Multifactor productivity: Estimates for 1970 to 2009

Abstract

This article presents multifactor productivity MFP estimates using experimental measures of quality adjusted labour inputs and capital services. Using a growth accounting framework, output growth can be split into the relative contributions of labour and capital inputs, and a residual component called MFP. MFP is also described in the literature as disembodied technical change, the Solow residual or total factor productivity. This approach complements traditional measures of productivity, which focus only on one input labour and take account only of the volume of labour and not changes in the composition of labour over time. The most recent data highlights how MFP has declined during the recession at both the whole economy and industry level. The article also backcasts the series to 1970 using the EU KLEMS dataset to create a longer run picture of MFP.