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William Gullickson
T he indexes of multifactor productivity for two-digit manufacturing sectors prepared by the Bureau of Labor Statistics for sectors in manufacturing have been revised and extended to cover the 1949-92 period. These indexes, also called the "KLEMS" multifactor measures, compare changes in output to changes in a composite of all the input used in production-capital, labor, energy inputs, nonenergy material inputs, and business services.1 Because of this comprehensive input list, these indexes give an indication of advances in technology and production efficiency in these broad sectors, important topics as the economy emerges from the recession of the early 1990's.
This article discusses the measurement of multifactor productivity for manufacturing and analyzes growth trends within the sector. Through the years, a wide variety of productivity statistics have appeared in the literature, distinguished by the concepts underlying the measurement of output, the methods of aggregation, and the inputs included for analysis. Recent additions of "superlative" indexes of gross domestic product (GDP) by industry to the U.S. national Income and Product Accounts, prepared by the Bureau of Economic Analysis, U.S. Department of Commerce, have enhanced available alternatives for measuring manufacturing productivity. Planned changes in the way BLS measures manufacturing productivity are also discussed.2
This excerpt is from an article published in the July 1995 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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Footnotes
1 For a description of these BLS measures, see William
Gullickson and Michael J. Harper, "Multifactor Productivity
in U.S. Manufacturing, 1949-83," Monthly Labor Review,
October 1987, pp. 18-28. The current data set updates the
measures described in this article and incorporates several
technical improvements. For a through discussion of capital
measurement procedures, see Trends in Multifactor
Productivity, 1948-81, Bulletin 2178 (Bureau of Labor
Statistics, 1983). For a discussion of BLS rental prices, see
Michael J. Harper, Ernst R. Berndt, and David O. Wood,
"Rates of Return and Capital Aggregation Using Alternative
Rental Prices," in Dale W. Jorgenson and Ralph Landau, eds.,
Technology and Capital Formation (Cambridge, MA., The
MIT Press, 1989), pp. 332-72.
2 BLS plans to publish these changes in future press releases on multifactor productivity in major sectors of the U.S. economy.
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