Australian Industry MFP: Measurement issues and initiatives

1
Australian Industry MFP Measurement issues and
initiatives

• Presentation to OECD Productivity Workshop, Bern,
  October 2006

2
Background

• Long history of MFP measurement
• Annual measurement of market sector MFP
• 12 industries
• Heightened interest in productivity in recent
  years
• Team established to develop official industry MFP
  estimates at division level
• Looking at all data quality and measurement
  issues

3
Average MFP growth rates
4
Industry MFP growth rates
5
Industry MFP growth rates
6
Measuring capital inputs

• Key issues
• Exogenous and endogenous rates of return
• Choice of price deflator
• Negative rental prices
• Asset lives
• Age efficiency profiles

7
Rates of return
8
Capital services Mining
9
Capital services Agriculture
10
Capital services Retail
11
Measuring labour input

• Primary data source is Labour Force Survey
• Measures actual hours worked
• Covers employees and self-employed
• But likely to be inconsistent with business
  surveys
• Considering using business survey basis but
  numerous data issues from an Australian
  perspective

12
Labour input industry shares
13
Labour input growth rates
14
Other measurement issues

• Aggregation analysing contributions from
  industries to the total
• Choice of index number formula and consistency
  with GDP methods
• Defining growth cycles
• Interpreting the data to what extent are the
  economic stories measurement created

15
Key lessons

• Presentation of data is important in giving
  messages
• MFP results can be sensitive to small changes in
  assumptions that dont affect the interpretation
  of the input series
• Understanding the robustness of the data is
  critical
• There are clear benefits to the core national
  accounts of exposing the data within a growth
  accounting fraemwork