Does Public Sector Inefficiency Constrain Firm Productivity


Book Description

This paper studies the effect of public sector efficiency on firm productivity using data from more than 400,000 firms across Italy’s provinces. Exploiting the large heterogeneity in the efficiency of the public sector across Italian provinces and the intrinsic variation in the dependence of industries on the government, we find that public sector inefficiency significantly reduces the labor productivity of private sector firms. The results suggest that raising public sector efficiency could yield large economic benefits: if the efficiency in all provinces reached the frontier, output per employee for the average firm would increase by 9 percent.




Efficiency in the Public Sector


Book Description

Regardless of where we live, the management of the public sector impacts on our lives. Hence, we all have an interest, one way or another, in the achievement of efficiency and productivity improvements in the activities of the public sector. For a government agency that provides a public service, striving for unreasonable benchmark targets for efficiency may lead to a deterioration of service quality, along with an increase in stress and job dissatisfaction for public sector employees. Slack performance targets may lead to gross inefficiency, poor quality of service, and low self-esteem for employees. In the case of regulation, inappropriate policies can lead to unprecedented disasters. Examples include the decimation of fish stocks through mismanagement of fisheries, and power blackouts through inappropriate restrictions on electricity generators and distributors. Efficient taxation policies minimise the tax bill for citizens. In all of these cases, efficient management is required, although it is often unclear how to assess this efficiency. In this volume, several authors consider various aspects and contexts of performance measurement. Hence, this volume represents a unique collection of advances in efficiency assessment for the public sector by leading researchers in the field. Efficiency in the Public Sector is divided into two sections. The first is titled "Issues in Public Sector Efficiency Evaluation" and comprises of chapters 1-4. The second section is titled "Efficiency Analysis in the Public Sector - Advances in Theory and Practice." This division is somewhat arbitrary, in the sense there are significant overlapping themes in both sections. However, it serves to separate chapters that can be characterised as dealing with broader issues (Section I), from chapters that can be characterised as focusing on specific theoretical problems and empirical cases (Section II).




Does Public Sector Inefficiency Constrain Firm Productivity


Book Description

This paper studies the effect of public sector efficiency on firm productivity using data from more than 400,000 firms across Italy’s provinces. Exploiting the large heterogeneity in the efficiency of the public sector across Italian provinces and the intrinsic variation in the dependence of industries on the government, we find that public sector inefficiency significantly reduces the labor productivity of private sector firms. The results suggest that raising public sector efficiency could yield large economic benefits: if the efficiency in all provinces reached the frontier, output per employee for the average firm would increase by 9 percent.




Improving Public Sector Productivity


Book Description

The productivity of America′s public agencies has never been more closely scrutinized. Taxpayers have drawn the line on what they are--and are not--willing to pay for governmental programs. Both public servants and their clients have an equal stake in making public agencies more productive and respected. Public agencies can be made more efficient, effective, and humane, and Improving Public Sector Productivity shows how. Ellen Rosen provides practical guidance to enhance both the service quality and client satisfaction of public agencies at the local, state, and national level. A wealth of current cases and examples focuses on the issues of quality management, improving service delivery, job reorganization, and worker empowerment. The author also details methods for measuring public productivity. Policymakers, public sector managers, researchers, and students of public administration will find Improving Public Sector Productivity an indispensable toolkit of ideas, strategies, and applications for making better use of taxpayers′ money. "This book is a welcome addition to the literature because it offers practical solutions as well as discussing theoretical issues. . . .The book is aimed at the serious student and practitioner of public administration and because it is written in a way that combines theory with practice, it is accessible to this audience. --Urban Studies "Managers and elected officials will find a ′tool-kit′ of ideas, strategies, and applications for making better use of taxpayers′ money--all based on sound rationale and of proven worth. The productivity concerns provided in the book can help improve service quality and client satisfaction, while being sensitive to employee concerns and asking them to contribute to the enterprise." --Beverly A. Cigler, The Pennsylvania State University "Ellen Doree Rosen′s book, Improving Public Sector Productivity, Concepts, and Practice provides some very useful information and ideas on how to attain higher levels of productivity. The book succeeds, however, in clearly explaining the many constraints on public administration which militate against achieving high levels of focus and efficiency. Improving the Public Sector Productivity et al. is thought provoking, intelligent, and one of the more practical public administration texts I′ve read. I recommend it to professors and students for its clear-eyed description of the issues practitioners must deal with in attempting to improve the way public business is conducted. It is a superior guide for those in the field who could often use a conceptual framework to help assess where we are and to mark a path in the direction we need to go." --Mark Miller, Orange County Chapter of the American Society of Public Administration




Ownership Versus Environment


Book Description

"Is public sector inefficiency due primarily to agency-type problems ("ownership") or to the environment in which public enterprises operate (as measured by soft budget constraints or barriers to competition)? Both"--Cover.







Public Sector Efficiency and Fiscal Austerity


Book Description

This paper uses a simple model to analyze the forces that determine the size of the public sector and the quality of workers employed in that sector. Workers are heterogeneous, and the public sector chooses an employment strategy that maximizes a social welfare function U(s, Y) that depends on the share of the labor force employed in public service s and private sector output Y. The government is fully informed about worker productivity. By examining the welfare properties of the possible outcomes, we are able to illuminate situations in which policies that seek to constrain the public sector may or may not improve economic efficiency.




Ownership Versus Environment


Book Description

Is public sector inefficiency due primarily to agency-type problems (ownership) or to the environment in which public enterprises operate (as measured by soft budget constraints or barriers to competition)? Both. Bartel and Harrison compare the performance of public and private sector manufacturing firms in Indonesia for 1981-95. They analyze whether public sector inefficiency is due primarily to agency-type problems (ownership) or to the business environment in which public enterprises operate, as measured by soft budget constraints or barriers to competition. They nest the two alternatives in a production function framework. The results, obtained from fixed-effects specifications, provide support for both models.The business environment matters. Only public enterprises that received loans from state banks or those shielded from import competition performed worse than private enterprises. Ownership matters. For a given level of import competition or soft loans, public enterprises perform worse than their counterparts in the private sector. Eliminating soft loans to Indonesia's public enterprises would raise total factor productivity by 6 percentage points; the same result could be achieved by increasing import penetration by 15 percentage points. Bartel and Harrison show that these findings are not due to selection effects for either privatization or the receipt of soft loans.This paper - a product of Poverty and Human Resources, Development Research Group - was part of a study funded by the Bank's Research Support Budget under the research project The Impact of Labor Market Policies and Institutions on Economic Performance (RPO 680-96).







The Impact of Product Market Reforms on Firm Productivity in Italy


Book Description

This paper examines the role of removing obstacles to competition in product markets in raising growth and productivity. Using firm-level data from Italy during 2003–13 and OECD measures of product market regulation, we estimate the effect of deregulation in network sectors on value added and productivity of firms in these sectors, as well as firms using these intermediates in their production processes. We find evidence of a significant positive impact. These effects are more pronounced in Italian provinces with more efficient public administration, underscoring the complementarities of advancing public administration and product market reforms simultaneously.