Estimation Of Production Function Research Articles

Comparison of the sustainability of mechanized and traditional rapeseed production systems using an emergy-based production function: A case study in Lorestan Province, Iran

Estimation of the production function is among the techniques applied to gain knowledge on the production sustainability status of agricultural systems. However, variations in the units of crop measurement and of the inputs to the model function used for estimation are considered as drawbacks, when investigating the stability of ecosystems. The present research is to calculate all inputs and outputs of the econometric model using the emergy technique, which expresses all terms in the model in the same unit, solar emjoules. It is important to bring up free environmental inputs in the production function and consider them as economic inputs affecting sustainability. Align the unit of measurement of all inputs and outputs, estimation of the input production function in uniform and powerful unit of solar emjouls (sej), considering free energy of solar radiation and the amount of soil organic matter and minerals indicates the comprehensiveness of the method compared to conventional production estimation methods. In this study, the sustainabilities of mechanized and traditional rapeseed production systems were compared with parameters derived from the estimation of the production function in Lorestan, Iran. Data were collected through questionnaires and continuous communication with 40 producers of rapeseed by mechanized methods (i.e., the producers using the highest level of mechanization) and 40 traditional rapeseed farmers (i.e., the producers using the lowest level of mechanization) among a total sample of 1489 rapeseed farmers active in 2018. Results showed elasticity values for soil organic matter reduction and erosion input in mechanized systems was −1.58 and for water, workforce, nitrogen and phosphorous fertilizers, and chemical pesticide inputs in traditional systems were −1.31, −3.53, −0.36, −2.30 and −1.51, respectively. These negative elasticities suggest that sustainability is threatened due to the excess consumption of these inputs. Application of policies to 1) integrate small land holdings into the total production function for rapeseed, 2) increase the knowledge and skills of the workforce in the agricultural sector, and 3) implement conservation measures to prevent soil organic matter reduction and erosion are practical approaches are suggested to improve the productivity and sustainability of these agricultural systems.

The role of contracts in the adoption of irrigation by Brazilian orange growers

This article analyses the drivers of adoption of irrigation systems by orange growers in the State of São Paulo, Brazil. Given the scarcity of similar studies focusing on the Brazilian orange sector, the starting point of our article is the estimation of a translog production function to assess the impact of irrigation on the production of a sample of 98 São Paulo’s orange growers. The results showed that irrigation adoption increased orange production of the farms in the sample by 21.9 %, ceteris paribus. Despite the potential benefits of irrigation, adoption was rather low: only 24.6 % of the orange orchards area in the Brazilian orange belt was irrigated in 2015. Starting from this apparent paradox, we argue that the information asymmetry and conflicts observed in the contractual relationship between growers and juice processing firms reduce the incentives for the adoption of technologies in the Brazilian orange sector. We apply probit models to the same sample to test four hypotheses on drivers of the decision to adopt irrigation. The results of our empirical analysis show that the use of contracts in transactions with processing firms negatively affect the adoption of irrigation. The analysis also identifies other variables that influence positively the adoption of irrigation: participation in producers’ associations, participation in courses on irrigation and dependence on the income from the orange orchard. The results of this study suggest that the design of policies aimed at fostering irrigation adoption must consider potential bargaining power asymmetries in the relationships between the users of irrigation and the buyers of their agricultural production.

ICT labor, software usage, and productivity: firm-level evidence from Turkey

This paper examines the impact of information and communication technology (ICT) on firm-level productivity in Turkey using a novel longitudinal data set. We combine two firm-level data sets compiled by the Turkish Statistical Institute and construct an unbalanced panel data set covering the period 2007–2014. Our data set matches firms in the ICT Usage in Enterprises Survey to the Annual Industry and Service Statistics Survey that includes data on production factors and firm characteristics. We estimate production functions augmented by ICT labor, software investments, and indicators for the usage of enterprise system applications including ERP, CRM, and SCM. Our results confirm that there is a positive relationship between firm-level productivity and ICT use. Empirical findings support the complementarity hypothesis between ICT labor and software usage variables. This result implies that the productivity contribution of ICT labor is larger in firms using specialized software. Accordingly, firms need to invest in ICT labor to reap the benefits from enterprise software investments. We also estimate our models using sub-samples based on size and sector. While the elasticity of ICT labor is higher in small and medium-size firms, larger firms have greater marginal product than smaller firms. Our results also suggest that the strength of the link between ICT and productivity may be different across sectors. In particular, we find that the productivity contribution of ICT labor is higher in the services than the manufacturing sector.

EU-US trade post-trump perspectives: TTIP aspects related to foreign direct investment and innovation

The international economic debate on the Transatlantic Trade and Investment Partnership (TTIP) has focused mainly on trade induced real income gains while the Foreign Direct Investment (FDI)-related and innovation induced benefits have been largely neglected, although the EU and the US are leading FDI host countries and FDI source countries. Moreover, from a theoretical perspective a knowledge production function has to be considered in order to analyze FDI and innovation dynamics – and this can then be linked to output and economic growth, respectively. It is argued that such a Schumpeterian approach for an open economy is needed to understand deep integration dynamics while the standard CGE model used by Francois et al. (2013) leads to an underestimation of deep integration projects such as TTIP. The panel data estimation of knowledge production functions for 20 EU countries between 2002 and 2012 shows clear empirical evidence that a rise of the number of researchers and of the FDI stock-GDP ratio (or related variables) will raise patent applications. Additionally, a higher per capita income – that could reflect trade related real income gains in the context of TTIP – also contributes to new knowledge and a fortiori to higher GDP. Time series data analysis for Germany indicates additionally that FDI induced higher innovation dynamics will raise output - combining trade benefits and FDI/innovation related real income gains plus transatlantic macroeconomic interdependency effects a real income gain of nearly 2% should be expected for Germany (and the EU). As the Trump Administration is focusing on bilateralism, the US is essentially renouncing a considerable output increase and opportunities to improve its current account; instead the Trump Administration has adopted a policy of protectionism which is likely to undermine trade dynamics and economic growth. In the long run, transatlantic trade perspectives could improve.

A New Perspective on Returns to Scale for Truckload Motor Carriers

Understanding how motor carriers' size affects their productivity (e.g., miles per power unit) is of fundamental importance to carrier managers, shippers, and investors, because the nature of this relationship should influence carriers' strategies with regard to growth. In the truckload (TL) sector, the prevailing assumption is that TL carriers face constant returns to scale such that productivity differs little between large and small carriers. While empirical findings from several studies conducted since deregulation are consistent with this assumption, we contend that the true relationship between carrier size and productivity is more nuanced and is contingent on carriers' level of technical efficiency. Specifically, we develop and test middle range theory that predicts increasing returns to scale for carriers with low technical efficiency, constant returns to scale for carriers with average technical efficiency, and decreasing returns to scale for carriers with high technical efficiency. We test our theory by estimating production functions using quantile regression for data collected from the U.S. Department of Transportation for 1,068 TL carriers. Results from our analyses corroborate our predictions. Our findings hold valuable implications for the logistics literature as well as TL carrier management, shippers, and other industry stakeholders.

Profitability and technical efficiency of leafy vegetable production: a stochastic frontier production function analysis

ABSTRACT Smallholder leafy vegetable farmers are often faced with resource-use inefficiency in production. This work examined the profitability and technical efficiency of leafy vegetable production to determine sources of inefficiencies in smallholder production. The Maximum Likelihood Estimates of the Stochastic frontier production function indicated factors positively influencing production gross margin were education level, experience, seed, labor costs, fertilizer and farm-size; farmer age negatively influenced results, especially those who have less contact with extension agents. The mean efficiency score was 0.804 with R2 of 0.912. With more education, the application of required inputs could improve the yield of leafy vegetables.

More evidence on the relationship between cash transfers and child height

ABSTRACTWe examine the effect of the Zambia Child Grant Programme – an unconditional cash transfer (CT) targeted to rural households with children under age five – on height-for-age up to four years after programme initiation. The CT scheme had large positive effects on nutritional inputs like food expenditure and meal frequency, but no impact on child height-for-age. Production function estimates indicate that food carries little weight in the production of child height in the study sample. In settings with poor health infrastructure and harsh disease environments, a stand-alone CT is unlikely to address long-term chronic malnutrition unless accompanied by complementary interventions.

Higher education in Iran: An investigation of its expansion during 2005–2015 period using a control function approach

This article aims at investigating the significant higher education expansion in the Islamic Republic of Iran during 2005–2015 period through employing the production function of higher education. Avoiding simultaneity and selection problems in the presence of shocks, we have used a novel method from industrial organization discipline introduced by Rovigatti and Mollisi [1] – which is officially offered embeded in a Stata® module – by providing different production function estimators (Olley-Pakes, Levinsohn-Petrin, and Wooldridge) using provincial data on Iran. Our empirical results reveal that physical capital is the most critical determinant of higher education graduates. The results also uncover some important facts about the contribution of academic staff to the process of graduation. Compared to other conventional estimation methods, we also provide evidence on the superiority of this innovative method, which is far beyond its original context.

Constructing County-Level Data for Agricultural Inputs and Analyzing Agricultural Productivity, 1951-1980

Constructing County-Level Data for Agricultural Inputs and Analyzing Agricultural Productivity, 1951-1980

Does Edtech Substitute for Traditional Learning? Experimental Estimates of the Educational Production Function

Experimental studies rarely consider the shape and nature of the education production function, which is useful for deriving optimal levels of input substitution in increasingly resource constrained environments. Because of the rapid expansion of EdTech as a substitute for traditional learning around the world and against the backdrop of full-scale temporary substitution due to the coronavirus pandemic, we explore the educational production function by using a large randomized controlled trial that varies dosage of computer-assisted learning (CAL) as a substitute for traditional learning. Results show production is concave in CAL. Moving from zero to a low level of CAL, the marginal rate of technical substitution (MRTS) of CAL for traditional learning is greater than one. Moving from a lower to a higher level of CAL, production remains on the same or a lower isoquant and the MRTS is equal to or less than one. The estimates are consistent with the general form of a Cobb-Douglas production function and imply that a blended approach of CAL and traditional learning is optimal. The findings have direct implications for the rapidly expanding use of educational technology worldwide and its continued substitution for traditional learning. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Identification and Estimation of a Nonseparable Production Function

COVID-19 leads to a substantial decrease in the Chinese economy in early 2020. More importantly, the economy's recovery is not immediate; even new COVID-19 cases drop (close) to zero for a few months. I develop a nonseparable production function model to show productivity channel is a resolution to this puzzle. I first establish nonparametric identification and estimation of all the unspecified elements and provide estimators' asymptotic properties. Applying the model to the data, I find COVID-19 lowers current period productivity by 0.101, which then decreases current period output by 2.6%, causing the substantial economic decrease. The decrease of current period productivity reduces next period productivity by 0.084. The low current and next period productivity decrease next period output by 1.9%, causing the slow economic recovery. My estimation results also show that the more the new COVID-19 cases are, the larger the decrease on current and next period productivity and output.

Nonparametric Identification of Production Function, Total Factor Productivity, and Markup from Revenue Data

Commonly used methods of production function and markup estimation assume that a firm's output quantity can be observed as data, but typical datasets contain only revenue, not output quantity. We examine the nonparametric identification of production function and markup from revenue data when a firm faces a general nonparametri demand function under imperfect competition. Under standard assumptions, we provide the constructive nonparametric identification of various firm-level objects: gross production function, total factor productivity, price markups over marginal costs, output prices, output quantities, a demand system, and a representative consumer's utility function.

Nonparametric Identification of Production Function, Total Factor Productivity, and Markup from Revenue Data

Commonly used methods of production function and markup estimation assume that a firm's output quantity can be observed as data, but typical datasets contain only revenue, not output quantity. We examine the nonparametric identification of production function and markup from revenue data when a firm faces a general nonparametri demand function under imperfect competition. Under standard assumptions, we provide the constructive nonparametric identification of various firm-level objects: gross production function, total factor productivity, price markups over marginal costs, output prices, output quantities, a demand system, and a representative consumer's utility function.

Measuring Labor Contributions in the Creation of Added Value in Creative Industries

Recognising the determinants of the creative industry is vital to increase this industry value-added. The study of 16 creative industry sub-sectors in ten creative cities in Indonesia was conducted to depict the importance of capital and labour used in the industry. We use dynamic panel data to estimate production function that describes the relationship between industry value-added and its inputs by using firm-level panel data surveyed by Statistics Indonesia ranging from 2005 to 2015. The result shows that labour provides an essential influence on the industry value added while capital plays insignificant effect. This finding emphasises the need for more advanced capital use in creative industry in developing countries.

Estimating Production Functions with Fixed Effects

I propose an estimation procedure that can accommodate fixed effects in the widely used proxy variable approach to estimating production functions. The procedure allows unobserved productivity to have a permanent component in addition to a (nonlinear) Markov shock. The procedure does not rely on differencing out the fixed effect and thus is not restricted to within-firm variation for identification. Finally, the procedure is easy to implement as it only entails adding a two stage least squares step using internal instruments.

Exposure to Intimate Partner Violence and Children's Dynamic Skill Accumulation: Evidence from a UK Longitudinal Study

Children are increasingly recognized as secondary victims of intimate partner violence. This paper uses a unique UK longitudinal child development survey to study the relationship between verbal and physical abuse experienced by mothers and children’s development up to the age of seven. Estimating production functions for cognitive, social, and socio-emotional skills we find that exposure during pre-school years has a quantitatively important negative effect on socio-emotional skills among toddlers and negatively affects cognitive and social skills after age three. The estimated impact on cognitive development is consistent with measures of cognitive skills based on school-based tests.

Exposure to Intimate Partner Violence and Children’s Dynamic Skill Accumulation: Evidence from a UK Longitudinal Study

Children are increasingly recognized as secondary victims of intimate partner violence. This paper uses a unique UK longitudinal child development survey to study the relationship between verbal and physical abuse experienced by mothers and children’s development up to the age of seven. Estimating production functions for cognitive, social, and socio-emotional skills we find that exposure during pre-school years has a quantitatively important negative effect on socio-emotional skills among toddlers and negatively affects cognitive and social skills after age three. The estimated impact on cognitive development is consistent with measures of cognitive skills based on school-based tests.

Heterogeneous Passthrough from TFP to Wages

What is the impact of firms' productivity shocks on workers' labor earnings? To answer this question, we propose a novel approach to identify firms' productivity shocks that combines a nonparametric production function estimation method with a set of two-way fixed effect regressions to control for differences in labor quality across firms. We apply this method on matched employer-employee data that encompasses the entire population of workers and firms in Denmark between 1995 and 2010. Our dataset allows us to separately study workers that stay in the firm across consecutive periods from those that transition between firms, to control for workers' endogenous job mobility decisions, and to investigate how the passthrough from firms' shocks to wages varies across narrow population groups. We find an elasticity of workers' hourly wages to firms' productivity of 0.08. This implies that a positive shock to firms' productivity of one standard deviation generates an increase of $1,100 US dollars in annual wages for the average worker in Denmark. This result also implies labor supply elasticities of around 5.6. We also find that both persistent and transitory shocks to firms are passed on to wages and that there is marked asymmetry in passthrough between positive and negative productivity shocks. In fact, after controlling for workers' endogenous mobility decisions, the elasticity of hourly wages to a negative productivity shock is twice that of a positive productivity shock of the same magnitude. This suggests that workers are more exposed to negative than to positive shocks to firms' productivity. Furthermore, we find that the changes in wages due to variation in firm productivity are quite persistent and do not dissipate even five years after the shock. By looking at the heterogeneity of passthrough across firm and worker groups, we provide insights about the theoretical mechanisms that could explain the patterns of passthrough we observe in the data.

MEASURING RETURNSS TO SCALE, DISTRIBUTION EFFICIENCY AND ESTIMATING WHEAT PRODUCTION FUNCTION IN DHI QAR PROVINCE

The aim of this research was to estimate the production function to measure returns to scale and distribution efficiency of resources used in the production of wheat. Cross sectional data used of a random sample of 130 farmers in Dhi Qar Province. The results of the quantitative analysis of estimating production function showed that the double logarithmic form was the best estimated model based on economic and statistical indicators. However, that form suffered from heteroscedasticity and autocorrelation, so the robust regression technique was chosen. Value of returns to scale was 0.89 and this indicates decreasing returns to scale. This means that production function is in the second stage of the function. The results of the distributional efficiency study showed that the resources used in the production of the crop were not optimized as they amounted to 1.28 for the human labor resource and 20.6 for the capital. There was a shortage in the use of labor resource and capital for the optimal use that achieves economic efficiency and this caused low efficiency of crop production. Therefore, the research recommends the need to increase the amount of human labor in the wheat crop farms in Dhi Qar province, which would move the production function curve to a higher level in order to achieve the economic efficiency of the crop cultivation in the province on the one hand and return the farmers to production in the rational stage. Also, it is important to have the proper allocation of resources available by farmers, which has the effect of increasing the economic efficiency of those resources, which will in turn reflects on the efficiency of crop production.

Scientific productivity and patenting at the laboratory level: an analysis of Brazilian public research laboratories

ABSTRACT In this study, we investigated how different styles of research organisation of laboratories were related to scientific performance and patenting. From a Brazilian national database that included 1,412 laboratories, we defined a typology with five categories of laboratories. The categories were defined based on team composition—represented by the participation of permanent researchers, postgraduate students, and technicians—and by the scope of activities conducted in the laboratories. Adopting the concept of knowledge production functions, we estimated the productivity of the different categories of laboratories and the elasticities of capital and labour available for scientific production and patenting at the laboratory level. We found that medium-scale university laboratories focused on teaching and research reported higher scientific productivity, whereas laboratories focused on providing technological services and small-scale laboratories, which were less common in universities, filed for more patents. The estimation of knowledge production functions showed that scientific production was determined both by capital and by the labour of permanent and non-permanent researchers. Patenting was mainly determined by the labour factor. We also found complementarity between scientific production and patenting as well as constant returns to scale for scientific production at the laboratory level.