Productivity in Services: An International Comparative Perspective

The measurement of productivity differentials in services for five countries is examined: namely Canada, France, Germany, the Netherlands and the US. Estimates of levels of output and productivity relative to the US are obtained for transport, communication and distribution. The estimates are based on the industry of origin approach, which has been applied in the International Comparisons of Output and Productivity (ICOP) project. The ICOP method is discussed in detail. It makes use of data on industry outputs and inputs from production statistics and from national accounts in combination with estimates of quantity relatives and purchasing power parities by industry. Labor productivity results for transport and communication, and for wholesale and retail trade are presented. Overall, it is found that the US is the productivity leader. The results are compared for services with those for the commodity sectors, including agriculture and manufacturing. Possible explanations are considered for the observed productivity gaps in services.