Overview of Productivity Analysis

Abstract

This chapter provides a wide-ranging interdisciplinary overview of productivity analysis, which also serves to introduce the chapters in the Handbook. It begins with an exploration into the significance of productivity growth, for business, for the economy, and for social economic progress. The chapter continues with a treatment of how productivity is defined, measured, and implemented. It then addresses two important empirical issues. The first involves productivity dispersion, and the productivity dynamics that would either lead to a reallocation of resources that would reduce dispersion and increase aggregate productivity, or allow dispersion to persist behind barriers to productivity-enhancing reallocation. The second involves a search for the drivers of (or impediments to) productivity growth, some of which are organizational in nature and under management control, and others of which are institutional in nature and beyond management control but subject to public policy intervention.