National Academies Press: OpenBook

Measurement and Interpretation of Productivity (1979)

Chapter: Front Matter

Suggested Citation:"Front Matter." National Research Council. 1979. Measurement and Interpretation of Productivity. Washington, DC: The National Academies Press. doi: 10.17226/9578.
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Suggested Citation:"Front Matter." National Research Council. 1979. Measurement and Interpretation of Productivity. Washington, DC: The National Academies Press. doi: 10.17226/9578.
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Suggested Citation:"Front Matter." National Research Council. 1979. Measurement and Interpretation of Productivity. Washington, DC: The National Academies Press. doi: 10.17226/9578.
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Measurement and Interpretation of Productivity PANEL TO REVIEW PRODUCTIVITY STATISTICS Committee on National Statistics Assembly of Behavioral and Social Sciences National Research Council NATIONAL ACADEMY OF SCIENCES Washington, D.C. 1979

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the Councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the Committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. Library of Congress Cataloging in Publication Data National Research Council. Panel to Review Productivity Statistics. Measurement and interpretation of productivity. Bibliography: p. 1. Industrialproductivity Measurement. I. Title. HD56.N38 1979 658.5 79-22715 ISBN 0-309-02898-1 Available from Office of Publications National Academy of Sciences 2101 Constitution Avenue, N.W. Washington, D.C. 20418 Printed in the United States of America

PANEL TO REVIEW PRODUCTIVITY STATISTICS ALBERT REES (Chairman), Department of Economics, Princeton Univer- sity ROSANNE COLE, Department of Economic Research, IBM Corporation, Armonk, New York EDWARD F. DENISON, Brookings Institution, Washington, D.C. SOLOMON FABRICANT, Nations Bureau of Economic Research, New York JOHN A. FRECHTEING, T=ck Marketing Research, Ford Motor Company, Birmingham, Michigan ROBERT I. GORDON, Department of Economics, Northwestern University PAUL W. HOLLAND, Educational Testing Service, Princeton, New Jersey BENJAMIN F. KING, School of Business Administration, University of Washington G. S. MADDALA, Department of Economics, University of Florida MARC L. NERLOVE, Department of Economics, Northwestern University REGINAED NEWEEL, International Association of Machinists and Aero- space Workers, Washington, D.C. MARKLEY ROBERTS, American Federation of Labor-Congress of Industri- al Organizations, Washington, D.C. RICHARD RUGGLES, Department of Economics, Yale University W. RICHARD SCOW, Department of Sociology, Stanford University Staff DAVE M. O'NElEE, Sta~Director SHARON DE SHA, Staff Officer JOHN W. KENDRICK, Consultant GEORIA A. WISE, Secretary . . . ~1

COMMITTEE ON NATIONAL STATISTICS CONRAD TAEUBER (Chairman), Center for Population Research, George- town University MORRIS H. DEGROOT (Associate Chairman), Department of Statistics, Carnegie-Mellon University DAVID R. BRILLINGER, Department of Statistics, University of California, Berkeley STEPHEN E. FIENBERG, Department of Applied Statistics, University of Minnesota CLIFFORD G. HILDRETH, Center for Economic Research, University of Minnesota I. STUART HUNTER, School of Engineering and Applied Science, Princeton University NATHAN KEYFITZ, Center for Population Studies, Harvard University HOWARD LEVENE, Department of Mathematical Statistics, Columbia University NANCY R. MANN, Department of Biomathematics, School of Medicine, University of California, Los Angeles PAUL MElER, Department of Statistics, University of Chicago GEOFFREY H. MOORE, National Bureau of Economic Research, New York INGRAM OLKIN, Department of Statistics, Stanford University EDWARD R. TUFTE, Department of Political Science, Yale University 1V

Contents Acknowledgments REPORT 1 Introduction, Findings, and Recommendations 2 Uses, Misuses, and Limitations of Productivity Statistics 3 Basic Productivity Concepts: Meaning and Measurement 4 Government Measures of Productivity: Concepts, Methods, and Sources The Measurement of Output The Measurement of Inputs Analyzing the Sources of Growth Measures of Productivity for Companies International Comparisons of Productivity Supplementary Statement Markley Roberts References PAPERS Measurement Error in Productivity Statistics Paul Holland and Benjamin King v . . V11 19 35 50 88 122 146 166 181 206 211 221

V1 Contents Revisions in BES Output per Hour Sharon De Sha Measuring Outputs in Hospitals ~ Richard Scott Welfare Dimensions of Productivity Measurement Milton Moss A Note on the Form of the Production Function and Productivity 309 G. S. Maddala Accounting for Intermediate Input: The Link Between Sectoral and Aggregate Measures of Productivity Growth Frank M. Gollop Evaluation of Work-Force Composition Adjustment Kent Kunze Comparison of Industry Output Measures in Manufacturing Joel Popkin Data Adequacy for Productivity Analysis: A Case Study of the Primary Paper Industry John G. Myers and Leonard Nakamura Productivity Measurement in the Men's and Boys' Clothing Industry Leon Greenberg 239 255 276 Biographical Sketches of Panel Members and Staff 318 334 363 391 423 445

Acknowledgments This report was made possible by the work of a great many people. I should like to record here my indebtedness to some of them. The Panel held eight meetings, all of which were well attended. In addition, most members of the Panel drafted chapters of the report or wrote papers that are included in this volume. All of them participated actively in Panel deliberations and helped to form the report through their detailed comments and suggestions. Nevertheless, as noted in Chapter 1, not every member of the Panel necessarily agrees with everything in the report. The Panel also benefited from the contribution of William E. Bittle, of the International Association of Machinists and Aerospace Workers, who participated in the Panel deliberations when Reginald Newell was unable to attend and assisted in the review of written materials. The Panel relied heavily on its able and hardworking stab: Dave M. O'Neill, staff director; Sharon De Sha, stab officer; John W. Kendrick, consultant; and Gloria A. Wise, secretary. In addition to such routine tasks as arranging meetings, preparing minutes, and collecting source materials, members of the staff drafted several chapters of the report and contributed substantially to all of them. An important support role was played by other members of the staff and committees of the National Research Council. Among these I should like to mention particularly Margaret E. Martin, who attended many meetings of the Panel and whose broad knowledge of official statistics was of great help. Eugenia Grohman and Christine L. McShane provided us with . . vat

V111 Acknowledgments valuable editorial assistance. Special recognition should be given to the unique role of William Kruskal, who was chairman of the Committee on National Statistics when we began our work. Throughout our efforts, Dean Kruskal has made incisive comments, repeatedly calling into question concepts that economists too easily take for granted. He has thus acted as the conscience of the Panel. That we have not succeeded in answering many of his questions is not his fault. Our meetings were attended by a number of observers from the statistical agencies of the federal government, who participated in our discussions and often provided much-needed information and saved us from serious error. Several of these observers also read drafts of chapters and commented on them. Although I cannot list all of these observers here, I should like to mention particularly the valuable inputs of Jerome Mark and his staff of the Bureau of Labor Statistics of the U.S. Department of Labor and Martin Marimont and his staff of the Bureau of Economic Analysis of the U.S. Department of Commerce. This volume contains a number of papers by members and staff of the Panel, outside consultants, and members of the staffs of federal statistical agencies. We have drawn on these extensively in preparing our report. The version of the paper by John G. Myers and Leonard Nakamura that appears here is substantially shorter than their original thorough study. The full paper is available from the National Technical Information Service. A draft of this report was reviewed by three sets of reviewers: the Committee on National Statistics and the Assembly of Behavioral and Social Sciences of the National Research Council and the Report Review Committee of the National Academy of Sciences. We are grateful to these reviewers for the great care they have taken in reviewing the draft and for their many valuable suggestions. Finally, I should like to thank the agency that funded our work, the National Center for Productivity and Quality of Working Life. This study would not have been possible without its active support. The National Center recognized the importance of the subject and initiated discussions with the Committee on National Statistics, which created our panel. The Center's executive director, George Kuper, and its staff gave us help throughout our work. In particular, Edgar Weinberg participated actively in formulating the study and provided continuing intellectual and administrative support. Although the National Center no longer exists, its functions are being carried out elsewhere in the federal government. ALBERT REES, Chairman Panel to Review Productivity Statistics

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