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Understanding productivity trends


  • Ben Dolman

    (Treasury, Government of Australia)

  • Lan Lu

    (Treasury, Government of Australia)

  • Jyoti Rahman

    (Treasury, Government of Australia)


Market sector productivity — the output produced per hour worked — grew at an annual rate of 3.2 per cent during the five years to 1998-99, which was the fastest rate on record. In the five years to 2003-04, productivity growth eased to 2.2 per cent per year, which is around the average rate over the past four decades. On balance, business cycle fluctuations, international developments, investment in physical and human capital (including information and communication technology), and the movement of labour across industries did not cause this easing in productivity growth. Rather, these trends are apparent within a number of industries: mining, construction, utilities, wholesale trade, communications and finance and insurance. A closer inspection of these industries suggests that, with the exception of mining, the recent trends at least partly reflect an easing of growth rates towards their historical averages after the unusual productivity surge of the late 1990s.

Suggested Citation

  • Ben Dolman & Lan Lu & Jyoti Rahman, 2006. "Understanding productivity trends," Economic Roundup, The Treasury, Australian Government, issue 1, pages 35-52, March.
  • Handle: RePEc:tsy:journl:journl_tsy_er_2006_1_1

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    References listed on IDEAS

    1. Abbas Valadkhani, 2003. "An Empirical Analysis of Australian Labour Productivity," Australian Economic Papers, Wiley Blackwell, vol. 42(3), pages 273-291, September.
    2. Dean Parham, 2004. "Sources of Australia's Productivity Revival," The Economic Record, The Economic Society of Australia, vol. 80(249), pages 239-257, June.
    3. Jyoti Rahman, 2005. "Comparing Australian and United States productivity," Economic Roundup, The Treasury, Australian Government, issue 2, pages 27-45, June.
    4. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    5. Susanto Basu & John Fernald, 2001. "Why Is Productivity Procyclical? Why Do We Care?," NBER Chapters,in: New Developments in Productivity Analysis, pages 225-302 National Bureau of Economic Research, Inc.
    6. Graeme Davis & Gene Tunny, 2005. "International comparisons of research and development," Economic Roundup, The Treasury, Australian Government, issue 4, pages 63-82, December.
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    Cited by:

    1. Samantha Farmakis‐Gamboni & David Prentice, 2011. "When Does Reducing Union Bargaining Power Increase Productivity? Evidence from the Workplace Relations Act," The Economic Record, The Economic Society of Australia, vol. 87(279), pages 603-616, December.
    2. Robert Ewing & Sian Fenner & Steven Kennedy & Jyoti Rahman, 2007. "Recent productivity outcomes and Australia’s potential growth," Economic Roundup, The Treasury, Australian Government, issue 3, pages 49-71, September.
    3. Samantha Farmakis-Gamboni & David Prentice, 2007. "Does Reducing Union Bargaining Power Increase Productivity?," Working Papers 2007.04 EDIRC Provider-In, School of Economics, La Trobe University.

    More about this item


    labour productivity; labour market; macroeconomics;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production


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