Effects of Insurance Adoption and Risk Aversion on Agricultural Production and Technical Efficiency: A Panel Analysis for Italian Grape Growers

This article aims to evaluate the effect of insurance on production, technical efficiency, and input use of Italian specialised-quality grape growers. A panel instrumental variable stochastic frontier approach is applied over the years 2008–2017 using data from the Farm Accountancy Data Network. The results show the requirement to correct for the endogeneity that stems from insurance adoption. Insurance has an enhancing effect on production and efficiency and reduces the use of intermediate inputs. It suggests that insurance helps to diminish the risk-averse farmers’ suboptimal input use due to the presence of uncertainty. Crop insurance leads risk-averse farmers to behave as if they were risk neutral and employs the profit-maximising input vector. Therefore, by reducing the risks linked to the uncertainty of outcomes, crop insurance leads grape growers to go in the direction of profit maximisation.

THE ANALYSIS OF ECONOMIC EFFICIENCY OF RED CHILLI BUSINESS IN SAWANG SUBDISTRICT, ACEH UTARA

Red chili is one of the horticultural commodities that are needed by the community. However, the productivity of red chili in Aceh Utara is still low at 6.19 tons/ha. This study aims to analyze the factors that affect the production of red chili and analyze the economic efficiency of red chili farming in Sawang Sub-District, Aceh Utara. This research is located in Aceh Utara, precisely in Sawang Sub-District. The sampling method was carried out by census, namely as many as 40 red chili farmers. This study uses a data analysis method, namely the Cobb-Douglas function model with a Stochastic frontier approach. The results of the analysis show that the production factors that affect the production of red chili in Sawang District are land area, labor, and fertilizer, while the seed and pesticide production factors did not affect the red chili production. The results of the study also explained that red chili farming in the research location was technically efficient (ET=0.796), but did not achieve allocative and economical efficiency with the respective averages (EA = 0.439 and EE = 0.351).

Assessment of Short- and Long-Run Energy Efficiency: Evidence from 141 Countries

Several studies have estimated the energy efficiency performance of firms, countries and regions. Recently, the efficiency literature highlighted two types of efficiencies- persistent and transient efficiency. However, several studies have failed to distinguish between these two types of efficiencies. In the light that there are no studies addressing this issue from a global perspective, this paper adopts the stochastic frontier approach and the Kumbhakar, Lien and Hardaker (KLH) model in the estimation of persistent, transient and total energy efficiency of 141 countries during the period 1980-2016. Our findings show that global energy efficiency issue is structural in nature. Increasing both transient and persistent energy efficiency will save 13% and 31% of total energy consumed, respectively. Therefore, environmental and energy security issues will profit significantly from long-term policies rather than the short-term policies. Thus, countries should focus on addressing environmental and energy issues using long-term policies.

A Stochastic Frontier Approach Applied to Farms to Selected Andean Countries

In this paper, we estimate a stochastic production function for Bolivia, Ecuador, Colombia, and Peru to investigate whether road infrastructure affects farm technical inefficiency. We use agricultural censuses of Colombia and Bolivia in 2013 and 2014, respectively; national agricultural surveys in 2017 of both Ecuador and Peru; and data on the road network and travel time to the nearest town with 50,000 inhabitants or more. Our main findings are that irrigation increases the value of production and road network decreases farm technical inefficiency, that is, road density (travel time) increases (decreases) farm technical efficiency.

The Effect of Crop Specialization on Farms' Performance: A Bayesian Non-neutral Stochastic Frontier Approach

A Bayesian non-neutral stochastic input distance function model is used to examine whether output specialization has an impact on the economic performance of vegetable producers in Benin. Specialization is assumed to have an effect on the production frontier itself, as well as on the distance of each producer's observed data to this frontier (technical efficiency). A derivative-based measure of economies of scope is obtained by exploiting the duality between the shadow cost and the input distance functions. In this study, we also control for spatial heterogeneity of vegetable production by including a soil fertility variable in the production function at the farm level. The technology is found to exhibit no economies of scope, indicating that vegetable producers have no incentive for specialization or diversification. However, the degree of specialization has a positive effect on technical efficiency. From a policy perspective, the findings imply that policies to encourage specialization may lead to higher performance.

Tax Effort of the Indian States from 2001–2002 to 2016–2017: A Stochastic Frontier Approach

This article estimates the tax capacity and tax effort of 17 major states of India from 2001–2002 to 2016–2017 using the stochastic frontier panel data model. It is found that per capita income, agriculture activity, infrastructure, labour force and bank credit are the significant determinants of tax capacity, while social sector spending and central transfer to states are significant in determining tax effort. The Goods and Services Tax has reduced the states’ tax powers. Therefore, the states are highly dependent on their limited legislative taxes for revenue mobilization. However, there is little scope for the subnational governments to increase tax revenue as all states have achieved at least 90% of their tax potential.

Estimating the reservation wage across city groups in Colombia: A stochastic frontier approach

We use the stochastic frontier approach to estimate the reservation wage across different city groups in Colombia. We use the information of GEIH from 2008-2019 of 23 urban cities. We find empirical evidence in favour of the search theory predictions that suggest a positive relation of the reservation wage with the level of education and with the net family labour income. We also find a gender gap in the reservation wage and explore this gap controlling by the level of education and presence of children in the household. Contrary to the results found in the literature, we find that the presence of children reduces the reservation wage of women and men. Finally, we found that the reservation wage increases with the level of development and productivity of the cities, however, qualified workers in low-quality cities present higher reservation wages than median quality cities.