Stats NZ has a new website.

For new releases go to

www.stats.govt.nz

As we transition to our new site, you'll still find some Stats NZ information here on this archive site.

  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+
Frequently asked questions about productivity – Production and multifactor productivity

What is production?

Production is the act of combining the inputs (labour and capital) to produce outputs of goods and services. A production function is used to show the relationship between inputs and outputs.

What is the output measure you used?

Output data is sourced from the annual national accounts. Statistics NZ has adopted value added in constant prices as its definition of output for productivity estimates. Annual data is available for March years in 1995/6 prices from the national accounts.

Constant price value-added data for the working industries that are within the measured sector industries are aggregated to the total measured sector by a chain-linked Laspeyres index.

How do you relate inputs to outputs?

Productivity measures relate a set of inputs (capital and labour) to output through a production function. The labour and capital inputs are weighted exponentially by their income shares to determine how important the input is to the production process. Increases in output that are not due to increases in capital or labour arise from technological progress (or multifactor productivity), which is not dependent on labour or capital input. The production function only relates inputs to a volume of output: it does not say anything about the impact inputs may have on outcomes, such as utility from consumption.

What is multifactor productivity?

Multifactor productivity growth refers to the contribution of technology, advances in knowledge, improvements in management, or production techniques towards output growth. It represents the growth in output that cannot be attributed to either labour or capital input. An increase in multifactor productivity means that improved production techniques, for example, have led to an increase in output compared with the previous year while still using the same amount of inputs.

In the multifactor productivity measure, how have you combined labour and capital?

Following OECD guidelines, the labour series and the capital series are weighted according to their respective income shares. The labour and capital income shares are two-period averages.

Capital income is calculated as the sum of adjusted gross operating surplus and a share of net taxes on production. Labour income refers to the total compensation of employees adjusted for working proprietors’ labour income and with the addition of a share of net taxes on production.

  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+
Top
  • Share this page to Facebook
  • Share this page to Twitter
  • Share this page to Google+