Showing papers on "Productivity model published in 2011"

Product Differentiation, Multi-product Firms and Estimating the Impact of Trade Liberalization on Productivity

Abstract: This paper studies whether removing barriers to trade induces efficiency gains for producers. Like almost all empirical work which relies on a production function to recover productivity measures, I do not observe physical output at the firm level. Therefore, it is imperative to control for unobserved prices and demand shocks. I develop an empirical model that combines a demand system with a production function to generate estimates of productivity. I rely on my framework to identify the productivity effects from reduced trade protection in the Belgian textile market. This trade liberalization provides me with observed demand shifters that are used to separate out the associated price, scale, and productivity effects. Using a matched plant-product level data set and detailed quota data, I find that correcting for unobserved prices leads to substantially lower productivity gains. More specifically, abolishing all quota protections increases firm-level productivity by only 2 percent as opposed to 8 percent when relying on standard measures of productivity. My results beg for a serious reevaluation of a long list of empirical studies that document productivity responses to major industry shocks and, in particular, to opening up to trade. My findings imply the need to study the impact of changes in the operating environment on productivity together with market power and prices in one integrated framework. The suggested method and identification strategy are quite general and can be applied whenever it is important to distinguish between revenue productivity and physical productivity.

Offshoring Bias in U.S. Manufacturing

Abstract: In this paper, we show that the substitution of imported for domestically produced goods and services—often known as offshoring—can lead to overestimates of U.S. productivity growth and value added. We explore how the measurement of productivity and value added in manufacturing has been affected by the dramatic rise in imports of manufactured goods, which more than doubled from 1997 to 2007. We argue that, analogous to the widely discussed problem of outlet substitution bias in the literature on the Consumer Price Index, the price declines associated with the shift to low-cost foreign suppliers are generally not captured in existing price indexes. Just as the CPI fails to capture fully the lower prices for consumers due to the entry and expansion of big-box retailers like Wal-Mart, import price indexes and the intermediate input price indexes based on them do not capture the price drops associated with a shift to new low-cost suppliers in China and other developing countries. As a result, the real growth of imported inputs has been understated. And if input growth is understated, it follows that the growth in multifactor productivity and real value added in the manufacturing sector have been overstated. We estimate that average annual multifactor productivity growth in manufacturing was overstated by 0.1 to 0.2 percentage point and real value added growth by 0.2 to 0.5 percentage point from 1997 to 2007. Moreover, this bias may have accounted for a fifth to a half of the growth in real value added in manufacturing output excluding the computer and electronics industry.

Material and energy productivity.

Abstract: Resource productivity, measured as GDP output per resource input, is a widespread sustainability indicator combining economic and environmental information. Resource productivity is ubiquitous, from the IPAT identity to the analysis of dematerialization trends and policy goals. High resource productivity is interpreted as the sign of a resource-efficient, and hence more sustainable, economy. Its inverse, resource intensity (resource per GDP) has the reverse behavior, with higher values indicating environmentally inefficient economies. In this study, we investigate the global systematic relationship between material, energy and carbon productivities, and economic activity. We demonstrate that different types of materials and energy exhibit fundamentally different behaviors, depending on their international income elasticities of consumption. Biomass is completely inelastic, whereas fossil fuels tend to scale proportionally with income. Total materials or energy, as aggregates, have intermediate behavior, depending on the share of fossil fuels and other elastic resources. We show that a small inelastic share is sufficient for the total resource productivity to be significantly correlated with income. Our analysis calls into question the interpretation of resource productivity as a sustainability indicator. We conclude with suggestions for potential alternatives.

Baumol’s cost disease, efficiency, and productivity in the performing arts: an analysis of german public theaters

Abstract: This paper analyzes the productivity development in the German public theater sector for the seasons 1991/1992 to 2005/2006. Using a stochastic distance frontier approach that allows decomposing total factor productivity change into different sources, we examine (a) whether Baumol’s cost-disease hypothesis is valid in this sector and (b) if so, whether any negative influence of the cost-disease effect on productivity can be compensated by efficiency gains. The findings indicate an increase in real unit labor cost as a result of rising wage rates and thus do support the cost-disease hypothesis. Further, increasing returns to scale are observed for the majority of the theaters, implying that significant efficiency gains can be realized by the exploitation of scale economies. However, because of the increasing unit labor cost and an increasing scale inefficiency, we find an overall decrease in average productivity of about 8% within the sample period.

DOES INPUT QUALITY DRIVE MEASURED DIFFERENCES IN FIRM PRODUCTIVITY?*: input quality and firm productivity

Abstract: Firms in the same industry can differ in measured productivity by multiples of 3. Griliches (1957) suggests one explanation: the quality of inputs differs across firms. We add labor market history variables such as experience and firm and industry tenure, as well as general human capital measures such as schooling and sex. We also use the wage bill and worker fixed effects. We show adding human capital variables and the wage bill decreases the ratio of the 90th to 10th productivity quantiles from 3.27 to 2.68 across eight Danish manufacturing and service industries. The productivity dispersion decrease is roughly of the same order of magnitude as some competitive effects found in the literature, but input quality measures do not explain most productivity dispersion, despite economically large production function coefficients. We find that the wage bill explains as much dispersion as human capital measures.

Labour productivity model for reinforced concrete construction projects

Abstract: Purpose – This study aims to identify systematically the factors that can often influence labour productivity directly and indirectly, to build a model that can evaluate the significance of these factors. The model can be used as a tool for assisting field construction mangers responsible for productivity.Design/methodology/approach – The factors were first identified by undertaking a literature review. The scope and method for measuring labour productivity were then determined. The final analysis model was built through a statistical analysis conducted with the chosen factors.Findings – The results of the analysis indicate that the work management component (e.g. the manager's abilities) and the work technique component (e.g. work continuity) have greater impact than the worker component (e.g. the workers' capability) and the work characteristic component (e.g. work difficulty).Research limitations/implications – This research focuses on the qualitative perspective of site managers on labour productivity...

Bank Productivity and Performance Groups: A Decomposition Approach Based upon the Luenberger Productivity Indicator

Abstract: The purpose of this paper is twofold. First, in the framework of the strategic groups' literature, it analyZes changes in productivity and efficiency of Spanish private and savings banks over an eight-year period (1998-2006). Second, by adapting the decomposition of the Malmquist productivity indices suggested by Fare et al. (1994), it proposes similar components decomposing the Luenberger productivity indicator. Initially, productivity is decomposed into technological and efficiency changes. Thereafter, this efficiency change is decomposed into pure efficiency, scale and congestion changes. Empirical results demonstrate that productivity improvements are partially due to technological innovation. Furthermore, it is shown how the competition between private and savings banks develops in terms of the analyzed productivity and efficiency components. While private banks enjoy better efficiency change, savings banks contribute more to technological progress. Consequently, the Luenberger components are used as cluster analysis inputs. Thus, economic interpretations of the resulting performance groups are made via key differences in productivity components. Finally, following the strategic groups' literature, supplementary insights are gained by linking these performance groups with banking ratios. (This abstract was borrowed from another version of this item.)

Changes in productivity of Spanish university libraries

Abstract: This paper analyzes productivity growth, technical progress, and efficiency change in a sample of 34 Spanish university libraries between 2003 and 2007. Data envelopment analysis and a Malmquist index are combined with a bootstrap method to provide statistical inference estimators of individual productivity, technical progress, pure efficiency, and scale efficiency scores. To calculate productivity, a three-stage service model has been developed, examining productivity changes in the relationships between the libraries' basic inputs, intermediate outputs, and final outputs. The results indicate a growth in the productivity of the libraries (relationship between basic inputs and intermediate outputs) and in the productivity of the service (relationship between basic inputs and final outputs). The growth in productivity in both relationships is due to technical progress. If the variable representing the use of electronic information resources is removed from the final output, the result is a significant reduction in productivity.

Productivity Dispersion and Plant Selection in the Ready-Mix Concrete Industry

Abstract: This paper presents a quantitative model of productivity dispersion to explain why inefficient producers are slowly selected out of the ready-mix concrete industry. Measured productivity dispersion between the 10th and 90th percentile falls from a 4 to 1 difference using OLS, to a 2 to 1 difference using a control function. Due to volatile productivity and high sunk entry costs, a dynamic oligopoly model shows that to rationalize small gaps in exit rates between high and low productivity plants, a plant in the top quintile must produce 1.5 times more than a plant in the bottom quintile.

Early fish growth varies in response to components of the flow regime in a temperate floodplain river

Abstract: Summary 1. The biological productivity of floodplain rivers is intimately related to their flow regimes and it has been proposed that fish production should be linked to components of the flow regime in productivity models. To assess applicability of existing models of productivity in floodplain rivers, we tested predictions about growth during the early life stages of a common, short-lived fish (Australian smelt Retropinna semoni) in a non-flow-altered, temperate Australian floodplain river. 2. The morphometric condition of larval and juvenile fish measured over a five-year period was positively related to annual discharge, but the highest average seasonal growth rates occurred in two years of contrasting hydrology, one with early spring flooding and the other with predominantly low flows and a late season (within channel) flow pulse. 3. Analysis of daily growth measures indicated that timing, river height, the duration of in-channel flow events and antecedent flood events are all significant factors influencing the early growth of Australian smelt. The flexible manner in which fish growth responds to these factors appears to be an effective early life history strategy for a short-lived species occupying a highly variable environment. 4. Growth rates conformed to some predictions of the Flood Pulse Concept (in particular the Extended Flood Pulse Concept), but specific growth responses suggest that the Riverine Productivity Model and tenets of the Low Flow Recruitment Hypothesis best describe the production of Australian smelt in this system. We suggest that none of the existing conceptual models adequately describes fish productivity in temperate Australian floodplain rivers but that aspects of each are likely to be relevant under different flow conditions.

Benchmarking and industry performance

Abstract: In this paper I interrelate productivity analysis and the theory of industrial organization. A proposition proves that an industrial organization is efficient if and only if it is supportable in the entry-proofness sense. Industrial performance is decomposed in efficiency and technical change terms as well as an industrial organization component. The performance measure is shown to be consistent with the Solow residual and Malmquist productivity indices for its components are provided.

Evaluation of trends in the UK construction industry using growth and productivity accounts

Abstract: For an assessment of the productivity performance of construction at the industry level, the quality of any analysis can be improved by the availability and use of detailed data on the basic components of the industry’s production function. The EU KLEMS Growth and Productivity Accounts comprise a dataset that provides a rich source of information on the sources of growth by industry, one of which is the construction industry (ISIC 45), since the 1970s for European Union countries and other major economies. The database allows a breakdown of factor inputs by the categorization of capital inputs into asset types and labour inputs into components such as skill levels to provide more precise measurement of sources of growth at industry level. The UK construction sector forms the focal point of the analysis and the results of this analysis provide evidence of a steady increase in the growth of ICT and improved labour skills usage and a relatively high rate of total factor productivity for the UK construction i...

A decomposition of productivity change in the semiconductor manufacturing industry

Abstract: This study divides a production system into three components: production design, demand support, and operations. Efficiency is then decomposed via network data envelopment analysis and integrated into the Malmquist Productivity Index framework to develop a more detailed decomposition of productivity change. The proposed model can identify the demand effect and the identity of the root cause of technical regress. Specifically, the demand effect allows the source of technical regress to be attributed to both demand deterioration and technical regress in the production technology. An empirical study using data from 1995 to 2000 for the semiconductor manufacturing industry is presented to demonstrate and validate the proposed method. The result shows that the regress of productivity in 1997–1998 and 1999–2000 is mainly caused by demand fluctuations rather than by technical regression in production capabilities.

The Luenberger indicator and productivity growth: a note on the European savings banks sector.

Abstract: We employ the Luenberger productivity indicator to estimate productivity growth and its decomposition into technical change and efficiency change components for savings banks sectors in 10 EU countries between 1996 and 2003. The Luenberger indicator requires less restrictive assumptions than standard nonparametric productivity indexes, and it allows the assumption of profit maximization to be made for sample firms. We estimate average productivity growth in the savings banks sector to be 2.78% per annum and driven almost entirely by technical change. Whilst the general results confirm earlier findings, this study is one of the earliest to identify cross-border differences in productivity growth in the savings banks sector.

A fresh look at the productivity and efficiency changes of UK airlines

Abstract: This article uses the bootstrapped Malmquist index methodology to measure and test the extent of efficiency and productivity changes in the UK airline sector. The aim of the bootstrap method is to overcome the statistical limitations of the Data Envelopment Analysis (DEA) method, generally used to measure the distance functions of the Malmquist index. In applying the method we use input/output data on a sample of major UK airlines for the period 2004–2007. Results showed that most airlines have witnessed significant decrease in their productivity, efficiency, scale and technology measures. Using a second stage Tobit regression, this article attributed the sources of productivity and efficiency changes to factors such as stage length, load factor and airline size. This article also discussed the negative impacts of oil price using illustrations from the UK and other international airlines.

Linking the Impact of IT Investments to Productivity and Profitability

Abstract: Implementing IT information technology systems such as ERP enterprise resource planning requires huge investments. Measuring the impact of these investments on productivity and profitability is extremely important for business managers. Many studies have failed to show the direct relationship between IT investments, organizational productivity and profitability, a phenomenon known as productivity paradox. The failure might relate to problems with the measurement techniques. This paper describes a measurement model, known as the PPP model "Profitability = Productivity + Price Recovery", that can fill the gap and show a link between IT investments, productivity, and profitability. The spreadsheet-based implementation of the PPP model, using multi-period data, generates performance trend charts of productivity, price recovery, and profitability. These performance charts provide a multi-period perspective to managers in identifying and understanding the impact of IT investments. This model is useful to managers considering heavy investments in IT as well as for managers interested in assessing their organizational performance and taking corrective actions in a timely manner.

On the Measurement of Total Factor Productivity: A Latent Variable Approach

Abstract: Despite the important role that total factor productivity (TFP) has played in the growth literature, few attempts have been made to change the methodology to estimate it. This paper proposes a methodology based on a state-space model to estimate TFP and its determinants. With this methodology, it is possible to reduce the measurement of our ignorance. As a by-product, this estimate yields the capital share in output and the long-term growth rate. When applied to Chile, the estimation shows a capital share around 0.5 and long-term growth of TFP around 1%. Capital accumulation tends to explain the growth rate in the fast growth periods under the econometric estimation more than the traditional growth accounting methodology.

Aggregate Productivity Growth in Indian Manufacturing: An Application of Domar Aggregation

Abstract: Productivity growth in Indian manufacturing is an important driver of overall growth, yet the issues related to its measurement have still not been resolved. The issue of how to compute an aggregate productivity measure holds significance for two reasons: one, the productivity of a firm should reflect the productivity of the lower levels, which comprise the aggregate; and two, aggregate productivity should also emphasize the importance of inter-industry transactions in an analysis of productivity growth. We have made an attempt to compute the aggregate productivity growth using the Domar aggregation technique. Comparing the estimates based on the Domar aggregation technique with those based on the traditional aggregate value added approach, we observe that the preferred estimates are about half of those obtained by the traditional aggregate value added method.

Productivity management methodology using productivity achievement ratio

Abstract: Although construction productivity has received a great deal of attention from construction practitioners and researchers, few research efforts have specifically evaluated productivity in the context of the productivity management cycle. Consequently, there is still a lack of useful indicators for determining which items should be prioritized and improved upon in order to yield the highest benefits from productivity management. In an effort to address this issue, this study proposes the Productivity Achievement Ratio (PAR), which is a productivity evaluation indicator that will assist in the selection of the most appropriate management items for construction productivity enhancement. Using a multiple linear regression analysis, the process for calculating the PAR is developed, and the applicability of the proposed indicator is verified through a case study of steel erection work. The results of this study indicate that the PAR can aid construction practitioners in achieving more balanced and effective productivity management, even when management resources are limited.

Combining Overall equipment Efficiency (OEE) and productivity measures as drivers for production improvements

Abstract: To compete on a globalized market companies need to constantly improve the performance in their manufacturing systems. Production performance measures can be used for different purposes, by practitioners they are commonly used for follow-up and reporting purposes. Two of the most commonly used performance measures are Overall Equipment Efficiency (OEE) and productivity. Between these two productivity exhibits the far most variety in definition. Even if OEE and productivity are strongly affected by improvement work, they are seldom used to drive the improvement efforts. The purpose of this paper is to present definitions of productivity suitable as improvement drivers, and to discuss the need for a combined set of performance measures to drive productivity improvements. Finally some experiences from industrial improvement work are viewed. (Less)

An effective speedup metric for measuring productivity in large-scale parallel computer systems

Abstract: With the parallel computer systems scaling-up, the measure index for performance of the systems demands a shift from traditional "high performance" to "high productivity." This brings a new challenge to defining a synthetic, yet meaningful, measure index of multiple productivity variables; namely computing performance, reliability, energy consumption, parallel software development, etc. Traditional measures for large-scale parallel computer systems merely focus on computing performance, and are incapable of measuring the multiple productivity variables simultaneously in an effective manner. A recently proposed market-related money model, which pursues high utility/cost ratio, relies on money as a measure to consider the multiple productivity variables. Differing from the previous models, this paper proposes a novel system productivity speedup metric for large-scale parallel computer systems. The metric uses speedup instead of money to comprehensively unify the measures of multiple productivity variables. Finally, we propose a trade-off productivity measurement to weigh different productivity variables, to address different design targets. The measurement can facilitate the system evaluation, expose future technique tendencies, and guide future system design.

Technology adoption and the impact on average productivity

Abstract: In this paper, a framework is developed to analyze how the specifications of new technologies and the heterogeneity of micro-units of production affect the input use, the adoption pattern, and the productivity of inputs It shows that asset-productivity-enhancing (APE) technologies tend to be adopted by micro-units with high-quality assets, while variable-input, efficiency-enhancing (VIEE) technologies tend to be adopted by micro-units with low-quality assets In both cases, the variable input productivity increases, but the average productivity of the fixed asset may decline in the case of the VIEE technology The distribution of asset quality and the new technology specifications will therefore determine the impacts of production technology innovations on aggregate behavior and consequently the change in average productivity of the fixed asset

Measuring and decomposing capital input cost

Abstract: The measurement of total factor productivity change (or difference) vis-a-vis labor productivity change crucially depends on the measurement and decomposition of capital input cost. This paper discusses the basics of its measurement and shows that one can dispense with the usual neoclassical assumptions. By virtue of its structural features, the measurement model is applicable to individual establishments and aggregates such as industries, sectors, or economies. © 2011 The Author. Review of Income and Wealth