Nonmanufacturing industry contributions to multifactor productivity, 1987-2006

Monthly Labor Review

Volumn 133, Issue 6, 2010, Pages 16-31

  Harper, Michael J ^a   Khandrika, Bhavani ^a   Kinoshita, Randal ^a   Rosenthal, Steven ^a  

^a BUREAU OF LABOR STATISTICS   (United States)

Author keywords

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EID: 77954531774     PISSN: 00981818     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (53)

1. Robert Solow, "We'd Better Watch Out," New York Times Book Review, July 12, 1987, p. 36.
2. The situation was actually noticed earlier.
3. Zvi Griliches, "Productivity, R&D, and the Data Constraint," American Economic Review, March 1994, pp. 1-23, provides a list of earlier studies, including The Stigler committee report on government price statistics (National Bureau of Economic Research, 1961).
4. Richard Ruggles, "The United States National Income Accounts, 1947-1977: Their Conceptual Basis and Evolution" (the Ruggles report), in Murray F. Foss (ed.), The U.S. National Income and Product Accounts: Selected Topics (Chicago, University of Chicago Press, 1983), pp. 15-106.
5. Albert Rees and others, Measurement and Interpretation of Productivity (Washington, dc, National Academy of Sciences, 1979).
6. Carol Corrado and Lawrence Slifman, "Decomposition of Productivity and Unit Costs," American Economic Review, Papers and Proceedings, vol. 89, May 1999, pp. 328-32.
7. Griliches, "Productivity, R&D, and the Data Constraint.".
8. Michael Boskin, Ellen Dulberger, Robert Gordon, Zvi Griliches, and Dale Jorgenson, Toward a More Accurate Measure of the Cost of Living: Final Report to the Senate Finance Committee from the Advisory Commission to Study the Consumer Price Index, Dec. 4, 1996, on the Internet at www.ssa.gov/history/reports/boskinrpt.html (visited Mar. 17, 2010).
9. See William Gullickson and Michael J. Harper, "Possible measurement bias in aggregate productivity growth," Monthly Labor Review, February 1999, pp. 47-67.
10. "Bias in aggregate productivity trends revisited," Monthly Labor Review, March 2002, pp. 32-40.
11. Jack Triplett and Barry Bosworth, Productivity in the U.S. Serv-ices Sector (Washington, DC, The Brookings Institution, 2004).
12. "Is the 21st Century Productivity Expansion Still in Services? And What Should Be Done About It?" paper presented at the January 2007 meeting of the American Economic Association, Washington, DC, on the Internet at www.brookings.edu/~/media/Files/rc/papers/2007/01_productivity_bosworth/01_productivity_bosworth.pdf (visited Mar. 17, 2010).
13. The BLS prepares both major sector and detailed industry productivity data. For labor productivity, major sectors range from business and nonfarm business sectors to manufacturing sectors; for multifactor productivity, detailed industries cut across private business and nonfarm business sectors through manufacturing industries at the two-and three-digit NAICS levels. Detailed industries consist of four-digit industries throughout the domestic economy. The BLS publishes both labor and multifactor measures. BLS multifactor productivity measures for detailed industries undergird major sector measures in general and the nonmanufacturing sector measures presented here. BLS labor productivity data are on the Internet at www.bls.gov/lpc, multifactor productivity data at www.bls.gov/mfp.
14. J. R. Norsworthy, Michael J. Harper, and Kent Kunze, "The Slowdown in Productivity Growth: Analysis of Some Contributing Factors", Brookings Papers on Economic Activity, no. 2 (Washington, DC, The Brookings Institution, 1979), pp. 387-421.
15. See Gullickson and Harper, "Possible measurement bias" and "Bias in aggregate productivity.".
16. Utilities may be categorized as a goods-producing or service-providing industry, depending on the activity in question. For example, the conversion of coal to energy or of sewage to gray water could be considered a goods-producing activity, whereas the delivery of utilities is a service.
17. Gullickson and Harper, "Possible measurement bias" and "Bias in aggregate productivity.".
18. The sectoral output concept is used at the industry level to apply the BLS model of multifactor productivity more accurately.
19. See "Multifactor Productivity Trends in Manufacturing, 2006," news release USDL 08-0857 (Bureau of Labor Statistics, May 1, 2008), on the Internet at www.bls.gov/news.release/archives/prod5_05012008.pdf (visited Mar. 17, 2010).
20. The KLEMS model measures the factor intensity of the five inputs listed. Intermediate inputs from outside an industry contribute to total production, or output, inside that industry. Thus, an industry's output includes both intermediate and final output, and an industry's input includes only intermediate inputs that are from outside the industry. At a more aggregate level of private business and nonfarm business sectors, a value-added concept of output, typically called final output, is used. Intermediate inputs cannot be disaggregated by sector or added to final output, because major sectors produce a majority of the domestic economic output.
21. The KLEMS model of multifactor productivity analysis for industry-level production was first presented in William Gullickson and Michael J. Harper, "Multifactor productivity in U.S. manufacturing, 1949-83," Monthly Labor Review, October 1987, pp. 18-28, on the Internet at www.bls.gov/opub/mlr/1987/10/art3full.pdf (visited Mar. 17, 2010).
22. Robert Solow, "Technical Change and the Aggregate Production Function," Review of Economics and Statistics, August 1957, pp. 312-20.
23. Dale Jorgenson and Zvi Griliches, "The Expansion of Productivity Change," Review of Economic Studies, July 1967, pp. 249-83.
24. Evsey Domar, "On the Measurement of Technological Change," Economic Journal, December 1961, pp. 709-29.
25. Ernst Berndt and David Wood, "Technology, Prices and the Derived Demand for Energy," Review of Economics and Statistics, August 1975, pp. 259-68.
26. Dale Jorgenson, Frank Gollop, and Barbara Fraumeni, Productivity and U.S. Economic Growth (Cambridge, MA, Harvard University Press, 1987).
27. W. Erwin Diewert, "Exact and Superlative Index Numbers," Journal of Econometrics, 1976, pp. 115-146.
28. The sum of the weights is assumed to be unity.
29. Barbara Fraumeni, Michael Harper, Susan Powers, and Robert Yuskavage, "An Aggregate BEA/BLS Production Account: A First Step and Theoretical Considerations," in Dale Jorgenson, Steven Landefeld, and William Nordhaus, A New Architecture for the U.S. National Accounts, Studies in Income and Wealth, vol. 66 (Chicago, University of Chicago Press, 2006), pp. 355-435.
30. Eric Strassner, Gabriel Medieros, and George Smith, "Annual Industry Accounts: Introducing KLEMS Input Estimates, 1997-2003," Survey of Current Business, September 2005, pp. 31-65.
31. Michael Harper, "Estimating Capital Inputs for Productivity Measurement: An Overview of U.S. Concepts and Methods," International Statistical Review, no. 3, 1999, pp. 327-37.
32. The chained Tornqvist index is a chain of antilogarithms of growth rates. The antilogarithms are computed as weighted averages of differences in successive logarithms of the input indexes. The weights, which change each year, are 2-year averages of respective inputs' shares of total input costs for the 2 years being compared.
33. See Jorgenson and Griliches, "The Expansion of Productivity Change." Further specifics on the BLS aggregation methods are detailed in Harper, "Estimating Capital Inputs.".
34. Labor compensation equals wages and salaries of employees, plus employers' contributions to social insurance and private benefit plans and all other fringe benefits, in current dollars. An estimate of the wages, salaries, and supplemental payments for the self-employed and unpaid family workers is included. Capital income is corporate capital income plus imputed noncorporate capital income. Corporate capital income equals corporate capital consumption allowances, plus corporate profits, plus corporate inventory valuation adjustment, plus corporate net interest, plus business transfer payments, plus the part of indirect business taxes associated with capital (property taxes and motor vehicle taxes). Noncorporate capital income equals total cost, less corporate capital income, less total labor compensation.
35. "Multifactor Productivity Trends in Manufacturing, 2005," news release USDL 07-0822 (Bureau of Labor Statistics, June 7, 2007).
36. Gullickson and Harper, "Possible Measurement Bias," p. 56.
37. "Bias in Aggregate Productivity," p. 35.
38. Domar, "Measurement of Technological Change.".
39. Frank Gollop, "Growth Accounting in an Open Economy," in A. Dogramici (ed.), Developments in Econometric Analyses of Productivity (Boston, Klumer Nijhoff, 1982).
40. An industry's Domar contribution to aggregate multifactor productivity growth is the industry's multifactor productivity growth multiplied by its Domar weight. Each industry's Domar weight is the ratio of the industry's current-dollar value of production to aggregate current-dollar value added. Domar showed that, although the weights sum to more than unity, the sum of industry contributions will equate to aggregate multifactor productivity.
41. Fraumeni, Harper, Powers, and Yuskavage, "An Aggregate BEA/BLS Production Account.".
42. "Multifactor Productivity Trends, 2005," news release USDL 07-0422 (Bureau of Labor Statistics, May 24, 2007).
43. See Stephen Oliner and Daniel Sichel, "The Resurgence of Growth in the Late 1990s: Is Information Technology the Story?" Journal of Economic Perspectives, fall 2000, pp. 3-22.
44. Dale Jorgenson, Kevin Stiroh, and Mun Ho, "Growth of U.S. Industries and Investments in Information Technology and Higher Education," in Carol Corrado, John Haltiwanger, and Daniel Sichel (eds.), Measuring Capital in the New Economy: Studies in Income and Wealth, vol. 65 (Chicago, University of Chicago Press, 2005), pp. 403-72.
45. "Multifactor Productivity Trends, 2006," news release USDL 08-0410 (Bureau of Labor Statistics, Mar. 27, 2008).
46. This contribution is based on Multifactor Productivity Trends in Manufacturing, 2005, and is shown to one decimal place in table 6.
47. Stephen Oliner, Daniel Sichel, and Kevin Stiroh, "Explaining a Productive Decade," Brookings Papers on Economic Activity, fall 2007, pp. 81-137.
48. Corrado and Slifman, "Decomposition of Productivity.".
49. Gullickson and Harper, "Possible Measurement Bias.".
50. Gullickson and Harper, "Bias in Aggregate Productivity.".
51. Triplett and Bosworth, Productivity in the U.S. Services Sector, p. 331.
52. Percentage-point contributions are weighted on the basis of the ratio of the industry's value of production to aggregate value added. The sum of negative weights for each period or subperiod represents only those industries that have a negative percentage-point contribution for that period or subperiod.
53. Gullickson and Harper, "Bias in Aggregate Productivity.".