Measuring Public Sector Productivity

This volume shows how public agencies can be made more efficient and humane, providing practical guidance to enhance both service quality and client satisfaction at local, state and national levels. Examples focus on the issues of quality management, improving service delivery, job reorganization and worker empowerment.

This edition looks at how risky behaviour can lead to disaster in private markets, with colourful examples from Lloyd's of London and Sumitomo Metals. Krugman also considers the collapse of the Mexican peso, and the burst of Japan's 'bubble' economy.

Productivity underpins business success and national well-being and thus it is crucial to understand the factors that influence productivity growth. This volume provides a comprehensive exploration into the significance of productivity growth for business, the economy, and for social economic progress. It examines how productivity is defined, measured and implemented. It also surveys the dispersion of productivity across time and place, focusing on the productivity dynamics that either leads to a reallocation of resources that reduces dispersion and increases aggregate productivity or, conversely, allows dispersion to persist behind barriers to productivity-enhancing reallocation. A third focus is an investigation of 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 subject to public policy intervention. The Oxford Handbook of Productivity Analysis contains contributions of distinguished productivity experts from around the world who analyze a wide range of timely issues. These issues concern purely analytical topics surrounding the measurement of productivity in various situations, beginning with the ideal situation in which all inputs and all outputs, and their prices, are observed accurately. They also include service sectors such as education in which the services provided are hard to define, much less measure, and other sectors that generate undesirable environmental externalities that are difficult to price and complicate the very definition of productivity. The issues also involve business management topics ranging from the role of business models and benchmarking to the quality of management practices, the adoption of new technologies, and possible complementarities between the two. The relationship between productivity and business performance is also explored. At a more aggregate level the issues range from the impacts of market power, incentive regulation, international trade and global value chains on productivity, to the contribution of productivity to economic development and economic welfare.

This note is the first of a two-part series that explores the importance of public-sector productivity and its measurement (part one); and its determinants (part two). This note summarizes a review of the literature on different approaches to measuring public-sector productivity (the rate at which inputs are converted into outputs). This note recommends: complementing traditional `macro' measures of public-sector productivity, such as the cost-weighted-output approach presented in Atkinson (2005), with fine-grained `micro' measures at the individual organization, employee, and task and process level; monitoring and reporting output (performance) measures and inputs (costs) separately; and combining multiple measures of productivity, tied closely to the service-delivery chain.