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Measuring productivity in the public sector: some conceptual problems

In many sectors of the economy, governments either provide various services at no cost or at highly subsidized prices. Examples are the health, education and general government sectors. The paper analyzes three possible general methods to measure the price and quantity of nonmarket government outputs. If quantity information on nonmarket outputs is available, then the first two methods of price valuation rely on either purchaser based valuations or on cost based valuations. If little or no information on the quantity of nonmarket outputs produced is available, then the method recommended in the System of National Accounts 1993 must be used, where aggregate output growth is set equal to aggregate input growth. The paper also discusses various methods of adjusting for quality change.

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File URL: http://hdl.handle.net/10.1007/s11123-011-0226-2
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Article provided by Springer in its journal Journal of Productivity Analysis.

Volume (Year): 36 (2011)
Issue (Month): 2 (October)
Pages: 177-191

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Handle: RePEc:kap:jproda:v:36:y:2011:i:2:p:177-191
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100296

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  1. Dan Usher, 1980. "The Measurement of Capital," NBER Books, National Bureau of Economic Research, Inc, number ushe80-1, Abril.
  2. Diewert, W E, 1992. "The Measurement of Productivity," Bulletin of Economic Research, Wiley Blackwell, vol. 44(3), pages 163-98, July.
  3. Kholi, U. & Fox, K., 1996. "GDP Growth, Terms-of-Trade Effects and Total Factor Productivity," Papers 96/28, New South Wales - School of Economics.
  4. Diewart, W Erwin & Morrison, Catherine J, 1986. "Adjusting Output and Productivity Indexes for Changes in the Terms of Trade," Economic Journal, Royal Economic Society, vol. 96(383), pages 659-79, September.
  5. F. M. Fisher & K. Shell, 1970. "The Pure Theory of the National-Output Deflator," Working papers 59, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Diewert, W Erwin, 1983. " The Measurement of Waste within the Production Sector of an Open Economy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(2), pages 159-79.
  7. Robert B. Archibald, 1977. "On the Theory of Industrial Price Measurement Output Price Indexes," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 6, number 1, pages 57-72 National Bureau of Economic Research, Inc.
  8. W. E. Diewert & Mick Silver & Saeed Heravi, 2007. "Hedonic Imputation Versus Time Dummy Hedonic Indexes," IMF Working Papers 07/234, International Monetary Fund.
  9. Triplett, Jack E & McDonald, Richard J, 1977. "Assessing the Quality Error in Output Measures: The Case of Refrigerators," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(2), pages 137-56, June.
  10. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
  11. W. Diewert & Alice Nakamura, 2003. "Index Number Concepts, Measures and Decompositions of Productivity Growth," Journal of Productivity Analysis, Springer, vol. 19(2), pages 127-159, April.
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