Transcript Australian Industry MFP: Measurement issues and initiatives Presentation to OECD Productivity Workshop, Bern, October 2006

Australian Industry MFP:
Measurement issues and initiatives
Presentation to OECD Productivity
Workshop, Bern, October 2006
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
Average MFP growth rates
Table 1: Annual average growth in MFP for the market sector industries,
market sector productivity growth cycle (Experimental estimates)
Per cent per year
Agriculture, forestry & fishing
Mining
Manufacturing
Electricity, gas & water
Construction
Wholesale trade
Retail trade
Accommodation, cafes & restaurants
Transport & storage
Communication services
Finance & insurance
Cultural & recreational services
Market sector
1984-85
to
1988-89
1988-89
to
1993-94
1993-94
to
1998-99
1998-99
to
2003-04
1984-85
to
2003-04
-1.3
2.8
1.7
5.1
-1.2
0.5
-2.8
-1.8
1.4
4.7
2.4
-3.7
0.7
3.9
2.4
1.8
4.1
-0.2
-2.4
0.9
-1.5
1.3
5.6
1.4
-0.8
0.9
3.8
0.2
0.7
2.2
2.7
5.5
1.8
1.6
2.1
3.9
2.3
-1.6
2.1
3.8
-0.5
2.2
-2.6
0.9
1.9
1.3
0.8
2.6
-1.0
-0.3
1.3
1.0
2.4
1.1
1.4
1.9
0.5
1.5
0.4
-0.1
2.0
3.2
1.2
-1.1
1.2
Industry MFP growth rates
Agriculture
Mining
130
130
110
110
90
90
70
70
50
1985
50
1985
1989
1993
1997
2001
2005
1989
1993
1997
2001
2005
Industry MFP growth rates
Electricity, gas & water
Cultural & recreational services
130
130
110
110
90
90
70
70
50
1985
50
1985
1989
1993
1997
2001
2005
1989
1993
1997
2001
2005
Measuring capital inputs
• Key issues
–
–
–
–
–
Exogenous and endogenous rates of return
Choice of price deflator
Negative rental prices
Asset lives
Age efficiency profiles
Rates of return
Table 4:
Average rates of return and deviations from the
exogenous rate of return, by market sector industry, 1984 85 to 2004-05
Per cent
Average rates of return
Deviations from
exogenous rate of return
Exogenous Endogenous Current Endogenous
Agriculture, forestry & fishing
Mining
Manufacturing
Electricity, gas & water
Construction
Wholesale trade
Retail trade
Accommodation, cafes &
restaurants
Transport & storage
Communication services
Finance & insurance
Cultural & recreational services
Current
7.99
7.99
7.99
7.99
7.99
7.99
7.99
7.99
1.30
6.42
6.86
3.77
9.63
5.78
6.85
3.41
8.39
8.38
8.55
7.99
11.34
8.13
8.43
8.01
-6.69
-1.58
-1.13
-4.22
1.63
-2.21
-1.14
-4.59
0.40
0.39
0.56
0.00
3.35
0.14
0.44
0.01
7.99
7.99
7.99
7.99
1.11
8.13
8.31
1.76
7.99
8.94
10.50
7.99
-6.89
0.14
0.32
-6.23
0.00
0.95
2.50
0.00
Capital services: Mining
Mining
120
100
80
60
40
20
0
1964-65
1974-75
1984-85
1994-95
2004-05
Capital services: Agriculture
Agriculture, forestry & fishing
200
160
120
80
40
0
1964-65 1974-75 1984-85 1994-95 2004-05
Capital services: Retail
Retail trade
120
100
80
60
40
20
0
1964-65
1974-75
1984-85
1994-95
2004-05
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
Labour input industry shares
Table 6:
Employment share by industry for SEE and modelled
employment data and LFS for 1985-86 and 2003-04
Per cent
1985-86
SEE &
ModEmp
LFS
Agriculture, forestry & fishing
Mining
Manufacturing
Electricity, gas & Water
Construction
Wholesale trade
Retail trade
Accommodation, cafes &
restaurants
Transport & storage
Communication services
Finance & insurance
Cultural & recreational services
2003-04
SEE &
ModEmp
LFS
7.8
2.1
24.4
2.9
10.1
7.5
21.1
6.3
8.9
2.4
24.5
2.8
10.4
7.7
19.3
4.7
6.0
1.4
17.9
1.0
12.8
8.4
25.7
7.8
6.3
1.6
18.0
1.3
13.3
7.5
24.2
7.9
7.5
2.7
5.4
2.3
7.3
3.1
6.1
2.7
7.5
2.3
5.5
3.7
7.2
2.8
5.8
4.0
Labour input growth rates
Table 7:
Average annual growth rates in hours worked for SEE &
modelled employment data and LFS, selected periods.
Per cent per year
Agriculture, forestry & fishing
Mining
Manufacturing
Electricity, gas & Water
Construction
Wholesale trade
Retail trade
Accommodation, cafes &
restaurants
Transport & storage
Communication services
Finance & insurance
Cultural & recreational services
1985-86 to 1994-95
1994-95 to 2003-04
SEE &
ModEmp
LFS
SEE &
ModEmp
LFS
-0.5
-0.3
0.2
-5.0
2.9
2.1
1.5
2.9
-1.0
-0.4
0.5
-4.6
2.7
2.1
1.9
5.3
-1.5
0.6
-1.4
-4.1
2.2
1.2
1.0
0.8
-1.3
1.7
-0.6
-1.3
3.2
-1.3
1.2
2.2
1.4
0.2
1.9
5.0
1.1
0.7
1.0
4.3
1.0
1.0
-0.5
1.5
1.4
1.8
1.2
2.0
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
Key lessons
• Presentation of data is important in giving messages
• MFP results can be sensitive to small changes in
assumptions that don’t 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