PUBLIC SUPPORT FOR PERFORMING ARTS. EFFICIENCY AND PRODUCTIVITY GAINS IN ELEVEN EUROPEAN COUNTRIES

Concetta Castiglione (), Davide Infante () and Marta Zieba ()
Additional contact information
Concetta Castiglione: Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)
Marta Zieba: Department of Economics, University of Limerick, Ireland

No 202205, Working Papers from Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF

Abstract: This paper investigates the importance of public cultural expenditure for the efficiency and productivity of the performing arts (PA) firms. To this aim, we estimate a translog production function using the stochastic frontier approach (SFA), and we obtain the estimates of both technical efficiency and its determinants for the PA firms in EU-11 countries over the period 2009-2017. The large panel data set enables the application of robust true random-effects SFA techniques, which control for noise, unobserved firms’ heterogeneity and endogeneity of the inputs. Moreover, by estimating a production function, the characteristics of the production technology in the PA sector is also derived. The empirical results demonstrate that PA firms are technically inefficient, implying that the investigated firms could increase their artistic output between 32 and 42 percent and that decreasing returns to scale are prevalent, due to the presence of too many micro and large-scale firms in the European PA sectors. In contrast to the seminal Baumol and Bowen’s (1965) paper, we also demonstrate that the total factor productivity (TFP) increased in the EU PA firms over the examined period. Technical efficiency, although relatively low, was the main driver of this productivity growth, as opposed to scale efficiency or technological changes which display very small or no increases. We also find that, contrary to the common wisdom on its negative effects on firm efficiency, public spending on culture increases the efficiency of PA firms. Within this context some policy implications are discussed.

Keywords: Cultural public expenditure; SFA production function; performing arts; technical efficiency; TFP change (search for similar items in EconPapers)
JEL-codes: D24 L82 L88 O52 Z10 Z18 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2022-10
New Economics Papers: this item is included in nep-cul and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.ecostat.unical.it/RePEc/WorkingPapers/WP05_2022.pdf First version, 2022-10 (application/pdf)

Related works:
Journal Article: Public support for performing arts. Efficiency and productivity gains in eleven European countries (2023)
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