Research at a Glance: An Analysis of Labor and Multifactor Productivity in Air Transportation: 1990–2001

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This research paper by Anthony D. Apostolides, Ph.D., is part of a series on multifactor productivity (MFP) in transportation. This paper examines labor productivity and MFP in U.S. air transportation during the 1990–2001 period and compares labor productivity and MFP to those of two other transportation subsectors, line-haul railroads and long distance freight trucking. The report also assesses the factors that have affected the changes of labor productivity and MFP in air transportation. Labor productivity is defined as output per unit of labor and is calculated by dividing output by a measure of the labor input (typically labor hours). Multifactor productivity refers to the productivity of all the inputs used in production.

The research in this report finds that both labor productivity and multifactor productivity in air transportation increased during the 1990–2001 period. However, both measures grew at lower rates during the second half of the 1990s. Factors affecting increases in labor productivity included increases in capital intensity and technological advances. Factors affecting multifactor productivity include improvements in the capital input, measures that increase the utilization of air carrier resources, measures that speed up maintenance work and the marketing of air services, and changes in industry structure through mergers, acquisitions, and bankruptcies.

Productivity increases in the U.S. economy over time have contributed significantly to economic growth and to improvements in the standard of living. According to the data and analysis presented in this paper, growth of labor and multifactor productivity in air transportation grew rather significantly over the period studied. Thus, the industry contributed positively to the economy’s productivity. However, the growth of both labor and multifactor productivity declined in the second half of the 1990s.

It would appear that air transportation is quite amenable to productivity improvements from technological innovations. And a substantial number of such innovations were developed and implemented in the decade. This portends rather well for future technological developments in the industry.

Labor Productivity in Transportation and U.S. Business, 1990–2001

SOURCES: The data on which this chart is based were obtained from the Bureau of Labor Statistics internet site. For the three transportation industries: ftp://ftp.bls.gov/pub/special.requests/opt/dipts/ipr.aiin.txt. For private business: http://data.bls.gov/PDQ/servlet/SurveyOutputServlet.

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