Capital Labor Multifactor Productivity Value Added

From Open Risk Manual


Capital Labor Multifactor Productivity Value Added. A ratio of a quantity index of value added to a quantity index of combined labor and capital input

Capital-labour MFP indices show the time profile of how productively combined labour and capital inputs are used to generate value added. Conceptually, capital-labour productivity is not, in general, an accurate measure of technical change. It is, however, an indicator of an industry's capacity to contribute to economy-wide growth of income per unit of primary input. In practice, the measure reflects the combined effects of disembodied technical change, economies of scale, efficiency change, variations in capacity utilisation and measurement errors.

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