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Productivity Trends: Capital and Labor View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Research Papers in Economics This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Productivity Trends: Capital and Labor Volume Author/Editor: John W. Kendrick Volume Publisher: NBER Volume ISBN: 0-87014-367-0 Volume URL: http://www.nber.org/books/kend56-1 Publication Date: 1956 Chapter Title: Productivity Trends: Capital and Labor Chapter Author: John Kendrick Chapter URL: http://www.nber.org/chapters/c5596 Chapter pages in book: (p. -3 - 23) Productivity Trends Capital and Labor JOHN W. KENDRICK OCCASIONAL PAPER 53 NATIONAL BUREAU OF ECONOMIC RESEARCH, INC. 1956 Reprinted from the Review of Economics andStatistics Libraryof Congresscatalogcard number: 56-9228 PRIcE 8.50 Thestudy upon which this paper is based was made possible by funds granted to the National Bureau of Economic Research by the Alfred P. Sloan Foundation, Inc. The Foundation, however, is not to be understood as approving or disapproving by ofits grant any of the statements made or views expressed in this publication. NATIONAL BUREAU OF ECONOMIC RESEARCH 1956 OFFICERS Harry Scherman, Chairman Gottfried Haberler, President George B. Roberts, Vice-President and Treasurer W. J. Carson, Executive Director DIRECTORS AT LARGE Wallace J.Campbell, Director, Cooperative League of the USA Solomon Fabricant, New York University Albert J. Hettinger, Jr., Lazard Frères and Company Oswald W. Knauth, Beau fort, South Carolina H. W. Laidler, Executive Director, League, for Industrial Democracy Shepard Morgan, Norfolk, Connecticut George B.Roberts, Vice-President, The First National City Bank of New York Beardsley Rumi, New York City Harry Scherman, Chairman, Book-of-the-Month Club George Soule, Bennington College N. I. Stone, Consulting Economist J. Raymond Walsh, New York City Joseph H. Willits, Director, The Educational Survey, Universityof Pennsylvania Leo Wolman, Columbia University Donald B. Woodward, Viclc Chemical Company Theodore0. Yntema, Vice-President —Finance,Ford Motor Company DIRECTORS BY UNIVERSITY APPOINTMENT E. Wight Bakke, Yale Gottfried Haberler, Harvard Arthur F. Burns, Columbia Clarence fleer, North Carolina Melvin G. de Chazeau, Cornell R. L. Kozelka, Minnesota G. A. Elliott, Toronto C. Arthur Kuip, Pennsylvania Frank W. Fetter, Northwestern T. W. Schultz, Chicago H. M. Groves, Wisconsin Jacob Viner, Princeton DIRECTORS APPOINTED BY OTHER ORGANIZATIONS Percival F. Brundage, American Institute of Accountants Harold G. Haicrow, American Farm Economic Association S.H.Ruttenberg, Congress of Industrial Organizations Murray Shields, American Management Association Boris Shishkin, American Federation of Labor Willard L. Thorp, American Economic Association W. Allen Wallis, American Statistical Association Harold F. Williamson, Economic History Association RESEARCH STAFF Solomon Fabricant, Director of Research Geoffrey H. Moore, Associate Director of Research Moses Abramovitz John W. Kendrick Morris A. Copeland Simon Kuznets David Durand Clarence D. Long Milton Friedman Ruth P. Mack Raymond W. Goldsmith use Mintz Millard Hastay G. Warren Nutter W. Braddock Hickman Lawrence H. Seltzer Daniel M. Holland George J. Stigler Thor Hultgren Leo Wolman Herbert B. Woolley RELATION OF THE DIRECTORS TO THE WORK AND PUBLIcATIoNs OF THE NATIONAL BUREAU OF ECONOMIC RESEARCH 1. The object of the National Bureau of Economic Research is to ascertain and to present to the public important economic facts and their interpretation in a scientific and impartial manner. The Board of Directors is charged with the responsibility of ensuring that the work of the National Bureau is carried on in strict conformity with this object. 2. To this end the Board of Directors shall appoint one or more Directors of Research. 3. The Director or Directors of Research shall submit to the members of the Board, or to its Executive Committee, for their formal adoption, all specific pro- posals concerning researches to be instituted. 4. No report shall be published until the Director or Directors of Research shall have submitted to the Board a summary drawing attention to the character of the data and their utilization in the report, the nature and treatment of the prob- lems involved, the main conclusions and such other information as in their opinion would serve to determine the suitability of the report for publication in accord- ance with the principles of the National Bureau. 5. A copy of any manuscript proposed for publication shall also be submitted to each member of the Board. For each manuscript to be so submitted a special committee shall be appointed by the President, or at his designation by the Ex- ecutive Director, consisting of three Directors selected as nearly as may be one from each general division of the Board. The names of the special manuscript committee shall be stated to each Director when the summary and report de- scribed in paragraph (4) are sent to him. It shall be the duty of each member of the committee to read the manuscript. If each member of the special committee signifies his approval within thirty days, the manuscript may be published. If each member of the special committee has not signified his approval within thirty days of the transmittal of the report and manuscript, the Director of Research shall then notify each member of the Board, requesting approval or disapproval of publication, and thirty additional days shall be granted for this purpose. The manuscript shall then not be published unless at least a majority of the entire Board and a two-thirds majority of those members of the Board who shall have voted on the proposal within the time fixed for the receipt of votes on the publica- tion proposed shall have approved. 6. No manuscript may be published, though approved by each member of the special committee, until forty-five days have elapsed from the transmittal of the summary and report. The interval is allowed for the receipt of any memorandum of dissent or reservation, together with a brief statement of his reasons, that any member may wish to express; and such memorandum of dissent or reservation shall be published with the manuscript if he so desires. Publication does not, however, imply that each member of the Board has read the manuscript, or that either members of the Board in general, or of the special committee, have passed upon its validity in every detail. 7. A copy of this resolution shall, unless otherwise determined by the Board, be printed in each copy of every National Bureau book. (Resolution adopted October 1926 and revised February 8, 1933 and Februar1, 24, 1941) Productivity Trends: Capital and Labor John W. Kendrick * HIS paper is a summary account of pro- Tductivity trends since the turn of the cen- tury inthe American economy, by major segments and industries.Different rates of productivity change in the various industries have significantly altered relative unit costs and prices of products, rates of output, and the distribution of resources by industry. At the national level, productivity growth has been of paramount importance in raising levels of liv- ing, in strengthening potential national security, and in the provision for future economic growth. Differences among nations in levels and rates of change in productivity are fundamental measures of comparative economic perform- ance and play a crucial role in the competition among nations and groups ofnations. The more we can learn of economic growth gener- ally, and of productivity changes in particular, the better equipped we are to survive the com- petition and to enjoy continued advances in our planes of living. * This is the first article published by this REVIEW in col- laboration with the National Bureau of Economic Research. We expect to continue this collaboration. This paper is a summary of part of a larger study of productivity trends in the United States in preparation for the National Bureau. The author is indebted to Moses Abramovitz and Thor Hult- gren of the Bureau staff for helpful criticism; Maude R. Pech has assisted greatly throughout in preparing the un- derlying estimates, a full description of which will appear in the later monograph. The present paper has been approved for publication, as a report of the National Bureau of Economic Research, by the Director of Research and the Board of Directors of the National Bureau, in accordance with the resolution of the Board governing National Bureau reports(see the 36th Annual Report of the National Bureau of Economic Re- search, May 1956). It is to be reprinted as No. 53 in the National Bureau's series of Occasional Papers. I Method and Meaning It will be helpful in understanding the fol- lowing summary and analysis of our quantita- tive findings to date to consider briefly the con- cept of productivity, the methods used to derive the estimates, and the meaning of changes in productivity as measured. Productivity can also be compared as between producing units or complexes turning out similar products, but the focus of this paper is on temporal com- parisons. Concept. The term "productivity" isfre- quently used loosely to denote the ratio of out- put to any related input or class of inputs. In this sense, there is a spectrum of productivity ratios, each of which indicates the savings achieved in particular cost elements over time as a result of changes in productive efficiency and factor substitutions. In order to attempt to measure changes in productive efficiency as such, however, output must be related to the ag- gregate of corresponding inputs. This is so be- cause the proportions in which factors are com- bined usually change over time because of changes in relative factor prices or in technical knowledge. When proportions have varied, changes in the ratio of output to one input or class of in- puts reflect inter-factor substitution as well as changes in over-all productive efficiency.
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