Essays on Efficiency, Productivity, and Impact of Policy

This thesis consists of five self-contained empirical essays centering on total factor productivity (TFP), efficiency, and impacts of policy. Essay I: “ TFP Change and Its Components for Swedish Manufacturing Firms During the 2008-2009 Financial Crisis ” (co-authored with Jonas Månsson and William H. Greene). A driving force of economic development is growth in total factor productivity (TFP). Manufactured goods are, to a large extent, exports, and represent an important part of the economy for many developed countries. Additionally, a slowdown in labour productivity has been observed in many OECD countries after the financial crisis 2008-2009. This study investigates TFP change and its components for the Swedish manufacturing industry, compared with the private service sector, during the years 1997-2013, centering on the financial crisis. Stochastic frontier analysis (SFA) is used to disentangle persistent and transient efficiency from firm heterogeneity and random noise, respectively. In addition, technical change (TC), returns to scale (RTS) and a scale change (SC) component are also identified. Along with the empirical analysis, an elaborative discussion regarding TC in SFA is provided. The persistent part for manufacturing (service) is 0.796 (0.754) and the transient part is 0.787 (0.762), indicating improvement potentials. Furthermore, TFP change is substantially lower between the years 2007-2013, compared to 1997-2007, driven by lower technological progress. Policy should, therefore, target interventions that enhance technology. However, care needs to be taken so that policies do not sustain low-productive firms that otherwise would exit the market. Essay II: “ A bootstrapped Malmquist index applied to Swedish district courts ” (co-authored with Jonas Månsson, Christian Andersson and Fredrik Bonander). This study measures the total factor productivity (TFP) of the Swedish district courts by applying data envelopment analysis (DEA) to calculate the Malmquist productivity index (MPI) of 48 Swedish district courts from 2012 to 2015. In contrast to the limited international literature on court productivity, this study uses a fully decomposed MPI. A bootstrapping approach is further applied to compute confidence intervals for each decomposed factor of TFP. The findings show a 1.7% average decline of TFP, annually. However, a substantial variation between years can be observed in the number of statistically significant courts below and above unity. The a