Title: Public support for performing arts: Efficiency and productivity gains in eleven European countries
Authors: Concetta Castiglione - University of Calabria (Italy) [presenting]
Davide Infante - Department of Economics Statistics and Finance - University of Calabria (Italy)
Marta Zieba - Department of Economics - University of Limerik (Ireland)
Abstract: The importance of public cultural expenditure for the efficiency and productivity of performing arts (PA) firms is investigated. To this aim, we estimate a translog production function using the stochastic frontier approach, and we obtain the estimates of both technical efficiency and its determinants for the PA firms in eleven EU countries from 2009 to 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. 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. The results also show that technological progress is not present for the PA firms in the EU eleven countries. However, in contrast to previous research, we demonstrate that the total factor productivity (TFP) increased in the EU PA firms over the examined time period, which is the result of the positive technical efficiency change, as opposed to scale efficiency or technological change. We find that, contrary to the common wisdom on its negative effects on firm efficiency, public spending on culture increases the efficiency of PA firms.