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on Efficiency and Productivity |
| By: | E. Marrocu; R. Paci |
| Abstract: | This study contributes to the ongoing debate on the assessment of university performance, a critical issue in light of increasing global competition in education and the growing demand for accountability as universities rely on taxpayer funding, particularly when public budget constraints are tight. Using a two-stage approach, we examine the evolution of productivity levels of public universities in Italy from 2010 to 2017, following the introduction of university reform in 2010. In the first stage, we apply the nonparametric bootstrap Data Envelopment Analysis (DEA) method to calculate universities internal technical efficiency scores, considering two outputs (teaching and research) and four inputs (students, academic staff, technical staff, and financial resources). In the second stage, we use linear and fractional response models to assess how the socio-economic characteristics of the regions where universities are located impact their internal efficiency. The first stage results reveal a general increase in relative technical efficiency between 2010 and 2017, accompanied by a notable reduction in efficiency dispersion, largely due to improvements among Southern universities. This suggests that universities have responded effectively to the reforms and the specific incentives they introduced. In the second stage, we find convincing evidence that regional contextual factors such as per capita income, student competencies, and the quality of local institutions significantly influence university efficiency. The paper, by suggesting to decision-makers and practitioners an easy procedure to calculate the universities' internal efficiency and the impact of contextual factors, offers valuable tools and insights to inform the design of more balanced policy measures to finance the public university system. |
| Keywords: | university;contextual factors;data envelopment analysis;fractional responses models;italy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202424 |
| By: | Joachim Hubmer (University of Pennsylvania); Mons Chan (Queen’s University); Serdar Ozkan (Federal Reserve Bank of St. Louis, University of Toronto); Sergio Salgado (University of Pennsylvania); Guangbin Hong (University of Chicago) |
| Abstract: | Do larger firms have more productive technologies, are their technologies more scalable, or both? We use administrative data on Canadian and US firms to estimate a joint distribution of output elasticities of capital, labor, and intermediate inputs—thus, returns to scale (RTS)—along with total factor productivity (TFP). We find significant heterogeneity in RTS across firms within industries. Furthermore, larger firms operate technologies with higher RTS, whereas the largest firms do not exhibit the highest TFP. Higher RTS for large firms are entirely driven by higher intermediate input elasticities. Descriptively, these align with higher intermediate input revenue shares. We also show that high-RTS firms grow faster, pay higher wages, and are owned by wealthier households. We then incorporate RTS heterogeneity into the workhorse model of endogenous entrepreneurship that matches the observed heterogeneity in TFP and RTS. We find that the efficiency losses from financial frictions are more than twice as large compared to a conventional calibration that attributes all heterogeneity to TFP and assumes a common RTS parameter. |
| Keywords: | Production function heterogeneity, returns to scale, misallocation |
| JEL: | E22 L11 L25 |
| Date: | 2024–11–21 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:24-036 |
| By: | Tommaso Agasisti (Politecnico di Milano, Italy); Alice Bertoletti (European Commission, Joint Research Center, Spain); Gaetano Francesco Coppeta (Politecnico di Milano, Italy) |
| Abstract: | In response to the COVID-19 pandemic, the Italian government increased public support for universities. While this influx of financial resources can partially mitigate some negative impacts of the pandemic on outputs, it also significantly increases inputs and costs for universities, potentially leading to a temporary loss of efficiency. This paper examines the policy effect of increased funding on universities’ efficiency in Italy. By focusing on both production and cost efficiency, we use a panel dataset spanning five years (2017–2021) and employ the recently developed Generalized True Random Effect stochastic frontier model. This model allows us to decompose overall inefficiency into persistent and transient components while accounting for heterogeneity across institutions. Our findings reveal that while production efficiency has remained relatively stable over the years, the post-COVID-19 era is characterized by a statistically significant decrease in cost efficiency. This result indicates a reversal of the positive efficiency trend observed in Italian universities in the years immediately prior to this period. Moreover, we identify a homogeneous reduction in cost efficiency across geographic regions, suggesting that the negative effect is unrelated to specific initial conditions or management decisions in the short run. |
| Keywords: | Efficiency; Public University; Stochastic frontier; COVID-19; Italy |
| JEL: | I22 I23 I28 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ipu:wpaper:117 |
| By: | Dan Andrews; Balázs Égert; Christine de la Maisonneuve |
| Abstract: | The productivity slowdown in many OECD countries over the last decades coincided with a significant deceleration in human capital growth. We show that nearly one-sixth of this productivity slowdown can be attributed to a decline in human capital growth, mainly driven by the decline in the quality of human capital, as measured by PISA scores. An analytical framework used to understand this decline considers education policies, the until recently largely unregulated use of digital devices in classrooms and the impact of the COVID-19 pandemic. The results highlight the negative effects of smartphone and social media usage on student performance and suggest that responsible internet use programs and education policy reforms could mitigate these effects. The paper also shows that public policies can help countries deploy more efficiently their human capital to enhance productivity. Without policy intervention, continued declines in PISA scores could reduce long-term MFP growth by nearly 3%. Combining education reforms with structural reforms could mitigate these effects and boost long-term MFP by about 1.5%. Therefore, efficient deployment and reallocation of human capital are crucial for sustaining productivity growth. |
| Keywords: | digital device, human capital, OECD, PISA scores, productivity slowdown, public policies |
| JEL: | E24 I20 I25 I26 I28 |
| Date: | 2024–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1827-en |
| By: | Richard Vale |
| Abstract: | This note observes that the Cobb-Douglas function is uniquely characterized by the property that, if the labour share of cost for a constant-returns-to-scale firm remains constant when the firm minimizes its cost for any given output level, then the firm's production function must be Cobb-Douglas. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2411.08067 |
| By: | Costas Cavounidis; Vittoria Dicandia; Kevin Lang; Raghav Malhotra |
| Abstract: | We present a unified technological explanation of both the movement of workers across jobs using different skills and the changes in skill use within jobs. An envelope-theorem approach allows us to estimate relative skill-productivity growth from worker mobility using OLS while making minimal assumptions on each occupation's production function. Using six decades of data, we conclude that routine-cognitive- and finger-dexterity-skill productivity grew rapidly and abstract- and social-skill productivity grew slowly - a form of "skill bias." These effects, along with our estimated relationships between skill inputs, also explain changes in skill use within occupations. |
| Keywords: | skills; technological change |
| JEL: | J24 O33 |
| Date: | 2024–11–26 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:99181 |
| By: | Roth, Felix; Mitra, Alessio |
| Abstract: | The European Union (EU) faces challenges such as an ageing population, migratory pressures, geopolitical vulnerabilities, and climate change, highlighting the need to enhance its ability to do more with less. This paper examines the drivers of EU labour productivity before and after the 2007 financial crisis, across goods and services sectors, tangible and intangible assets, and Information and Communication Technologies (ICT) and non-ICT tangibles. Using the EUKLEMS 2022 dataset for 14 EU countries and the UK from 1995-2019 and growth regression analysis, we find that Research & Innovation (R&I) is crucial for productivity growth. Labour productivity in the goods sector benefits most from non-ICT tangible assets, while in the service sector, it benefits more from the non-R&D intangibles software, training, and organisational capital. On the other hand, training and ICT tangibles became more important drivers of labor productivity growth after the economic crisis. We argue that the productivity gap between the EU and the United States is largely due to insufficient investment in non-R&D intangibles like software, training, and organizational capital. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:uhhhdp:19 |
| By: | Diana Cook; Hilary Devine; John Janssen (The Treasury) |
| Abstract: | The world has been experiencing a productivity slowdown, from which New Zealand has not been exempt. This matters because sustainable improvements in our living standards depend upon productivity. Productivity is also a key driver of the Treasury’s economic and fiscal forecasts and long-term fiscal projections, which underpin its advice about fiscal policy and fiscal sustainability. This Treasury Paper is an exploration of recent trends in productivity and the potential drivers of the slowdown. Both labour and multi-factor productivity (MFP) growth have been slowing since the turn of the century in advanced economies, and since the Global Financial Crisis (GFC) in emerging market and developing economies. For example, average labour productivity growth across the Organisation for Economic Co-operation and Development (OECD) countries was still close to 2% p.a. in the 1990s, before falling sharply to around 0.8% p.a. from the 2000s. Like other countries, New Zealand’s productivity performance has been slowing. Productivity for the whole economy averaged 1.4% p.a. between 1993 and 2013 but averaged only 0.2% p.a. over the last ten years. While New Zealand’s productivity growth has been weaker than expected over a long period of time, other factors contributing to GDP have been stronger than expected, which has broadly offset the impact of lower productivity on New Zealanders’ incomes. This paper provides a brief analysis of potential causes of the productivity slowdown to inform judgements about whether recent trends are likely to continue. It draws from the evidence that we are aware of, including insights from the Treasury Guest Lecture Series (TGLS) ‘Productivity in a Changing World’ theme, which we have hosted over the past year. It also draws on the New Zealand and global literature, although it isn’t an exhaustive review. It explores both the global and the New Zealand context as, given the global nature of the slowdown, it is likely that common factors are playing out across countries. It looks for evidence of recent trends in productivity drivers, given that a credible suspect of the productivity slowdown must align with the timing of the slowdown. |
| Date: | 2024–05–03 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nzttps:tp24/01 |
| By: | Xiaojun Yu (School of Finance, Capital University of Economics and Business, Beijing, China.); Russell Smyth (Department of Economics, Monash University, Victoria, Australia.); Yao Yao (School of Economics and International Trade, Shanghai Lixin University of Accounting and Finance, Shanghai, China.); Quanda Zhang (Institute of Innovation, Science and Sustainability, Federation University Australia, Victoria, Australia & Department of Economics, Monash University, Victoria, Australia.) |
| Abstract: | We estimate the causal effect of climate change induced water stress on firm-level productivity in China. In contrast with most extant studies that have employed precipitation to proxy firm-level availability of water, we use local water runoff, which we argue is a more appropriate measure of water stress on firms. By matching a panel for half a million formal industrial firms with county-level data on water runoff, we find that shocks to local water runoff, defined as a standard deviation increase or decrease in local water runoff from its long-run average, exert asymmetric effects on firm productivity. A negative shock to water runoff reduces firm productivity by between 1.93 and 5.40 per cent, depending on the magnitude of the shock, while the effect of a positive shock to water runoff on firm productivity is insignificant. These results are robust to numerous sensitivity checks. We show that water runoff outperforms other proxies of water availability across different horserace specifications. We find that the main transmission mechanisms are the adverse effect of negative shocks to water runoff on constraining water inputs in production, disruptions to power generation and, to a lesser extent, higher financing cost. Our study sheds new light on how climate change can impede economic development. |
| Keywords: | Water stress, water runoff, climate change, firm performance, panel model |
| JEL: | L60 O44 O47 Q54 Q25 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2024-20 |
| By: | Niccolò Cannarsa; Jean-Marie Grether |
| Abstract: | Do technologies embedded in imports boost domestic productivity? This paper investigates empirically the role of complementarities between absorptive capacity and imports. Different import categories are combined with different proxies for absorptive capacity. The database covers 18 manufacturing industries across 16 European countries over the 2008-2014 period. Our findings suggest that complementarities do exist but are limited to certain types of imports (capital goods) and certain proxies of absorptive capacity (education level). These findings are robust to altering specifications or controlling for endogeneity, and reinforced when the potential non-linearity of the interaction is considered. |
| Keywords: | Capital Imports, Intermediate Imports, Absorptive Capacity, Labour Productivity |
| JEL: | F14 L60 O4 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:irn:wpaper:24-07 |
| By: | Diana Cook; Hilary Devine; Anna Golebicka-Buchanan (The Treasury) |
| Abstract: | This paper provides a summary of the Treasury’s Guest Lecture Series (TGLS) on the theme of Productivity in a Changing World, which ran over 2023-24. The purpose of the TGLS is to bring the latest research and cutting-edge thinking into the Treasury, and to foster public engagement and debate. We chose the theme of Productivity in a Changing World in recognition that lifting our productivity performance continues to be central to improving New Zealanders’ wellbeing, but that we are facing this challenge in the context of significant economic, social and environmental shifts. It has been a fascinating and thought-provoking series. We heard from a range of excellent speakers, exploring the implications of the changing world we find ourselves in and what this means for productivity growth in New Zealand and around the world. The Treasury has already been drawing on the insights from the series to inform its work, particularly in a recent Treasury Paper that explores trends in New Zealand’s productivity performance to inform our economic forecasts. This paper draws out themes that emerged across the seminar series, as well as providing a summary of the presentation from each speaker. There were many insights and different perspectives. Our speakers, and their discussions with audiences, have highlighted the wide-ranging and complex interaction between global trends and productivity. However, the following themes emerged through the series: Most of the speakers recognised the global productivity slowdown, and that New Zealand has not been exempted. While there were different degrees of optimism for the future, several speakers signalled that there are challenges ahead. Many speakers highlighted the importance of innovation and technological change, as well as the debate on the extent to which innovation will contribute to future productivity. Linked to the role of innovation, the importance of skills and capabilities which support the diffusion and adoption of new technologies, was highlighted by many speakers. The role of management capabilities was particularly emphasised. Last, but not least, many of our speakers explored the theme of climate change and productivity, including the compatibility of climate change and productivity goals. This paper aims to capture the key lessons from the series and help others to access them. If you want to delve deeper into the presentation of any of the speakers, you can find video, transcripts and slides on the Treasury website. |
| Date: | 2024–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:nzt:nzttps:tp24/02 |
| By: | Zhang Nian (Faculty of Management, Universiti Teknologi Malaysia Author-2-Name: Logaiswari Indiran Author-2-Workplace-Name: Department of Marketing and Entrepreneurship, Faculty of Management, Universiti Teknologi Malaysia, 81310, Skudai Johor, Malaysia Author-3-Name: Zuraidah Sulaiman Author-3-Workplace-Name: "Department of Marketing and Entrepreneurship, Faculty of Management, Universiti Teknologi Malaysia, 81310, Skudai Johor, Malaysia " Author-4-Name: Maria Anityasari Author-4-Workplace-Name: Department of Industrial and Systems Engineering, Institut Teknologi Sepuluh Nopember (ITS), Sukolilo Campus Surabaya Indonesia 60111 Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - This study aims to investigate whether corporate social responsibility (CSR) promotes R&D investment, whether R&D investment promotes Total Factor Productivity (TFP), and whether R&D investment plays a mediating role in the impact CSR on TFP. Methodology/Technique – Based on the hypotheses, this study constructed the structural equation model, with CSR as the independent variable, TFP as the dependent variable, and R&D as the mediating variable. The control variables are capital investment (CAP), gearing (LEV) and return on assets (ROA). The causal relationship and the heterogeneity of regional and Senior managers attributes were analyzed using SPSS software. Findings – Based on all sample data and analyzed using SPSS, it is found that CSR in the solid waste treatment industry has a positive effect on R&D investment, and R&D investment has a positive effect on TFP. Meanwhile, R&D investment plays a mediating role in the impact of CSR on enterprises' TFPs. Novelty – The novelty of this paper lies in the fact that China's solid waste treatment industry was selected as the object of analysis, and the relationship between CSR and TFP as well as the mediating effect of R&D investment in this industry were analyzed. Type of Paper - Empirical" |
| Keywords: | Corporate Social Responsibility; Research and Development; Solid Waste Treatment Industry |
| JEL: | M14 O32 Q53 |
| Date: | 2024–11–30 |
| URL: | https://d.repec.org/n?u=RePEc:gtr:gatrjs:jfbr225 |
| By: | Rabia Bashir (School of Economics, Finance and Banking, Universiti Utara Malaysia, Sintok, Kedah, Malaysia Author-2-Name: Muhammad Ahmad Author-2-Workplace-Name: Accounting and Finance, Management and Science University, Shah Alam, Selangor, Malaysia Author-3-Name: Sultan Rehman Sherif Author-3-Workplace-Name: Business Management and Law, Management and Science University, Shah Alam, Selangor, Malaysia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - The primary aim of this study is to investigate the effect of dynamic working capital (DWC) management on operational efficiency through operating expenses and operating margins across non-financial firms in emerging markets. Methodology/Technique – This study utilized generalized method of moments (GMM) to evaluate a comprehensive dataset of 438 firms from Indonesia, Malaysia and Thailand for the period 2018 to 2023. Findings – DWC is measured study using both cash conversion cycle (CCC) and working capital ratio (WCR). Results show that optimized DWC management reduces operating expenses (OER) and increases operating margins (OMR). These findings highlight the importance of efficient working capital practices and liquidity management in emerging markets. Novelty – This study provides valuable insights for financial managers in emerging countries, advocating focused strategies on working capital cycles to strengthen operational efficiency and profitability. Type of Paper - Empirical" |
| Keywords: | Working capital management, Cash conversion cycle, working capital requirement, Operating efficiency, Emerging countries |
| JEL: | M13 M40 M49 |
| Date: | 2024–11–30 |
| URL: | https://d.repec.org/n?u=RePEc:gtr:gatrjs:jfbr224 |
| By: | Mertens, Matthias; Schoefer, Benjamin |
| Abstract: | We document and dissect a new stylized fact about firm growth: the shift from labor to intermediate inputs. This shift occurs in input quantities, cost and output shares, and output elasticities. We establish this fact using German firm-level data and replicate it in administrative firm data from 11 additional countries. We also document these patterns in micro-aggregated industry data for 20 European countries (and, with respect to industry cost shares, for the US). We rationalize this novel regularity within a parsimonious model featuring (i) an elasticity of substitution between intermediates and labor that exceeds unity, and (ii) an increasing shadow price of labor relative to intermediates, due to monopsony power over labor or labor adjustment costs. The shift from labor to intermediates accounts for one half to one third of the decline in the labor share in growing firms (the remainder is due to wage markdowns and markups) and rationalizes most of the labor share decline in growing industries. |
| Keywords: | firm growth, labor-intermediate substitution, labor share, monopsony |
| JEL: | D24 E23 J23 J42 L60 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:307130 |
| By: | Liping Gao; Hyeongwoo Kim; Jiquan Chen |
| Abstract: | This study proposes an alternative approach to examining the Environmental Kuznets Curve (EKC). Instead of using conventional pollution indicators, we employ gross primary production (GPP) data from the NASA-MODIS dataset as a proxy for environmental quality across 131 countries. By estimating the nonlinear relationship between environmental protection and economic development, we confirm the conventional EKC pattern only in wealthy nations, where environmental quality improves as economies achieve higher levels of prosperity. In less developed countries, however, environmental quality tends to deteriorate further as economic growth accelerates. These results suggest that the EKC may be a localized phenomenon, raising concerns about policy suggestions that prioritize economic growth over environmental protection in less developed regions. |
| Keywords: | Gross Primary Production; NASA-MODIS; Environmental Kuznets Curve; Nonlinearity; Income Groups |
| JEL: | Q0 Q5 O0 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:abn:wpaper:auwp2024-08 |