Factor Utilisation and Productivity Estimates for the United Kingdom

Jens Larsen (), Katharine Neiss () and Fergal Shortall

No 120, Royal Economic Society Annual Conference 2002 from Royal Economic Society

Abstract: This paper derives series for capital utilisation, labour effort and total factor productivity from a DGE model with variable utilisation and labour adjustment costs. Capital utilisation tracks survey-based measures closely, while movements in total hours worked drive our labour effort series. TFP is less cyclical than the traditional Solow residual, though a weighted average of capital utilisation and labour effort - aggregate factor utilisation - and the Solow residual are not closely related. Rather, aggregate factor utilisation is correlated with detrended labour productivity, providing more evidence that differences in average and marginal labour productivity may be linked to factor hoarding.

Date: 2002-08-29
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Working Paper: Factor utilisation and productivity estimates for the United Kingdom (2002)
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