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CHANGES TO PRODUCTIVITY AND RELATED MEASURES
Labour productivity, capital productivity and multifactor productivity, on both an hours worked basis and quality adjusted hours worked basis (table 13) are also impacted by this change.
The valuation of aggregate output measures and industry gross value added measures are aligned by this change. Basic price is the preferred valuation from a producer or seller's perspective, as it represents the amount retained and is the price most relevant to their decision making. Purchasers' prices, on the other hand, is the preferred valuation from a buyer's perspective. Basic price valuation of output complies with the international standard as described in the System of National Accounts 2008 handbook:
Productivity measures were first introduced by the ABS in 1989 as aggregate measures for a grouping of 12 industries labelled as the market sector. The underlying framework for these measures was based upon the original Solow classical growth accounting framework (Solow, 1957)(footnote 1) . Output measures in this framework are valued at market or purchasers’ prices. The field has developed considerably following major contributions by Dale Jorgenson, Zvi Griliches and Erwin Diewert. In particular, the growth accounting framework was fully articulated for industry level measures. These developments have formed the basis for internationally recommended practices with the release of the 2001 OECD Manual - Measuring Productivity. Importantly, the manual is consistent with the SNA in its recommendation for the valuation of output at basic prices:
In 2007, the ABS introduced Experimental Estimates of Industry Multifactor Productivity (cat. no. 5260.0.55.002): industry-level measures in this data cube are consistent with the OECD handbook and therefore unaffected by the conceptual change. However, aggregations of industries in the next data cube release on 7 December 2011 will reflect the change in the valuation of outputs.
1 Solow, R., Technical Change and the Aggregate Production Function, The Review of Economics and Statistics, Vol. 39, No. 3., pp 312-320 <back
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