Measuring productivity

This paper discusses the main measurement issues in calculating productivity indicators, and provides guidance to researchers and statisticians in addressing these difficulties. It draws on the OECD Productivity Manual and on recent OECD work on productivity levels. The paper examines a range of issues related to the measurement of productivity growth, including the choice of output measure (gross output versus value added), the measurement of output, labour and capital input, as well as index number issues. It also discusses OECD estimates of productivity levels and the key measurement issues in deriving these estimates, including the appropriate conversion from one currency unit to another. A final section discusses the interpretation of productivity measures, including their most common applications and the possible pitfalls. The paper concludes that substantial progress has been made in recent years to improve the comparability of productivity statistics. In many countries, however, basic source data are still the key limitation to the development of comparable indicators of productivity. In addition, statisticians, researchers and policy makers need to be more aware of the appropriate uses and interpretation of productivity statistics.