Relative Sources of European Regional Productivity Convergence: A Bootstrap Frontier Approach

Abstract

We address the issue of Western European regional productivity growth and convergence by means of Data Envelopment Analysis (DEA), decomposing labor productivity into efficiency change, technical change and capital accumulation. The decomposition shows that most regions have fallen behind the production frontier in efficiency and that capital accumulation has had a diverging effect on the labor productivity distribution. We also account for the inherent bias and the stochastic elements in the efficiency estimation using bootstrapping methods. We find that the relative ranking of the bias-corrected efficiency scores remains stable after the bias correction and that the DEA successfully identifies the regions on the production frontier as significantly more efficient than other regions.JEL Classification: C14, C15, O47, R1

Inequality convergence in inefficiency and interprovincial income inequality in Indonesia for 1990–2010

“…Originally, DEA was used in productivity analysis at the micro level, but it has recently become increasingly popular at the macro level as a non-parametric alternative to growth accounting (Enflo and Hjertstrand 2009). Charnes et al (1989) applied this technique to regional economic performance analysis, evaluating relative efficiency in terms of economic Ezcurra and Iraizoz 2009;Olaskoaga-Larrauri et al 2011;Li and Zhao 2015;Li and Dewan 2017).…”

Regional Knowledge Performance in Europe

“…3 However, this kind of growth-accounting exercise has been so far carried out only in some parallel studies on productivity growth and convergence among European regions by Enflo and Hjertstrand (2009) and Filippetti and Payrache (2012). This can be done thanks to the implementation of the Malmquist index, which can decompose productivity changes (PCs) into their main components.…”

“…4. Within the background literature presented above, Enflo and Hjertstrand (2009) apply this methodology to build confidence intervals in order to assess the statistical significance of their results. Results show the expected positive sign and also that the human capital elasticity turns out to be higher than the research and development elasticity, confirming the absolute relevance of skilled workers for the knowledge process.…”

“…To this end, this paper investigates the nature of knowledge production and diffusion among regions in 29 European Union (EU) countries and tries to assess its effectiveness. Regional applications at the European level have been quite rare, with some exceptions, such as Zabala-Iturriagagoitia et al (2007) and Enflo and Hjertstrand (2009).The main aim of this paper is to assess, by means of DEA, the degree of efficiency with which European regions use internal and external inputs for the production of new knowledge and ideas. The analysis produces a ranking of the innovative performance of EU regions for two points in time: the beginning of the current century and the second part of this decade.…”

“…Recently, it has become increasingly popular at the macro-level as a non-parametric alternative to parametric estimation. Regional applications at the European level have been quite rare, with some exceptions, such as Zabala-Iturriagagoitia et al (2007) and Enflo and Hjertstrand (2009).The main aim of this paper is to assess, by means of DEA, the degree of efficiency with which European regions use internal and external inputs for the production of new knowledge and ideas. DEA allows us to compute for the first time a regional ranking of the innovative performance within the European Union (EU) in the first years of the current century.…”