Dispersion in Dispersion: Measuring Establishment‐Level Differences in Productivity

Abstract

Productivity measures are critical for understanding economic performance. The official Bureau of Labor Statistics (BLS) productivity statistics, which are available for major sectors and detailed industries, are useful for understanding the sources of aggregate productivity growth. A large volume of research shows that within-industry variation in productivity provides important insights into productivity dynamics. This research has revealed large and persistent productivity differences across businesses even within narrowly-defined industries. These differences vary across industries and over time and are related to productivity-enhancing reallocation. Dispersion in productivity across businesses may provide information about the nature of competition and frictions within sectors and about the sources of rising wage inequality across businesses. There are currently no official statistics that provide this level of detail. To fill this gap in the official statistics, the BLS and the Census Bureau are collaborating to create measures of within-industry productivity dispersion with the goal of publishing dispersion statistics to complement the official aggregate and industry-level productivity growth statistics produced by the BLS and thereby improve our understanding of the rich productivity dynamics in the U.S. economy. We are also developing restricted-use datasets for use by researchers in the Federal Statistical Research Data Center (FSRDC) network.