1. Monash University – ACER CENTRE FOR THE ECONOMICS OF EDUCATION AND TRAINING Industry-level measures of productivity growth Michael Long 14 th National Conference 29 October 2010 Ascot House, Melbourne

2. Some topics ♦Productivity measures ♦Australia’s productivity growth ♦Education and training ♦Service industries ♦Productivity growth by industry ♦Value-added dollar per hour by industry o Builds on a project for Service Skills Australia

3. Productivity o Central to our standard of living o More output for fixed inputs o Many influences:  Quality of labour  Technology  Workforce strategies  Capacity utilisation  Economies of scale  Natural disasters  Government regulation  Changed inputs

4. Productivity measures o Labour productivity LP = VA / L or LP = (GO - I) / L o Capital productivity KP = VA / K or KP = (GO-I) / K o Multifactor productivity (value added) MFP VA = VA / (KL) or MFPVA = (GO-I) / (KL) o Multifactor productivity (gross output) MFP GO = GO / (IKL)

5. Sources  National accounts  Quarterly business indicators survey  Labour force survey  Price indices  Industry measures  Ad hoc surveys eg of hotel occupancy

6. Caveats  Quality  Intra-industry transfers  The business cycle  All the problems associated with GDP

7. Australia’s productivity growth Labour, Capital and Multifactor Productivity Indexes: Five year moving averages, 1985-90. Adapted from ABS, Experimental estimates of industry multifactor productivity, Australia: detailed productivity estimates. 1985-86 to 2008-09. 5260.0.55.002

8. Australia’s productivity growth Years86-9090-9595-0000-0505-0606-0707-0808-09 Labour 1.522.123.062.242.141.071.54-0.29 Capital 0.04-0.260.20-0.57-2.17-1.10-1.95-5.30 MFP GVA 0.891.121.830.950.080.02-0.15-2.74

9. Australia’s productivity growth Average labour productivity growth by selected OECD countries, 2004 to 2008 OECD.Stat 24 May 2010.

10. Service industries  Service industries are sometimes considered the poor cousins in terms of productivity but they are not all created equal  Market and non-market  Estimates available/not available  Mozart’s string quintet in G Minor  Travel, health, venues, media, digital recordings.

11. Productivity and education & training  Observation of association between education levels and earnings & labour force participation  More detailed statistical analyses linking education to labour market outcomes  Estimates of the more than satisfactory rates of return to investment in education  Growth accounting – over-time within and between countries  Self-sustaining growth theory

12. Productivity and education & training Year84-8988-9493-9998-0403-08 Output growth 4.4%1.7%4.5%3.2%3.6% % contribution Capital services 38.159.038.648.070.8 Hours worked 38.6-16.215.017.634.4 Labour composition 3.60.61.80.62.8 MFP19.456.144.633.5-8.1

13. Labour productivity by industry Annual change in labour productivity by industry, Australia 1998-99 to 2008-09 Adapted from ABS, Experimental estimates of industry multifactor productivity, Australia: detailed productivity estimates. 1985-86 to 2008-09. 5260.0.55.002

14. MFP VA productivity by industry Annual change in MFP VA productivity by industry, Australia 1998-99 to 2008-09 Adapted from ABS, Experimental estimates of industry multifactor productivity, Australia: detailed productivity estimates. 1985-86 to 2008-09. 5260.0.55.002

15. $ value-added per hour by industry Dollars of value-added output per hour of labour by industry, Australia 2007 www.euklems.net.

16. Thank you  and also www.education.monash.edu.au/centres/ceet