FPJ1801 - O’Donnell, C (2021), Measuring and explaining changes in productivity

FPJ1801 - O’Donnell, C (2021), Measuring and explaining changes in productivity

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Policy-makers often talk about the need to increase productivity. What many fail to understand is that higher productivity is often associated with lower profits. This lack of understanding can lead to poor policy-making. To help remedy this situation, this paper begins by defining exactly what economists mean by the term ‘productivity’. It then explains how to measure and identify the main economic drivers of productivity change. Most economists and statistical agencies do this type of work badly.

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Published 13 Apr 2021

Industry performance measures are vital indicators for understanding return on industry investment, judging appropriate levels of government and other public support and how industries contribute to economic health and wellbeing. Total Factor Productivity (TFP) is a standard measure of industry performance which describes a ratio of all outputs relevant to…
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