Productivity Measurement and Analysis

image of Productivity Measurement and Analysis

Productivity measurement and analysis are the main topics addressed in this book, which brings together contributions presented and discussed in two international workshops organized by the Statistics Directorate and the Directorate for Science, Technology and Industry (DSTI) of the OECD. The first workshop was organised jointly by the OECD with Fundaccion BBVA and the Instituto Valenciano de Investigaciones Económicas and held in Madrid in October 2005, and the second one was organized jointly by the OECD and the Swiss Federal Statistical Office and the State Secretary for Economic Affairs of Switzerland and held in Bern in October 2006. The two workshops brought together representatives of statistical offices, central banks and other branches of government in OECD countries that are engaged in the analysis and the measurement of productivity developments at aggregate and industry levels.



Changes in Human Capital

Implications for Productivity Growth in the Euro Area

Productivity growth is the main source of increases in economic welfare, as measured by real output per capita, in the long run. In this respect, the recent evolution of euro area productivity growth has been disappointing. In particular, the euro area has experienced a sustained decline in labour productivity growth since the 1980s. Existing analysis of the causes of this decline suggests that lower productivity growth has been due to both a decline in capital deepening and lower total factor productivity (TFP) growth over this time period (see for example Gomez-Salvador et al., 2006). However, the same analysis suggests that over the last ten years, the observed slowdown in capital deepening appears to be linked mainly to stronger employment growth. Robust euro area employment growth in the late 1990’s together with economic policies aimed at encouraging employment of lower skilled workers in many euro area countries may also have resulted in a shift in the composition of the workforce towards workers with lower human capital. If this were the case, the sustained decline in euro area labour productivity growth could, in part, also refl ect a lower contribution of labour quality growth to labour productivity growth. Standard unadjusted measures of labour input used so far in analysing euro area productivity growth ignore changes in human capital – changes in average labour quality – leading to an underestimation of the contribution of the labour input to economic growth. Best practise in the area of productivity measurement suggests instead that changes in labour quality should be taken into account by using a quality-adjusted number of hours actually worked as a measure of labour input (OECD, 2001). 


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