Labour or Total Factor Productivity: Do We Need to Choose?

Timothy C. Sargent and Edgard Rodriguez ()

Working Papers-Department of Finance Canada from Department of Finance Canada

Abstract: Two competing measures of productivity are commonly used by both academics and policy makers. These are labour productivity—output per hour—and total factor productivity (TFP)—which measures productivity net of the contribution of capital. Which measure is the ‘best’ has been the subject of recent debate in academic and policy circles. In this paper, we argue that both measures have their place, and that neither tells the whole story. TFP is more useful over the long run, assuming that one is confident about the underlying growth process and the quality of capital stock data, whereas labour productivity is more reliable in the short run, when there is doubt about the underlying growth process, or when capital stock data are unreliable.

Deux mesures concurrentes de la productivité sont habituellement utilisées par les universitaires et les décideurs. Il s’agit de la productivité du travail — la productivité par heure de travail —et de la productivité totale des facteurs —, qui mesure la productivité, déduction faite de la contribution du capital. La question de savoir quelle est la « meilleure » mesure a fait l’objet de débats récemment dans les milieux universitaires et politiques. Dans ce document, nous soutenons que les deux mesures sont utiles et que ni l’une ni l’autre ne donne une image complète de la situation. La productivité totale des facteurs est plus utile à long terme, en supposant que l’on ait confiance au processus de croissance sous-jacent et à la qualité des données sur le stock de capital, tandis que la productivité du travail est plus fiable à court terme, lorsqu’on doute du processus de croissance sous-jacent ou que les données sur le stock de capital ne sont pas fiables.

New Economics Papers: this item is included in nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.fin.gc.ca/scripts/Publication_Request/r ... p?doc=wp2001-04e.pdf
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.fin.gc.ca:80 (No such host is known. )

Related works:
Journal Article: Labour or Total Factor Productivity: Do We Need to Choose? (2000)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fca:wpfnca:2001-04

Access Statistics for this paper

More papers in Working Papers-Department of Finance Canada from Department of Finance Canada Contact information at EDIRC.
Bibliographic data for series maintained by Gustavo Durango ( this e-mail address is bad, please contact ).