EU KLEMS project on Productivity in the European Union

1
EU KLEMS project on Productivity in the European
Union

• Presentation at EPROS meeting, Luxembourg, 8-9
  November 2004, Luxembourg
• Bart van Ark (Groningen Growth and Development
  Centre, University of Groningen)
• This project is funded by the European
  Commission, Research Directorate General as part
  of the 6th Framework Programme, Priority 8,
  "Policy Support and Anticipating Scientific and
  Technological Needs".

2
Main aspects

• EU KLEMS project is 3-year statistical and
  analytical research project funded by 6th
  Framework Programme
• Purpose is to create a database on productivity
  by industry for EU member states with a breakdown
  into contributions from capital (K), labour (L),
  energy (E), materials (M) and service inputs (S)
• Conduct out a number of analytical research
  projects in areas of
• analysis of productivity, prices, industry
  structures, technology and innovation indicators
• labour markets and skills
• technological progress and innovation
• link to productivity research using firm level
  databases
• 14 research institutes across Europe, led by GGDC
  and NIESR

3
Background for EU KLEMS project (I)

• Policy interests
• monitoring and evaluating the Lisbon and
  Barcelona agendas, complementary to existing
  indicators (e.g. Eurostat structural indicators)
• Divergence between EU and US productivity
  performance
• Impact of new entry of 10 member states on EU
  economic performance
• Developments in academic world
• Growth regression literature is running out of
  steam
• Growth accounting methodologies have become more
  sophisticated
• Need for better data to test hypotheses on, e.g.,
  skill-biased technological change and role of
  non-technological innovations

4
Background for EU KLEMS project (II)

• Statistical developments in productivity
  measurement and national accounts
• Publication of Eurostat Handbooks on Price and
  Volume Measures and Input-Output Manual
• Publication of OECD Productivity and Capital
  Measurement Manuals
• Developments in light of implementation of
  present SNA and steps towards next SNA version
  (e.g. role for intangibles - Canberra II group)
• Increased availability of firm level databases
  for productivity measurement

5

• Productivity is the Key Variable
• of Economic Performance

6

• Setup of project Workpackages

7
WP1 Interindustry Accounts (I)

• Measures
• Gross output (basic prices) and intermediate
  inputs (purchaser prices) at industry level from
  which to obtain value added
• Intermediate inputs (purchase prices) by origin
  of supply broken down into energy inputs,
  material inputs and service inputs
• Measures of prices for output and intermediate
  inputs to deflate value series
• Industry level before 1995 A31 after 1995 A60
• Sources
• Input-Output Tables and National Accounts from
  individual countries, Eurostat and OECD
• Extended to obtain greater industry detail on the
  basis of census/industry survey information

8
WP1 Interindustry Accounts (II)

• Methodological and data research
• Availability of annual IO-tables (ind x ind)
• Construct on basis use/supply tables
• Intrapolation in between benchmarks
• Inconsistency between GVO and GVA measures from
  IO-tables and NA
• Solve breaks in series due to ESA 95 SNA 93
• industry classification
• treatment of financial intermediation services
• Software expenditure Measurement of output in
  services (market services and public services)
• Measurement of quality change in price indices
• Use of hedonic prices for ICT output

9
WP2 Labour Accounts (I)

• Measures
• Measures of total number of persons engaged
  (including full-time and part-time distinction)
  and average and total number of actual hours
  worked.
• Breakdown of labour quantity into gender, age
  (3-4 categories), and level of educational
  attainment (3 or more categories).
• Obtain measures of total labour compensation
• Sources
• National Accounts from individual countries,
  Eurostat and OECD
• Extended to obtain greater industry detail on the
  basis of labour force statistics
• Alternative sources social security statistics,
  household surveys

10
WP2 Labour Accounts (II)

• Methodological and data research
• Consistency of employment from enterprise/
  establishment based surveys, household surveys
  and national accounts
• Small samples can lead to volatile series - can
  introduce errors
• Analysis of average working hours (e.g., with
  time use surveys)
• Detailed comparison of categories of educational
  attainment
• High, Medium, Low
• Country specific divisions
• Occupational classifications, e.g., for IT
  workers
• Labour costs must include non-wage labour costs
  
• Self-employed wage imputation
• Temporary workers (employment exchanges) where
  they are allocated?

11
WP3 Capital Accounts (I)

• Measures
• Investment in seven asset categories (IT
  equipment, communication equipment, other
  machinery, transport equipment, software,
  non-res. structures, dwellings)
• Estimation of capital stocks and rental prices.
• Price indices for investment and user cost to
  obtain capital services.
• Measures of total capital compensation
• Sources
• National Accounts from individual countries,
  Eurostat and OECD
• Extended to obtain greater industry detail on the
  basis of commodity flow tables, production and
  trade statistics

12
WP3 Capital Accounts (II)

• Methodological and data research
• Specific capital assets
• Measurement of software
• Treatment of owner occupied housing
• Land, inventories and infrastructure
• Leased assets
• Hedonic price measures for ICT capital inputs
• Age of physical capital stock harmonised or
  national?
• Age-efficiency profiles harmonised or national?
• Role of taxation differences
• Rate of return internal or external, aggregate
  or industry specific

13
Statistical vs. analytical modules of database

• Statistical module of the database
• Data consistent with those published by NSIs
• According to rules and conventions on national
  accounts, supply and use tables, commodity flow
  methods, etc. (SNA 1993, ESA 1995)
• Data meet statistical standards of NSI's and
  Eurostat and can eventually be incorporated in
  their present statistical practices.
• Analytical module of the database
• Developed parallel to the Statistical module
• Produces additional data and fills gaps using
  alternative techniques (e.g. growth accounting)
  which presently will go beyond the ESA95 and
  SNA93 or do not (yet) meet statistical standards
• Consider alternative or pioneering assumptions
  regarding statistical conventions on, for
  example, the output and price measurement of ICT
  goods and non-market services, measurement of
  skill levels, construction of capital stock and
  capital services, or capitalization of intangible
  assets.

14
Deliverables related to NSIs

• Statistical roadmap (month 9)
• methods and procedures guide for consortium
• already available in mini-format
• EU KLEMS Manual (month 24) user guide
• Statistical implementation plan (month 35)
  producer guide
• Statistical progress report (every 6 months)

15
Involvement of NSIs (I)

• Discuss with (national) consortium members
  possibilities to match data availability at NSIs
  and data requirements by consortium
• Advice on methodologies
• Co-operate in areas of specific interest of NSIs
• Advice on quality of results
• Discuss possibilities to implement productivity
  dataset at NSIs
• Participate in consortium workshops
• Invite consortium members for participation in
  NSI projects or events as well as ESTAT NAWG or
  EPROS

16
Involvement of National Statistical Agencies (II)

• Subcontracting Statistics Finland, ISTAT,
  possibly ONS
• Participatory status Statistics Netherlands
• Observer status
• Contacts Statistics Austria, INSEE, INE,
  Statistisches Bundesamt, Statistics Denmark,
  Statistics Sweden, Institute of National
  Statistics (Belgium), ...
• Other EU-15 partners Greece, Ireland,
  Luxembourg, Portugal
• New member countries covered by project Czech
  Republic, Hungary, Poland
• Other new member countries may contribute

17
Next steps

• October 04-February 05 contacts with NSIs to
  investigate possibilities for co-operation and
  advice on development of statistical roadmap
• March-November 05 possibility to plan additional
  meetings for exchanging information on methods,
  data, etc.
• January 06-October 06 first round of feedback
  from NSIs on results for statistical and
  analytical module
• As of beginning 06 discussion of statistical
  implementation plan
• Throughout project invitation to participate in
  Consortium activities and regular reporting to
  NAWG