-level data for a sample of 12 EU countries covering the years 1995-2005. The estimates document the importance of positive cross-sectoral knowledge spillovers and indicate that labour mobility has considerable beneficial effects on industry productivity. Possible endogeneity problems related to labour mobility are tackled by employing a two stage instrumental variables approach. Moreover we show that the spillover effects vary considerably by technology level of the giving industry. While workers moving away from high and medium-tech industries are found to produce positive productivity effects for the receiving industry, no effect is found for those coming from low-tech industries. |
| Keywords: | Knowledge Spillovers, Labour Mobility, Productivity, Human Capital, Industry Level |
| JEL: | J24 J60 O47 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:wsr:wpaper:y:2013:i:117&r=eff |
| By: | Anne Neumann; Maria Nieswand; Torben Schubert |
| Abstract: | Nonparametric efficiency analysis has become a widely applied technique to support industrial benchmarking as well as a variety of incentive-based regulation policies. In practice such exercises are often plagued by incomplete knowledge about the correct specifications of inputs and outputs. Simar and Wilson (2001) and Schubert and Simar (2011) propose restriction tests to support such specification decisions for cross-section data. However, the typical oligopolized market structure pertinent to regulation contexts often leads to low numbers of cross-section observations, rendering reliable estimation based on these tests practically unfeasible. This small-sample problem could often be avoided with the use of panel data, which would in any case require an extension of the cross-section restriction tests to handle panel data. In this paper we derive these tests. We prove the consistency of the proposed method and apply it to a sample of US natural gas transmission companies in 2003 through 2007. We find that the total quantity of gas delivered and gas delivered in peak periods measure essentially the same output. Therefore only one needs to be included. We also show that the length of mains as a measure of transportation service is non-redundant and therefore must be included. |
| Keywords: | Benchmarking models, Network industries, Nonparametric efficiency estimation, Data envelopment analysis, Testing restrictions, Subsampling, Bootstrap. |
| JEL: | C14 L51 L95 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:rsc:rsceui:2013/13&r=eff |
| By: | Das, Arabinda |
| Abstract: | It has been argued that the deterministic frontier approach in inefficiency measurement has a major limitation as inefficiency is mixed with measurement error (statistical noise) in this approach. The result is that inefficiency is contaminated with noise. Later stochastic frontier approach improves the situation with allowing a statistical noise in the model which captures all other factors other than inefficiency. The stochastic frontier model has been used for inefficiency analysis despite its complicated form and estimation procedure. This paper introduced an extra parameter which estimates the amount of proportion that an error component shares in the observational error. An EM estimation approach is used for estimation of the model and a test procedure is developed to test the significance of presence of the error component in the observational error. |
| Keywords: | stochastic frontier model, skew-normal distribution, identification, EM algorithm, Monte Carlo simulation. |
| JEL: | C15 C21 C51 |
| Date: | 2013–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46168&r=eff |
| By: | Mitsuo Inada (Graduate School of Economics, Kyoto University) |
| Abstract: | Inward foreign direct investment (FDI) in China has been accompanied by rapid economic growth. A growing literature has emerged in recent years examining the role of FDI on Chinese economic growth. However, measuring the e?ects of FDI has been challenging, because other fac- tors which in?uence ?rms?productivity occur in parallel with FDI, and because economic growth also simultaneously attracts FDI. To address these endogeneities, this paper analyzes the e?ects of a change in the FDI regulations on the productivity growth of Chinese industries using Chinese industry-level panel data. In 2002, the Chinese government lifted its regulations on the entry of foreign a￠ liates, which has made it substantially easier for foreign ?rms to engage in FDI in a?ected industries. As a result of this regulation change, our di?erence-in-di?erences estimates show that these industries experienced signi?cantly larger increases in foreign ?rms?total sales, exports, and domestic sales. We also ?nd that this increase in FDI resulted in an increase in labor productivity and in total factor productivity (TFP) of the a?ected industries and local industries, but we do not ?nd that they experienced signi?cantly larger in?ows of FDI or productivity growth before 2002, which provides evidence against endogeneity concerns. The results above are su￠ - ciently robust to include changes in industrial tari? reduction as controls. These ?ndings suggest that the growth of foreign sales and TFP in a?ected industries is not well explained except by the e?ects of regulation changes. |
| Keywords: | Foreign Direct Investment; Regulation Change; Industrial Growth; Technology Spillovers; Difference-in-Differences. |
| JEL: | F21 O33 O38 O43 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:856&r=eff |
| By: | Jürgen Bitzer (University of Oldenburg, Department of Economics); Erkan Gören |
| Abstract: | From an engineering perspective, a capital good’s service is energy conversion – e.g., the physical ‘work’ done by a machine – and can thus be measured directly by the energy consumed in production. We show important empirical advantages of our concept over traditional measures. The empirical application reveals that our concept avoids a number of conceptual problems of the latter. Furthermore, our measure is more sensitive to fluctuations in economic activity and therefore captures the utilization of the capital stock better. In a growth accounting exercise, this results in higher TFP growth rates, especially in times of global recession. |
| Keywords: | capital service, utilization, energy consumption, total factor productivity, growth accounting |
| JEL: | E22 D24 O47 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:old:wpaper:351&r=eff |
| By: | Agnese, Pablo (FH Düsseldorf) |
| Abstract: | The subject of offshoring and productivity has not yet received the attention it deserves. Here I propose a simple framework for estimating the contribution of these strategies to the growth rate of labor productivity from a time-series perspective. This framework is then used to assess the impact of offshoring on skill upgrading and the labor share. For both empirical questions I take up the study of a group of Japanese industries during the recent years of slow growth. The results should be interpreted with caution yet clearly suggest that offshoring can improve labor productivity in the Semiconductors industry. Moreover, offshoring is found to be the source of important changes among industries with different skills (skill upgrading) and an important factor behind the fall of the labor share. |
| Keywords: | offshoring, labor productivity, skill upgrading, labor share |
| JEL: | J23 J24 E25 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7323&r=eff |