Methodology of decomposition in KLEMS productivity accounts for the Polish economy
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The Department of Macroeconomic Studies and Finance Statistics of Statistics Poland, within the “experimental statistics”, carries out studies related to the implementation of KLEMS economic productivity accounts in the Polish conditions. These accounts are based on the neoclassical concept of economic growth decomposition initiated by Robert Solow and developed methodologically by Dale Jorgenson and associates.
The economic growth decomposition in the KLEMS accounts can take the shape of a gross value added (GVA) growth decomposition or a gross output growth decomposition. For Poland, during the implementation of KLEMS accounts, the GVA growth decomposition, being the essential part of KLEMS accounts, was initially performed. When developing the accounts, a developed decomposition of the labour factor contribution to GVA growth and the above-mentioned gross output growth decomposition were carried out, which allows for addition analytical studies. The final stage is the performance of the KLEMS accounts not only for the total Polish economy, but also at regional level by Polish voivodeships.
The KLEMS accounts deliver fundamental macroeconomic and mesoeconomic information on the economy and thus represent an important assisting tool for the economic growth researcher. The decomposition of economic growth allows to identify its sources, and therefore allows by this means to explain the underlying causes. It can be a basis for numerous analyses and studies on economic growth, and also be used for international comparisons with the other countries carrying out these accounts.
Multivariant factor decomposition:
It is the predecessor of the proper KLEMS regional productivity accounts by voivodship. This accounting was initially performed under an EU grant from Technical Assistance Operational Programme, but has now been updated by re-feeding the data and extending the time series. A technical description is attached to the four table files.
GVA growth decomposition in the framework of KLEMS accounts:
In the Polish conditions this accounting was done in four methodological versions:
- A – Capital without residential capital (without dwellings), labour quality understood as labour composition
- B – Capital with residential capital (with dwellings), labour quality understood as labour composition
- C – Capital without residential capital (without dwellings), labour quality understood as labour compensation level
- D – Capital with residential capital (with dwellings), labour quality understood as labour compensation level
In the attached file of tables, the sheets are labelled with the above-mentioned letters (A, B, C and D) and with voivodship symbols - the legend can be found in the "Contents" sheet preceding the tables with the result data. In the individual sheets, the designations of tables A, B, C and D refer to the contributions to the growth of aggregate gross value added (for total Polish economy and for the voivodships), while the designations of tables A', B', C' and D' refer to the contributions to sectoral gross value added (i.e. according to the NACE groupings adopted in the accounts).
Development of labour factor contribution decomposition in the framework of KLEMS accounts:
In the traditional KLEMS productivity accounting the contribution of the labour factor (L), understood as labour services, is decomposed into the contributions of hours worked (H) and labour composition (LC). For Poland, an extended decomposition variant was adopted composed in a hierarchical way of:
- a decomposition of labour compensation (LR) contribution to GVA growth into the contributions of remunerations’ level (SC) and labour services (L),
- a decomposition of labour services (L) contribution into the contributions of labour composition (LC) and hours worked (H), and
- a decomposition of hours worked (H) contribution into the contributions of the number of employees (M) and the number of hours worked per employee (H/M).
The tables for this decomposition are marked by E for contributions to aggregate GVA growth rate, and by E’ for contributions to sectoral GVA growth rates. Except that, the layout and designation of the sheets are similar to those for the GVA growth decomposition.
Gross output growth decomposition:
The gross output growth decomposition was also perfomed at the total Polish economy level. This decomposition allows to clear the contribution of MFP to GVA growth rates from possible impact of substitution between the production factors and the intermediate consumption. Some new avenues for analysing economic processes are also opening. The tables for this decomposition are marked by A to D and by A’ to D’ in a similar way as for GVA growth decomposition tables.
