Decomposing multifactor productivity in Italy from 1998 to 2004: evidence from large firms and SMEs using DEA

This paper presents a firm-level analysis of multifactor productivity (MFP) in Italy between 1998 and 2004. Using data envelopment analysis (DEA) technique, MFP change are measured for 31 industries and decomposed into efficiency change and technical change (which in turn is interpreted as the combined effect of technical progress and scale economies). The results highlight the stagnation in many Italian production activities and even a decrease in MFP in some industries. A non-parametric statistical test on the results obtained from DEA reveals that the analysed larger firms have been more likely to perform better in efficiency than the smaller ones. This outcome seems to complement the Schumpeterian view of a relatively high attitude of larger firms towards technological innovation and productivity growth.     

Fixed-mobile integration

Fixed-line incumbents often also own the largest mobile network. We consider the effect of this joint ownership on market outcomes. Our model predicts that while fixed-to-mobile call prices to the integrated mobile network are more efficient than under separation, those to rival mobile networks are distorted upwards, amplifying any incumbency advantage. This result is robust to changes in the competitiveness of the fixed market and to the presence of fixed-mobile substitution. As concerns potential remedies, a uniform off-net pricing constraint leads to higher welfare than functional separation, and even allows to maintain some of the efficiency gains.     

Entrepreneurial drain under moral hazard: A high-yield sector curse?

We describe a two-sector, general-equilibrium model of productive sorting under output risk and incomplete information. Risk-neutral (entrepreneurial) individuals can either produce alone, or - acting as employers/insurers - team up with risk-averse (non-entrepreneurial) individuals. Although the latter option has the potential to generate more surplus, when effort is unobservable and risk is high, the moral hazard problem in mixed matches may be too severe for mixing to be attractive to both risk-aversion types, leading to a segregated equilibrium in which risk-averse individuals select low-risk, low-yield activities. An increase in the profitability of the riskier sector can then trigger a switch from a mixed to a segregated equilibrium and cause aggregate output to fall. Evidence from a panel of non-OECD countries - showing that the presence of uninsured, small-scale mining firms has a negative impact on the relationship between natural resource exports and agrarian productivity - suggests that this ‘high-yield sector curse’ might be present in natural resource-rich, low-income countries.     

Labour mobility and the redistributive effects of trade integration

This paper addresses the role of mobility costs in shaping the effects of trade integration on wage inequality and welfare. We present a three-factor, two-sector model in which the production technology exhibits capital-skill complementarity and the cost of moving across sectors differs between unskilled and skilled workers. Results show that trade integration increases aggregate welfare, but it also raises wage inequality, both within and across skill categories. We also model a public re-training program, financed by a proportional tax levied on skilled workers, which reduces the mobility cost of unskilled workers. We show that even if the re-training programme entails some welfare losses, it can reduce both within and between wage inequality, while still making free trade Pareto superior with respect to the no-trade regime.     

Ex ante regulation and co-investment in the transition to next generation access

Investments in next generation access networks (NGANs) ask for a new set of regulatory remedies. This paper contributes to this debate by focusing on three issues: the migration from the legacy copper network to the NGA infrastructure, and how wholesale pricing regulation might affect this process; the introduction of differentiated wholesale remedies according to geographical differences in NGAN deployment; the impact of co-investment decisions on market outcomes and their interplay with access regulation. Using the recent economic literature, arguments and possible guidelines are proposed, which might be useful to regulators and policy makers.     

Conceptualization and measurement of disability in studies on subjective well-being: a critical review and evidence from the Italian Health Surveys

The main aim of this study is to assess, through a wide literature review, whether the concept of “disability,” as variously formulated, can be considered a good foundation for scientific research on happiness and subjective well-being, as well as the effect of some conceptualizations on the understanding of the relationship between happiness and disability. The literature review includes longitudinal population studies, cross-sectional surveys and longitudinal clinical researches. The empirical part of the study, based on the 2013 Italian Health Interview Survey, shows some examples of the impact of different definitions of disability on the subjective well-being variability. The Italian Health Interview Survey is conducted every 5 years and carried out on a sample of about 60,000 households and 162,000 respondents distributed in 1456 municipalities. Some suggestions for future research, based on a vision of the multifaceted nature of disability, are proposed.     

Investment subsidies and time-consistent environmental policy

We describe a model of dynamic pollution abatement choices withheterogeneous agents where, due to the presence of a distributionalobjective and to the absence of incentive-compatible compensationmechanisms, the choice of a second-best level of emission taxationis time-inconsistent. In this model, we investigate whetherinvestment subsidies can act as a substitute for policy commitment.     

The method of entropy maximization

Use of Boltzmann’sH-function has been widely advocated for the «production», via its maximization under constraints, of prior probability distributions, e.g. in the search for noninformative priors in econometrics. The procedure appears to rest on a misunderstanding of theH-function’s role in statistical mechanics, where it was first introduced by Boltzmann. This paper traces the origin and development of the method and criticizes its inappropriate and misleading applications.