The document discusses using new quarterly GDP data by industry from the BEA to measure quarterly labor productivity by industry. It addresses issues with data sources for output and hours worked, choices between using value-added or sectoral output measures, and results of calculating quarterly productivity growth rates by industry. Key findings are that quarterly data show more heterogeneity across industries and volatility in estimates compared to annual data. It raises questions about whether input measures are independent of output measures and how to interpret quarterly changes given productivity is usually a longer-term structural change.

1. by Lucy P. Eldridge and Jennifer L. Price
Measuring Quarterly Labor
Productivity by Industry
IARIW 2014 – Session 4D

2. Outline
Can the new quarterly BEA GDP-by-industry statistics be
used to produce reasonable quarterly labor productivity
measures at the industry level?
Issues presented in the paper are:
–Data sources
–Quarterly labor productivity by industry
–Assess the new information provided by these labor
productivity measures
–Data quality issues (is output independently estimated
from hours worked?)

3. New Quarterly GDP-by-Industry Data
– Published by BEA, April 25,2014
– Begins in 2005 and extends forward
– Available 120 days after the end of the reference quarter
– Consistent with the methods used to construct the annual
industry accounts
– Value-added and gross output by industry in current and
constant dollars

4. Quarterly Hours by Industry
– Same methods used by BLS aggregate productivity
statistics
– BLS Current Employment Statistics program (CES) data
on employment and hours paid
– BLS National Compensation Survey (NCS) data for adjust
to an hours worked concept
– BLS Current Population Survey (CPS) data to estimate
nonsupervisory worker data, and hours for self-
employed and unpaid family workers

5. Choice of output measures
Value-added (VA) Sectoral output (SO) (excluding
intra-industry deliveries)
– Outsourcing lowers VA, but also employment;
– SO provides a full picture of the production function and
technical efficiencies (with the exception of K)
– Aggregation issues, moving from individual industries to
the industry sector and GDP: VA based measures can
directly be translated to GDP (contributions to growth)
– Differences accelerations and decelerations in measured
labor productivity (lags in input adjustments)

6. Choice of output measures
– VA volume changes are based on double deflation
– Focus is on quarter to quarter productivity growth (issues
related tot seasonal adjustment?)
– Measurement restricted to the business sector (excluding
the household sector) as output must be measured
independently from (labour) input.
– Discussion on self-employed labour is perhaps somewhat
puzzling (given unincorporated business is excluded)

7. VA and SO by Industry, 2013billions

8. Quarterly Labor Productivity by Industry
Set up:
–Calculated as the quarter to quarter growth in output less
the quarter to quarter growth in labor hours
–Both output and hours worked are seasonally adjusted
–Quarterly growth expressed as an annual rate to facilitate
comparisons to the annual growth rates
Results:
–Quarterly growth rates provide additional information
that is not apparent in the annual trends
–Initial quarters of recovery showing significantly faster
growth than annual

9. Labor Productivity Growth in the Private Sector,
Sectoral Output
Percent Change from Previous Period

10. Labor Productivity Growth in the Private Sector,
Value-Added
Percent Change from Previous Period

11. Labor Productivity Growth, Nondurable Goods
Manufacturing (sectoral output?)
Percent Change from Previous Period

12. Labor Productivity Growth, 2012 - 2013

13. Main methodological findings
– Heterogeneity in labor productivity growth among
industries is more pronounced when looking at the
quarterly data.
– Quite a bit of volatility in the estimates
– Important to know if input measures are used for output
measurement: if so, productivity will be biased toward
zero (this point requires further investigation).
– Long-run negative productivity growth (construction)

14. Questions of discussant
About methodology:
–Does the commercial sector include unincorporated
businesses (the household sector)?
–Could you elaborate a bit more on seasonal adjustments?
About interpretation:
–What precisely is measured on a quarterly basis, given
productivity is generally conceived as a structural change
phenomenon (innovation, technical change)?