Fuller Measures of Output, Input and Productivity in the Non-profit Sector: A Proof of Concept

We explore the appropriate conceptual framework for thinking about the output and productivity of the non-profit sector, and sketch a roadmap for measuring the productivity of the sector. Doing so requires us to go beyond the National Accounts, since some inputs to the non-profit sector (such as volunteer time) are outside the GDP boundary. Using a range of publicly available data we estimate new input and output measures for the Non-Profit Institutions Serving Households (NPISH) sector, and from these estimate productivity levels and growth. We find that the NPISH sector in the UK has grown rapidly over the past 20 years, with hours worked and nominal GVA growing faster than for the economy as a whole. Our fuller measures suggest NPISH accounts for about 4.4% of GDP in 2019, compared with 2.9% before conceptual adjustments, and up from 3.3% two decades before. The NPISH sector is less productive than the UK average, although similar to other labour-intensive industries like retail. We estimate little growth in real productivity, although price measurement in the relevant industries is difficult, so there is considerable uncertainty around our estimates of real GVA and productivity growth. There are also conceptual and practical difficulties in measuring the value of a sector that is likely to exhibit significant positive externalities, such that our adjusted measures still undervalue the sector.