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STATISTICS Measuring Productivity – OECD Manual Measurement of Aggregate and Industry-level Productivity Growth Measures of productivity growth constitute core indicators for the analysis of economic growth.
However, there are many different approaches to productivity measurement and their calculation and interpretation requires careful consideration, in particular when undertaking international comparisons. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 76 |
The Measuring Productivity OECD Manual is the first comprehensive guide to the various productivity measures aimed at statisticians, researchers and analysts involved in constructing industry-level productivity indicators.
This manual presents the theoretical foundations to productivity measurement, and discusses implementation and measurement issues.
The text is accompanied by empirical examples from OECD countries and by numerical examples to enhance its readability. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 87 |
The Manual also offers a brief discussion of the interpretation and use of productivity measures.
Related Publication This manual provides a link with Measuring Capital – OECD manual.
M e a s u r i n g P r o d u c t i v i t y – O E C D M a n u a l All OECD books and periodicals are now available on line www.SourceOECD.org www.oecd.org ISBN 92-64-18737-5 92 2001 12 1 P -:HSTCQE=V]\X\Z: L E ON LIN L E ON LIN B B V V A A E E AIL A AIL A w w w .
S o u r c e O E C D .
o r g w w w .
S o u r c e O E C D . | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 207 |
o r g D D I I S S PONIB L E PONIB L E Measuring Productivity OECD Manual E E N N E E N N G G LI LI STATISTICS« MEASUREMENT OF AGGREGATE AND INDUSTRY-LEVEL PRODUCTIVITY GROWTH Measuring Productivity MEASUREMENT OF AGGREGATE AND INDUSTRY-LEVEL PRODUCTIVITY GROWTH OECD Manual ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote policies designed: – to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; – to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and – to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 293 |
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 58 |
The following countries became Members subsequently through accession at the dates Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000).
The Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD Convention). | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 170 |
indicated hereafter: MESURER LA PRODUCTIVITÉ Mesurer la croissance de la productivité par secteur et pour l’ensemble de l’économie Publié en français sous le titre : © OECD 2001 Permission to reproduce a portion of this work for non-commercial purposes or classroom use should be obtained through the Centre français d’exploitation du droit de copie (CFC), 20, rue des Grands-Augustins, 75006 Paris, France, tel.
(33-1) 44 07 47 70, fax (33-1) 46 34 67 19, for every country except the United States. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 172 |
In the United States permission should be obtained through the Copyright Clearance Center, Customer Service, (508)750-8400, 222 Rosewood Drive, Danvers, MA 01923 USA, or CCC Online: www.copyright.com.
All other applications for permission to reproduce or translate all or part of this book should be made to OECD Publications, 2, rue André-Pascal, 75775 Paris Cedex 16, France.
FOREWORD Measures of productivity growth constitute core indicators for the analysis of economic growth. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 137 |
However, there are many different approaches to productivity measurement and their calculation and interpretation requires careful consideration, in particular when undertaking international comparisons.
The OECD Productivity Manual is the first comprehensive guide to the various productivity measures aimed at statisticians, researchers and analysts involved in constructing industry-level productivity indicators. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 68 |
The Manual presents the theoretical foundations to productivity measurement, and discusses implementation and measurement issues.
The text is accompanied by empirical examples from OECD countries and by numerical examples to enhance its readability.
The Manual also offers a brief discussion of the interpretation and use of productivity measures.
This manual is a joint product between the OECD Directorate for Science, Technology and Industry and the OECD Statistics Directorate. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 94 |
It has been authored by Paul Schreyer to whom comments and questions should be addressed.
However, the manual would not have been possible without the active advice and review process of the Statistical Working Party of the OECD Industry Committee and an informal expert group (see Annex 7 for list of participants), both chaired by Edwin Dean (formerly of the United States Bureau of Labor Statistics).
The report is published on the responsibility of the Secretary-General of the OECD. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 107 |
Enrico Giovannini Chief Statistician, OECD Risaburo Nezu Director, OECD Directorate for Science, Technology and Industry 3 TABLE OF CONTENTS 1.
INTRODUCTION ................................................................................................................................ 7 1.1.
1.2. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 70 |
1.2.
OBJECTIVES ................................................................................................................................. 7 COVERAGE AND STRUCTURE OF THE MANUAL ............................................................................. 7 2.
OVERVIEW OF PRODUCTIVITY MEASURES.......................................................................... 11 2.1.
2.2.
2.3.
2.4.
2.5. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 100 |
PURPOSES OF PRODUCTIVITY MEASUREMENT ............................................................................ 11 MAIN TYPES OF PRODUCTIVITY MEASURES................................................................................ 12 A SHORT GUIDE TO SOME PRODUCTIVITY MEASURES................................................................. 13 GROWTH ACCOUNTING AND MAIN ASSUMPTIONS UNDERLYING THE CONCEPTUAL FRAMEWORK18 SOME CONCLUSIONS .................................................................................................................. 20 2.5.1. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 123 |
Use and interpretation of productivity measures.................................................................. 20 2.5.2.
Challenges for statisticians................................................................................................... 21 3.
OUTPUT ............................................................................................................................................. 23 3.1. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 65 |
GROSS-OUTPUT AND VALUE-ADDED BASED PRODUCTIVITY....................................................... 24 3.1.1.
Definitions ............................................................................................................................ 24 3.1.2.
Production functions, gross output and value added............................................................ 25 Intra-industry flows of products ........................................................................................... 31 3.1.3. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 102 |
DEPRECIATION........................................................................................................................... 32 QUANTITY MEASURES OF OUTPUT ............................................................................................. 32 3.3.1.
Deflation of value added....................................................................................................... 33 3.3.2. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 70 |
The need for independent estimates...................................................................................... 34 3.3.3.
Quality change and new products ........................................................................................ 35 STATISTICAL SOURCES AND STATISTICAL UNITS ........................................................................ 37 3.2.
3.3.
3.4.
4. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 83 |
3.3.
3.4.
4.
LABOUR INPUT................................................................................................................................ 39 4.1.
4.2.
4.3.
4.4.
4.5. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 62 |
CHOICE OF UNITS ....................................................................................................................... 40 STATISTICAL SOURCES............................................................................................................... 41 MEASURING HOURS WORKED .................................................................................................... 43 LABOUR COMPENSATION AND LABOUR SHARES......................................................................... 44 ACCOUNTING FOR DIFFERENT TYPES OF LABOUR INPUT............................................................. 46 5. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 110 |
CAPITAL INPUT............................................................................................................................... 51 5.1.
5.2.
5.3.
5.4.
5.5.
5.6.
5.7. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 60 |
INTRODUCTION .......................................................................................................................... 51 OVERVIEW................................................................................................................................. 52 MEASUREMENT OF THE PRODUCTIVE STOCK AND OF CAPITAL SERVICES ................................... 61 MEASUREMENT OF USER COSTS ................................................................................................. 65 5.4.1. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 90 |
Age-price profiles, net stock and depreciation ..................................................................... 66 5.4.2. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 28 |
Nominal rate of return and capital gains/losses................................................................... 69 AGGREGATION ACROSS ASSETS ................................................................................................. 71 CAPITAL UTILISATION................................................................................................................ 73 SCOPE OF CAPITAL INVESTMENTS .............................................................................................. 75 6. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 88 |
INTERMEDIATE INPUT AND VALUATION .............................................................................. 77 6.1.
6.2.
INPUT-OUTPUT TABLES .............................................................................................................. 77 VALUATION ............................................................................................................................... 79 5 7. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 74 |
INDEX NUMBERS ............................................................................................................................ 83 7.1.
7.2.
7.3. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 36 |
7.2.
7.3.
CHAINED AND DIRECT COMPARISONS ........................................................................................ 84 CHOICE OF INDEX NUMBER FORMULA........................................................................................ 87 A DIGRESSION: FROM MALMQUIST TO TÖRNQVIST ................................................................... 89 8. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 88 |
AGGREGATING PRODUCTIVITY GROWTH ACROSS INDUSTRIES ................................. 93 INTEGRATION, AGGREGATION AND INTERMEDIATE INPUTS ....................................................... 93 8.1.
8.2.
DOMAR WEIGHTS: AGGREGATION OF KLEMS MEASURES......................................................... 94 8.3.
WEIGHTED AVERAGES: AGGREGATION OF VALUE-ADDED BASED PRODUCTIVITY...................... 98 9. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 133 |
IMPLEMENTATION GUIDE ........................................................................................................ 101 10.
INTERPRETATION OF PRODUCTIVITY MEASURES .......................................................... 115 10.1.
10.2.
10.3.
10.4.
10.5. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 81 |
TECHNOLOGY AND PRODUCTIVITY MEASURES: SOME LINKS ................................................... 115 PRODUCTIVITY GROWTH AS COST REDUCTION......................................................................... 117 PRODUCTIVITY MEASURES OVER THE BUSINESS CYCLE ........................................................... 119 INDUSTRY AND FIRM-LEVEL PRODUCTIVITY GROWTH ............................................................. 120 INNOVATION AND PRODUCTIVITY MEASUREMENT ................................................................... 120 Annex 1 Glossary..................................................................................................................................... 123 Annex 2 Links and References to National Productivity Statistics.......................................................... 126 Annex 3 Productivity Measurement in a Growth Accounting Framework .............................................. 128 Annex 4 Capital Stock Measures ............................................................................................................. 132 Annex 5 User Costs.................................................................................................................................. 134 Annex 6 Aggregation of Output, Inputs and Productivity........................................................................ 138 Annex 7 Acknowledgements ................................................................................................................... 146 REFERENCES AND BIBLIOGRAPHY ............................................................................................. 147 Boxes BOX 1. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 319 |
THE ECONOMETRIC APPROACH TO PRODUCTIVITY MEASUREMENT .......................................... 19 BOX 2.
HEDONIC PRICE INDICES............................................................................................................. 36 BOX 3.
QUALITY ADJUSTMENT OF LABOUR INPUT IN DENMARK........................................................... 49 BOX 4.
CAPITAL MEASURES IN THE UNITED STATES ............................................................................. 58 BOX 5. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 122 |
CAPITAL MEASURES IN CANADA................................................................................................ 59 BOX 6.
CAPITAL MEASURES IN AUSTRALIA ........................................................................................... 60 BOX 7.
CHAIN AND FIXED-WEIGHT INDEX NUMBERS IN NATIONAL ACCOUNTS ................................... 86 BOX 8.
SUPERLATIVE INDICES OF INPUTS AND OUTPUTS....................................................................... 88 6 1.
INTRODUCTION 1.1. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 135 |
INTRODUCTION 1.1.
Objectives 1.
The main objectives of this manual are to: • • • Provide an accessible guide to productivity measurement for those involved in constructing and interpreting productivity measures, in particular statistical offices, other relevant government agencies and productivity researchers.
Improve international harmonisation: although there is no strong prescriptive element in the manual, it contains indications about desirable properties of productivity measures. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 98 |
Hence, when countries have a choice in constructing new measures or developing a system of indicators, the manual may provide guidance.
Identify desirable characteristics of productivity measures by reference to a coherent framework that links economic theory and index number theory.
Desirable properties have to be assessed against the reality of data availability or the costs of producing statistics. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 75 |
Broad trends can often be discerned with tools that do not live up to full theoretical standards as long as they are interpreted with the necessary caution.
However, the user has to be aware of simplifications that occur in the practice of productivity measurement.
1.2.
Coverage and structure of the manual 2.
The manual is focused in four ways: • • First, the manual focuses on measures of productivity growth rather than on the international comparison of productivity levels. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 103 |
Although there may be few conceptual differences between growth and level comparisons (the former compares different points in time, the latter different points in space), there are practical differences between the two.
In particular, productivity level comparisons between industries have to address the tricky issue of currency conversion.1 Productivity growth measurement avoids this question and constitutes a useful starting point, given its frequent use in analysis and policy formulation. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 89 |
Second, the manual focuses on the measurement of productivity at the industry level.
This is a natural choice given that much of the underlying methodology relies on the theory of production and on the assumption that there are similar production activities across units of observation (firms or establishments). | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 59 |
Because industries are defined as “a group of establishments engaged in the same, or similar, kinds of activity” (Commission of the European Communities, OECD, IMF, United Nations, World Bank, 1993, System of National Accounts 1993, paragraph 5.40 – SNA 93), the industry level is an appropriate level 1.
See van Ark (1996) for a discussion of the main issues.
7 of analysis. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 110 |
7 of analysis.
At the same time, an important part of the manual is also devoted to issues of aggregation across industries and the link to economy-wide or sector-wide measures of productivity growth.
• Third, the manual does not cover productivity measures of production activities beyond the production boundary of the System of National Accounts, in particular households’ production. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 77 |
Within the SNA production boundary, emphasis is given to productivity measures of those industries that are characterised by a large share of market producers, leaving aside those activities where non-market producers dominate in many OECD countries.2 These activities pose specific problems of productivity measurement, due to the difficulty or impossibility of observing and/or defining market prices or output.3 Reference will be made when appropriate but an in-depth treatment of the output measurement in each of these industries would go beyond the scope of the present manual.4 • Fourth, the manual focuses on non-parametric methods of productivity measurement. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 125 |
This choice has been made because the manual’s primary audience is statistical offices and other, regular producers of productivity series.
Econometric methods, as opposed to non-parametric approaches to productivity measurement are a tool that is much more frequently used in the context of individual, academic research projects.
3.
This manual is organised as follows.
Chapter 2 starts out with an overview of those productivity measures that fall within the scope of the manual, as defined above. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 103 |
Chapter 3 then discusses measurement of output, followed by the measurement of labour input (Chapter 4), capital inputs (Chapter 5) and intermediate inputs (Chapter 6).
Chapter 7 deals with index numbers, Chapter 8 with issues of aggregation.
Chapter 9 is a short implementation guide.
Chapter 10 addresses the interpretation and use of productivity measures and provides a synopsis of the different measures. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 97 |
Six annexes formulate many of the statements in the main text in a more rigorous way, and so provide a bridge to the more academically oriented literature.
2.
3.
4.
As explained in the System of National Accounts 1993, paragraph 5.41: “An industry […] consists of a group of establishments engaged in the same type of productive activity, whether the institutional units to which they belong are market producers or not. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 105 |
[…] For example, the health industry in a particular country may consist of a group of establishments, some of which are market producers while others are non-market producers that provide their services free or at prices that are not economically significant”. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 48 |
Within the institutional classification of the SNA, market producers comprise non-financial corporations, financial corporations and households to the extent that they are engaged – as unincorporated enterprises – in the production of market goods and services.
Practices of deflation of output and value added of non-market activities are described in OECD (1996b).
A more recent discussion can be found in Eurostat (2001), Handbook on Price and Volume Measures in National Accounts. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 111 |
When market prices are missing or when observed prices are not meaningful, techniques of data envelopment analysis (DEA) can play a useful role.
Brief reference to DEA is made in Section 6.3, but a fuller treatment is beyond the scope of this manual.
The following activities are considered to possess a large share of non-market producers (ISIC Rev. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 82 |
3, division 75-99): public administration and defence and compulsory social security, education, health and social work, sewage and refuse disposal, sanitation and similar activities, activities of membership organisations, private households with employed persons, extra-territorial organisations and bodies.
8 4. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 69 |
8 4.
Each of the main chapters on measuring output, inputs and on index numbers and aggregation starts out with an overview of the main concepts and conclusions, and with reference to those parts of the document that provide greater in-depth treatment of individual issues.
It is hoped that this facilitates access and increases readability of the manual.
9 2.
OVERVIEW OF PRODUCTIVITY MEASURES 2.1.
Purposes of productivity measurement 5. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 111 |
Purposes of productivity measurement 5.
Productivity is commonly defined as a ratio of a volume measure of output to a volume measure of input use.
While there is no disagreement on this general notion, a look at the productivity literature and its various applications reveals very quickly that there is neither a unique purpose for, nor a single measure of, productivity.
The objectives of productivity measurement include: • Technology. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 87 |
A frequently stated objective of measuring productivity growth is to trace technical change.
Technology has been described as “the currently known ways of converting resources into outputs desired by the economy” (Griliches, 1987) and appears either in its disembodied form (such as new blueprints, scientific results, new organisational techniques) or embodied in new products (advances in the design and quality of new vintages of capital goods and intermediate inputs). | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 101 |
In spite of the frequent explicit or implicit association of productivity measures with technical change, the link is not straightforward.
• Efficiency.
The quest for identifying changes in efficiency is conceptually different from identifying technical change.
Full efficiency in an engineering sense means that a production process has achieved the maximum amount of output that is physically achievable with current technology, and given a fixed amount of inputs (Diewert and Lawrence, 1999). | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 96 |
Technical efficiency gains are thus a movement towards “best practice”, or the elimination of technical and organisational inefficiencies. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 26 |
Not every form of technical efficiency makes, however, economic sense, and this is captured by the notion of allocative efficiency, which implies profit-maximising behaviour on the side of the firm.5 One notes that when productivity measurement concerns the industry level, efficiency gains can either be due to improved efficiency in individual establishments that make up the industry or to a shift of production towards more efficient establishments.
• Real cost savings. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 89 |
• Real cost savings.
A pragmatic way to describe the essence of measured productivity change.
Although it is conceptually possible to isolate different types of efficiency changes, technical change and economies of scale, this remains a difficult task in practice.
Productivity is typically measured residually and this residual captures not only the above-mentioned factors but also changes in capacity utilisation, learning-by-doing and measurement errors of all kinds. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 99 |
Harberger (1998) re-stated the point that there is a myriad of sources behind productivity growth and labelled it the real cost savings.
In this sense, productivity measurement in practice could be seen as a quest to identify real cost savings in production.
5.
The distinction and identification of technical change and efficiency change is at the heart of “data envelopment analysis” – a mathematical programming approach towards productivity measurement that was pioneered by Rolf Färe. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 105 |
For a survey of DEA methodologies, see Seiford and Thrall (1990) and Charnes et al.
(1994).
Diewert and Mendoza (1995) also discuss the DEA approach and compare it to the more traditional index number and econometric approaches.
A recent application can be found in Ball et al.
(2001).
11 • Benchmarking production processes.
In the field of business economics, comparisons of productivity measures for specific production processes can help to identify inefficiencies. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 133 |
Typically, the relevant productivity measures are expressed in physical units (e.g.
cars per day, passenger-miles per person) and highly specific.
This fulfils the purpose of factory-to- factory comparisons, but has the disadvantage that the resulting productivity measures are difficult to combine or aggregate.6 • Living standards.7 Measurement of productivity is a key element towards assessing standards of living. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 91 |
A simple example is per capita income, probably the most common measure of living standards: income per person in an economy varies directly with one measure of labour productivity, value added per hour worked.
In this sense, measuring labour productivity helps to better understand the development of living standards.
Another example is the long-term trend in multifactor productivity (MFP). | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 78 |
This indicator is useful in assessing an economy’s underlying productive capacity (“potential output”), itself an important measure of the growth possibilities of economies and of inflationary pressures.
2.2.
Main types of productivity measures There are many different productivity measures.
The choice between them depends on the 6. purpose of productivity measurement and, in many instances, on the availability of data. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 86 |
Broadly, productivity measures can be classified as single factor productivity measures (relating a measure of output to a single measure of input) or multifactor productivity measures (relating a measure of output to a bundle of inputs).
Another distinction, of particular relevance at the industry or firm level is between productivity measures that relate some measure of gross output to one or several inputs and those which use a value-added concept to capture movements of output. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 93 |
Table 1 uses these criteria to enumerate the main productivity measures.
The list is 7. incomplete insofar as single productivity measures can also be defined over intermediate inputs and labour-capital multifactor productivity can, in principle, be evaluated on the basis of gross output.
However, in the interest of simplicity, Table 1 was restricted to the most frequently used productivity measures. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 84 |
These are measures of labour and capital productivity, and multifactor productivity measures (MFP), either in the form of capital-labour MFP, based on a value-added concept of output, or in the form of capital-labour-energy-materials MFP (KLEMS), based on a concept of gross output.
Among those measures, value-added based labour productivity is the single most frequently computed productivity statistic, followed by capital-labour MFP and KLEMS MFP.
6.
7. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 116 |
6.
7.
For an example of such an approach, see Baily (1993).
A more extensive discussion of productivity and living standards can be found in Baumol et al.
(1992).
12 Table 1. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 63 |
Overview of main productivity measures Type of input measure Type of output measure Gross output Value added Labour Capital Capital and labour Labour productivity (based on gross output) Capital productivity (based on gross output) Capital-labour MFP (based on gross output) Capital, labour and intermediate inputs (energy, materials, services) KLEMS multifactor productivity Labour productivity (based on value added) Capital productivity (based on value added) Capital-labour MFP (based on value added) - Single factor productivity measures Multifactor productivity (MFP) measures 8. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 117 |
These measures are not independent of each other.
For example, it is possible to identify various driving forces behind labour productivity growth, one of which is the rate of MFP change.
This and other links between productivity measures can be established with the help of the economic theory of production.
Once productivity measures are conceptualised on the basis of economic theory, there are 9. several ways to go about their empirical implementation. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 91 |
From a broad methodological viewpoint, parametric approaches can be distinguished from non-parametric ones.
In the first case, econometric techniques are applied to estimate parameters of a production function and so obtain direct measures of productivity growth. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 49 |
In the second case, properties of a production function and results from the economic theory of production are used to identify empirical measures that provide a satisfactory approximation to the unknown “true” and economically defined index number.
The growth accounting approach to productivity measurement is a prominent example for non-parametric techniques.
2.3.
A short guide to some productivity measures 10.
The following pages review the five most widely used productivity concepts. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 97 |
They point out major advantages and drawbacks and briefly interpret each measure.
For a further discussion, see also Chapter 10.
13 Definition Interpretation Labour productivity, based on gross output Quantity Quantity index index of of gross labour output input Shows the time profile of how productively labour is used to generate gross output. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 72 |
Labour productivity changes reflect the joint influence of changes in capital, intermediate inputs, as well as technical, organisational and efficiency change within and between firms, the influence of economies of scale, varying degrees of capacity utilisation and measurement errors.
Labour productivity only partially reflects the productivity of labour in terms of the personal capacities of workers or the intensity of their effort. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 77 |
The ratio between output and labour input depends to a large degree on the presence of other inputs, as indicated above.
When measured as gross output per unit of labour input, labour productivity growth also depends on how the ratio of intermediate inputs to labour changes.
A process of outsourcing, for example, implies substitution of primary factors of production, including labour, for intermediate inputs. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 80 |
Gross-output based labour productivity rises as a consequence of outsourcing and falls when in-house production replaces purchases of intermediate inputs.
Obviously, this does not reflect a change in the individual characteristics of the workforce, nor does it necessarily reflect a shift in technology or efficiency.
Although some efficiency gain should be expected as a consequence of input substitution, it cannot be captured by the measured change in labour productivity. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 92 |
MFP measures are required for this purpose.
Because labour productivity measures reflect the combined effects of changes in capital inputs, intermediate inputs and overall productivity, they do not leave out any direct effects of technical change, be they embodied or disembodied.
The former operates via capital goods and intermediate inputs and so affects labour productivity; the latter generally enhances production possibilities for a given set of inputs and so also affects labour productivity. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 90 |
Purpose Advantages Gross-output based labour productivity traces the labour requirements per unit of (physical) output.
It reflects the change in the input coefficient of labour by industry and can help in the analysis of labour requirements by industry.
Ease of measurement and readability.
In particular, the gross-output measure requires only prices indices on gross output, not on intermediate inputs as is the case for the value-added based measure. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 95 |
Drawbacks and limitations Labour productivity is a partial productivity measure and reflects the joint influence of a host of factors.
It is easily misinterpreted as technical change or as the productivity of the individuals in the labour force.
14 Definition Interpretation Labour productivity, based on value added Quantity Quantity index index of of value labour added input Shows the time profile of how productively labour is used to generate value added. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 89 |
Labour productivity changes reflect the joint influence of changes in capital, as well as technical, organisational and efficiency change within and between firms, the influence of economies of scale, varying degrees of capacity utilisation and measurement errors.
Labour productivity only partially reflects the productivity of labour in terms of the personal capacities of workers or the intensity of their effort. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 74 |
The ratio between output and labour input depends to a large degree on the presence of other inputs, as mentioned above.
In comparison with labour productivity based on gross output, the growth rate of value- added productivity is less dependent on any change in the ratio between intermediate inputs and labour, or the degree of vertical integration.
For example, when outsourcing takes place, labour is replaced by intermediate inputs.
This leads to a fall in value added as well as a fall in labour input. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 103 |
The first effect raises measured labour productivity; the second effect reduces it.
Thus, value-added based labour productivity measures tend to be less sensitive to processes of substitution between materials plus services and labour than gross-output based measures.
Because labour productivity measures reflect the combined effects of changes in capital inputs, intermediate inputs and overall productivity, they do not leave out any direct effects of technical change, be they embodied or disembodied. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 93 |
The latter operates via capital goods and intermediate inputs and so affects labour productivity; the former generally enhances production possibilities for a given set of inputs and so also affects labour productivity.
Purpose Analysis of micro-macro links, such as the industry contribution to economy-wide labour productivity and economic growth.
At the aggregate level, value-added based labour productivity forms a direct link to a widely used measure of living standards, income per capita. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 94 |
Productivity translates directly into living standards, by adjusting for changing working hours, unemployment, labour force participation rates and demographic changes.
From a policy perspective, value-added based labour productivity is important as a reference statistic in wage bargaining.
Advantages Ease of measurement and readability.
Drawbacks and limitations Labour productivity is a partial productivity measure and reflects the joint influence of a host of factors. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 90 |
It is easily misinterpreted as technical change or as the productivity of the individuals in the labour force.
Also, value-added measures based on a double-deflation procedure with fixed-weight Laspeyres indices suffer from several theoretical and practical drawbacks. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 57 |
15 Definition Interpretation Capital-labour MFP based on value added Quantity index of index of combined value labour added and capital input Quantity Quantity index of combined labour and capital input = Quantity index of (different types of) labour and capital, each weighted with its current-price share in total value added.
Capital-labour MFP indices show the time profile of how productively combined labour and capital inputs are used to generate value added. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 100 |
Conceptually, capital-labour productivity is not, in general, an accurate measure of technical change.
It is, however, an indicator of an industry’s capacity to contribute to economy-wide growth of income per unit of primary input.
In practice, the measure reflects the combined effects of disembodied technical change, economies of scale, efficiency change, variations in capacity utilisation and measurement errors. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 88 |
When the capital input measure is an aggregator of detailed types of assets, each weighted by their respective user cost, and based on capital goods prices that reflect quality change, the effects of embodied technical change are picked up by the capital input term, and only disembodied technical change affects MFP.
Purpose Advantages Analysis of micro-macro links, such as the industry contribution to economy-wide MFP growth and living standards, analysis of structural change. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 100 |
Ease of aggregation across industries, simple conceptual link of industry-level MFP and aggregate MFP growth.
Data directly available from national accounts.
Drawbacks and limitations Not a good measure of technology shifts at the industry or firm level.
When based on value added that has been double-deflated with a fixed weight Laspeyres quantity index, the measure suffers from the conceptual and empirical drawbacks of this concept. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 96 |
16 Definition Interpretation Capital productivity, based on value added Quantity Quantity index index of of value capital added input The capital productivity index shows the time profile of how productively capital is used to generate value added.
Capital productivity reflects the joint influence of labour, intermediate inputs, technical change, efficiency change, economies of scale, capacity utilisation and measurement errors. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 79 |
Like labour productivity, capital productivity measures can be based on a gross-output or a value-added concept.
The same reasoning as for labour productivity applies between gross-output and value-added based measures in the case of outsourcing and changing vertical integration: value-added based capital productivity measures tend to be less sensitive to processes of substitution between intermediate inputs and capital than gross- output based measures. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 83 |
When capital input is measured in its theoretically preferred form, i.e.
as a flow of services adjusted for changes in the quality of investment goods, the capital measure translates embodied technical change (rising or falling quality of capital goods) into a larger or smaller flow of constant-quality capital services.
Thus, rising quality of capital goods implies a larger amount of capital services.
For the same rate of output growth, this implies a fall in capital productivity. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 101 |
Capital productivity has to be distinguished from the rate of return on capital.
The former is a physical, partial productivity measure; the latter is an income measure that relates capital income to the value of the capital stock.
Purpose Changes in capital productivity indicate the extent to which output growth can be achieved with lower welfare costs in the form of foregone consumption.
Advantages Ease of readability. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 88 |
Advantages Ease of readability.
Drawback and limits Capital productivity is a partial productivity measure and reflects the joint influence of a host of factors.
There is sometimes confusion between rates of return on capital and capital productivity. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 49 |
17 Definition Interpretation KLEMS Multifactor productivity Quantity of gross combined index of Quantity index output inputs Quantity index of combined inputs = Quantity index of (different types of) labour, capital, energy, services, each weighted with its current-price share in total gross output.
Shows the time profile of how productively combined inputs are used to generate gross output.
Conceptually, the KLEMS productivity measure captures disembodied technical change. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 106 |
In practice, it reflects also efficiency change, economies of scale, variations in capacity utilisation and measurement errors.
When capital and intermediate input measures are aggregators of detailed types of assets and products, each weighted by their respective share in total cost, and based on prices that reflect quality change, the effects of embodied technical change are picked up by the capital and intermediate inputs terms, and only disembodied technical change enters the MFP measure. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 94 |
Purpose Analysis of industry-level and sectoral technical change.
Advantages Drawback and limitations Conceptually, KLEMS-MFP is the most appropriate tool to measure technical change by industry as the role of intermediate inputs in production is fully acknowledged; “Domar” aggregation of KLEMS-MFP across industries provides an accurate picture of the contributions of industries to aggregate MFP change. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 85 |
Significant data requirements, in particular timely availability of input-output tables that are consistent with national accounts; Inter-industry links and aggregation across industries more difficult to communicate than in the case of value-added based MFP measures.
2.4.
Growth accounting and main assumptions underlying the conceptual framework 11.
The economic theory of productivity measurement goes back to the work of Jan Tinbergen (1942) and independently, to Robert Solow (1957). | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 112 |
They formulated productivity measures in a production function context and linked them to the analysis of economic growth.
The field has developed considerably since, in particular following major contributions by Dale Jorgenson, Zvi Griliches and Erwin Diewert.
Today, the production theoretical approach to productivity measurement offers a consistent and well-founded approach that integrates the theory of the firm, index number theory and national accounts.
12. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 94 |
12.
This manual largely adopts the index number approach in a production theoretic framework.
This “growth accounting” technique examines how much of an observed rate of change of an industry’s output can be explained by the rate of change of combined inputs.
Thus, the growth accounting approach evaluates multifactor productivity (MFP) growth residually.
13.
To construct an index of an industry’s output, different types of outputs have to be weighted with their share in total output. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 116 |
To construct an index of combined inputs, the rates of change of different inputs (labour, capital, intermediate inputs) have to be weighted appropriately.
Production theory tells us that, under some simplifying assumptions, factor income shares should be used as weights.
These income shares (for example the share of employee compensation in total cost) approximate production elasticities or the effects of a 1% change in individual inputs on output. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 93 |
For 18 every period under consideration, income shares are re-calculated and combined with the rates of change of factor inputs to obtain an index of combined inputs.
Alternatively, an econometric approach could be chosen (see Box 1).
Box 1.
The econometric approach to productivity measurement The econometric approach to productivity measurement is only based on observations of volume outputs and inputs. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 87 |
It avoids postulating a relationship between production elasticities and income shares, which may or may not correspond to reality, and indeed puts researchers in a position of testing these relationships.
Further possibilities arise with econometric techniques: allowance can be made for adjustment cost (the possibility that changes in factor inputs are increasingly costly the faster they are implemented) and variations in capacity utilisation. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 83 |
Furthermore, it is possible to investigate forms of technical change other than the Hicks-neutral formulation implied by the index number based approach; and there is no a priori requirement to assume constant returns to scale of production functions.
The literature about the econometric approach is large, and examples of integrated, general models can be found in Morrison (1986) or Nadiri and Prucha (2001).
All these possibilities come at a cost, however. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 104 |
All these possibilities come at a cost, however.
Fully-fledged models raise complex econometric issues and sometimes put a question mark on the robustness of results.
Often, researchers are constrained by the sample size of observations, and have again to revert to a priori restrictions (for example constant returns to scale) to increase the degrees of freedom for estimation. | https://docs-lawep.s3.us-east-2.amazonaws.com/1696769327474.pdf | https://unstats.un.org/unsd/nationalaccount/docs/OECD-Productivity-e.pdf | 81 |