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Measuring Productivity – OECD Manual a V STATISTICS « STATISTICS ON E LIN BL E A IL Measuring Productivity – OECD Manual A V A Measurement of Aggregate and Industry-level E Productivity Growth www.SourceOECD.org N G I D L I N SP E Measures of productivity growth constitute core indicators for the analysis of economic ONIBLE growth. However, there are many different approaches to productivity measurement and their calculation and interpretation requires careful consideration, in particular when Measuring undertaking international comparisons. The Measuring Productivity OECD Manual is the – OECD Manual Measuring Productivity first comprehensive guide to the various productivity measures aimed at statisticians, Productivity 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 OECD Manual 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. MEASUREMENT OF AGGREGATE AND INDUSTRY-LEVEL Related Publication This manual provides a link with Measuring Capital – OECD manual. PRODUCTIVITY GROWTH 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: 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. 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. The following countries became Members subsequently through accession at the dates indicated hereafter: 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). Publié en français sous le titre : MESURER LA PRODUCTIVITÉ Mesurer la croissance de la productivité par secteur et pour l’ensemble de l’économie © 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. 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. 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. 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. 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. Enrico Giovannini Risaburo Nezu Chief Statistician, OECD Director, OECD Directorate for Science, Technology and Industry 3 TABLE OF CONTENTS 1. INTRODUCTION ................................................................................................................................7 1.1. OBJECTIVES .................................................................................................................................7 1.2. COVERAGE AND STRUCTURE OF THE MANUAL .............................................................................7 2. OVERVIEW OF PRODUCTIVITY MEASURES..........................................................................11 2.1. PURPOSES OF PRODUCTIVITY MEASUREMENT ............................................................................11 2.2. MAIN TYPES OF PRODUCTIVITY MEASURES................................................................................12 2.3. A SHORT GUIDE TO SOME PRODUCTIVITY MEASURES.................................................................13 2.4. GROWTH ACCOUNTING AND MAIN ASSUMPTIONS UNDERLYING THE CONCEPTUAL FRAMEWORK18 2.5. SOME CONCLUSIONS ..................................................................................................................20 2.5.1. Use and interpretation of productivity measures..................................................................20 2.5.2. Challenges for statisticians...................................................................................................21 3. OUTPUT .............................................................................................................................................23 3.1. GROSS-OUTPUT AND VALUE-ADDED BASED PRODUCTIVITY.......................................................24 3.1.1. Definitions ............................................................................................................................24 3.1.2. Production functions, gross output and value added............................................................25 3.1.3. Intra-industry flows of products ...........................................................................................31 3.2. DEPRECIATION...........................................................................................................................32 3.3. QUANTITY MEASURES OF OUTPUT .............................................................................................32 3.3.1. Deflation of value added.......................................................................................................33 3.3.2. The need for independent estimates......................................................................................34 3.3.3. Quality change and new products ........................................................................................35 3.4. STATISTICAL SOURCES AND STATISTICAL UNITS ........................................................................37 4. LABOUR INPUT................................................................................................................................39 4.1. CHOICE OF UNITS .......................................................................................................................40 4.2. STATISTICAL SOURCES...............................................................................................................41 4.3. MEASURING HOURS WORKED ....................................................................................................43 4.4. LABOUR COMPENSATION AND LABOUR SHARES.........................................................................44 4.5. ACCOUNTING FOR DIFFERENT TYPES OF LABOUR INPUT.............................................................46 5. CAPITAL INPUT...............................................................................................................................51 5.1. INTRODUCTION ..........................................................................................................................51 5.2. OVERVIEW.................................................................................................................................52
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