Measurement and Interpretation of Productivity (1979) / Chapter Skim
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Evaluation of Work-Force Composition Adjustment
Evaluation of Work-Force Composition Adjustment
Pages 334-362
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could implement the measurement of the productivity effects of changes in work-force composition. Presently, BUS publishes labor productivity measures for several economic sectors (including the private business economy)
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219-2231. It is this measure of total hours that a work-force composition adjustment adjusts in order to correct for shifts in the demographic and organizational (industry and occupation)
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in fact, there is evidence that there may be some overeducation of the work force, which forces some people to work in jobs for which they are overtrained.2 This might lead to a decrease in productivity growth when people work in jobs that are not as challenging or exciting as those they were educated for. A MODEL OF WORK-FORCE COMPOSITION To construct a measure of aggregate labor input for use both in accounting for changes in unweighted labor productivity and in measuring multi-factor productivity, total input (hours)
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of total hours worked by the ith category of workers. Therefore, the growth rate of labor services can be expressed as the sum of the rates of change in work-force composition Qua and unweighted hours: L (L+ H L QL H where Q' AH, N .]
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Discrimination can also create wage differentials among workers with the same characteristics and productivity, although discrimination is not consistent with perfect competition. To facilitate the measurement of labor inputs, the neoclassical model has been used in two ways.
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In general, however, industry wage differentials also reflect regional differentials, occupational differentials, union/non-union differentials, and disequilibrium differentials, rather than productivity differences arising from worker characteristics alone. Occupation The term occupation describes different types of labor that are in a position to handle different specific ranges of job functions.
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Sex Traditionally, married women have not participated in the labor force continuously because they usually withdrew from it during their childbearing years. This rather loose attachment to the work force caused married women to forgo the advantages of continuous experience in a profession, and they were therefore not able to achieve the higher earning levels that males achieved through continuous employment.
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Individual factors when isolated from one another may not always prove to be important, but when they interact, there may be a significant joint effect on the level of labor input. Consider, for example, age and sex; age is a better measure of experience for the male work force than for the female work force because many women raise families and re-enter the work force later in life.
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Each additional level of disaggregation of a dimension of the work force adds not one additional type of labor but the sum of an the disaggregations of all the other dimensions. For example, given two sexes, three age groups, five industries, four occupations, two education levels, and two worker classes, the total number of labor types that would be the product of all these is 480.
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This is the only survey and only data source other than the decennial census that collects information on all the dimensions of the labor force we have outlined. This information includes employment and hours worked for 48 industries (51 after 1975)
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make it one of the most significant sources of information for productivity analysis. It provides reliable data for 3and 4-digit sac levels for the manufacturing industries.
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The survey covers 600,000 manufacturing establishments and provides industry detail at the 4-digit sac level. However there is a lag of at least 1 year between the collection and the availability of the data, hours are not collected for nonproduction workers, there are no comparable hours for nonmanufacturing industries, and again, there is no demographic classification of employment or hours.
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They all assume explicitly or implicitly that the production function is linearly homogeneous (shows constant returns to scale) , that the observed wage rates or factor prices are equal to the marginal product of the worker or other factor input (perfect competition in the factor markets)
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The wage rates for each characteristic are held constant, and the index rises or falls through time as the proportions at each level of a characteristic change. Denison did not change his wage rates over the entire time period.
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The inputs and outputs are aggregated from the industry classifications to arrive at measures for major economic sectors and the total economy. Method of Aggregation and Data Kendrick explicitly assumes that the production functions of the total economy and the separate industries are of the Cobb-Douglas form.
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For the private domestic economy, labor input increased 1.26 percent annually. The private domestic nonfarm business sector had an increase in labor input of 1.21 percent for the same period.
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Tobacco manufactures (10) Textile mill products Apparel and other fabricated textile products Paper and allied products Printing, publishing, and allied industries Chemicals and allied products Petroleum and coal products
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State and local government enterprises 351 dimension and level, generating 81,600 different types of labor. Because each dimension is cross classified by every other dimension, Gollop and Jorgenson can compute partial indexes for each separate type of cross classification and can also compute the marginal adjustment contribution that an additional dimension gives to the labor composition coefficient.
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Composition adjustment coefficients were calculated for several 2-, 3-, and 4-digit sac level industries for discrete and unrelated time intervals. These industries are some of those for which BUS pub
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Denison found that the adjustment for labor composition contributed to labor input at an annual rate of 0.65 percent from 1947 to 1969. Gollop and Jorgenson found that labor composition contributed to labor input at an annual rate of 0.74 percent for the same period.
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Denison adjusts only for the demographic characteristics (the supply characteristics) , while Kendrick adjusts using only industry mix (possibly a quality effect, but also possibly a measure of increased capital used with labor and/or improved resource allocation among industries)
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is probably the least restrictive specification. DATA If the number of dimensions could be sufficiently limited and still provide accurate measures of work-force composition, then the cPs composition data could be controlled to establishment-based industry totals, which correspond to the NIPA estimates of output.
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manufacturing industries. National Bureau of Economic Research Conference.
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c c~ ~ ~ ~ ~ ~ ~ = ~: c c~ o oo c 3 <,5 V'C c3,- 3 C~tt t_, o C)
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c p" u o x ~ - ~ ~o cr~ r~ r~ - ~ z v, c~ ~ ~ vl c)
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