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Mary Jablonski
M ultifactor productivity, an indicator of economic performance that relates output to the combined inputs of labor, capital, and intermediate purchases, rose by an average 0.8 percent per year between 1972 and 1991 in the cotton and synthetic broadwoven fabrics industry. Growth in multifactor productivity can result from numerous influences such as technological change, economies of scale, changes in the skills of the work force, and changes in the organization of production. In the broadwoven fabrics industry, technological change was perhaps the most important factor underlying multifactor productivity growth in the period, as there was widespread adoption of technological advances, such as modern weaving machines.
Another measure of productivity, output per employee hour, grew at an average annual rate of 3.1 percent during the 1972-91 period. The growth rate of this labor productivity measure exceeded that of multifactor productivity because of the substitution of capital-equipment, buildings, land, and inventories-and of intermediate purchases-materials, fuel, electricity, and purchased services-for hours of labor in the production process. The capital-labor ratio and the ratio of intermediate purchases to labor both increased substantially in the cotton and synthetic broadwoven fabrics industry during this period.
Although the Bureau of Labor Statistics has published industry labor productivity measures for decades, its first multifactor productivity measures for detailed industries were introduced relatively recently, in 1987. The new measure of multifactor productivity in the cotton and synthetic broadwoven fabrics industry presented in this article joins the previously published multifactor productivity measures for the following detailed industries: motor vehicles, steel, footwear, tires and tubes, farm and garden machinery, railroad transportation, household furniture, and metal stampings.1
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 The Bureau of Labor Statistics also publishes
multifactor productivity measures for two-digit manufacturing
industries, for utilities industries and for three major sectors
of the economy: private business, private nonfarm business and
manufacturing.
Multifactor productivity in the metal stampings industry. May 1995.
Multifactor productivity in household furniture. June 1994.
Multifactor productivity in the utility services industries. May 1993.
Multifactor productivity in manufacturing industries. October 1992.
Multifactor productivity in railroad transportation. August 1992.
Multifactor productivity in farm and garden equipment. June 1991.
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