New Zealand’s productivity growth: Component and industry decompositions

This note applies Diewert (2014a)’s productivity growth decomposition method to New Zealand data.  This approach decomposes aggregate labour productivity growth into: industry labour productivity growth, changes in industry labour input shares and changes in industry real output prices.  Similarly, aggregate MFP growth is decomposed into: industry MFP growth, changes in industry input shares, changes in industry real output prices and changes in industry reciprocal input prices.  Consistent with Meehan (2014), industry labour productivity growth was a much larger component of aggregate labour productivity growth in New Zealand over the 1978-2011 period than changes in labour input shares.