Multifactor productivity
Why are these statistics needed?
Measuring productivity growth is part of the European System of Accounts (ESA 2010, 22.99 – 22.107), but productivity indicators have never been extensively produced and published by Eurostat. The aim in providing this indicator is to improve and extend the availability of productivity measures and to complement the analyses of the labour productivity and capital productivity indicators.
Multifactor productivity (MFP) is a measure of economic performance that compares the amount of goods and services produced (output) to the amount of combined inputs used to produce those goods and services. In simple terms, a change in MFP can be described as the change in the volume of output (expressed in terms of real gross value added) that cannot be explained by changes in the quantity (and quality) of capital and labour inputs used to generate that output.
Why are they experimental?
The measure is referred to as ‘crude’ as it is based on growth rates of capital stocks (in real terms) and hours worked and not on capital and labour services that take into account changes in labour composition and in the quality of assets composing the capital stock. This is the reason why this indicator is experimental.
The indicator is based on national accounts labour input and total capital stocks data (available in the framework of the ESA 2010 transmission programme of data) without the need for assumptions or additional information (to derive quality adjusted labour input or capital services). As such the ‘crude’ MFP does not include changes in labour composition (together with hours worked growth resulting in ‘labour services’ growth) or change in the quality of assets composing the capital stock (i.e. capital services). As a consequence, ‘crude’ MFP includes for instance the changes in quality that are not taken into account by labour input (hours worked) and by capital input (capital stock). Thus, the labour composition effect and the changes in capital composition are still part of the ‘crude’ MFP.
How are they produced?
To calculate ‘crude’ MFP growth, the data on real growth rates of value added, total capital stock in chain-linked volumes, hours worked and compensation of employees are needed. They are available in the framework of the ESA 2010 Transmission Programme of data.
For further details, please consult our methodological note.
Access to the statistics
The graphs in the Excel file allow visualising and comparing, between EU countries, the trends of ‘crude’ multi factor productivity growth and contributions to value added growth of labour input and capital input.
Feedback
To help Eurostat improve these experimental statistics, users and researchers are kindly invited to give us their feedback by email:
- Are the concepts and the calculations of the ‘crude’ MFP easy to understand in their current form?
- How did you use the ‘crude’ MFP? Did you compare with more sophisticated measures produced by countries and international organizations? Do you think it could help to analyse the impact of different methodologies used in estimating input factors (labour and capital) between countries?
- Do you have any general comments on this indicator or suggestions for improvement?