measuring the spillovers from technical advance mainframe computers in financial services measuring the social gains from recent technological advances is difficult because there are no output indexes from some important adopters measurement methods that infer the willingness to pay of theadopting industries from the derived demand curve for a new technologyovercome this difficulty the derived demand for high speed computersfor use in banks finance and insurance is shown to imply a very largesocial gain to computerization that is not captured by computer manufacturers copyright 1986 by american economic association

the use of parametric and non parametric frontier methods to measure the productive efficiency in the industrial sector a comparative study abstract parametric frontier models and non parametric methods have monopolised the recent literature on productive efficiency measurement empirical applications have usually dealt with either one or the other group of techniques this paper applies a range of both types of approaches to an industrial organisation setup the joint use can improve the accuracy of both although some methodological difficulties can arise the robustness of different methods in ranking productive units allows us to make a comparative analysis of them empirical results concern productive and market demand structure returns to scale and productive inefficiency sources the techniques are illustrated using data from the us electric power industry

the adjustment cost model of the firm duality and productive efficiency we present the theoretical foundation for an adjustment cost technology that supports the intertemporal production decision making behavior using the directional distance function dynamic input efficiency measures are developed that can separate out the impact of variable and dynamic factors inefficiency levels an approach to implement this theory in a nonparametric fashion is developed and applied to an unbalanced panel of dutch glasshouse firms the application finds overuse of all variable inputs and overcapitalization of installations the overall dynamic efficiency gain of 16 remains possible with allocative inefficiencies indicating underinvestment in structures and installations a comparison of static and dynamic efficiency measures finds that the static overall cost inefficiency is overestimated with technical inefficiency being overstated and allocative inefficiency being understated

information technology and productivity evidence from country level data this paper studies a key driver of the demand for the products and services of the global it industry returns from it investments we estimate an intercountry production function relating it and non it inputs to gdp output on panel data from 36 countries over the 1985 1993 period we find significant differences between developed and developing countries with respect to their structure of returns from capital investments for the developed countries in the sample returns from it capital investments are estimated to be positive and significant while returns from non it capital investments are not commensurate with relative factor shares the situation is reversed for the developing countries subsample where returns from non it capital are quite substantial but those from it capital investments are not statistically significant we estimate output growth contributions of it and non it capital and discuss the contrasting policy implications for capital investment by developed and developing economies

stochastic dea with ordinal data applied to a multi attribute pricing problem multiple attribute pricing problems are highly challenging due to the dynamic and uncertain features in the associated market in this paper we address the condominium multiple attribute pricing problem using data envelopment analysis dea in this study we simultaneously consider stochastic variables non discretionary variables and ordinal data and present a new type of dea model based on our proposed dea an effective performance measurement tool is developed to provide a basis for understanding the condominium pricing problem to direct and monitor the implementation of pricing strategy and to provide information regarding the results of pricing efforts for units sold as well as insights for future building design a case study is executed on a leading canadian condominium developer

estimating griliches k shifts griliches k shift a crucial parameter in the welfare evaluation of technological change is shown to be equal to the radial rate of technological change plus a vector of commodity bias parameters obtained from the distance function the analysis permits decomposition of sectoral productivity growth into productivity growth by commodity the k shifts estimated for wheat corn soybeans and beef in u s agriculture indicate a decrease in the marginal cost of production of corn soybeans and wheat during the 1950 1993 years

analysis of lumber and pulpwood production in a partial adjustment model with dynamic and variable speeds of adjustment this article proposes a partial adjustment model in which the speed of adjustment is a linear function of policy and economic variables rather than fixed the model is applied to analyze the behavior of lumber and pulpwood production since the model is overparameterized and intrinsically nonlinear the task of estimation is done by the nonlinear least squares method using quarterly data covering the period from 1961 through 1983 both the adjustment speeds of lumber and pulpwood production are found to vary inversely with the discrepancy between the actual and the expected interest rate the adjustment speed of lumber production is also found to shift positively with the difference between the actual and the expected government expenditure in addition the results show that the adjustment speed of lumber production suffers from a longterm declining trend whereas the adjustment speed of pulpwood production exhibits a long term upward sweep and that desired outputs of lumber and pulpwood respond negati

forecasting foreign exchange rates with an intrinsically nonlinear dynamic speed of adjustment model forecasting foreign exchange rates is an important but difficult process therefore it is important to use a superior forecasting model the paper takes up this criterion and proposes to describe and forecast foreign exchange rates by developing an intrinsically nonlinear model with variable and dynamic speeds of adjustment it is found that the speed of adjusting the random or expected to the equilibrium rate is very slow implying that fiscal policy statistically insignificat and monetary policy statistically significant may be ineffective to induce changes in the adjustment speed we also find that the nonlinear dynamic model improves forecasting performance implying that nonlinearities in the sense of functional forms are exploitable for improved point forecasting of foreign exchange rates

multi factor performance measure model with an application to fortune 500 companies abstract the paper develops tools for reconciling diverse measures which characterize the financial performance of the fortune 500 companies the technology of data envelopment analysis dea is employed to determine a multi factor financial performance model which inherently recognizes tradeoffs among various financial measures this study offers an alternative perspective and characterization on the performance of the fortune 500 companies it is shown that the top ranked companies by revenue do not necessarily have top ranked performance viewed as being multidimensional only about 3 companies were operating on the best practice frontier substantial technical and scale inefficiencies are found decreasing returns to scale drs are uncovered among the relatively large revenue top ranked companies the study of congestion shows that a reduction in current levels of employees assets and equity may actually increase revenue and profit levels factor specific measures within the framework of multidimensional measure are developed to further study the performance of companies and industries the performance of best practice frontier companies is analyzed by constructing reference share measures which indicate the role each frontier company plays in evaluating non frontier companies finally the reliability of the best practice frontier is examined

efficiency analysis for exogenously fixed inputs and outputs we evaluate by means of mathematical programming formulations the relative technical and scale efficiencies of decision making units dmus when some of the inputs or outputs are exogenously fixed and beyond the discretionary control of dmu managers this approach further develops the work on efficiency evaluation and on estimation of efficient production frontiers known as data envelopment analysis dea we also employ the model to provide efficient input and output targets for dmu managers in a way that specifically accounts for the fixed nature of some of the inputs or outputs we illustrate the approach using real data for a network of fast food restaurants

spillovers and governance an analysis of knowledge and reputational spillovers in information technology investigating spillovers potential costs and benefits to a firm that extend beyond an individual transaction i integrate transaction cost theory and the knowledge based view of the firm in an effort to better understand the efficient governance of knowledge contracts with detailed task descriptions were associated with transactions with the potential to generate new and reusable knowledge the risk of a firm s technology spilling over to others and the risk of reputation impairing spillovers were associated with suppliers using their own employees rather than subcontractors thus results suggest that the creation and protection of knowledge are key factors in understanding governance decisions

information technology effects on firm performance as measured by tobin s q despite increasing anecdotal evidence that information technology it assets contribute to firm performance and future growth potential of firms the empirical results relating it investments to firm performance measures have been equivocal however the bulk of the studies have relied exclusively on accounting based measures of firm performance which largely tend to ignore it s contribution to performance dimensions such as strategic flexibility and intangible value in this paper we use tobin s q a financial market based measure of firm performance and examine the association between it investments and firm q values after controlling for a variety of industry factors and firm specific variables the results based on data from 1988 1993 indicate that in all of the five years the inclusion of the it expenditure variable in the model increased the variance explained in q significantly the results also showed that for all five years it investments had a significantly positive association with tobin s q value our results are consistent with the notion that it contributes to a firm s future performance potential which a forward looking measure such as the q is better able to capture

some models for estimating technical and scale inefficiencies in data envelopment analysis in management contexts mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best in this capacity mathematical programming serves as a planning aid to management data envelopment analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments however they may have been planned or executed mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities the ccr ratio form introduced by charnes cooper and rhodes as part of their data envelopment analysis approach comprehends both technical and scale inefficiencies via the optimal value of the ratio form as obtained directly from the data without requiring a priori specification of weights and or explicit delineation of assumed functional forms of relations between inputs and outputs a separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of dea directly on observational data technical inefficiencies are identified with failures to achieve best possible output levels and or usage of excessive amounts of inputs methods for identifying and correcting the magnitudes of these inefficiencies as supplied in prior work are illustrated in the present paper a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing constant or decreasing returns to scale in multiple input and multiple output situations the results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with contestable market theories

is coal desulphurisation worthwhile evidence from the market abstract the paper develops a forward looking way to estimate the economic benefits of research and development on coal desulphurisation the methodology makes use of survey based techniques pioneered in environmental economics the empirical results illustrate the difficulty of configuring desulphurised coal to meet the requirements of existing electricity generating plants in addition to estimating the returns to investment in coal desulphurisation the contributions of the paper are in extending survey based valuation to meet the needs of r d investors for intelligence about the prospective value of their investments and using robust estimation techniques to reduce the influence of outliers

supply response and the dispersion of price expectations nomic an0lysis is the implication of aggregation when doing market studies the conditions for exact aggregation under a variety of definitions and settings have been studied paris and rausser theil the focus of this paper is on supply response in agriculture several authors have studied the effects of and tests for differential supply response coefficients across individuals or areas when aggregating firms e g theil p 567 here these coefficients are assumed to be identical for every firm but another problem is examined when uncertainty is present it is well documented that farmers have diverse price expectations e g bessler the question occurs as to the effects of such different expectations on aggregate supply response it is found that the curvature of the supply function is a crucial component of the analysis for example if the supply function is strictly concave an increase in the dispersion of expectations will reduce supply in aggregate

agriculture s environmental externalities dea evidence for french agriculture the existence of persistent technical inefficiency offers the opportunity for a free lunch not typically implied by the neoclassical theory of the firm when external effects are related to the use of particular inputs reduction of persistent technically inefficient levels of input use represents a means of reducing external impacts an important example is found in agriculture where substantial environmental impacts are generated by particular inputs within this context this paper considers the usefulness of data envelopment analysis dea for estimation of potential input reductions and assessment of potential reductions of environmental impacts of agricultural inputs an application for french cereal production provides estimates that indicate that substantial potential exists for reduction of input use and environmental impacts

wages competition and the surplus of labour a classical contribution to explaining profit this paper proposes a reconstruction of one of torrens little known pieces of work on the making and the distribution of income among the social classes the framework assumes a single good economy with fixed production coefficients it differs from the contemporary ricardian theory i e sraffa s in three ways i the real wage is depicted as the economic outcome of competition in the labour market ii the allocation of the net product between wages and profits is determined with no obligation to fix exogenous variables of distribution and iii the model suggests an innovative concept of surplus labour to define profit apart from the labour theory of value finally torrens approach lays the foundations of an original conception of profit explained by a specific transaction of capitalism economy

information technology and its impact on productivity firm level evidence from government and private data sources 1977 1993 robert solow s quip that we see computers everywhere but in the productivity statistics has prompted a large and growing literature examining the information productivity paradox some aggregate and industry level studies have failed to detect a positive contribution to productivity growth from investments in computer technology more recent studies utilizing firm level data however have detected a significant contribution this paper confirms the results of these latter studies using u s firm level computer asset and financial data for nonagricultural firms during the period 1977 1993 from a variety of data sources including the u s census bureau s enterprise and auxiliary establishment surveys compustat and computer intelligence infocorp a market research firm our principal finding that computers especially personal computers do contribute positively to productivity growth suggests that the traditional information productivity paradox is largely a measurement problemn this is closely related to the more general problem of assessing service sector productivity because computers are used most intensively in the service sector and in the service functions of non service sector firms e g payroll and purchasing as zvi griliches 1994 noted these activities pose the greatest problems for output and productivity measurement moreover although we may see computers everywhere they represent only a tiny fraction of capital stock on about 2 of plant property and equipment so aggregate effects may be hard to detect oliner and sichel 1993 our data indicate that computers not only contributed to productivity growth during the period 1977 1993 but they yielded excess returns relative to other types of capital the data also suggest that computer productivity peaked around 1986 1987 3 that computers are complementary with skilled labour krueger 1993 and autor katz and krueger 1997 and that use of computers may permit reductions in inventory levels finally and perhaps most interesting the evidence

employment and welfare participation among women laurie j bassi the model makes a distinction between voluntary and involuntary welfare receipt the findings suggest that among female heads of households the increase in welfare receipt that occurred between 1967 and 1979 was almost completely attributable to an increase in involuntary unemployment and an increase in the proportion of the population that was eligible for welfare due to changes in program parameters the passage of time used as a proxy for changes in the stigma associated with receiving welfare appears to be of secondary importance the labor supply response to welfare programs is small and possibly diminishing over time i introduction during the last thirty years the aid to families with dependent children afdc and food stamp programs experienced phenomenal increases in outlays between 1965 and 1975 the afdc population grew 162 percent and real government spending on benefits more than tripled by 1980 the probability that a family was receiving afdc was four times the probability in 1950 value the food stamp program after its introduction in the late 1960s experienced equally dramatic increases in recipiency rates and outlays these striking increases in welfare costs and participation brought an emerging consensus that the afdc and food stamp programs had failed as charles murray writes in losing ground 1984 146 the popular wisdom is characterized by hostility toward welfare it makes people lazy historian james patterson 1981 179 provides an alternative though not inconsistent explanation of the skyrocketing caseloads despite the hostility of the middle classes to increases in welfare poor americans refused at last to be cowed from applying for aid compared to the past when poor people harassed and stigmatized by public authorities were slow to claim their rights this was a fundamental change both of these explanations of the increase in welfare participation assert changes in people s response to the programs murray claims that program changes in the 1960s induced negative labor supply responses increasing numbers of individuals voluntarily reduced their earned income in order to become eligible for welfare patterson claims that a reduction in the stigma associated with welfare led a greater percentage of those eligible to apply for welfare a theoretical model for evaluating the validity of these two views as descriptions of reality is presented here the model is tested using data on women who headed households at some time between 1967 to 1979 the analysis attempts to identify changes in behavior among female heads of households but does not model the decision to head a family a decision which embodies both marital status and fertility choices the implications of this limitation are discussed at the end of the paper the focus is on developing a tractable theoretical structure that allows for a distinction between voluntary and involuntary welfare participation the model also provides a simple test for whether reported unemployment is a constraint on choice or rather a result of it i e whether unemployment too is involuntary or voluntary the empirical results enable us to dis aggregate the changes in welfare participation into their component parts the findings suggest that the increase in welfare participation rates among female heads of households during the late 1960s and 1970s is attributable to both an increase in involuntary unemployment and to an increase in those eligible for welfare as a result of changes in program parameters the passage of time used as a proxy for a lessening of stigma appears to be of minor importance the labor supply response to welfare programs appears to be small and possibly diminishing over time in section ii a model for determining the effect of redistribution schemes on labor supply and welfare participation decisions is developed

payoffs from investment in information technology lessons from the asia pacific region abstract this paper examines the factors influencing investment in information technology it and the payoffs from investment in it use on productivity and economic growth in 12 asia pacific countries for 1984 1990 it finds a significant positive correlation between growth in it investment and growth in both gdp and productivity over the seven year period countries with higher growth rates in it investment achieved consistently higher growth rates of gdp and productivity this finding is consistent with the notion of it led development it challenges the so called productivity paradox or the notion that investment in it has not paid off in productivity improvements

domestic and international product embodied r d diffusion abstract the paper examines the process of product embodied rd it is the fastest growing acquired technology cluster with the share of other technology clusters steady or declining the authors would like to thank two anonymous referees for their constructive comments to previous versions of this paper while absolving them from any remaining errors the views expressed in this paper are those of the authors and do not necessarily reflect those of the oecd its member countries or the central research institute of the electric power industry in japan

are hospitals seasonally inefficient evidence from washington state efficiency measurement has been one of the most extensively explored areas of health services research over the past two decades despite this attention few studies have examined whether a provider s efficiency varies on a monthly quarterly or other sub annual basis this article presents an empirical study that looks for evidence of seasonal inefficiency using a quarterly panel of general acute care hospitals from washington state we find that hospital efficiency does vary over time however the nature of this dynamic inefficiency depends on the type of efficiency being measured our results suggest that technical and cost efficiency vary by quarter allocative and scale efficiency also vary on a quarterly basis but only if the data are jointly disaggregated by quarter and another firm specific factor such as size or operating status thus future research corporate decisions and government policies designed to improve the efficiency of hospital care need to account for seasonal trends in hospi

the welfare analysis of product innovations with an application to computed tomography scanners the main goal of this paper is to put forward a methodology for the measurement of product innovations using a value metric that is equating the magnitude of innovations with the welfare gains they generate this research design is applied to the case of computed tomography scanners a revolutionary innovation in medical technology the econometric procedure centers on the estimation of a discrete choice model the nested multinominal logit which yields the parameters of a utility function defined over the changing quality dimensions of the innovative product the estimated flow of social gains from innovation is used to compute a social rate of return to r d to explore the interrelation between innovation and diffusion and to trace the time profile of benefits and costs the latter suggesting the possible occurrence of technological cycles

the substitution of information technology for other factors of production a firm level analysis fueled by its constant technological and price improvements information technology it is displacing other inputs in the production of goods and services by 1994 it accounts for over 15 of fixed investments by the u s private sector and the ratio of new it investments to labor costs is approaching 5 1990 dollar basis the ability to take advantage of improvements in it is determined in part by the substitutability of it for other factors of production this paper builds on the empirical framework of brynjolfsson and hitt brynjolfsson e l hitt 1995 information technology as a factor of production the role of differences among firms econom innovations and new tech 3 183 199 and extends it to jointly estimate output and substitution elasticities using the ces translog production function our primary source of it related data is the idg computerworld annual survey data on is spending by large u s firms for the period 1988 to 1992 previously analyzed by brynjolfsson and hitt brynjolfsson e l hitt 1995 information technology as a factor of production the role of differences among firms econom innovations and new tech 3 183 199 brynjolfsson e l hitt 1996 paradox lost firm level evidence on the returns to information systems spending management sci 424 541 558 and lichtenberg lichtenberg f r 1995 the output contributions of computer equipment and personnel a firm level analysis econom innovations and new tech 3 201 217 a key result is that it capital is a net substitute for both ordinary capital and labor suggesting that the factor share of it in production will grow to more significant levels over time we confirm earlier findings of positive returns to it investment for this data set further we find excess returns on it investment relative to labor input and some evidence of excess returns relative to ordinary capital taken together these results shed new light on the productivity paradox of it and on the growth of information intensity across the economy as firms take advantage of the continuing improvements in it

a general model of r d competition and policy this article constructs a model of r d with heterogeneous firms each firm s probability of success is a function of its sunk and recurrent r d expenditures the social gains from an innovation are not fully captured by the successful firm the comparison of the social optimum and the market equilibrium involves balancing spillover and crowding effects pigovian corrective policies as well as strategic policies for a subset of colluding firms are discussed

further evidence for sraffa s interpretation of ricardo samuel hollander 1973 1975 1979 has attracted much attention by disputing piero sraffa s famous corn model interpretation of ricardo s 1815 essay on profits john eatwell 1975 and more recently pierangelo garegnani 1982 in this journal have come to sraffa s defence at issue is sraffa s suggestion contained in the introduction to the first volume of his edition of ricardo s works that the rational foundation of ricardo s dictum that the profits of the farmer regulate the profits of all other trades is the assumption that the inputs and outputs of agricultural production are roughly homogenous and that the rate of profit in agriculture may therefore be conceived as a ratio of physical quantities independent of valuation sraffa 1951 p xxxi eatwell and garegnani base their defences of this proposition upon exegeses of the relevant text and correspondence in this short paper i will show that further evidence in support of sraffa s view may be found in a now little known article written by robert torrens which appeared in the edinburgh review of october 1819 1 that article which was ostensibly a review of four pamphlets of robert owen and which bore the running title mr owen s plans for relieving the national distress details a corn model theory of profits in much more explicit terms than does ricardo s essay on profits ricardo moreover was not only familiar with the article but wrote approvingly of it in several letters to j r mcculloch on 28 february 1820 he wrote

the solow productivity paradox what do computers do to productivity 1 you don t see computers everywhere in a meaningful economic sense computers and information processing equipment are a relatively small share of gdp and of the capital stock 2 you only thinkyou see computers everywhere government hedonic price indexes for computers fall too fast according to this position and therefore measured real computer output growth is also too fast 3 you may not see computers everywhere but in the industrial sectors where you most see them output is poorly measured examples are finance and insurance which are heavy users of information technology and where even the concept of output is poorly specified 4 whether or not you see computers everywhere some of what they do is not counted in economic statistics examples are consumption on the job convenience better user interface and so forth 5 you don t see computers in the productivity statistics yet but wait a bit and you will this is the analogy with the diffusion of electricity the idea that the productivity implications of a new technology are only visible witlh a long lag 6 you see computers everywhere but in the productivity statistics because computers are not as productive as you think here there are many anecdotes such as failed computer system design projects but there are also assertions from computer science that computer and software design has taken a wrong turn 7 there is no paradox some economists are counting innovations and new products on an arithmetic scale when they should count on a logarithmic scale

how income transfer programs affect work savings and the income distribution a critical review for helpful comments on earlier drafts we thank without implicating moses abramovitz yves balcer john bishop alan blinder richard burkhauser michael darby irwin garfinkel alan gustman daniel hamermesh martin holmer george jakubson robert lampman paul menchik robert moffitt michael murray joseph quinn timothy smeeding eugene smolensky barbara wolfe and two anonymous referees

the corn model gluts and surplus value the controversy over ricardo s corn model has focused on the interpretation of his early writings here ricardo s later use of a corn model example in his dispute with malthus over gluts is discussed malthus s own use of a corn model table in attempting to justify his use of a labour commanded measure of value is analysed it is shown that he calculates what marx was to describe as surplus value from the physical conditions of production and the real wage copyright 2006 oxford university press

benchmarking urban energy efficiency in the uk this study asks what is the best way to measure urban energy efficiency there has been recent interest in identifying efficient cities so that best practices can be shared a process known as benchmarking previous studies have used relatively simple metrics that provide limited insight on the complexity of urban energy efficiency and arguably fail to provide a fair measure of urban performance using a data set of 198 urban uk local administrative units three methods are compared ratio measures regression residuals and data envelopment analysis the results show that each method has its own strengths and weaknesses regarding the ease of interpretation ability to identify outliers and provide consistent rankings efficient areas are diverse but are notably found in low income areas of large conurbations such as london whereas industrial areas are consistently ranked as inefficient the results highlight the shortcomings of the underlying production based energy accounts ideally urban energy efficiency benchmarks would be built on consumption based accounts but interim recommendations are made regarding the use of efficiency measures that improve upon current practice and facilitate wider conversations about what it means for a specific city to be energy efficient within an interconnected economy

estimating technical and allocative efficiency in the public sector a nonparametric analysis of dutch schools abstract public sector output provision is influenced not only by discretionary inputs but also by exogenous environmental factors in this paper we extended the literature by developing a conditional dea estimator of allocative efficiency that allows a decomposition of overall cost efficiency into allocative and technical components while simultaneously controlling for the environment we apply the model to analyze technical and allocative efficiency of dutch secondary schools the results reveal that allocative efficiency represents a significant 37 percent of overall cost efficiency on average although technical inefficiency is still the dominant part furthermore the results show that the impact of environment largely differs between schools and that having a more unfavorable environment is very expensive to schools these results highlight the importance of including environmental variables in both technical and allocative efficiency analysis

evaluating the operational efficiency of major ports in the asia pacific region using data envelopment analysis in recent years as competition among international ports has intensified the impartial and objective evaluation of port operational efficiency has become increasingly important in enabling each individual port to understand its peculiar strengths and weaknesses as well as any immediate threats or opportunities that may affect its competitive environment this study applies ccr model bcc model and 3 stage dea model to evaluate the changes in efficiency that have taken place between 1998 and 2001 in 10 ports in the asia pacific region using cross period data the empirical results show that different model will lead to different result on average the efficiency estimated by 3 stage dea procedure is the highest while ccr efficiency is the lowest it should be noted that the efficiencies based on ccr and bcc model are somewhat lower than the 3 stage dea approaches because they do not take the environmental factors managerial inefficiency and statistical noises into account

an economic model of welfare stigma perhaps the most basic assumption of the economic theory of consumer demand is that more is better than less virtually all of the major propositions of consumer theory can in a certain sense be derived from the assumption that goods are good interestingly however this tenet seems to be violated by the behavior of many individuals in the low income population for many turn out to be eligible for a positive welfare benefit but do not in fact join the welfare rolls for example it has been estimated that in 1970 only about 69 percent of the families eligible for afdc aid to families with dependent children participated in the program see richard michel 1980 the corresponding percentage for afdc u the program for which families with an unemployed male are eligible was only 43 percent and the participation rate in the food stamp program was only 38 percent see maurice mcdonald 1977 this phenomenon has puzzled many investigators because such individuals do not locate on the boundaries of their budget sets consequently most investigators ignore the problem when studying the effects of welfare programs on behavior in this paper this seemingly irrational rejection of an increase in income is modeled as resulting from welfare stigma that is from disutility arising from participation in a welfare program per se 1 the existence of stigma has been amply documented in the sociological literature patrick horan and patricia austin 1974 lee rainwater 1979 where interviews of recipients have often uncovered feelings of lack of self respect and negative self characterizations from participation in welfare nevertheless this phenomenon has not been modeled and many questions consequently remain when is the disutility of participation strong enough to prevent participation shouldn t we expect individuals to weigh the disutility of participation against the potential benefit in their decisions what is the elasticity of participation with respect to the potential benefit also in a slightly different vein how are the work disincentives of welfare affected by stigma these questions have been given scant attention by economists yet they are crucial for our ability to predict the impact of various welfare programs on the lowincome population here these questions are addressed by modeling nonparticipation as a utility maximizing decision the model is developed and estimated for the afdc program 2 the model posits an individual utility function containing not just disposable income but

exact consumer s surplus and deadweight loss consumer s surplus is a widely used tool in applied welfare economics both economic theorists and cost benefit analysis often use consumer s surplus despite its somewhat dubious reputation the basic idea is to evaluate the value to a consumer or his willingness to pay for a change in price of a good from say pricep to pricep because price changes affect consumer welfare an evaluation of this effect is often a key input to public policy decisions yet consumer s surplus is probably the most controversial of widely used economic concepts both paul samuelson and ian little conclude that the economics profession would be better off without it it is my feeling of the situation that substantial agreement exists on the correct quantities to be measured the amount the consumer would pay or would need to be paid to be just as well off after the price change as he was before the price change the quantities correspond to john hicks compensating variation measures an alternative measure which takes ex post price change utility as the basis of comparison is hicks equivalent variation the controversy arises in the measurement of these quantities the usual measurement procedure is to use the area to the left of the marshallian market demand curve between two price levels jules dupuit originated this measure of welfare change and alfred marshall and hicks derived appropriate conditions for its use the primary condition for the area to the left of the demand curve to correspond to the compensating variation is to have constant marginal utility of income marshall gave this condition and if it holds the same quantity will be derived as the area to the left of the compensated hicksian demand curve this area to the left of the compensated demand curve is exactly what the compensating variation and equivalent variation measure thus the constant marginal utility of income is a sufficient condition for marshallian consumer s surplus to be equal to hicks consumer s surplus in this case arnold harberger s plea to use the welfare triangle as one half times the product of the price change times the quantity change to measure deadweight loss corresponds to the correct theoretical amount of welfare change in a recent paper robert willig derives bounds for the percentage difference between the correct measure of either the compensating or equivalent variation and the marshallian measure derived form the market demand curve his bounds which depend on the income elasticity of demand for the single good in the region of price change being considered as well as the proportion of the consumer s income spent on the good demonstrate that the marshallian consumer s surplus is often a good approximation to hicks consumer s surplus the fact that the proportion of the consumer s income spent matters as well as the income elasticity was first pointed out by harold hotelling willig contends that the approximation error will be less than the errors involved in estimating the demand curve thus he hopes to remove the need for apology that applied economists often need to give to theorists who remark on the inappropriateness of using marshallian consumer s surplus to measure welfare change however in this paper i show that for the case primarily considered by willig of a single price change which is also the situation in which consumer s surplus is often used in applied work no approximation is necessary professor of economics massachusetts institute of technology and research associate national bureau of economic research i would like to thank peter diamond erwin diewert daniel mcfadden robert merton robert solow hal varian joel yellin and the referees for help and comments research support from the national science foundation is acknowledged the reason that we still have two rather than one of samuelson s six measures of consumer s surplus arises from an index number problem of the correct basis for the welfare comparison i will give both measures but plan to concentrate on the compensating variation

anticipating the consequences of school reform a new use of dea we use dea type linear programming techniques to simulate a basic component of educational reform eliminating restrictions on the allocation of school personnel our technique allows us to identify potential output gains or equivalently potential cost savings from reform we can also identify which personnel groups are likely to gain and lose under this reform when we apply our model to a sample of texas school districts we find evidence that the educational establishment has substantial economic rents to protect from school reform and that the primary beneficiaries of reform are likely to be affluent school districts with few minority students the technique which relies on the relationship between the direct and indirect distance functions can be easily generalized to measure the potential gains from removing other input restrictions such as union work rules environmental regulations or deed restrictions

estimating most productive scale size using data envelopment analysis abstract the relation between the most productive scale size mpss for paparticular input and output mixes and returns to scale for multiple inputs multiple outputs situations is explicitly developed this relation is then employed to extend the applications of data envelopment analysis dea introduced by charnes cooper and rhodes ccr to the estimation of most productive scale sizes for convex production possibility sets it is then shown that in addition to productive inefficiencies at the actual scale size the ccr efficiency measure also reflects any inefficiencies due to divergence from the most productive scale size two illustrations of the practical applications of these results to the estimation of most productive scale sizes and returns to scale for hospitals and stem electric generation plants are also provided emphasize the advantage of this method in examining specific segments of the efficient production surface

a partial adjustment approach to evaluating and measuring the business value of information technology abstract in this paper we develop a partial adjustment approach based on the theory of partial adjustment to assess the value of information technology we also propose a performance measure derived from the approach the constrained structural or implicit and unconstrained non structural or explicit models derived from the approach are fitted into a set of panel data at the country level covering the period from 1993 to 2006 for a sample of 12 countries including the g7 nations and are estimated by the seemingly unrelated regression estimation the results produced by the models are robust with respect to the choice of the production function representing the true desired or maximum output and challenge the widely held belief that the productivity paradox has disappeared and the view that the productivity paradox exists in developing economies only the proposed approach compares favorably with the time varying stochastic production frontier approach since it is easier and simpler to apply but unlike the non parametric data envelopment analysis approach it is parametric

an empirical model of mainframe computer investment this paper introduces a dynamic model of investment decisions in mainframe computer systems i estimate and test the model using detailed micro data from a company in the telecommunications industry the model accounts for technological depreciation which distinguishes computers from other investment goods where physical depreciation is typically a key factor underlying replacement investment decisions the company increased its installed mainframe computer capacity by over 30 fold over the 10 year sample period part of this growth was undoubtedly due to the huge increase in performance and the corresponding drop in the per unit cost of processing capacity of mainframes a consequence of moore s law however there was also tremendous growth in the need for computers for billing account processing and other tasks due to the rapid growth in the telecommunications industry over this same time period i estimate the unknown parameters of the investment model using a nonlinear least squares nested fixed point algorithm nls nfxp which solves the bellman equation underlying the dynamic model of investment and replacement of mainframe computers by nonlinear least squares i demonstrate that it is feasible to estimate this model on an ordinary pc whereas standard discretization approaches to solving the firm s optimal investment policy might not even be feasible using supercomputers i show that the estimated model fits the data very well and accurately captures the large growth in installed mainframe capacity the timing and magnitude of replacement investment as well as periodic upgrades of existing mainframe units i use the model to decompose how much of the 30 fold increase in mainframe computer capacity is due to moore s law i e the huge drop in the unit cost of installed mainframe capacity and how much is due to the growth in demand for services of mainframes due to the rapid growth in demand for telecommunications services particularly cell phone accounts by the firm s customers copyright 2010 john wiley sons ltd

computerisation and wage dispersion an analytical reinterpretation the rich countries have recently seen a dramatic rise in income inequality all the more surprising because the long term trend had been toward equality this paper examines one of the leading explanations computerisation in the workplace i offer a theory of computers impact on white collar work which goes far toward explaining the timing form and locus of recent labour market changes the theory looks at the bureaucratic and organisational applications of computers that have been first largest and most influential they have two effects on firms demand for labour at different skill levels

nonparametric analysis of educational costs abstract traditional economic analyses of the public sector that assume cost minimization are not consistent with political models of bureaucracy if costs are not minimized then estimated cost functions will be biased the purpose of this paper is to provide a flexible nonparametric technique based on farrell type efficiency measures to estimate public sector costs standard indices need to be modified to fit the special nature of public sector service provision which is characterized by an influence of exogenous variables on cost a useful by product is an index of environmental harshness faced by local governments for illustrative purposes this technique is applied to a sample of new york state school districts it is found that nearly 64 of districts are cost inefficient spending on average 1200 per pupil above the cost minimizing level in addition it is estimated that the average school district faces environmental cost of over 1700 per pupil

paradox lost firm level evidence on the returns to information systems spending the productivity paradox of information systems is is that despite enormous improvements in the underlying technology the benefits of is spending have not been found in aggregate output statistics one explanation is that is spending may lead to increases in product quality or variety which tend to be overlooked in the aggregate statistics even if they increase output at the firm level furthermore the restructuring and cost cutting that are often necessary to realize the potential benefits of is have only recently been undertaken in many firms our study uses new firm level data on several components of is spending for 1987 1991 the dataset includes 367 large firms which generated approximately 1 8 trillion dollars in output in 1991 we supplemented the is data with data on other inputs output and price deflators from other sources as a result we could assess several econometric models of the contribution of is to firm level productivity our results indicate that is spending has made a substantial and statistically significant contribution to firm output we find that the gross marginal product mp for computer capital averaged 81 for the firms in our sample we find that the mp for computer capital is at least as large as the marginal product of other types of capital investment and that dollar for dollar is labor spending generates at least as much output as spending on non is labor and expenses because the models we applied were similar to those that have been previously used to assess the contribution of is and other factors of production we attribute the different results to the fact that our data set is more current and larger than others explored we conclude that the productivity paradox disappeared by 1991 at least in our sample of firms

the dynamo and the computer an historical perspective on the modern productivity paradox the dynamo and the computer an historical perspective on the modern productivity paradox author s paul a david source the american economic review vol 80 no 2 papers and proceedings of the hundred and second annual meeting of the american economic association may 1990 pp 355 361 published by american economic association stable url http www jstor org stable 2006600 accessed 08 12 2010 01 40

energy efficiency measurement in agriculture with imprecise energy content information abstract measuring energy efficiency is crucial when planning energy reduction policies however decision makers are understandably reluctant to act in the absence of solid data and results supporting a policy position this paper proposes a methodology to measure the energy efficiency of farms based on the data envelopment analysis dea approach in a manner similar to the cost framework we decompose energy efficiency measurements into technical and allocative efficiencies in energy contents of inputs in this study we replace input prices used in traditional economic efficiency measurements by their energy content we use the energy efficiency model to explore the optimal input mix that produces the current outputs at minimum energy consumption we demonstrate that this decomposition can help policy makers design accurate energy policies however the uncertainty of the data and more particularly the energy content of the inputs leads us to recommend using the methodologies to calculate the bounds of efficiency to obtain more plausible and robust results based on our analysis energy efficiency is not a fixed value and policy makers should consider it with caution we use a 2007 database of french farms specialised in field crops for empirical illustration

a conditional directional distance function approach for measuring regional environmental efficiency evidence from uk regions abstract this paper by using conditional directional distance functions as introduced by simar and vanhems j econometrics 166 2012 342 354 modifies the model by fare and grosskopf eur j operat res 157 2004 242 245 and examines the link between regional environmental efficiency and economic growth the proposed model using conditional directional distance functions incorporates the effect of regional economic growth on regions environmental efficiency levels the results from uk regional data reveal a negative relationship between regions gdp per capita and environmental inefficiency up to a certain gdp per capita level after that level it appears that the relationship becomes positive as an overall result the regional environmental inefficiency gdp per capita relationship appears to have a u shape form

welfare as a cause of poverty a time series analysis since the inception of welfare programs critics have argued that giving aid to the poor dampens their incentive to provide for themselves and their dependents 1 charles murray s losing ground 1984 presents a modern reincarnation of this work disincentive hypothesis he notes that both nominal welfare benefits and caseloads increased during the seventies suggesting that higher benefits cause more people to join the welfare rolls others contend that welfare receipt may be a necessity rather than a matter of personal choice even if the nonworking poor actively sought employment many would not be able to find jobs furthermore many would find only low paying jobs which would not enable them to work their way out of poverty e g abraham 1983 in this view unemployment labor market segmentation and low wages cause poverty which view is correct studies of the effects of welfare typically specify a single model and use regression analysis to test whether the data support its implications in contrast this paper uses the granger 1969 causality test in a system of welfare and employment equations this strategy offers two advantages first regression presumes causality whereas the granger approach tests whether or not causality defined in a technical sense exists second we can use a very general empirical model to test the work disincentive hypothesis as well as the implications of two competing models section 2 presents three models of the welfare caseload and their implied patterns of causality section 3 explains granger s concept of and test for causality in section 4 the test is performed indicating the direction of causality between real afdc benefits the afdc caseload and unemployment we then repeat the exercise using labor force participation rates rather than unemployment rates the paper concludes with a summary of the results and their qualifications

rational expectations and macroeconomic forecasts the article presents extensive results from testing for bias and serially correlated errors in a collection of time series of quarterly multiperiod forecasts for six variables including real gnp growth inflation and unemployment the analysis covers responses by 79 frequent participants in economic outlook surveys conducted regularly since 1968 it shows much greater incidence of apparently systematic errors for inflation than for the other variables also the tests are more favorable to composite group forecasts than to most of the individual forecast sets

estimating multiple discrete choice models an application to computerization returns buyers in many markets face multiple discrete choices they can purchase multiple units as well as multiple brands at the same time this paper presents a multiple discrete choice model for the analysis of differentiated products demand users maximize profits by choosing the number of units of each brand they purchase i estimate the model using micro level data on the demand for personal computers i use the estimated demand structure to assess the welfare gains from computerization and technological innovation in peripherals the estimated return on investment in personal computers is 92 moreover a 10 increase in the performance to price ratio of microprocessors leads to a 2 2 gain in the estimated user surplus the personal computer pc market is of interest to industrial organization economists because of its size the continual technological change and above all because of the farreaching implications of pcs on the economy as a whole several distinct features make pc demand difficult to model pcs are a differentiated durable good in constant technological evolution moreover buyers make multiple discrete choices firms according to our data spread their purchases of pcs over different brands at the same time they buy pcs in blocks several units of each brand that they have chosen the aim of the paper is to present a model that captures these features and to use this model to estimate the welfare gains from computerization classical discrete choice models allow one choice among mutually exclusive alternatives in contrast the proposed framework allows users to demand multiple units and multiple brands the model can be applied to other cases of multiple discrete choices e g the composition of airline fleets car holdings per household the fields of the faculty in economics departments household cereals consumption or any other good consumed in more than one variety during a relevant time period although pervasive multiple discrete choice problems have received little attention because of their complexity a central issue regarding the pc market is the current controversy in the economics literature about the computerization puzzle this puzzle stems from the empirical finding that computerization has had no effect on firm productivity griliches and siegel 1991 and morrison and berndt 1990 contrary to those results hendel 1994 and lichtenberg 1995 using more disaggregate data than most previous studies report excess returns to computerization this indicates that data aggregation may have created the computerization puzzle in this paper i present a model consistent with the basic

computers productivity and input substitution i introduction the last two decades has been a puzzling time for many productivity analysts while computer prices fell at extraordinary rates and firms invested hundreds of billions of dollars in new computer equipment aggregate productivity growth remained sluggish this computer productivity paradox has generated a large literature that examines the economic impact of the computer revolution 1 this paper offers a simple solution to the computer productivity paradox by making careful distinction between computers as an output from one sector and an input to other sectors data for 35 manufacturing and service sectors for 1947 1991 show that sectoral differences are crucial in understanding the impact of computers aggregate analysis is inappropriate since it obscures basic distinctions between a shifting production function in the computer producing sector multi factor productivity growth and movements along production functions in the computer using sectors substitution and capital accumulation once these differences are isolated the growth impact of computers is readily observable the computer producing sector experienced fundamental technological progress and now produces cheaper better computers the sectoral data show this as rapid multi factor productivity mfp growth for 1973 1991 although aggregate mfp growth remains below historic averages the computer producing sector has clearly done its part mfp growth in this sector is many times the economy average and has contributed over one third of aggregate mfp growth for 19811991 the sectoral detail shows that the slowdown in aggregate productivity would have been much more severe were it not for such large mfp gains in the computer producing sector for the other sectors of the economy computers affect growth in a more traditional although less glamorous way when the price of real computing power fell so dramatically in the 1970s and 1980s firms responded by substituting away from relatively expensive labor and non computer capital and investing heavily in cheap computers for these sectors the computer revolution affects output growth not by raising mfp but by inducing firms to accumulate computers at extraordinary rates real computer services for example grew in excess of 20 per year in 14 out of 35 sectors for 1973 1991 although virtually all sectors are rapidly accumulating computer equipment computers remain small in levels in 1991 for example computer investment was only 10 of private fixed investment so the growth contribution of computers remains small relative to sectoral aggregates of labor and non computer capital the rapid rates of accumulation however are clearly making computers a more important source of growth across sectors with this heavy investment also came the wide spread expectation that computers would fundamentally alter the way firms operate and lead to higher mfp the reality has been very different as the most computer intensive sectors show steep declines in mfp growth after 1973 with three quarters of all computers concentrated in three service sectors trade fire and other services however this finding must be interpreted with caution as griliches 1994 notes output in these sectors is largely unmeasurable and thus mfp growth will be understated nonetheless it is quite reasonable that even computer using sectors where output is easier to measure show no mfp gains computer investment creates a capital input that enters the production function like any other purchased input since constant quality deflators embody productivity improvements in investment the direct impact is seen through the rapid capital accumulation only if the adoption of computers leads to production externalities or spillovers would computer investment also increase mfp growth the data however show no evidence of this ii computers and growth the national statistics most clearly show the computer revolution in the investment data

a generalized production frontier approach for estimating determinants of inefficiency in u s dairy farms this article investigates farm level efficiency of u s dairy farmers by estimating their technical and allocative efficiency technical inefficiency is assumed to be composed of a deterministic component that is a function of some farm specific characteristics and a random component by doing this we extend the stochastic frontier methodology in which determinants of technicial inefficiency are explicitly introduced in the model given the inputs variations in efficiency of farms are then explained by both deterministic and random components of technical inefficiency the empirical results indicate that a levels of education of the farmer are important factors determining technical inefficiency and b large farms are more efficient technically than small and medium sized farms both technical and allocative inefficiency are found to decrease with increase in the level of education of the farmer

piecewise loglinear estimation of efficient production surfaces linear programming formulations for piecewise loglinear estimation of efficient production surfaces are derived from a set of basic properties postulated for the underlying production possibility sets unlike the piecewise linear model of banker charnes and cooper banker r d a charnes w w cooper 1984 models for the estimation of technical and scale inefficiencies in data envelopment analysis management sci 30 september 1078 1092 this approach permits the identification of increasing marginal products and estimation of the classical s shaped production functions methods are also provided for estimating technical inefficiencies and other production characteristics such as rates of substitution and transformation marginal products returns to scale and most productive scale sizes on the basis of observed production data the results of a simulation study are reported to illustrate the usefulness of this estimation method in empirical applications when there are a priori reasons to expect increasing marginal products in some regions of the production function a modified model is provided to extend this analysis to the situation of non competing outputs addressed by the bi extremal model of banker charnes cooper and schinnar banker r d a charnes w w cooper a schinnar 1981 a bi extremal principle for frontier estimation and efficiency evaluation management sci 27 december 1370 1382

globalization trade and income my purpose in this paper is to address two questions that confront our discipline repeatedly these days first what is a useful classification of the symptoms and the determinants of globalization a phase used in a remarkable variety of contexts to economists globalization is generally thought of as the increasing internationalization of the production distribution and marketing of goods and services the term is used less precisely in the popular literature perhaps best exemplified by kenichi ohmae s book the borderless world and when used loosely it invokes a wide variety of political sociological environmental and economic trends that are the concern of media attention almost daily however one defines globalization it is surely a development that is having a profound impact on the subject of economics as a whole and ought to have on the field of international economics in particular my second purpose is to ask how globalization is affecting our profession s view of theory and empirical work in international economics traditional trade theory was concerned with a set of fairly well defined questions regarding the determinants of trade the pattern of trade and the welfare consequences of various trade policy instruments the last two decades and perhaps the last decade in particular has led to a much wider interpretation of what living in an open economy means the change that is occurring on a wide range of economic social scientific and

do welfare benefits cause the welfare caseload analyses of the welfare system generally examine one of five competing models 1 the work disincentive model 2 the human capital model 3 the macroeconomic model 4 the public choice model or 5 the cost of job loss model this paper employs the granger causality concept and the multiple rank f statistic to test the implications of all five of these models simultaneously the results offer modest support to all but the macroeconomic model the relationships among welfare benefits caseloads and labor market conditions appear to be too complex to be fully captured by a single model

interpreting ricardo a rejoinder to peach this note answers terry peach s 1998 response to our criticisms of his interpretation of ricardo we show that the available evidence supports sraffa s interpretation the arguments put forward by peach far from undermining that interpretation or furthering an understanding of ricardo s project do little more than catalogue the already well known difficulties that ricardo encountered as he grappled toward a clearer account of the laws that regulate distribution and prices copyright 2002 oxford university press

investigating and comparing the dynamic patterns of the business value of information technology over time abstract the long debated issue of the business value of information technology it to the firm country has received a great deal of attention in the literature but the studies have rarely examined the dynamic patterns of the it value as measured by the firm s productive efficiency over time the objective of this paper is to apply the three factor constant elasticity of substitution ces time varying stochastic production frontier models and use the same data set as used in several previous studies to investigate the dynamic patterns of it value over time in connection with the issues of inputs substitution and complement and the productivity paradox this paper adopts two analytical skills collective and individual to analyze the empirical results collectively we find that the dynamic patterns of it value are closely related to the substitution and complement of three inputs and the it productivity paradox individually we identify five common dynamic patterns of the it value measured by productive efficiency and interpret their implications for the productivity paradox as summarized in a two by two matrix of practical applications and strategies this matrix accounts for four different scenarios of the relationship between the average productive efficiency and the it productivity paradox illustrates some practical applications by the analytical results and provides some business insights and managerial strategies for it decision makers and po is managers this represents a new contribution to the understanding of the dynamic influence of it investments upon the value of it over time

ricardo torrens and sraffa the untenability of de vivo s summing up giancarlo de vivo 1996 repeats his argument of 1985 that the second edition of torrens s essay on the external com trade 1820 provides significant corroboration of sraffa s reading of ricardo s early theory of profits 1996 p 387 there runs his assertion torrens presents a corn model and goes out of his way to acknowledge his indebtedness to ricardo s original and profound inquiry into the laws by which the rate of profit is determined 1820 p xix he takes issue with my contention that this case has not been convincingly made hollander 1995 a rereading of the evidence stimu lated by de vivo s remarks leaves me wholly unconvinced in fact his restatement confirms the untenability of his position i shall explain why as in 1985 p 95 de vivo again concedes torrens s weakness in allowing for materials in manufacturing capital in whatever proportion the quantity of produce obtained from the soil exceeds the quantity employed in raising it in that proportion the value of manufactured goods will exceed the values of the food and material expended in preparing them torrens 1820 p 362 1826 p 75 1 it would have helped had de vivo recognised the implications of this weakness for his theme that torrens s position confirms the validity of sraffa s interpretation of ricardo instead of reiterating that this problem of materials only arises in the manufacturing sector and does not affect the corn ratio determination of profits 1996 p 389 de vivo s italics for the problem remains that the sraffa interpretation requires homogeneity of capital in all sectors if there is to be a uniform rate of profit in all trades it is the exchangeable values of the products of other trades relatively to their own capitals i e relatively to corn that must be adjusted so as to yield the same rate of profit as has been established in the growing of corn sraffa 1951 p xxxi this is all i intended when i wrote that de vivo s recognition of a weakness in torrens amounts in effect to admitting that we do not have a sraffa model 1995 p 486 de vivo s case might be strengthened if one assumed the corn material price ratio to be constant there is perhaps a hint of this in torrens himself when the cultivation of inferior soils increases the productive cost and consequently the

technological and organisational change in a process of industrial rejuvenation the case of the italian cotton textile industry the coevolution of technological and organizational change shapes modernization in mature industries only large vertically integrated managerial firms can bear the delays between the adoption of new information technologies and their positive effects on productivity growth a feature of the italian cotton industry is the highly specialized colocalized family owned small firm that is functionally organized it emerged in the 1970s to cope with the introduction of technological changes such as shuttleless looms and open end spinning this structure risks delaying the successful implementation of technological innovations an industrial policy aimed at the adoption of both technological and organizational change could counterbalance the trend toward decline copyright 1998 by oxford university press

a dynamic efficiency model using data envelopment analysis abstract changes in productivity due to technological progress or regress are incorporated in models of data envelopment analysis dea in two ways either through a network technology or in terms of a capacity variable or capital input embodying technical progress the second way is analyzed here in terms of time varying capital inputs due to the changes in input prices over time this provides an optimal control theoretic view of the time path of capital inputs which minimizes a discounted sum of total input costs for each dmu the cost of risk aversion and the adjustment cost of input price fluctuations may then be minimized in an extended dea model framework these extensions of the dea model are analyzed here and illustrated by an empirical application to international airlines data

small is not that beautiful after all measuring the scale efficiency of tunisian high schools using a dea bootstrap method allocation of resources to schools in a centrally managed state system as the tunisian one should depend on the performance of the individual institutions the optimal size is of crucial importance in this context and we need accurate measurement for sound policies this article discusses and implements a nonparametric statistical test procedure for organization scale efficiency this procedure allows us to test whether the observed scale efficiency is optimal or not using a smooth bootstrap methodology for efficiency measures estimated using data envelopment analysis dea methods because school principals do not control for the size of their institution i e the capital available at decision time the scale efficiency measures are defined so as to include quasi fixed inputs the results show that scale efficiency measures are subject to sampling variation we also found that the schools that are scale efficient are usually mid sized and large schools when size is measured by the number of students

assessing the business values of information technology and e commerce independently and jointly abstract the purpose of this paper is to assess the business values of information technology it and electronic commerce ec independently and simultaneously as measured by productive efficiency in order to provide new insights into it and ec investments and consequently lead to better decisions on it and ec investments the paper analyzes a panel data set at the country level based on the theory of production and its companions called the time varying stochastic production frontier spf approaches with the one equation and two equation models estimated by a two step nonlinear maximum likelihood method the performance metric called productive efficiency is built in the research approaches the empirical evidence strongly suggests that the presence of ec may strengthen or weaken it value and vice versa which provide a good explanation for the disappearance or existence of the so called productivity paradox and that the paradox may exist in a country regardless of whether it is a developed or a developing country inconsistent with conventional wisdom claiming that the paradox exists only in developing countries the findings imply that it is imperative to carefully assess the values of it and ec and as such prudent rather than blind it and ec investing decisions are made and that the values of it and ec must be evaluated jointly rather than separately the findings add significant contributions to the literature and serve as a catalytic agent in stimulating further comparative research in these important areas linking it investments and ec developments when their business values are the major concern

the curvilinear relationships between structural embeddedness and productive efficiency an exploratory study abstract existing network studies pay much attention to the benefits of structural embeddedness however uzzi 1996 points out the marginal benefits of structural embeddedness may follow a pattern of diminishing returns using major customer disclosure data from compustat this study investigates the curvilinear relationships between multiple aspects of structural embeddedness and productive efficiency applying both wang and ho 2010 and chen and lin 2009 stochastic frontier models we confirm the diminishing returns of eigenvector and betweenness centralities with a partial support for interconnectedness implications from our findings can help decision makers better understand the effects of structural embeddedness and help devise network structural change strategies for productive efficiency

the indian auto component industry estimation of operational efficiency and its determinants using dea in this paper the performance analysis of the indian auto component industry is carried out from the perspectives of an original equipment manufacturer and a component supplier various efficiency measures are estimated using data envelopment analysis with publicly available financial data on a representative sample of 50 firms the first stage analysis reveals various operational inefficiencies in the auto component industry which are subsequently decomposed into technical input mix and scale efficiencies the study finds evidence that a majority of the inefficient firms are operating in the diminishing returns to scale region and demonstrates potential savings through benchmark input targets a second stage analysis aimed at exploring root causes of inefficiencies finds that substitution of labour for capital could be causing a variety of inefficiencies including the input mix inefficiency in the indian component industry the empirical results also suggest that unlike the global auto supply chain higher average inventories are required for higher operational efficiencies in the indian context contrary to the popular expectations the technology licensing does not show significant influence on efficiency at least in the short term whereas efficient working capital management does result in higher operational efficiencies the study also unearths the need to reform labour laws which are significantly contributing to various inefficiencies in the indian component industry

a comparative application of data envelopment analysis and translog methods an illustrative study of hospital production this paper compares inferences about hospital cost and production correspondences from two different estimation models 1 the econometric modeling of the translog cost function and 2 the application of data envelopment analysis dea while there are numerous examples of the application of each approach to empirical data this paper provides insights into the relative strengths of the estimation methods by applying both models to the same data the translog results suggest that constant reruns are operant whereas the dea results suggest that both increasing and decreasing returns to scale may be observed in different segments of the production correspondence in turn suggesting that the translog model may be averaging diametrically opposite behavior on the other hand by examining the rate of output transformation both models agree that patient days devoted to care of children are more resource intensive than those devoted to adults or to the elderly in addition we compare estimates of technical efficiencies of individual hospitals obtained from the two methods the dea estimates are found to be highly related to the capacity utilization but no such relationship was found for the translog estimates this comparative application of different estimation models to the same data to obtain inferences about the nature of underlying cost and production correspondences sheds interesting light on the strengths of each approach and suggests the need for additional research comparing estimation models using real as well as simulated data

innovation r d cooperation and labor recruitment evidence from finland this article investigates the role played by one type of firm interaction namely rd rd and labor acquisition appears to be only of limited importance for innovation

efficiency subsidies and environmental adaptation of animal farming under cap the purpose of this article is to model the interaction between the targets of the current cap environmental adaptation subsidies and efficiency q1 of animal farming to this end we first have to identify the production frontier and relative efficiency level for each animal oriented farm in the sample the production frontier and efficiency index for each type of farm assuming no specific production functions are identified using data envelope analysis dea techniques we then address the relationship between relative efficiency farm size and environmentally friendly behavior by carrying out a nonparametric regression of efficiency on economic size a proxy for the degree of environmental appropriateness and regional dummies calculations of the efficiency of the farms including direct subsidies are compared with the counterfactual exercise in the case in which direct subsidies are not considered finally we look for relations between subsidies and factors such as farm size efficiency and environmentally friendly behavior one key result shows that on average direct payments generally tend to increase efficiency however in most of the cases the mean efficiency decreases as the percentage of direct payments rises direct payments are found to be positively related to environmentally friendly production at least in germany however in general the direct payment system is not sufficient to offset the fact that the less environmentally friendly farms as well as the larger farms are more efficient

on interpreting ricardo a reply to sraffians this paper seeks to clarify and defend aspects of the interpretation advanced in interpreting ricardo terry peach 1993 in the light of published criticisms by writers of a sraffian persuasion the principal areas of discussion include the corn model interpretation the labor theory of value and the invariable measure of value and the ricardo sraffa relationship copyright 1998 by oxford university press

the measurement and sources of technical inefficiency in the indonesian weaving industry production function models are estimated with a time series of cross section data on indonesian weaving establishments the sources of technical inefficiency are investigated three firm attributes are identified as being potentially related to firm efhciency tbey are firm ownership age and size the importance of these attributes as sources of inefficiency in the indonesian weaving industry is investigated and the implications of the find ings discussed

robert torrens and ricardo s corn ratio theory of profits the main point at issue in the dispute started more than ten years ago by s hollander on sraffa s interpretation of ricardo s early theory of profits undoubtedly concerns the logic underlying the notion which ricardo entertained at that stage namely that it is the profits of the farmer which regulate the profits of all other trades ricardo to trower 5 march 1814 in ricardo 1951 73 vi p 104 as is well known the rational foundation for such statements by ricardo was according to sraffa that in agriculture the same commodity namely corn forms both the capital and the product therefore in agriculture the rate of profit is determined as a ratio between two quantities of corn without any question of valuation if there is to be a uniform rate of profit in all trades it is the exchangeable values of the product of other trades relatively to corn that must be so adjusted as to yield the same rate of profit as has been established in the growing of corn sraffa 1951 p xxxi hollander writes that it does not seem likely that ricardo intended to ascribe a determining role to the agricultural sector on the logic ascribed to him by sraffa 1979 p 146 it is remarkable that hollander concedes even more than is necessary for sraffa s case when he writes of his ricardo s assumption in the essay that corn alone enters the wage basket ibid he seems however to reconcile this with his general position by suggesting that the essay on profits constitutes an essay in persuasion p 118 and its policy orientation would justify ricardo s emphasis upon corn in the wage basket to get the message across regarding the effects of corn import restriction no general theoretical significance ought to be attached to such strong cases hollander 1979 p 146 i shall not deal here with the difficulties that hollander s reconstruction of what ricardo intended encounters on grounds of both logic and evidence for this see eatwell 1975 garegnani 1982 the purpose of the present note is to show that the logic which sraffa ascribes to ricardo is clearly spelled out in the second edition of torrens external corn trade 1820 where we find both the determination of the agri cultural rate of profit in physical terms as a ratio between two quantities of corn and the determination of the value of manufactured goods relative to corn using the given agricultural rate of profit remarkably in this work torrens goes out of his way to acknowledge his great indebtedness to ricardo s original and profound inquiry into the

the microeconomics of manufacturing modernization programs abstract manufacturing modernization programs are designed to improve the competitiveness of small and medium sized manufacturers by accelerating their use of best practice technologies justification for these programs is most often cast in terms of past slow rates of adoption international economic competitiveness and market failures in the provision of information these frameworks however do not adequately address policy and programmatic issues related to program design financing and program evaluation using a microeconomic model based on the firm and industry level effects of these programs we examine the importance of spillover benefits from modernization efforts both horizontal spillovers to rivals of program clients and vertical spillovers to clients customers and the implications for these policy and programmatic issues

child care costs and family labor supply this paper presents a theoretical and empirical analysis of the effects of child care costs on family labor supply and the demand for market child care the model is a framework for cross section estimation of the effects of child care costs on labor supply and child care use it applies to households having young children requiring continuous care and in which both the mother and 1 other potential child care provider are present the 3 potential sources of child care are the mother the potential informal provider and the market using data from the 1980 baseline household survey of the employment opportunity pilot projects this empirical analysis uses a subsample of 6170 households in which there is a married woman under age 45 with her spouse present at the time of the survey at least 1 child under age 14 and nonmissing data on key variables results show that 1 higher market child care costs discourage women from working even when an informal source of care is available indicating that such informal care is an imperfect substitute for market care 2 a higher wage rate for the mother encourages her to work thus a higher wage rate increases the probability of using market child care 3 the number of children requiring care has a negative impact on the probability of the women working with the largest impact caused by younger children 4 nonwage income has a negative impact on the probability of the woman working and 5 black women are more likely to work than whites and are statistically more likely than whites to use market child care if they do work this family labor supply model predicts that the cost of market child care will affect household decisions on labor supply and child care use estimates of a qualitative choice model provide strong confirmation that child care costs affect such decisions the responsiveness of the labor supply of mothers to child care costs demonstrated in this study indicate that such subsidies do have their intended effect of encouraging labor supply the fact that a large proportion of current child care subsidies benefit primarily middle and upper income families via the income tax credit suggests that the labor supply effets of such subsidies may in practice be stronger for less needy families than for low income families employer subsidized child care may become an increasingly popular tool for attracting mothers into the labor force

economic efficiency and frontier techniques abstract most of the literature related to the measurement of economic efficiency has based its analysis either on parametric or on non parametric frontier methods the choice of estimation method has been an issue of debate with some researchers preferring the parametric and others the non parametric approach the aim of this paper is to provide a critical and detailed review of both core frontier methods in our opinion no approach is strictly preferable to any other moreover a careful consideration of their main advantages and disadvantages of the data set utilized and of the intrinsic characteristics of the framework under analysis will help us in the correct implementation of these techniques recent developments in frontier techniques and economic efficiency measurement such as bayesian techniques bootstrapping duality theory and the analysis of sampling asymptotic properties are also considered in this paper

welfare programs in the rent seeking society over the past fifteen years the interest group theory of government behavior has shown itself to be an empirically rich and powerful explanatory tool applications have included environmental regulation 14 17 federal trucking regulation 15 the output of state legislatures 12 and numerous other government programs and activities but one important subset of government programs has been consistently neglected in the literature meanstested transfer programs as a group the poor are not well organized for political lobbying they are dispersed and consequently face high organization costs further as a potential lobbying group the poor face potentially overwhelming free rider problems i e all of the poor stand to benefit from poverty programs that some subset of the poor achieve via lobbying for this reason the interest group theory of government seems to offer meagre explanatory power in the case of poverty programs many who otherwise typically interpret governmental activity from the perspective of rent seeking analysis make an exception when it comes to welfare programs and argue that here ideology mostly egalitarian ideology has for some unexplained reason dominated the political process there is sometimes a reference to the imperialism of the welfare bureaucracy which benefits indirectly from any expansion of the poverty program system and admittedly this seems to be a plausible partial explanation for the rapid recent growth of welfare spending finally tullock 19 has adopted a radical reinterpretation arguing that the welfare state does not really transfer net wealth to the poor at all but actually represents a thinly disguised system of net transfers to better organized middle class interest groups the tullock hypothesis is designed mainly to explain major patterns of government transfer spending it represents an attempt to reinterpret the net effect of transfer spending on the wealth positions of different income groups and does not attempt to explain specific welfare programs from an interest group perspective while this approach has merit an interest group analysis of specific welfare programs must concern itself with the functional consequences of particular programs and the interest groups which benefit from them both directly and indirectly but such an analysis should not necessarily presuppose that the poor themselves are the most important politically relevant interest group involved in the lobbying process or even that they play a major role very substantial transfers to the poor or to any other recipient group may ultimately be the result of interest group pressure in the

the evolution and main determinants of productivity in brazilian electricity distribution 1998 2005 an empirical analysis abstract this paper estimates changes in the productivity of the brazilian electricity distribution sector using data envelopment analysis dea on a panel of 18 firms from 1998 to 2005 the study decomposes the productivity change of these distribution firms in terms of technical efficiency scale efficiency and technical progress this exercise aims to help the understanding of the main determinants of the evolution of productivity focusing its relationship with the restructuring process implemented in the 1990s tfp index records a yearly positive growth rate of 1 3 in the whole period under analysis for all firms technical change was the main component behind this evolution with an average growth of 2 1 per year while technical efficiency presented a yearly negative performance of 0 8 the results prove that in general terms the incentives generated in the reform process do not seem to have led the firms to behave in a more efficient manner

analyzing the relationships between information technology inputs substitution and national characteristics based on ces stochastic frontier production models abstract this research examines four interrelated issues at the country level the value of information technology it inputs substitution and complement the complementarity phenomenon created by it and national characteristics and the productivity paradox jointly and critically from a global perspective using the so called productive efficiency as the performance measure to that end we develop the three factor constant elasticity of substitution ces stochastic production frontier model and apply it to a set of panel data from 15 countries over the period 1993 2003 along with the traditional two factor ces models within the one and two equation frameworks in the two equation setting six national characteristics are selected as the contributing factors of the productive efficiency the findings include i the value of it as measured by the productive efficiency is duly recognized ii the productivity paradox is found to be absent from the production process in a majority of developed and developing countries considered rejecting the existing argument that the paradox exists only in developing economies but does not exist in developed countries however the developed countries have used it capital in their production systems more productively efficiently than the developing nations iii traditional capital non it capital traditional labor and it capital are not pairwise substitutable contrary to the notion that they are pairwise substitutable at the firm level iv constant returns to scale as commonly assumed are not supported by the data v different national characteristics affect a country s output represented by gross domestic product or gdp and its productive efficiency differently and vi the complementarity phenomenon is observed in most of the countries developed and developing under study

computing productivity firm level evidence we explore the effect of computerization on productivity and output growth using data from 527 large us firms over 1987 1994 we find that computerization makes a contribution to measured productivity and output growth in the short term using one year differences that is consistent with normal returns to computer investments however the productivity and output contributions associated with computerization are up to five times greater over long periods using five to seven year differences the results suggest that the observed contribution of computerization is accompanied by relatively large and time consuming investments in complementary inputs such as organizational capital that may be omitted in conventional calculations of productivity the large long run contribution of computers and their associated complements that we uncover may partially explain the subsequent investment surge in computers in the late 1990s

the efficiency of conventional fuel power plants in south korea a comparison of parametric and non parametric approaches abstract the efficiencies of the 64 conventional fuel power plants operating in south korea were determined by data envelopment analysis dea approaches as well as by a stochastic frontier method the banker charnes and cooper bcc dea efficiencies were introduced into an econometric estimate of a standard production function model leading to a corrected factors version of the model with significant improvement of the statistical explanation of our data a statistical analysis of the dea efficiencies was carried out and these were compared to efficiencies revealed by a stochastic frontier method

the structure of technology in a multioutput branch banking firm we formulate and estimate a multioutput bank s cost function amenable for distinguishing between economies of scale and economies of network density we find significant returns to network density especially for smaller banks diseconomies of scale are found for the larger banks whereas the hypothesis of constant returns to scale could not be rejected for the smaller banks