|
on Efficiency and Productivity |
|
Issue of 2015‒04‒25
thirty-two papers chosen by |
| By: | Bibek Ray Chaudhuri (Indian Institute of Foreign Trade, Kolkata, India); Shubhasree Bhadra (Department of Business Management, University of Calcutta) |
| Abstract: | The present study attempts to empirically examine the total factor productivity change (TFPG) of Indian microfinance institutions, using balanced panel data set of 55 MFIs in India between 2008 and 2010. A non parametric Malmquist Productivity Index has been used for this purpose. Efficiency of Indian MFIs has been calculated based on production approach. It was found that technological change has played a significant role in increase of TFPG in the terminal year considered. Further, significant change of scale efficiency in terms of women borrowers also enhances TFPG. Moreover, it was found that operational self sufficiency, return on asset and lagged capital-asset ratio, are significant determinants of TFPG. PAR>30 was also found to be positively related to TFPG. |
| Keywords: | Productivity change, efficiency, microfinance institution, index number |
| JEL: | D24 G21 C43 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:ift:wpaper:1527&r=eff |
| By: | Eric Bartelsman (VU University Amsterdam, The Netherlands, and IZA, Germany); Sabien Dobbelaere (VU University Amsterdam, The Netherlands, and IZA, Germany); Bettina Peters (Centre for European Economic Research (ZEW), MaCCI Mannheimer Centre for Competition and Innovation, Germany, and University of Zurich, Switzerland) |
| Abstract: | This paper examines how productivity effects of human capital and innovation vary at different points of the conditional productivity distribution. Our analysis draws upon two large unbalanced panels of 6,634 enterprises in Germany and 14,586 enterprises in the Netherlands over the period 2000-2008, considering 5 manufacturing and services industries that differ in the level of technological intensity. Industries in the Netherlands are characterized by a larger average proportion of high-skilled employees and industries in Germany by a more unequal distribution of human capital intensity. Except for low-technology manufacturing, average innovation performance is higher in all industries in Germany and the innovation performance distributions are more dispersed in the Netherlands. In both countries, we observe non-linearities in the productivity effects of investing in product innovation in the majority of industries. Frontier firms enjoy the highest returns to pro duct innovation whereas the most negative returns to process innovation are observed in the best-performing enterprises of most industries. In both countries, we find that the returns to human capital increase with proximity to the technological frontier in industries with a low level of technological intensity. Strikingly, a negative complementarity effect between human capital and proximity to the technological frontier is observed in knowledge-intensive services, which is most pronounced for the Netherlands. Suggestive evidence for the latter points to a winner-takes-all interpretation of this finding. |
| Keywords: | Human capital, innovation, productivity, quantile regression |
| JEL: | C10 I20 O14 O30 |
| Date: | 2013–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130095&r=eff |
| By: | Uwe Jirjahn |
| Abstract: | Using panel data from German establishments, this study finds that performance pay is associated with increased productivity only when it is coupled with a high-wage policy. This holds for individual-based performance pay, group-based performance pay and profit sharing. |
| Keywords: | Performance pay, high-wage policy, productivity, fixed effects regressions |
| JEL: | D20 J33 M52 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:trr:wpaper:201504&r=eff |
| By: | Karima Kourtit (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam); Soushi Suzuki (Hokkai-Gakuen University, Sapporo, Japan) |
| Abstract: | See the article in <I>Computers Environment and Urban Systems</I> (2013). Volume 38, pages 67-77.<P> This paper aims to provide a new methodological and empirical contribution to the rising literature on the relative performance and benchmarking of large cities in a competitive world. On the basis of a recent detailed database on many achievement criteria of 35 major cities in the world, it seeks to arrive at a relative performance ranking of these cities by using Data Envelopment Analysis (DEA). A novel element is the use of a new type of ‘Super-Efficiency DEA’ to identify unambiguously the high performers ('exceptional places’) in the group of world cities investigated. This new productivity-based approach is complemented with two new directions in DEA research, viz. a Distance Friction Method and a Context-Dependent method. |
| Keywords: | world cities; city performance; Data Envelopment Analysis |
| JEL: | C8 O1 |
| Date: | 2013–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130104&r=eff |
| By: | Julia Müller (Erasmus University Rotterdam); Thorsten Upmann (University Duisburg-Essen, Germany); Joachim Prinz (University Duisburg-Essen, Germany) |
| Abstract: | Teams, in both firms and in sports, jointly produce a product. While a fixed task is assigned to each member of a team, the individual team productivity of a worker or player is difficult to conceptualize. This is particularly true, if this concept is aimed to be operable on observable data. In this paper we, therefore, propose two versions of a new concept of individual team productivity which is closely related to eigenvalue centrality; accordingly we refer to it as eigenvalue productivity. For each version of eigenvalue productivity we provide an example demonstrating the operability of our concept. |
| Keywords: | individual team productivity, eigenvalue productivity, centrality, team production, team sports |
| JEL: | D24 J24 L23 L83 |
| Date: | 2013–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130183&r=eff |
| By: | Henze, Philipp |
| Abstract: | This paper uses a long time series of German employment data to test the theory of Ngai & Pissarides (2007). The theory suggests that the shift of employment shares from manufacturing to services is due to divergent growth rates of total factor productivity (TFP) in the two sectors. To test the theoretical predictions, I use the "Establishment History Panel" together with sectoral data on total factor productivity. The results confirm the theoretical predictions, i.e. they show a negative relationship between employment growth and TFP growth. |
| Keywords: | Structural Change,Economic Growth,Total Factor Productivity |
| JEL: | L16 O14 O40 D24 |
| Date: | 2015–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:109138&r=eff |
| By: | Beata Javorcik (University of Oxford, United Kingdom); Steven Poelhekke (VU University Amsterdam, the Netherlands) |
| Abstract: | The literature has documented a positive effect of foreign ownership on firm performance. But is this effect due to a one-time knowledge transfer or does it rely on continuous injections of knowledge? To shed light on this question we focus on divestments, that is, foreign affiliates that are sold to local owners. To establish a causal effect of the ownership change we combine a difference-in-differences approach with propensity score matching. We use plant-level panel data from the Indonesian Census of Manufacturing covering the period 1990-2009. We consider 157 cases of divestment, where a large set of plant characteristics is available two years before and three years after the ownership change and for which observationally similar control plants exist. The results indicate that divestment is associated with a drop in total factor productivity accompanied by a dec line in output, markups as well as export and import intensity. The findings are consistent with the benefits of foreign ownership being driven by continuous supply of headquarter services from the foreign parent. |
| Keywords: | divestment, foreign direct investment, Indonesia and productivity |
| JEL: | F23 |
| Date: | 2014–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140094&r=eff |
| By: | Pedro Bento; Diego Restuccia |
| Abstract: | We construct a new dataset using census, survey, and registry data from hundreds of sources to document a clear positive relationship between development and average establishment size in manufacturing across 134 countries. We rationalize this relationship using a standard model of reallocation among production units that features endogenous entry and productivity investment. The model connects small operational scales to the prevalence in poor countries of correlated distortions (the elasticity between wedges and establishment productivity). The model also rationalizes the finding in poor countries of low establishment-level productivity and low aggregate productivity investment. A calibrated version of the model implies that when correlated distortions increase from 0.09 in the U.S. to 0.5 in India, establishment size and establishment-level productivity fall by more than 82 percent and aggregate productivity falls by around 70 percent. Relative to the existing literature, these substantial size and productivity effects are more in line with cross-country data. |
| Keywords: | misallocation, establishment size, productivity, investment, idiosyncratic distortions. |
| JEL: | O1 O4 |
| Date: | 2015–04–18 |
| URL: | http://d.repec.org/n?u=RePEc:tor:tecipa:tecipa-537&r=eff |
| By: | Peter Mulder (VU University Amsterdam); Henri L.F. de Groot (VU University Amsterdam); Birte Pfeiffer (German Institute of Global and Area Studies Institute for African Affairs (IAA), Hamburg, Germany) |
| Abstract: | We present a detailed analysis of energy intensity developments across 23 service sectors in 18 OECD countries over the period 1980−2005. We find that the shift towards a service economy has contributed to lower overall energy intensity levels in the OECD, but this contribution would have been considerably larger if the service sector had realized the same degree of energy efficiency improvements as the manufacturing sector. In most OECD countries actual energy intensity levels in the service sector tend to decrease relatively slow, especially after 1995. If we control this trend for the impact of structural changes within the services sector – by means of a decomposition analysis – we find that in about one-third of the OECD countries, energy intensity levels in the service sector have increased over time. The impact of structural changes on aggregate energy i ntensity dynamics in the service sector has increased considerably after 1995, highlighting a relatively poor energy efficiency performance within a wide range of service sectors. We show that the introduction of Information and Communication Technology (ICT) plays a potentially important role here. Using spatial panel data regression analysis, we find a limited role for energy prices in explaining variation in energy productivity, casting doubt on the effectiveness of price instruments to enhance energy efficiency in the service sector. In contrast, climate conditions have a clear impact on energy productivity, especially the number of heating days. |
| Keywords: | energy intensity, convergence, decomposition, sectoral analysis, service sector |
| JEL: | O13 O47 O5 Q43 |
| Date: | 2013–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130175&r=eff |
| By: | Soushi Suzuki (Hokkai-Gakuen University,Japan); Peter Nijkamp (VU University Amsterdam) |
| Abstract: | Airports face a mutual competition. Consequently, they will be forced to improve the efficiency. Actual airport policies may comprise both short-term (flexible) adjustments and long-term (rigid) adjustments. Data Envelopment Analysis (DEA) is a standard tool to assess the relative efficiency. Two interesting approaches, namely Distance Friction Minimization (DFM) model and Context-Dependent (CD) model, are noteworthy here. DFM model serves to improve the performance of business activities by identifying the most appropriate movement towards the efficiency frontier surface. Likewise, CD model seeks to reach efficient frontiers in a series of steps. Stepwise DFM model is integrated of DFM and CD model. An extension of Stepwise DFM model is next achieved by including a fixed (rigid) input factor. In our study, the above-mentioned Stepwise Fixed Factor projection model is illustrated on the basis of a comparative study regarding an efficiency assessment of airports in Japan. |
| Keywords: | Data Envelopment Analysis (DEA), Stepwise Projection, Distance Friction Minimization, Context-Dependent Model, Fixed Factor, Airport Operations |
| JEL: | L93 |
| Date: | 2013–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130105&r=eff |
| By: | David J. Mayston |
| Abstract: | Applying Data Envelopment Analysis (DEA) to real-world public policy issues can raise many interesting complications beyond those considered in standard models of DEA. One of these complications arises if the funding levels of public service providers, and their ability to attract and retain clients and able staff, depend upon the quality of the output which they produce. This dependency introduces additional inter-relationships between inputs and outputs beyond the uni-directional Production Possibility Frontier (PPF) relationship considered by standard DEA models. The paper therefore analyses the multiplier effects which can be generated by these additional relationships, in which key resource inputs become endogenous variables subject to the external environmental variables which the public service provider faces across these different relationships. The magnitude of these multiplier effects can be captured by focusing DEA on the estimation of an Achievement Possibility Frontier, which reveals the wider set of opportunities which are available to a public service provider to improve its own output quality than that revealed by the estimation of the PPF associated with standard models of DEA. In doing so, the paper enables DEA to be still applied, but in modified form, to the estimation of the scope for improved output of any given public service provider in the presence of such resource endogeneity. |
| Keywords: | Data envelopment analysis, resource endogeneity, public services, output quality, frontier analysis. |
| JEL: | C30 C61 D24 I23 L30 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:15/05&r=eff |
| By: | Athula Naranpanawa |
| Keywords: | Agricultural productivity, Regional economic growth, Pro-poor growth, Computable general equilibrium model, South Asia, India |
| JEL: | C68 Q16 R11 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:gri:epaper:economics:201503&r=eff |
| By: | Soushi Suzuki (Hokkai-Gakuen University, Japan); Peter Nijkamp (VU University Amsterdam); Piet Rietveld (VU University Amsterdam) |
| Abstract: | This paper offers a quantitative contribution to energy-environment policy in Japan in the aftermath of the Fukushima nuclear power accident. Since then, nuclear power energy supply has almost entirely been banned .There is no clear-cut direction for energy policy, as each option involves costs and CO2 consequences. A balanced energy-environment policy is difficult to achieve and there is an urgent need for a comprehensive efficiency and performance analysis of the Japanese energy sector. This paper presents a newly developed adjusted DEA model, emerging from a blend of the Euclidian Distance Minimization EDM method and the Target-Oriented (TO) approach based on a Super-Efficiency model, for generating an appropriate efficiency-improving projection model. The TO approach specifies a Target-Efficiency Score (TES) for inefficient DMUs. This approach can compute an input reduction value and an output increase value in order to achieve a higher TES. This model will be applied to an efficiency analysis of the energy-environment interface for ten regions in Japan. The focus is on two input cost criteria (viz. expenditures and CO2 emission) and two output performance criteria (viz. electricity generation and regional CO2 absorption). A comparative performance analysis of the ten Japan regions under consideration will be pursued. |
| Keywords: | Data Envelopment Analysis (DEA), Euclidean Distance Minimisation (EDM), Target-Oriented (TO), Energy-Environment efficiency |
| JEL: | L93 |
| Date: | 2013–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130137&r=eff |
| By: | Soushi Suzuki (Hokkai-Gakuen University); Peter Nijkamp (VU University Amsterdam); Piet Rietveld (VU University Amsterdam) |
| Abstract: | The recent dramatic change in energy supply in Japan has prompted a search for a new energy-environment-economic efficiency policy, in which a compromise has to be found between a sufficient supply of energy resources, the development of low carbon emission technology, and a continuation of economic growth. The prefectures in Japan – 46 in total (excluding Tokyo) – are regarded as the institutional agents or decision-making units (DMUs) which are responsible for the design of a new sustainable energy balance in these regions. The main challenge is now to design an efficient energy-environment-economic system. The present paper aims to develop a balanced decision-support tool for achieving an efficient energy supply in all Japanese prefectures. To that end, a new variant of Data Envelopment Analysis (DEA) is presented, which is characterized by two integrated features: (i) the use of a general Euclidean Distance Method (EDM) to achieve the most appropriate movement towards the efficiency frontier surface (in contrast to the standard radial movement, leading to a uniform proportional input reduction – or uniform proportional output increase); (ii) the incorporation of preference-based (PB) adjustments in efficiency strategies regarding the input reduction allocation – or the output increase allocation – of DMUs in order to balance rigorous efficiency decisions with political priorities at the regional level. This paper illustrates this new methodology by means of an application to prefectural energy efficiency strategies in Japan. |
| Keywords: | Data Envelopment Analysis (DEA); Euclidean Distance Minimization (EDM); Preference Based (PB); Energy-Environment-Economic efficiency |
| JEL: | C00 R58 Q48 |
| Date: | 2013–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130162&r=eff |
| By: | Larson,Donald F.; Savastano,Sara; Murray,Siobhan; Palacios-Lopez,Amparo |
| Abstract: | African governments and international development groups see boosting productivity on smallholder farms as key to reducing rural poverty and safeguarding the food security of farming and non-farming households. Prompting smallholder farmers to use more fertilizer has been a key tactic. Closing the productivity gap between male and female farmers has been another avenue toward achieving the same goal. The results in this paper suggest the two are related. Fertilizer use and maize yields among smallholder farmers in Uganda are increased by improved access to markets and extension services, and reduced by ex ante risk-mitigating production decisions. Standard ordinary least squares regression results indicate that gender matters as well; however, the measured productivity gap between male and female farmers disappears when gender is included in a list of determinants meant to capture the indirect effects of market and extension access. |
| Date: | 2015–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:7241&r=eff |
| By: | Stefan P.T. Groot (Centraal Planbureau, The Hague, the Netherlands); Henri L.F. de Groot (VU University Amsterdam, the Netherlands) |
| Abstract: | This paper employs a unique set of micro-data covering almost one third of the Dutch labor force, to estimate the relationship between agglomeration externalities and the level of education. While the positive relationship between economic density and productivity and wages has long been established in the economic literature, less is known about the effects of density on the productivity of different types of workers. This paper shows that there is substantial heterogeneity in the relationship between density and productivity for workers with different types of education. Apart from estimating the impact of aggregate density, we also estimate whether the composition of the local labor market in terms of education is related to the productivity of different types of workers. Using the presence of universities as an instrument, we estimate the effect of the supply of university graduates on wages, i.e. the social return to education. |
| Keywords: | agglomeration, education, knowledge-spillovers, wages, local labor markets |
| Date: | 2014–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140088&r=eff |
| By: | George J. Borjas; Kirk B. Doran; Ying Shen |
| Abstract: | The largest and most important flow of scientific talent in the world is the migration of international students to the doctoral programs offered by universities in industrialized countries. This paper uses the opening of China in 1978 to estimate the causal effect of this flow on the productivity of their professors in mathematics departments across the United States. Our identification strategy relies on both the suddenness of the opening of China and on a key feature of scientific production: intra-ethnic collaboration. The new Chinese students were more likely to be mentored by American professors with Chinese heritage. The increased access that the Chinese-American advisors had to a new pool of considerable talent led to a substantial increase in their productivity. Despite these sizable intra-ethnic knowledge spillovers, the relatively fixed size of doctoral mathematics programs (and the resulting crowdout of American students) implied that comparable non-Chinese advisors experienced a decline in the number of students they mentored and a concurrent decline in their research productivity. In fact, the productivity gains accruing to Chinese-American advisors were almost exactly offset by the losses suffered by the non-Chinese advisors. Finally, it is unlikely that the gains from the supply shock will be more evident in the next generation, as the Chinese students begin to contribute to mathematical knowledge. The rate of publication and the quality of the output of the Chinese students is comparable to that of the American students in their cohort. |
| JEL: | D83 J24 J61 O31 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21096&r=eff |
| By: | Santosh K. Sahu (Madras School of Economics); K. Narayanan (Department of Humanities and Social Sciences, Indian Institute of Technology Bombay, Powai, Mumbai) |
| Abstract: | We examine the importance of a firm’s R and D activity, technology import and intra-sectoral R and D spillovers on the decision to export and export intensity using firm level panel data for the Indian automobile sector from 2000-2014. R and D and technology import activities are found to be important determinants of export activity. There is evidence that R and D spillovers exert positive effects on firms’ export intensity and decision to export. In addition to these results, firm age and size are nonlinearly related to export decision and export intensity. Energy efficiency plays important role in export behavior for firms that are continuously exporting and those who are exporting at least for one year. |
| Keywords: | Decision to export, Export intensity, Indian automobile sector, R and D intensity, Technology import intensity |
| JEL: | L10 L21 L22 L62 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:mad:wpaper:2015-098&r=eff |
| By: | Andrea Caragliu (Politecnico di Milano, Italy); Peter Nijkamp (VU University Amsterdam) |
| Abstract: | Usually, the diffusion of a non-rival market knowledge externality - called a Knowledge Spillover (KS) - is related to geographical proximity. In this paper we explore the channels through which knowledge spreads. Compared with earlier work on KS measures, this study makes a step forward by calculating KS (as a balance of positive and negative absolute knowledge flows) on the basis of different proximity matrices. In particular, we focus on the relational, social, technological, and cognitive channel, along with the traditional geographical channel. In the light of previous studies on KS, we examine: (i) which types of proximity enhance or hamper the outward flow of knowledge; and (ii) whether the local endowment of absorptive capacity reduces such a flow. Our results show that KSs vary across alternative definitions of proximity. The parameter estimates of such a KS model show interesting patterns, with geographical and cognitive proximity having the highest explanatory power am ong all the types of proximity considered. Local absorptive capacity is found to be negative only when a region is surrounded by regions with similarly high levels of absorptive capacity. Furthermore, outward KSs decrease as geographical, relational, social, technological and cognitive distance increase. This points to the emergence or existence of large clusters of regions <I>('absorptive capacity clubs')</I>, where relational, social, technological and cognitive proximity lock-in maximizes the returns to local investment in R&D. |
| Keywords: | knowledge spillover, total factor productivity, proximity, absorptive capacity, knowledge production function |
| JEL: | R1 D8 |
| Date: | 2013–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130148&r=eff |
| By: | Bernard, Andrew B.; Moxnes, Andreas; Saito, Yukiko U. |
| Abstract: | This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for suppliers in different locations. Low search and outsourcing costs lead firms to search more and find better suppliers. This in turn drives down the firm's marginal production costs. We test the theory by exploiting the opening of a high-speed (Shinkansen) train line in Japan which lowered the cost of passenger travel but left shipping costs unchanged. Using an exhaustive dataset on firms' buyer-seller linkages, we find significant improvements in firm performance as well as creation of new buyer-seller links, consistent with the model. |
| Keywords: | firm-to-firm neworks; infrastructure; productivity; trade |
| JEL: | D22 D85 F14 L10 L14 R12 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10551&r=eff |
| By: | Voeten, Jaap (Tilburg University, School of Economics and Management) |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:8c8febf6-a063-4caf-8656-3b29ab653d24&r=eff |
| By: | Chao Li (University of Waikato); John Gibson (University of Waikato) |
| Abstract: | The nature and location of urbanization economies and their effects on productivity per worker in China are examined. Unlike previous studies, more accurate resident-based measures of urban scale from the 2010 census are used. The size of urbanization economies is similar to those in other countries and they occur only in bigger cities and not in smaller towns, and operate only through tertiary sector activity. Efforts by government to disperse urbanization, through land use and migration restrictions and by stimulating construction and manufacturing in China’s counties, are unlikely to create beneficial agglomeration effects. |
| Keywords: | agglomeration; cities; population; productivity; urbanization; China |
| JEL: | R12 O15 |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:14/02&r=eff |
| By: | Gazi M. Hassan (University of Waikato); Arusha Cooray (University of Nottingham, Malaysia); Mark J. Holmes |
| Abstract: | Adopting a production function based approach, we model the role of health as a regular factor of production on economic growth, and use disaggregate measures of male and female health capital using principal components analysis. Allowing for the dynamics of TFP to be embedded in the production function, we estimate it both in levels and in growth rates to distinguish between long- and short-run effects. We use appropriate panel cointegration methodology to control for endogeneity, cross-sectional dependence and heterogeneity. Our main finding is that while male and female health capital stock has a significantly positive effect on level of output in the long-run, changes in gender disaggregated health capital has a negative or insignificant effect on output growth in the short-run. |
| Keywords: | health and economic development; economic growth; endogeneity; panel data; TFP convergence; economics of gender |
| JEL: | J16 |
| Date: | 2015–04–21 |
| URL: | http://d.repec.org/n?u=RePEc:wai:econwp:15/03&r=eff |
| By: | Randolph Sloof (University of Amsterdam); Mirjam van Praag (Copenhagen Business School, Denmark) |
| Abstract: | This discussion paper resulted in a publication in the 'Journal of Economics and Management Strategy', forthcoming.<P> Distorted performance measures in compensation contracts elicit suboptimal behavioral responses that may even prove to be dysfunctional (gaming). This paper applies the empirical test developed by Courty and Marschke (2008) to detect whether the widely used class of Residual Income based performance measures —such as Economic Value Added (EVA)— is distorted, leading to unintended agent behavior. The paper uses a difference-in-differences approach to account for changes in economic circumstances and the self-selection of firms using EVA. Our findings indicate that EVA is a distorted performance measure that elicits the gaming response.<P> Submitted to the 'Journal of Economics and Management Strategy'. |
| Keywords: | Residual Income, Economic Value Added, distortion, performance measurement, incentive compensation |
| JEL: | D21 G35 J33 L21 M12 M40 M52 |
| Date: | 2014–05–09 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140056&r=eff |
| By: | Spyridon Stavropoulos (University of Patras, Greece); Martijn J. Burger (Erasmus University Rotterdam, the Netherlands; University of Patras, Greece); Dimitris Skuras (University of Patras, Greece) |
| Abstract: | A central question in strategic management is why some firms perform better than others. One approach to addressing this question empirically is to decompose the variance in firm-level profitability into firm, industry, location, and year components. Although it is well established that data sparseness in variance decomposition studies can lead to overestimating particular variance components, little attention has been paid to sample size requirements in strategic management studies that have examined the nature of differences in firm profitability. We conduct a meta-regression and variance decomposition study and conclude that the variation in the results from previous studies is driven—to a considerable extent—by the number of observations per group within a component. Based on these findings, we draw conclusions regarding the validity and reliability of previo us variance decomposition studies and provide implications for current debates in the strategic management literature. |
| Keywords: | Firm profitability, variance decomposition, data sparseness, meta-analysis |
| JEL: | C18 L16 R11 |
| Date: | 2015–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150014&r=eff |
| By: | Franz R. Hahn (WIFO) |
| Abstract: | The prevailing view in the banking industry is that increased bank capital requirements drag down bank lending. This is because capital is assumed to impose higher funding costs on banks than debts. The leading scholarly view in finance maintains the contrary. We are able to present microeconometric evidence in support of the theoretical proposition that the bank capital-bank lending linkage remains positive under a minimum capital requirement regime. Most importantly, the empirical analysis indicates that this finding may hold well in both short and long run. |
| Keywords: | Bank capital, Credit crunch, Minimum capital requirement |
| Date: | 2015–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2015:i:498&r=eff |
| By: | Elbert Dijkgraaf (Erasmus University Rotterdam); Raymond Gradus (VU University Amsterdam) |
| Abstract: | Much attention has been paid to the influence of the institutional form of waste collection on costs. We extend this literature in three directions by including the unit-based pricing system. First, we show that unit-based pricing systems are more important from a cost-minimizing point of view than the institutional mode of waste collection. In particular, the bag-based and frequency-based pricing systems are preferred. Second, dividing the cost effects between price and quantity effects, we illustrate that lower administrative costs and a smaller waste quantity are the most important drivers of cost decreases. It also shows that a disadvantage of the bag-based system is that it is not easy to price compostable waste. Third, if more general cost functions are analyzed, these estimations suggest that there are economies of scale for small municipalities. |
| Keywords: | waste collection; cost functions; efficiency; unit-based pricing; contracting out |
| JEL: | H31 H71 Q38 |
| Date: | 2014–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20140003&r=eff |
| By: | Iván Arribas (ERI-CES and Ivie, Universitat de València, Spain); Jesús Peiró-Palomino (Universitat de València, Spain); Emili Tortosa-Ausina (IVIE, Valencia and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | The aim of this paper is to analyze the links between banking integration and economic develop- ment for a sample of OECD countries. We measure banking integration considering state-of-the-art indicators that measure not only how open a banking system is but also its degree of connectedness with other banking systems. In a second stage, we plug these indicators in a model of economic growth, also controlling for other relevant variables considered by the economic growth literature. In contrast to previous initiatives, this second stage explicitly takes into account the differing levels of economic development of the countries in our sample, since the benefits of enhanced banking inte- gration might not be generalizable. To this end, we implement quantile regression, also considering the presence of endogenous regressors. Results show that bank connectedness is more important for economic development than bank openness, but the combined effect (i.e., banking integration) overall is positive and significant. Quantile regression models in the second stage of the analysis show that the effects are stronger for the poorest economies. |
| Keywords: | banking, growth, integration, quantile regression |
| JEL: | C21 F15 F36 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2015/05&r=eff |
| By: | Bruno de Borger (University of Antwerp, Belgium); Ismir Mulalic (Technical University of Denmark, Denmark); Jan Rouwendal (Faculty of Economics and Business Administration, VU University Amsterdam, the Netherlands) |
| Abstract: | We provide estimates of the rebound effect for car transport in Denmark, using a rich data set with individual household data on car use, fuel efficiency, and car as well as household characteristics. A demand model is estimated in first differences; the availability of households in the sample that replaced their car during the period of observation combined with information on their driving behaviour before and after the car switch allows us to identify the rebound effect. Endogeneity is taken into account by using appropriate instruments. Results include the following. First, we reject the 'conventional' formulation in which only fuel cost per kilometre matters. Second, the selection equation confirms that higher fuel prices induce households to switch car. Third, the results suggest the presence of a rebound effect that is on the lower end of the estimates available in the literature. Specifically, our best estimate of the rebound effect is some 7.5%-10%. Fourth, the fuel price sensitivity of the demand for kilometres appears to be declining with household income, but we do not find a significant impact of income on the rebound effect. Finally, simulation results indicate that the small rebound effect and changes in car characteristics in response to higher fuel prices imply that -- compared to the reference scenario -- higher fuel prices lead to a substantial reduction in both the demand for kilometres and in demand for fuel. |
| Keywords: | The rebound effect, fuel efficiency, first difference models |
| JEL: | D01 C02 |
| Date: | 2015–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20150039&r=eff |
| By: | Allers, Maarten; van Ommeren, Bernard; Geertsema, Bieuwe (Groningen University) |
| Abstract: | In many countries, local governments operating on a small scale face a choice between amalgamation and cooperation. This paper applies a novel methodology to investigate the implications of this choice for operating efficiency. Using a unique micro-level dataset of over 11,000 loans made to both municipalities and intermunicipal organizations in the Netherlands, we show that the latter consistently pay higher interest rates than the former.<br/>That is remarkable, because credit risk is zero in both cases, and we control for loan characteristics like amortization and maturity. In contrast, municipal amalgamation does not result in higher interest rates. Possible legal or administrative costs associated with enforcing loan guarantees cannot explain the higher interest paid by intermunicipal organizations. That is because we find that public companies (which may default) do not pay higher interest rates<br/>than public bodies (which never default). Surprisingly, the number of partners cooperating in an intermunicipal organization does not affect interest rates. Thus, we find no evidence for the ?law of 1/n?. |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:gro:rugsom:15003-eef&r=eff |
| By: | Philipp Ager (University of Southern Denmark, Odense); Fabrizio Spargoli (Rotterdam School of Management, Erasmus University Rotterdam, Rotterdam, The Netherlands) |
| Abstract: | We exploit the introduction of free banking laws in US states during the 1837-1863 period to examine the impact of removing barriers to bank entry on bank competition and economic growth. As governments were not concerned about systemic stability in this period, we are able to isolate the effects of bank competition from those of state implicit guarantees. We find that the introduction of free banking laws stimulated the creation of new banks and led to more bank failures. Our empirical evidence indicates that states adopting free banking laws experienced an increase in output per capita compared to the states that retained state bank chartering policies. We argue that the fiercer bank competition following the introduction of free banking laws might have spurred economic growth by (1) increasing the money stock and the availability of credit; (2) leading to efficiency gains in the banking market. Our findings suggest that the more frequent bank failures occurring in a competitive banking market do not harm long-run economic growth in a system without public safety nets. |
| Keywords: | Bank Deregulation, Bank Competition, Economic Growth, Financial Development, Dynamic Efficiency, Free Banking |
| JEL: | G18 G21 G28 N21 |
| Date: | 2013–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20130210&r=eff |
| By: | Luca Papi (Università Politecnica delle Marche and Money and Finance Research Group (MoFiR)); Emma Sarno (Università di Napoli “L’Orientale”); Alberto Zazzaro (Università Politecnica delle Marche, MoFiR and CSEF) |
| Abstract: | The evolution of the banking industry has always been affected by recurrent waves of technological, regulatory and organizational changes. All such changes have significant effects on the spatial organization of banks, the interconnectedness of geographical credit markets and the core-periphery structure of banking industry. In this chapter, we review the literature on the effects of geographical distances between the key actors of the credit market (the borrowing firm, the lending branch, the lending bank, and rival banks) on lending relationships and interbank competition. Using the metrics and graph techniques for network analysis we then provide evidence concerning the evolving geographical network of bank organizations in Italy. JEL Classification: G2 |
| Keywords: | Distances in credit markets; spatial organization of banks; network analysis. |
| Date: | 2015–04–20 |
| URL: | http://d.repec.org/n?u=RePEc:sef:csefwp:403&r=eff |