International productivity gaps

Abstract

Cross-country differences in the measurement of labour input contribute to observed productivity gaps across countries. In most countries, labour force surveys (LFS) form a primary source of information for employment related statistics, such as persons employed, employees and hours worked. However, because the coverage of LFS does not fully align with the coverage of activities used to estimate GDP, additional adjustments relying on complementary sources, such as administrative or business statistics, are often applied to bridge conceptual differences, and in many countries, the use of these sources is often preferred to LFS data. Evidence from the 2018 OECD/Eurostat national accounts labour input survey shows that the adjustments made to align measures of labour input with the corresponding measures of production according to the domestic concept, vary considerably across countries, with many countries making no adjustments, in particular, for the measurement of hours worked. This paper demonstrates that countries making no adjustments to average hours worked measures extracted from the original source, such as self-reported hours actually worked in the LFS, appear to systematically overestimate labour input and, so, under-estimate labour productivity levels. To illustrate the size of this bias, for this group of countries, the paper adopts a simplified component method that introduces a series of explicit adjustments on working time using information available in LFS and complementary sources. The results point to a reduction in relative productivity gaps of around 10 percentage points in many countries compared to current estimates. Although future releases of OECD productivity (levels) statistics will incorporate these changes, it is important to stress that these estimates will only be used as a stop-gap while countries making no, or minimal adjustments, work to leverage all available data sources to produce average hours worked estimates that align with the national accounts domestic concept and that address selfreporting bias; which is the paper's principal recommendation for those countries that currently make no or only partial adjustments. Indeed, many EU member states, coordinated by Eurostat, are already moving in this direction, with ESA 2010 derogations set to expire by 2020.

Towards Improved and Comparable Productivity Statistics

“…A number of measurement issues affect the international comparability of employment data across countries. The most important challenges and differences come from the measurement of employment in terms of persons employed or job counts, measuring the self-employed, the type or variety of data sources used, and the extent to which employment measures align with national accounting principles (Ward et al, 2018).…”

“…Source: Ward et al (2018). 5 There is ongoing work to harmonise Statistical Business Registers (SBR) via both the UN Wiesbaden Group on Business Registers, the UN Committee of Experts on Business Statistics, and the joint UNECE-Eurostat-OECD expert group on business registers.…”

“…In 2018, Eurostat and the OECD surveyed their combined member countries, and selected nonmember countries, regarding their data availability, sources and methods used to compile labour input data in the national accounts (Ward et al, 2018). All countries surveyed produce data on employment at a whole economy level and by industry, most commonly breaking employment down to at least a partial two-digit industry level.…”

“…In practice, the necessary adjustments vary as much as the primary data sources chosen and their scale can range from minimal to pronounced. The 2018 Eurostat/OECD survey on labour input measurement revealed that the majority of countries make some type of adjustment to their original source data to align with the national accounts production boundary or for other data source specific requirements (Ward et al, 2018).…”

The Anatomy of UK Labour Productivity: Lessons from New and Existing Data Sources

“…The national series have been augmented by estimates of regional labour input for high-level industries on a quarterly basis, and annual estimates of real and nominal labour productivity for the NUTS1 regions of the UK for high-level industries which are consistent with the labour productivity headline data. New estimates of labour productivity by industry and country have been published (ONS, 2017a), a programme of engagement with the OECD has sought to examine and assure the comparability of aggregate labour productivity estimates across countries (Ward, Zinni and Marianna, 2018) and these have allowed new insights on UK productivity performance at the national and regional level.…”