Showing papers on "Productivity model published in 2006"

Measuring productivity in the construction industry

Abstract: The paper provides an overview of methods used to measure productivity in the construction industry. The advantages and disadvantages of average labour productivity and total factor productivity measures are discussed in detail, and the relationship between these two measures is established both theoretically and in an application at the industry level. The usefulness of any productivity measurement framework for policy-makers and industry practitioners alike depends crucially on the extent to which it enables the identification of the underlying drivers of productivity. This requirement necessitates an approach that involves formally describing the production process and explaining as much as possible of construction output in terms of the quantity and quality of inputs that are used to generate it. Whilst it is accepted that data requirements are a major constraint to such an approach, it is suggested that by establishing a robust measurement framework, data deficiencies can be defined more easily. Guid...

The Role of R&D in Productivity Growth: The Case of Agriculture in New Zealand: 1927 to 2001

Abstract: Productivity growth is a key determinant of rising living standards. The agricultural sector has been an important contributor to the overall growth of productivity in New Zealand. The average rate of multifactor productivity growth in agriculture from 1926-27 to 2000-01 was 1.8%. We find evidence that this rate has been increasing especially since the reforms of the 1980s. This paper estimates the contribution that R&D has made to agricultural productivity. It develops a theoretical framework based on the stock of knowledge available to producers. This model incorporates foreign stocks of knowledge and the spill-in effect for New Zealand. The estimation allows for extended lag effects of research spending on productivity. We find that foreign knowledge is consistently an important factor in explaining the growth of productivity. It appears that the agricultural sector relies heavily on drawing on the foreign stock of knowledge generated off-shore. The contribution of domestic knowledge generated by New Zealand’s investment in R&D is less clear cut. However, there is typically a significant positive relation between domestic knowledge and the growth of productivity. We find a wide range of estimates of the return to domestic R&D. The results are sensitive to the type of model used and the specification of the variables. Based on our preferred model we estimate that investment in domestic R&D has generated an annual rate of return of 17%. The results underscore the importance of foreign knowledge in a small open economy. The very existence of foreign knowledge may be a necessary condition for achieving productivity growth in a small open economy. However in no way could it be argued that this was sufficient. Having a domestic capability that can receive and process the spill-ins from foreign knowledge is vital to capturing the benefits. The challenge is to be able to isolate those effects from aggregate data for the agricultural sector. In that task we claim only modest success.

Measuring Chinese Productivity Growth, 1952-2005

Abstract: This paper has two objectives. (i) Assess the availability and the quality of the data series necessary to construct productivity measures for the Chinese economy. (ii) Produce a set of productivity statistics that can be integrated into the existing set of OECD productivity indicators and that can be updated later on. The paper in three sections examines the availability and quality of output, labor, and capital data. A further section discusses and calculates a range of productivity measures. The final section offers some thoughts on the future calculation of productivity measures for China.

It and Productivity in U.S. Manufacturing: Do Computer Networks Matter?

Abstract: The link between information technology and productivity is clear. Yet how computers affect productivity is not well understood. Ours is the first study using data for approximately 30,000 U.S. manufacturing plants to examine the effect of computer networks on productivity. We find a positive and significant relationship between computer networks and plant labor productivity. Plants with lower productivity in earlier periods are also more likely to have a computer network, supporting the hypothesis that plants use networks to catch up. The positive network effect remains significant when we account for endogenous computer networks. (JEL L6, O3)

A Productivity Model of City Crowdedness

Abstract: Population density varies widely across U.S. cities. A simple, static general equilibrium model suggests that moderate-sized differences in cities' total factor productivity can account for such variation. Nevertheless, the productivity required to sustain above-average population densities considerably exceeds estimates of the increase in productivity caused by such high density. In contrast, increasing returns to scale may be able to sustain multiple equilibria at below-average population densities.

A performance measurement system using a profit‐linked multi‐factor measurement model

Abstract: Purpose – The purpose of this paper is to re‐introduce the APC model (developed by the American Productivity Center) through a spreadsheet application of the model in a real‐world setting, with a case study of Harlingen Waterworks, Texas, USA.Design/methodology/approach – This paper introduces a performance measurement system using a multi‐factor productivity measurement model in a real‐world setting. The model uses operational‐level accounting data such as quantities and prices of inputs and outputs of a revenue‐generating organization. Such operational data is rarely published or shared by for‐profit organizations. Thus, the study focused on a government‐run enterprise that cannot claim confidentiality. Since water utilities are experiencing financial pressures, this application is very timely. The spreadsheet‐based implementation, using multi‐period data, generates performance trend charts of productivity, price recovery and profitability contributions that give a better perspective to managers in iden...

New estimates of total factor productivity growth in indonesian manufacturing

Abstract: This paper estimates new elasticities of value added with respect to labour and capital in Indonesian manufacturing, controlling for the simultaneity problem that potentially exists between the choice of input levels and a productivity shock (such as an increase in productivity due to new production processes), for plant exit, and for quasi-constant unobservable plant characteristics. It does so by applying the Levinsohn and Petrin (2003) production function estimator to plant-level value added, fixed assets, labour, and electricity consumption data over the period 1988–95. This methodology allows us to revisit the previously used growth accounting based elasticities, and thereby improves total factor productivity (TFP) estimates. The results show that, in the period under study, aggregate TFP growth in Indonesian manufacturing was higher than had previously been estimated.

Network effects of the productivity of infrastructure in developing countries

Abstract: Using panel data models, the author examines the threshold effects of the productivity of infrastructure investment in developing countries. He considers various specifications of an augmented production function that allow for endogenous thresholds. More precisely, these specifications are tested in a panel threshold regression model. The author's main robust result is the presence of strong threshold effects in the relationship between output and private and public inputs. Whatever the transition mechanism used, the testing procedures lead to strong rejection of the linearity of this relationship. In particular, the productivity of infrastructure investment generally exhibits some network effects. When the available stock of infrastructure is very low, investment in this sector has the same productivity as noninfrastructure investment. On the contrary, when a minimum network is available, the marginal productivity of infrastructure investment is generally largely greater than the productivity of other investment. Finally, when the main network is achieved, its marginal productivity becomes similar to the productivity of other investment.

Productivity/performance measurement: Case application at the government pharmaceutical organization

Abstract: Purpose – To address two key problems facing the production department at the government pharmaceutical organization (GPO). They were a lack of productivity and performance measurement at the operational level, and a need to assess the functional readiness to undertake its own performance‐analysis work.Design/methodology/approach – The decision was made to apply the multi‐factor productivity measurement model (MFPMM). This was due to its ability to link with existing data that had been generated by the accounting department, its explicit integration between productivity and financial performance (i.e. profitability) at the operational level, and its major features such as information on opportunity gain/loss.Findings – For the GPO, it was quite clear that productivity improvement would represent the critical direction for the production department in the future. Based on its initial deployment at the Section 3 unit, the MFPMM was generally viewed as a suitable tool for measuring and providing necessary pr...

How Endowments, Accumulations, and Choice Determine the Geography of Agricultural Productivity in Ecuador

Abstract: Spatial disparity in incomes and productivity is apparent across and within countries. Most studies of the determinants of such differences focus on cross-country comparisons or location choice among firms. Less studied are the large differences in agricultural productivity within countries related to concentrations of rural poverty. For policy, understanding the determinants of this geography of agricultural productivity is important, because strategies to reduce poverty often feature components designed to boost regional agricultural incomes. Census and endowment data for Ecuador are used to estimate a model of endogenous technology choice to explain large regional differences in agricultural output and factor productivity. A composite-error estimation technique is used to separate systemic determinants from idiosyncratic differences. Simulations are employed to explore policy avenues. The findings suggest a differentiation between the types of policies that promote growth in agriculture generally and those that are more likely to assist the rural poor.

Productivity and Efficiency Analysis

Abstract: Productivity and economic efficiency analysis has entered a new phase, since the data envelopment analysis (DEA) introduced a nonparametric method of measuring technical and allocative efficiency. The DEA efficiency models have three most interesting features, which have fostered numerous applications in several disciplines, for example, microeconomics, operations research, and econometrics. The first feature is the specification and estimation of a multi-output multi-input production frontier, which can be estimated without any price information. Second, the production frontiers can be estimated for public sector decision making units (DMUs) with observed input and output data only and every DMU can be compared in terms of its relative efficiency in respect of the whole group comprising all DMUs. Third, if the market data in the form of output and input prices are available, then the DEA model can be used to compute overall cost efficiency and allocative efficiency. Thus a cost frontier can be estimated along with a productive frontier. In a cost frontier, output technical inefficiency indicates the amount by which a firm or DMU can increase output, holding cost constant and input technical inefficiency captures the amount by which a firm can reduce costs, holding output constant.

The Tax Man Cometh - but is he Efficient?

Abstract: The performance of local tax offices of Norway is studied over a three-year period applying Data Envelopment Efficiency analysis and a Malmquist productivity index. The estimates are bias-corrected using a bootstrap approach recently developed for DEA models. The results show that bias correction and the construction of confidence intervals give a quite different picture without bootstrapping. A set of best practice offices is identified for future work on finding explanations for good performance. The productivity development of individual offices is classified into the four categories: productivity improving cost increase, productivity improving cost savings, productivity decreasing cost savings and productivity decreasing cost increase.

Supply-Side Performance and Structure in the Czech Republic (1995-2005)

Abstract: In this paper, we apply the aggregate production function to approximate the path of potential output We use a time-varying NAIRU to derive the amount of potential labour and a newly developed measure of capital services to account for the productive impact of capital In addition, trend total factor productivity is estimated Production functions for the key sectors (Agriculture, Industry, etc) are also calculated, exploring the growth accounting approach and decomposition of total factor productivity growth During 1995--2005, the growth in potential output was constrained by a gradual increase in the NAIRU, a temporary drop in investment activity and, most importantly, by only a modest rise in total factor productivity In this period, the Czech economy also suffered from a structural burden, ie all growth in total factor productivity was exclusively due to better utilisation of resources, given their initial allocation, with an even negative contribution of resource reallocation Just from 2001 onwards, we observe substantial improvements in supply-side performance, except for the functioning of the labour market

A productivity model for parasitized, multibrooded songbirds

Abstract: We present an enhancement of a simulation model to predict annual productivity for Wood Thrushes (Hylocichla mustelina) and American Redstarts (Setophaga ruticilla); the model includes effects of Brown-headed Cowbird (Molothrus ater) parasitism. We used species-specific data from the Driftless Area Ecoregion of Wisconsin, Minnesota, and Iowa to parameterize the model as a case study. The simulation model predicted annual productivity of 2.03 ± 1.60 SD for Wood Thrushes and 1.56 ± 1.31 SD for American Redstarts. Our sensitivity analysis showed that high parasitism lowered Wood Thrush annual productivity more than American Redstart productivity, even though parasitism affected individual nests of redstarts more severely. Annual productivity predictions are valuable for habitat managers, but productivity is not easily obtained from field studies. Our model provides a useful means of integrating complex life history parameters to predict productivity for songbirds that experience nest parasitism.

Externalities, efficiency, regulation, and productivity growth in the U.S. electric utility industry

Abstract: This paper examines the decomposition of total factor productivity growth for firms subject to regulation, given the production of a bad output. The production of good and bad outputs provides benefits and costs to society. Corporate socially responsible firms recognize the cost to society of producing the bad output. The paper separates the production technology and regulation effects from both the scale and technical change components. The paper also examines the measurement and decomposition of productivity growth when not accounting for production of the bad output. Using a 1992–2000 panel of 34 U.S. investor-owned electric utilities, results indicate that improvements in the scale, efficiency change, and technical change components contributed to positive growth. Not accounting for production of the bad output led to, on average, an overestimation of both the rate of productivity growth, and the contributions of scale economies and technical change to changes in productivity growth.

The Measurement of Capital and the Measurement of Productivity Growth and Efficiency in State Manufacturing

Abstract: No single way of measuring the capital stock has been agreed upon by regional researchers. The authors examine five methods that have been proposed for measuring the capital stock in state manufacturing. They discuss the properties of each of the five capital stock allocation methods and then estimate state efficiency levels and productivity growth rates during the period 1982 to 1996 for each of the five methods. Their findings indicate that efficiency levels are significantly different for states depending on which method of capital measurement is used. However, productivity growth rates do not appear to be as sensitive to capital measurement, averaging 2.5 to 3 percent annual rates for the period.

Productivity Change in the Australian Sheep Industry Revisited

Abstract: Recent low estimates of total factor productivity change for wool producers in the Australian sheep industry indicate that they are struggling to improve their performance. This evidence is at odds with the views of many technical observers of industry performance, prompting us to re-estimate total factor productivity change for farmers in a benchmarking group in south-west Victoria who had been the subject of such a negative finding. An important transformation in sheep production in Australia in recent decades has been a change in enterprise mix, notably a greater presence of prime lamb production. This change complicates the process of computing efficiency and productivity change. We demonstrate that a multi-input multi-output approach, based on the use of a stochastic output distance function and assuming non-neutral technical change, helps to avoid errors of estimation of productivity change. Following this approach, we find substantial technical progress and productivity gains on farms over the period, 1995/1996 to 2003/2004, for merino wool specialists. Growth in total factor productivity on properties operating wool and prime lamb enterprises is less impressive, indicating an initial decline in total factor productivity in 1996/1997 as farmers adopted a more diversified enterprise mix. Following this decline, however, farms achieved a modest increase in total factor productivity.

Energy and Productivity, Two Sides of a Coin in the U.S. Auto Industry

Abstract: Productivity is a significant issue in the US auto industry that is often viewed as the success or failure that a vehicle assembly plant can make or break their production schedule. In other words, productivity is often looked at in terms of the number of assembled vehicles produced per year. While high production volume is an important indicator in a manufacturing environment, it certainly does not necessarily imply high productivity. By definition, Productivity is the ratio of output (number of vehicles produced) divided by all input resources such as labor, material, capital, overhead, health and energy costs. Improvement in productivity can be achieved in two ways: a reduction of inputs while output remains constant, or an increase in output while inputs remain constant. Energy is the single most controllable cost parameter in the input parameters of the productivity equation. In today’s competitive marketplace, energy efficiency can provide means to improve productivity through reducing the manufacturing energy cost. This paper addresses this missing link between energy and productivity in U.S. auto industry. Furthermore, it outlines a methodological approach for driving improvements in energy usage in a major vehicle assembly plant in US. It is hoped that efforts in this direction would pave the road to better understand role of energy as an important factor in the assembly plant’s vision to productivity improvement.

Impact of Productivity on Energy Conservation

Abstract: Productivity has a major impact on energy use and conservation in manufacturing plants. It is often more significant than the optimization of equipment energy efficiency. This article describes a lean manufacturing, which represents the current state of the art in plant productivity. A significant opportunity for energy savings by transforming production into a single-piece lean flow is demonstrated. The impact from major individual productivity elements on energy is discussed. Simple metrics and models are presented as tools for relating productivity to energy. Simple models are preferred because productivity is strongly influenced by intangible human factors, such as work organization and management, learning and training, communications, culture, and motivation, which are difficult to quantify in factories.

R&D and productivity: The knowledge capital model revisited ⁄

Abstract: Investment in knowledge at the flrm level is a primary source of productivity growth. To account for the fact that such investments create long-lived assets for flrms, Griliches (1979) developed the knowledge capital model that has remained a cornerstone of the productivity literature for more than 25 years. The link between R&D and productivity, however, is much more complex. In this paper, we relax the assumptions on the R&D process and examine the impact of the investment in knowledge on the productivity of flrms. We develop a simple estimator for production functions in the presence of endogenous productivity change that allows us to retrieve productivity and its relationship with R&D at the flrm level. We illustrate our approach on an unbalanced panel of more than 1800 Spanish manufacturing flrms in nine industries during the 1990s. Our flndings indicate that the link between R&D and productivity is subject to a high degree of uncertainty, nonlinearity, and heterogeneity across flrms. Abstracting from uncertainty and nonlinearity, as is done in the knowledge capital model, or assuming an exogenous process for productivity, as is done in the recent literature on structural estimation of production functions, overlooks some of its most interesting features.

Labour productivity model (WPMR system) and its application to the stripping area of Garp Lignite Enterprise in Turkey

Abstract: Although labour productivity problems are thought of as a factor mainly caused by the lack of commitment by the labour force, it essentially arises by a process in which several parameters are interrelated such as the effects of legislation, management and labour responsibility. In the present study, the method of Labour Productivity Management by Ratio (WPMR) was used to assess labour productivity at the lignite mining company, GLE-Turkey, since this method takes into account the factors affecting labour productivity. The method was applied to the stripping area of GLE-Turkey in order to measure and interpret the labour productivity in this mine. A major conclusion of the present investigation was that labour productivity at GLE was found to be lower than should be expected. It was also found that most of the labour productivity losses were related to both legislative restrictions and the lack of management and supervision.

Productivity Change in Taiwan's Farmers' Credit Unions: A Nonparametric Risk-Adjusted Malmquist Approach

Abstract: This article proposes an extended three-stage DEA methodology similar to Fried et al. (2002) to improve the measurement of productivity growth then the assumption of free disposability of undesirable outpu t does not apply. A directional distance function is used to construct adjusted Malmquist-Luenberger productivity indexes which simultaneously account for the impacts of undesirable outputs, environmental variables, and statistical noise. Panel data for 264 farmers' credit unions (FCUs) in Taiwan covering the 1998-2000 period are employed to illustrate the advantages of this method. On average, the productivity of Taiwan's FCUs is found to have deteriorated over the 1998-2000 period. Although an improvement in efficiency has been observed, the major reason for the deterioration is found to be due to the regression of techno logy.

A note on the choice of Malmquist productivity index and Malmquist total factor productivity index

Abstract: This paper by analyzing the two popular methodologies of productivity measurement provides an example that illustrates the differences when adopting the two methodologies. Furthermore, under the restriction of constant returns to scale raises some methodological issues regarding the theory of productivity measurement using the Malmquist Productivity Index and Malmquist Total Factor Productivity Index. Furthermore by using an illustrative example under the restriction of constant returns to scale the study indicates that the two indexes produce similar results. However, the differences observed are determining the choice of the methodology adopted when measuring productivity.

Applying Data Envelopment Analysis To Evaluate The Efficiency Of Fishermen Associations In Malaysia

Abstract: The fishermen association (FA) in Malaysia has a dual character, as it is both an enterprise and also an association. Hence the business and social performances have to be closely linked. The organization has to perform efficiently to sustain its existence in business and to function as a social organization to its members. With both aspects (economic and social) evaluated equally, it could be categorized as a good or poor performer society. Currently, financial ratios are used to measure the overall financial soundness of the association and the quality of its management. However, due to the association’s dual nature (as it is both an enterprise and also an association) and its multipurpose activities, the overall performance evaluation is often a complicated process. As an alternative form of analysis of the many analytical tools that have been in existence, this study introduces the Data Envelopment Analysis (DEA) method, a non-parametric method to evaluating the performance of the association. Applying DEA to the panel data of 68 FAs from 1994 to 2001, produces estimates of efficiency (the distance of inefficient FAs from the frontier) and the separation of technical efficiency from scale efficiency. Then the measurement of technical progress (the shifting of the best practice over time) allows Malmquist indices of total factor productivity (TFP) to be constructed from the efficiency and technical change measures without recourse to prices. The results are presented as chained indices, so that the rates and causes of TFP growth can be analysed. The Malmquist index is ideal for investigating this problem because it decomposes total factor productivity into technical progress, technical efficiency and scale efficiency measures. Results from this empirical study have identified five “best-practice” FAs, which are located in three different “regions” in Malaysia. The derivation of the Malmquist productivity indices indicated a productivity growth in the socio-economic dimension of 1.033. The economic dimension efficiency showed a productivity growth with a TFP change of 1.015. In contrast, the social performance dimension was marked by a productivity regress with the TFP change score of 0.889. The productivity growth in the socio-economic and economic dimensions had been driven by positive technical change. With respect to the social dimension, the principal cause for the productivity regress was the efficiency change. Overall, the results showed that the FAs needed to improve in their efficiency to catch up with the best-practice frontier as much as by 3.9% in economic performance, 9% in social performance and 3.5% in socio-economic performance. Results indicated that the efficiencies in the economic and social dimensions were determined neither by the length of time in operation and geographical location of the association nor by the amount of grant or subsidy allocated by the government. In conclusion, for the FAs to be efficient with their dual-purpose objective, they need to achieve their optimum productivity in business and provide social benefits for their members, at the same time conforming to the values and practices of cooperative organizations

Software Cost and Productivity Model

Abstract: A software cost and productivity model is summarized. The model is based on 452 software development activities that commenced or completed after January 1, 1996, and are drawn from air, sea, land, and space programs. Software complexity is considered by assigning each data record to one of 32 combinations of operational environment and application domains. In addition, the model captures productivity information based on programming language. The following areas are examined, with comparisons to an earlier (1996) Aerospace Corporation model whenever possible: (1) software development productivity, (2) code growth, (3) apparent minimum and maximum software development schedules as a function of the number of source lines of code, (4) relationships for estimating the number of developer-months needed to produce a given number of lines of code, and (5) approximate data distributions. A key finding is that an apparent increase in software productivity has occurred, with median levels of productivity...