Decompositions of Productivity Growth into Sectoral Effects: Some Puzzles Explained

Walter Diewert

Economics working papers from Vancouver School of Economics

Abstract: An earlier paper by Diewert (2013) provided some new decompositions of economy wide labour productivity growth and Total Factor Productivity (TFP) growth into sectoral effects. The economy wide labour productivity growth rate turned out to depend on the sectoral labour productivity growth rates, real output price changes and changes in sectoral labour input shares. A puzzle is that empirically, the real output price change effects, when aggregated across industries, did not matter much. The economy wide TFP growth decomposition into sectoral explanatory factors turned out to depend on the sectoral TFP productivity growth rates, real output and input price changes and changes in sectoral aggregate input shares. The puzzle with this decomposition is that empirically all of these price change effects and input share effects did not matter much when they were aggregated over sectors; only the sectoral TFP growth rates contributed significantly to overall TFP growth. The present paper explains these puzzles.

Keywords: Total Factor Productivity; labour productivity; index numbers; sectoral contributions to growth. (search for similar items in EconPapers)
JEL-codes: C43 C82 D24 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2014-10-29, Revised 2014-11-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Chapter: Decompositions of Productivity Growth into Sectoral Effects: Some Puzzles Explained (2016)
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