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on Efficiency and Productivity |
| By: | Jaan Masso; Amaresh K Tiwari |
| Abstract: | This paper develops a new method to estimate a production function and the total factor productivity (TFP)impact of persistence in exporting. Certain “proxymethods” for estimating the production function invert the demand for flexible inputs with respect to TFP to obtain a proxy for the unobserved TFP. When markets are imperfectly competitive, the demand for inputs depends on unobserved demand shifters (UDS), which violates the “scalar unobservability” required for inversion. We write the production function as a partially linear model, where the nonparametric part, the proxy for productivity, depends on the UDS. Identification rests on postulating (i) a law of motion for the UDS, which evolves endogenously, and(ii) distributional restrictions to control for the correlation between the UDS and the variables of interest. Output elasticities and productivity impact of endogenous treatments are identified. Using Estonian firm-level data, we find that revenue per employee and the amount, in physical units, of goods exported per employee generally increase with the number of years of exporting activities (NYrEx). However, we find limited evidence of the TFP impact of exporting, with only the most persistent of exporters experiencing such gains. In comparison, the estimated productivity impact of NYrEx from analternative estimator, which assumes perfect competition, closely matches the way revenue per employee varies with the NYrEx. Finally, exporters charge lower markups than non-exporters, where the difference between the exporters’and the non-exporters’ markups increases with NYrEx. |
| Keywords: | Production Function Estimation, Imperfect Competition, Variable Markups, TFP, Unobserved Demand Shifters, Learning by Exporting |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:mtk:febawb:150 |
| By: | Carol C. Bertaut; Stephanie E. Curcuru; Ester Faia; Pierre-Olivier Gourinchas |
| Abstract: | The allocative efficiency of capital flows is one of the oldest and most contentious questions. We answer it by matching cross-border securities holdings reported in the US external statistics from 1995 to 2022 with the corresponding firm-level measures of allocative efficiency. We find that US investors tilt their international equity investment toward firms with high MRPK and markups, thereby fostering their potential for growth. Foreign investors tilt their holdings toward US firms with high productivity and intangible capital. A horse race shows that productivity is the best predictor of foreign investment in US firms and MRPK for US investment in foreign firms. Both US and foreign firms that receive more international funding increase spending on intangible capital, and foreign firms also increase tangible capital. The results are stronger for more productive firms. |
| Keywords: | Productivity; Capital allocation; capital flows |
| JEL: | E20 F30 F60 |
| Date: | 2024–11–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:1399 |
| By: | Fabling Richard (Motu Economic and Public Policy Research) |
| Abstract: | Productivity data is missing from the Longitudinal Business Database (LBD) for over a third of firm-year observations in “measured sector” industries, equating to a fifth of total labour in those industries. We develop a method to fill these data gaps using an additional (third) data source – firm-level annualised goods and services tax (GST) returns. Coupled with additional modelling using full-coverage employment information, the resulting “complete” productivity dataset provides additional avenues for researchers to test the robustness of their results to the inclusion of firm types previously underrepresented in the productivity data – particularly new and owner-operated firms. |
| Keywords: | Longitudinal Business Database; administrative data; productivity |
| JEL: | D20 D24 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:mtu:wpaper:24_06 |
| By: | Usman, Gana; Umar Isah, Yahaya; Muhammad, Umar Farouq |
| Abstract: | This paper investigates the asymmetric impact of insecurity on agricultural productivity in Nigeria. It used non-linear autoregressive distributed Lag model to show effect of insecurity proxied by terrorism index and crime rate on agricultural productivity proxied agriculture share of gross domestic product. Quarterly time series data were sourced from Central Bank of Nigeria, Institute for Economic and Peace and World Development Indicators for the period 2009Q1 to 2022Q4. Major findings revealed significant long and short run asymmetric impact of terrorism on agricultural productivity, as increase and decrease in terrorism and crime rate in Nigeria cause disproportionate change in agricultural productivity. The paper concludes that insecurity is a major determinant of agricultural productivity in Nigeria and recommends in favor of the need to re-invest in the security sector especially in rural communities of Nigeria where impact of insurgencies and other forms of terrorism are prevalent. This will help reduce the effect of terrorism on agricultural productivity in food producing communities, in addition to helping communities affected by terrorism to revive their interests in agriculture. |
| Keywords: | Agricultural productivity, insecurity, terrorism, crime rate, NARDL |
| JEL: | Q0 Q01 Q5 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123113 |
| By: | Maczulskij, Terhi; Kässi, Otto |
| Abstract: | Abstract This study utilizes unique Finnish firm-level microdata on service imports, productivity, and employment during the 2002–2016 period. We use world service export demand shocks as an instrument to identify the causal effect of service offshoring on firm-level performance. Our results indicate that while service offshoring does not impact productivity, it increases the number of employees and also immigrant employment. Despite the rise in overall employment, service offshoring affects the occupational structure within firms. Specifically, firms that increase service sourcing from abroad exhibit reduced shares of managerial and technical jobs, accompanied by a simultaneous increase in the share of production work. |
| Keywords: | Service offshoring, Productivity, Employment |
| JEL: | F10 F14 L80 |
| Date: | 2024–12–04 |
| URL: | https://d.repec.org/n?u=RePEc:rif:report:155 |
| By: | Fabling Richard (Motu Economic and Public Policy Research); David Maré (Motu Economic and Public Policy Research) |
| Abstract: | This study examines whether working in a M?ori-led firm contributes to the earnings of M?ori employees. It uses administrative data for 2005-2020 to identify M?ori-led firms, based on the ethnicity and descent of working proprietors, and using an improved method of measuring descent. Almost 8% of M?ori employees work in M?ori-led firms. Controlling for firm and worker characteristics, we find that M?ori-led firms have slightly lower than average multi-factor productivity and wage levels. The wage effects for M?ori of working in a M?ori-led firm are small but there is some evidence to suggest that moving between M?ori-led firms contributes to wage growth for w?hine M?ori, and that in M?ori-led firms there is stronger pass-through of firm performance to earnings levels for t?ne M?ori. |
| Keywords: | earnings; productivity; M?ori; ethnicity |
| JEL: | J30 J15 J71 J42 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:mtu:wpaper:24_05 |
| By: | Koutchade, Obafémi Philippe; Carpentier, Alain; Féménia, Fabienne |
| Abstract: | In this paper, we propose an approach to allocate input uses among crops produced by farmers, based on panel data that includes input use aggregated at the farm-level. Our proposed approach simultaneously allows for (i) controlling for observed and unobserved farm heterogeneity, (ii) accounting for the potential dependence of input uses on acreage decisions, and (iii) ensuring consistent values of input use estimates. These are significant issues commonly faced in the estimation of input allocation equations. The approach is based on a model of input allocation derived from accounting identities, where unobserved input uses per crop are treated as time-varying random parameters. We estimate our model on a sample of French farms’ accounting data, by relying on an extension of the Stochastic Approximation of Expectation Maximization algorithm. Our results show good performance of our approach in accurately allocating input uses among crops, for the crops the most frequently produced in our data sample in particular. |
| Keywords: | Crop Production/Industries, Production Economics, Research Methods/ Statistical Methods |
| Date: | 2024–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:ags:inrasl:348476 |
| By: | Cortes, Guido Matias; Dabed, Diego; Oliveira, Ana; Salomons, Anna |
| Abstract: | We consider how firms' organization of production relates to workers' wages. Using matched employer-employee data from Portugal, we document that firms differ starkly in their occupational employment concentration, even within detailed industries, with some firms employing workers across a broad range of occupations and others being much more specialized. These differences are robustly predictive of wages: a worker employed in a specialized, i.e. "fissured" firm, earns less than that same worker employed in a less specialized firm. This wage penalty for working in a fissured firm is observed across occupations of all skill levels. Firm specialization helps account for the role of firms in inequality, as specialization is strongly negatively related to estimated AKM firm fixed effects. Around two-thirds of the wage penalty from fissuring is explained by differences in firm productivity. Fissured firms also engage in lower rates of rent-sharing conditional on productivity, accounting for around one-quarter of the difference in wage premia between high- and low-specialization firms. Finally, we show that being employed in a specialized firm is also associated with worse longer-term career outcomes for workers. |
| Keywords: | Occupational Segregation, Between-Firm Wage Inequality, Firm Productivity, Rent-Sharing |
| JEL: | J24 J31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:clefwp:307595 |
| By: | Zvonimir Bašić (Adam Smith Business School, University of Glasgow, UK); Stefania Bortolotti (University of Bologna); Daniel Salicath (Norwegian Labour and Welfare Administration); Stefan Schmidt (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Schneider (Max Planck Institute for Research on Collective Goods, Bonn); Matthias Sutter (Max Planck Institute for Research on Collective Goods, Bonn, University of Cologne, Germany, University of Innsbruck, Austria, IZA Bonn, Germany, and CESifo Munich) |
| Abstract: | Incentives are supposed to increase effort, yet individuals react differently to incentives. We examine this heterogeneity by investigating how personal characteristics, preferences, and socio-economic background relate to incentives and performance in a real effort task. We analyze the performance of 1, 933 high-school students under a Fixed, Variable, or Tournament payment. Productivity and beliefs about relative performance, but hardly any personal characteristics, play a decisive role for performance when payment schemes are exogenously imposed. Only when given the choice to select the payment scheme, personality traits, economic preferences and socioeconomic background matter. Algorithmic assignment of payment schemes could improve performance, earnings, and utility, as we show. |
| Keywords: | Effort, productivity, incentives, personality traits, preferences, socio-economic background, ability, heterogeneity, sorting, algorithm, lab-in-the-field experiment |
| JEL: | C93 D91 J24 J41 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:mpg:wpaper:2024_13 |
| By: | Campbell, Romaine A. (Cornell University); Gershenson, Seth (American University); Lindsay, Constance A. (University of North Carolina, Chapel Hill); Papageorge, Nicholas W. (Johns Hopkins University); Rendon, Jessica H. (American University) |
| Abstract: | Workers learn on the job from both repetition and peers. Less understood is how specific types of experience and peer characteristics affect on-the-job learning. This likely differs by context (e.g., occupation, tasks, or roles). Absent such knowledge, it is unclear how to optimally assign workers to tasks and peers. We examine on-the-job learning among elementary school teachers. We focus on white teachers' productivity teaching Black students. We examine specific types of experience and specific types of peers that could lead to rapid productivity gains for white teachers: experience teaching Black students and having Black colleagues. Both lead to significant productivity gains over and above those associated with total teaching experience and access to generally productive peers. This is due to learning, as peer effects are persistent and driven by more effective Black peers. These findings offer insights to improving Black students' educational outcomes when facing a disproportionately white teaching force. More generally, they underscore the importance of understanding whether and how nuanced types of experiences and peers enter the production function and drive on-the-job human capital accumulation. |
| Keywords: | peer effects, knowledge spillovers, teacher effectiveness, teacher diversity, achievement gaps, education production function, learning-by-doing, human capital |
| JEL: | I2 J24 D2 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17576 |
| By: | Hassen, Sied (Environment and Climate Research Center); Damte, Abebe (Environment and Climate Research Center, Policy Studies Institute) |
| Abstract: | Studies document that micro and small enterprises are growing rapidly in Ethiopia. The industrial sector consumes a large proportion of electricity in the country. The growing number of micro and small enterprises is also creating pressure on electricity consumption. This may lead to power outages caused by overburdened generation, transmission, and distribution infrastructure. Routine outages also lead to increased costs associated with outage adaptations. Improved energy efficiency has spillover benefits by reducing power outages and this in turn allows more customers to access power and may also improve customer satisfaction and payment rates. In this regard, the purpose of this study is to investigate firms’ use of energy efficiency and conservation measures and analyse the impact of these measures on their electricity consumption. We use data from a survey of 1000 micro and small enterprises in Addis Ababa, Ethiopia. Using a translog cost function model and a system of regression equations, we find that electricity and other factors of production such as labor found to be substitutes instead of being complementary. Where wages are low, firms may substitute manual labor for some of electricity-based operations. Further, the econometric results show that firms that use energy efficient method consume less electricity than those use conservation methods. The results have policy implication in terms of promoting energy efficiency and conservation methods. |
| Keywords: | Energy efficient technologies; energy conservation practices; enterprises; Ethiopia |
| JEL: | D22 Q40 Q41 |
| Date: | 2024–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:gunefd:2024_012 |
| By: | Pratik Thakkar (Indira Gandhi Institute of Development Research); Kausik Gangopadhyay (Indian Institute of Management Kozhikode) |
| Abstract: | Weather shocks associated with global climate change engender substantial damages, in the order of multi-billion dollars annually, to the Indian economy. Using data from 33 states during 1981--2022, we explore the effect of weather shock on India's economic growth, in the presence of interplay of temperature and precipitation levels. To avoid arbitrary assumptions of parametric estimation, we estimate the economic damages resulting from weather shocks using semi-parametric varying coefficient generalised additive models (VC-GAM). We select the optimal class of VC-GAM among 29 possible classes based on four relevant criteria. From the optimal class, out of 84 possible specifications, we determine the optimal damage specification using the out-of-sample and in-sample performance. We find that the contemporaneous year-on-year weather change and lagged year-on-year precipitation change have an impact on the per capita economic growth through total factor productivity channel, whereas only contemporaneous precipitation level have an impact on the per capita economic growth through labour productivity channel. We observe that the marginal effect of a contemporaneous weather change varies with the level of lagged precipitation level, whereas high lagged precipitation level combined with a low to moderate lagged temperature level exacerbates the detrimental impact of a positive lagged precipitation change on the per capita economic growth for India. One potential mechanism through which contemporaneous and lagged weather variables could have an impact on the per capita economic growth, is based on the impact of soil moisture quality. We have demonstrated our results to be considerably robust. |
| Keywords: | Weather, Damage function, Varying coefficient generalized additive models, Economic growth, India |
| JEL: | C14 O44 O53 Q54 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ind:igiwpp:2024-021 |