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Mark K. Sherwood
C onsiderable data on revenues of service industries are available to researchers interested in productivity analysis. Often, however, the data do not provide a measure of output that distinguishes changes in price over time from changes in real output. This article examines and classifies some of the generic problems that have been identified in studies that address the measurement of the real output of service industries.
In general, measuring a service industry's output involves first identifying the unit of output and then dealing with the issue of quality change. Conceptual problems can arise at either or both of these stages. Accordingly, the article considers problems falling into two broad categories corresponding to the two stages. The failure to solve these problems completely has resulted in the absence of adequate price indexes for use in the construction of output measures for many service industries. Also, the article summarizes problems encountered in measuring output when innovations occur in an industry and, finally, presents two general approaches that have been followed by researchers to measure services.
The discussion of quality change is limited to the conceptual problems that make the identification of such change difficult in regard to many services. The article does not discuss the formidable problems that arise in measuring public services and that can arise even in the classification of industries and firms as producers of goods or services.
This excerpt is from an article published in the March 1994 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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