The measurement and decomposition of economy-wide productivity growth:Assessing the accuracy and selecting between different approaches

Productivity at the macro level is a complex concept but also arguably the most appropriate measure of economic welfare. Currently, there is limited research available on the various approaches that can be used to measure it and especially on the relative accuracy of said approaches. This thesis has two main objectives: firstly, to detail some of the most common productivity measurement approaches and assess their accuracy under a number of conditions and secondly, to present an up-to-date application of productivity measurement and provide some guidance on selecting between sometimes conflicting productivity estimates. With regards to the first objective, the thesis provides a discussion on the issues specific to macro-level productivity measurement and on the strengths and weaknesses of the three main types of approaches available, namely index-number approaches (represented by Growth Accounting), non-parametric distance functions (DEA-based Malmquist indices) and parametric production functions (COLS- and SFA-based Malmquist indices). The accuracy of these approaches is assessed through simulation analysis, which provided some interesting findings. Probably the most important were that deterministic approaches are quite accurate even when the data is moderately noisy, that no approaches were accurate when noise was more extensive, that functional form misspecification has a severe negative effect in the accuracy of the parametric approaches and finally that increased volatility in inputs and prices from one period to the next adversely affects all approaches examined. The application was based on the EU KLEMS (2008) dataset and revealed that the different approaches do in fact result in different productivity change estimates, at least for some of the countries assessed. To assist researchers in selecting between conflicting estimates, a new, three step selection framework is proposed, based on findings of simulation analyses and established diagnostics/indicators. An application of this framework is also provided, based on the EU KLEMS dataset.

A new slacks-based measure of Malmquist-Luenberger index in the presence of undesirable outputs

In the majority of production processes, noticeable amounts of bad byproducts or bad outputs are produced. The negative effects of the bad outputs on efficiency cannot be handled by the standard Malmquist index to measure productivity change over time. Toward this end, the Malmquist-Luenberger index (MLI) has been introduced, when undesirable outputs are present. In this paper, we introduce a Data Envelopment Analysis (DEA) model as well as an algorithm, which can successfully eliminate a common infeasibility problem encountered in MLI mixed period problems. This model incorporates the best endogenous direction amongst all other possible directions to increase desirable output and decrease the undesirable outputs at the same time. A simple example used to illustrate the new algorithm and a real application of steam power plants is used to show the applicability of the proposed model.

Spillovers from foreign direct investment in Central and Eastern Europe:an index for measuring a country’s potential to benefit from technology spillovers

In the paper, we construct a composite indicator to estimate the potential of four Central and Eastern European countries (the Czech Republic, Hungary, Poland and Slovakia) to benefit from productivity spillovers from foreign direct investment (FDI) in the manufacturing sector. Such transfers of technology are one of the main benefits of FDI for the host country, and should also be one of the main determinants of FDI incentives offered to investing multinationals by governments, but they are difficult to assess ex ante. For our composite index, we use six components to proxy the main channels and determinants of these spillovers. We have tried several weighting and aggregation methods, and we consider our results robust. According to the analysis of our results, between 2003 and 2007 all four countries were able to increase their potential to benefit from such spillovers, although there are large differences between them. The Czech Republic clearly has the most potential to benefit from productivity spillovers, while Poland has the least. The relative positions of Hungary and Slovakia depend to some extent on the exact weighting and aggregation method of the individual components of the index, but the differences are not large. These conclusions have important implications both the investment strategies of multinationals and government FDI policies.

Profit, productivity and price performance changes in the water and sewerage industry:an empirical application for England and Wales

This paper aims to analyse the impact of regulation in the financial performance of the Water and Sewerage companies (WaSCs) in England and Wales over the period 1991–2008. In doing so, a panel index approach is applied across WaSCs over time to decompose unit-specific index number-based profitability growth as a function of the profitability, productivity and price performance growth achieved by benchmark firms, and the catch up to the benchmark firm achieved by less productive firms. The results indicated that after 2000 there is a steady decline in average price performance, while productivity improves resulting in a relatively stable economic profitability. It is suggested that the English and Welsh water regulator is now more focused on passing productivity benefits to consumers, and maintaining stable profitability than it was in earlier regulatory periods. This technique is of great interest for regulators to evaluate the effectiveness of regulation and companies to identify the determinants of profit change and improve future performance, even if sample sizes are limited.

Eco-efficiency measurement and material balance principle:an application in power plants Malmquist Luenberger Index

Incorporating Material Balance Principle (MBP) in industrial and agricultural performance measurement systems with pollutant factors has been on the rise in recent years. Many conventional methods of performance measurement have proven incompatible with the material flow conditions. This study will address the issue of eco-efficiency measurement adjusted for pollution, taking into account materials flow conditions and the MBP requirements, in order to provide ‘real’ measures of performance that can serve as guides when making policies. We develop a new approach by integrating slacks-based measure to enhance the Malmquist Luenberger Index by a material balance condition that reflects the conservation of matter. This model is compared with a similar model, which incorporates MBP using the trade-off approach to measure productivity and eco-efficiency trends of power plants. Results reveal similar findings for both models substantiating robustness and applicability of the proposed model in this paper.

Price-cap regulation in the English and Welsh water industry:a proposal for measuring productivity performance

Privately owned water utilities typically operate under a regulated monopoly regime. Price-cap regulation has been introduced as a means to enhance efficiency and innovation. The main objective of this paper is to propose a methodology for measuring productivity change across companies and over time when the sample size is limited. An empirical application is developed for the UK water and sewerage companies (WaSCs) for the period 1991-2008. A panel index approach is applied to decompose and derive unit-specific productivity growth as a function of the productivity growth achieved by benchmark firms, and the catch-up to the benchmark firm achieved by less productive firms. The results indicated that significant gains in productivity occurred after 2000, when the regulator set tighter reviews. However, the average WaSC still must improve towards the benchmarking firm by 2.69% over a period of five years to achieve comparable performance. This study is relevant to regulators who are interested in developing comparative performance measurement when the number of water companies that can be evaluated is limited. Moreover, setting an appropriate X factor is essential to improve the efficiency of water companies and this study helps to achieve this challenge.

Spillovers from Foreign Direct Investment in Central and Eastern Europe. An index for measuring a country’s potential to benefit from technology spillovers

In the paper, we construct a composite indicator to estimate the potential of four Central and Eastern European countries (the Czech Republic, Hungary, Poland and Slovakia) to benefit from productivity spillovers from foreign direct investment (FDI) in the manufacturing sector. Such transfers of technology are one of the main benefits of FDI for the host country, and should also be one of the main determinants of FDI incentives offered to investing multinationals by governments, but they are difficult to assess ex ante. For our composite index, we use six components to proxy the main channels and determinants of these spillovers. We have tried several weighting and aggregation methods, and we consider our results robust. According to the analysis of our results, between 2003 and 2007 all four countries were able to increase their potential to benefit from such spillovers, although there are large differences between them. The Czech Republic clearly has the most potential to benefit from productivity spillovers, while Poland has the least. The relative positions of Hungary and Slovakia depend to some extent on the exact weighting and aggregation method of the individual components of the index, but the differences are not large. These conclusions have important implication both the investment strategies of multinationals and government FDI policies.

Degradation rates and productivity signals of organic-walled dinoflagellate cyst species in surface sediment samples

To understand the role of the ocean within the global carbon cycle, detailed information is required on key-processes within the marine carbon cycle; bio-production in the upper ocean, export of the produced material to the deep ocean and the storage of carbon in oceanic sediments. Quantification of these processes requires the separation of signals of net primary production and the rate of organic matter decay as reflected in fossil sediments. This study examines the large differences in degradation rates of organic-walled dinoflagellate cyst species to separate these degradation and productivity signals. For this, accumulation rates of cyst species known to be resistant (R-cysts) or sensitive (S-cysts) to aerobic degradation of 62 sites are compared to mean annual chlorophyll-a, sea-surface temperature, sea-surface salinity, nitrate and phosphate concentrations of the upper waters and deep-water oxygen concentrations. Furthermore, the degradation of sensitive cysts, as expressed by the degradation constant k and reaction time t, has been related to bottom water [O2]. The studied sediments were taken from the Arabian Sea, north-western African Margin (North Atlantic), western-equatorial Atlantic Ocean/Caraibic, south-western African margin (South Atlantic) and Southern Ocean (Atlantic sector). Significant relationships are observed between (a) accumulation rates of R-cysts and upper water chlorophyll-a concentrations, (b) accumulation rates of S-cysts and bottom water [O2] and (c) degradation rates of S-cysts (kt) and bottom water [O2]. Relationships that are extremely weak or are clearly insignificant on all confidence intervals are between (1) S-cyst accumulation rates and chlorophyll-a concentrations, sea-surface temperature (SST), sea-surface salinity (SSS), phosphate concentrations (P) and nitrate concentrations (N), (2) between R-cyst accumulation rates and bottom water [O2], SST, SSS, P and N, and between (3) kt and water depth. Co-variance is present between the parameters N and P, N, P and chlorophyll-a, oxygen and water depth. Correcting for this co-variance does not influence the significance of the relationship given above. The possible applicability of dinoflagellate cyst degradation to estimate past net primary production and deep ocean ventilation is discussed.

Paleotemperature and productivity reconstruction of sediment core D11957P on the Iberian Margin

Foraminifera counts and climatic assemblages from the Tore Seamount are used to approach the glacial and interglacial changes in temperature and productivity on the Iberian Margin over the last 225 kyr. Chronostratigraphy is based on Globigerinoides ruber and Globigerina bulloides oxygen isotopes and supported by foraminifera and carbonate stadial fluctuations. Foraminifera indicate cooling from late interglacial stage 5 to the beginning of Termination I (TI). Neogloboquadnna pachyderma-s reflects cold conditions during glacial stages 4-2. In contrast, glacial stage 6 is dominated by warmer N. pachyderma-d and dutertrei and a restricted arctic assemblage. Past sea surface temperatures confirm the general cooling, reaching 4.3°C (SIMMAX.28) during stage 2. Multiple productivity proxies such as organic carbon, productivity-related foraminifera, and delta13C constrain the changes observed. A productivity increase occurs after interglacial stage 5, enhanced from late glacial stage 3 to TI Present-day satellite-detected phytoplankton plumes off Portugal would have accounted in the past glacial stages for the general productivity increase over the Tore. On top of this, welldefined peaks of organic carbon and productivity-related foraminifera correspond with Heinrich events 1-4.

Terrigenous input and marine productivity for the Pacific sector of the Southern Ocean based on lipid biomarkers

In this study, we present a new multiproxy data set of terrigenous input, marine productivity and sea surface temperature (SST) from 52 surface sediment samples collected along E-W transects in the Pacific sector of the Southern Ocean. Allochtonous terrigenous input was characterized by the distribution of plant wax n-alkanes and soil-derived branched glycerol dialkyl glycerol tetraethers (brGDGTs). 230Th-normalized burial rates of both compound groups were highest close to the potential sources in Australia and New Zealand and are strongly related to lithogenic contents, indicating common sources and transport. Detection of both long-chain n-alkanes and brGDGTs at the most remote sites in the open ocean strongly suggests a primarily eolian transport mechanism to at least 110°W, i.e. by prevailing westerly winds. Two independent organic SST proxies were used, the UK'37 based on long-chain alkenones, and the TEX86 based on isoprenoid GDGTs. Both, UK'37 and TEX86 indices show robust relationships with temperature over a temperature range between 0.5 and 20°C, likely implying different seasonal and regional imprints on the temperature signal. While alkenone-based temperature estimates reliably reflect modern SST even at the low temperature end, large temperature residuals are observed for the polar ocean using the TEX86 index. 230Th-normalized burial rates of alkenones are highest close to the Subtropical Front and are positively related to lithogenic fluxes throughout the study area. In contrast, highest isoGDGT burial south of the Antarctic Polar Front is not related with dust flux but may be largely controlled by diatom blooms, and thus high opal fluxes during austral summer.

(Table 1) Alkenone concentration, UK'37 index and derived sea surface temperatures for ODP Site 167-1020

Uk'37 sea-surface temperature (SST) estimates obtained at ~2.5-k.y. resolution from Ocean Drilling Program Site 1020 show glacial-interglacial cyclicity with an amplitude of 7°-10°C over the last 780 k.y. This record shows a similar pattern of variability to another alkenone-based SST record obtained previously from the Santa Barbara Basin. Both records show that oxygen isotope Stage (OIS) 5.5 was warmer by ~3°C relative to the present and that glacial Uk'37 temperatures warm in advance of deglaciation, as inferred from benthic d18O records. The alkenone-based SST record at Site 1020 is longer than previously published work along the California margin. We show that warmer than present interglacial stages have occurred frequently during the last 800 k.y. Alkenone concentrations, a proxy for coccolithophorid productivity, indicate that sedimentary marine organic carbon content has also varied significantly over this interval, with higher contents during interglacial periods. A baseline shift to warmer SST and greater alkenone content occurs before OIS 13. We compare our results with those from previous multiproxy studies in this region and conclude that SST has increased by ~5°C since the last glacial period (21 ka). Our data show that maximum alkenone SSTs occur simultaneously with minimum ice volume at Site 1020, which is consistent with data from farther south along the margin. The presence of sea ice in the glacial northeast Pacific, the extent of which is inferred from locations of ice-rafted debris, provides further support for our notion of cold surface water within the northern California Current system, averaging 7°-8°C cooler during peak glacial conditions. The cooling of surface water during glacial stages most likely did not result from enhanced upwelling because alkenone concentrations and terrestrial redwood pollen assemblages are consistently lower during glacial periods.

Standardization in the Pre-Columbian Pottery from El Caño, Panama: Specialization, Productivity and Consumption

The pottery found in the burials of El Cano is uniform in style to these made in the coclesanos valleys between 700 and 1000 AD. The coefficient of variability of the different pottery forms, evidence diverse standardizations values for polychrome and non-polychrome ceramics. Moreover, data of funerary contexts from the Cano recently excavated, suggest that elite has controlled ceramic production. This control over the production of certain goods reveals that these were important in the support or proper operational of the chiefdoms in Panama and mark the phase of splendour of this culture.

Interannual and (multi-)decadal variability in the sedimentary BIT index of Lake Challa, East Africa, over the past 2200 years: assessment of the precipitation proxy

The branched vs. isoprenoid tetraether (BIT) index is based on the relative abundance of branched tetraether lipids (brGDGTs) and the isoprenoidal GDGT crenarchaeol. In Lake Challa sediments the BIT index has been applied as a proxy for local monsoon precipitation on the assumption that the primary source of brGDGTs is soil washed in from the lake's catchment. Since then, microbial production within the water column has been identified as the primary source of brGDGTs in Lake Challa sediments, meaning that either an alternative mechanism links BIT index variation with rainfall or that the proxy's application must be reconsidered. We investigated GDGT concentrations and BIT index variation in Lake Challa sediments at a decadal resolution over the past 2200 years, in combination with GDGT time-series data from 45 monthly sediment-trap samples and a chronosequence of profundal surface sediments.

Our 2200-year geochemical record reveals high-frequency variability in GDGT concentrations, and therefore in the BIT index, superimposed on distinct lower-frequency fluctuations at multi-decadal to century timescales. These changes in BIT index are correlated with changes in the concentration of crenarchaeol but not with those of the brGDGTs. A clue for understanding the indirect link between rainfall and crenarchaeol concentration (and thus thaumarchaeotal abundance) was provided by the observation that surface sediments collected in January 2010 show a distinct shift in GDGT composition relative to sediments collected in August 2007. This shift is associated with increased bulk flux of settling mineral particles with high Ti / Al ratios during March–April 2008, reflecting an event of unusually high detrital input to Lake Challa concurrent with intense precipitation at the onset of the principal rain season that year. Although brGDGT distributions in the settling material are initially unaffected, this soil-erosion event is succeeded by a massive dry-season diatom bloom in July–September 2008 and a concurrent increase in the flux of GDGT-0. Complete absence of crenarchaeol in settling particles during the austral summer following this bloom indicates that no Thaumarchaeota bloom developed at that time. We suggest that increased nutrient availability, derived from the eroded soil washed into the lake, caused the massive bloom of diatoms and that the higher concentrations of ammonium (formed from breakdown of this algal matter) resulted in a replacement of nitrifying Thaumarchaeota, which in typical years prosper during the austral summer, by nitrifying bacteria. The decomposing dead diatoms passing through the suboxic zone of the water column probably also formed a substrate for GDGT-0-producing archaea. Hence, through a cascade of events, intensive rainfall affects thaumarchaeotal abundance, resulting in high BIT index values.

Decade-scale BIT index fluctuations in Lake Challa sediments exactly match the timing of three known episodes of prolonged regional drought within the past 250 years. Additionally, the principal trends of inferred rainfall variability over the past two millennia are consistent with the hydroclimatic history of equatorial East Africa, as has been documented from other (but less well dated) regional lake records. We therefore propose that variation in GDGT production originating from the episodic recurrence of strong soil-erosion events, when integrated over (multi-)decadal and longer timescales, generates a stable positive relationship between the sedimentary BIT index and monsoon rainfall at Lake Challa. Application of this paleoprecipitation proxy at other sites requires ascertaining the local processes which affect the productivity of crenarchaeol by Thaumarchaeota and brGDGTs.

Modelling and estimating models of physician labour supply and productivity

Ma thèse s’intéresse aux politiques de santé conçues pour encourager l’offre de services de santé. L’accessibilité aux services de santé est un problème majeur qui mine le système de santé de la plupart des pays industrialisés. Au Québec, le temps médian d’attente entre une recommandation du médecin généraliste et un rendez-vous avec un médecin spécialiste était de 7,3 semaines en 2012, contre 2,9 semaines en 1993, et ceci malgré l’augmentation du nombre de médecins sur cette même période. Pour les décideurs politiques observant l’augmentation du temps d’attente pour des soins de santé, il est important de comprendre la structure de l’offre de travail des médecins et comment celle-ci affecte l’offre des services de santé. Dans ce contexte, je considère deux principales politiques. En premier lieu, j’estime comment les médecins réagissent aux incitatifs monétaires et j’utilise les paramètres estimés pour examiner comment les politiques de compensation peuvent être utilisées pour déterminer l’offre de services de santé de court terme. En second lieu, j’examine comment la productivité des médecins est affectée par leur expérience, à travers le mécanisme du "learning-by-doing", et j’utilise les paramètres estimés pour trouver le nombre de médecins inexpérimentés que l’on doit recruter pour remplacer un médecin expérimenté qui va à la retraite afin de garder l’offre des services de santé constant. Ma thèse développe et applique des méthodes économique et statistique afin de mesurer la réaction des médecins face aux incitatifs monétaires et estimer leur profil de productivité (en mesurant la variation de la productivité des médecins tout le long de leur carrière) en utilisant à la fois des données de panel sur les médecins québécois, provenant d’enquêtes et de l’administration. Les données contiennent des informations sur l’offre de travail de chaque médecin, les différents types de services offerts ainsi que leurs prix. Ces données couvrent une période pendant laquelle le gouvernement du Québec a changé les prix relatifs des services de santé. J’ai utilisé une approche basée sur la modélisation pour développer et estimer un modèle structurel d’offre de travail en permettant au médecin d’être multitâche. Dans mon modèle les médecins choisissent le nombre d’heures travaillées ainsi que l’allocation de ces heures à travers les différents services offerts, de plus les prix des services leurs sont imposés par le gouvernement. Le modèle génère une équation de revenu qui dépend des heures travaillées et d’un indice de prix représentant le rendement marginal des heures travaillées lorsque celles-ci sont allouées de façon optimale à travers les différents services. L’indice de prix dépend des prix des services offerts et des paramètres de la technologie de production des services qui déterminent comment les médecins réagissent aux changements des prix relatifs. J’ai appliqué le modèle aux données de panel sur la rémunération des médecins au Québec fusionnées à celles sur l’utilisation du temps de ces mêmes médecins. J’utilise le modèle pour examiner deux dimensions de l’offre des services de santé. En premierlieu, j’analyse l’utilisation des incitatifs monétaires pour amener les médecins à modifier leur production des différents services. Bien que les études antérieures ont souvent cherché à comparer le comportement des médecins à travers les différents systèmes de compensation,il y a relativement peu d’informations sur comment les médecins réagissent aux changementsdes prix des services de santé. Des débats actuels dans les milieux de politiques de santé au Canada se sont intéressés à l’importance des effets de revenu dans la détermination de la réponse des médecins face à l’augmentation des prix des services de santé. Mon travail contribue à alimenter ce débat en identifiant et en estimant les effets de substitution et de revenu résultant des changements des prix relatifs des services de santé. En second lieu, j’analyse comment l’expérience affecte la productivité des médecins. Cela a une importante implication sur le recrutement des médecins afin de satisfaire la demande croissante due à une population vieillissante, en particulier lorsque les médecins les plus expérimentés (les plus productifs) vont à la retraite. Dans le premier essai, j’ai estimé la fonction de revenu conditionnellement aux heures travaillées, en utilisant la méthode des variables instrumentales afin de contrôler pour une éventuelle endogeneité des heures travaillées. Comme instruments j’ai utilisé les variables indicatrices des âges des médecins, le taux marginal de taxation, le rendement sur le marché boursier, le carré et le cube de ce rendement. Je montre que cela donne la borne inférieure de l’élasticité-prix direct, permettant ainsi de tester si les médecins réagissent aux incitatifs monétaires. Les résultats montrent que les bornes inférieures des élasticités-prix de l’offre de services sont significativement positives, suggérant que les médecins répondent aux incitatifs. Un changement des prix relatifs conduit les médecins à allouer plus d’heures de travail au service dont le prix a augmenté. Dans le deuxième essai, j’estime le modèle en entier, de façon inconditionnelle aux heures travaillées, en analysant les variations des heures travaillées par les médecins, le volume des services offerts et le revenu des médecins. Pour ce faire, j’ai utilisé l’estimateur de la méthode des moments simulés. Les résultats montrent que les élasticités-prix direct de substitution sont élevées et significativement positives, représentant une tendance des médecins à accroitre le volume du service dont le prix a connu la plus forte augmentation. Les élasticitésprix croisées de substitution sont également élevées mais négatives. Par ailleurs, il existe un effet de revenu associé à l’augmentation des tarifs. J’ai utilisé les paramètres estimés du modèle structurel pour simuler une hausse générale de prix des services de 32%. Les résultats montrent que les médecins devraient réduire le nombre total d’heures travaillées (élasticité moyenne de -0,02) ainsi que les heures cliniques travaillées (élasticité moyenne de -0.07). Ils devraient aussi réduire le volume de services offerts (élasticité moyenne de -0.05). Troisièmement, j’ai exploité le lien naturel existant entre le revenu d’un médecin payé à l’acte et sa productivité afin d’établir le profil de productivité des médecins. Pour ce faire, j’ai modifié la spécification du modèle pour prendre en compte la relation entre la productivité d’un médecin et son expérience. J’estime l’équation de revenu en utilisant des données de panel asymétrique et en corrigeant le caractère non-aléatoire des observations manquantes à l’aide d’un modèle de sélection. Les résultats suggèrent que le profil de productivité est une fonction croissante et concave de l’expérience. Par ailleurs, ce profil est robuste à l’utilisation de l’expérience effective (la quantité de service produit) comme variable de contrôle et aussi à la suppression d’hypothèse paramétrique. De plus, si l’expérience du médecin augmente d’une année, il augmente la production de services de 1003 dollar CAN. J’ai utilisé les paramètres estimés du modèle pour calculer le ratio de remplacement : le nombre de médecins inexpérimentés qu’il faut pour remplacer un médecin expérimenté. Ce ratio de remplacement est de 1,2.

Productivity growth and the structure of production

In this study, interactions between potential hierarchical value chains existing in the production structure and industry-wise productivity growths are sought. We applied generalized Chenery-Watanabe heuristics for matrix linearity maximization to triangulate the input-output incidence matrix for both Japan and the Republic of Korea, finding the potential directed flow of values spanning the industrial sectors of the basic (disaggregated) industry classifications for both countries. Sector specific productivity growths were measured by way of the Trönquvist index, using the 2000-2005 linked input-output tables for both Japan and Korea.