Wednesday, December 20, 2017

Productivity and Compensation -- The Early Years -- the first take

I put output-per-hour and compensation-per-hour (two lines) on a graph, for both the Business Sector and the NonFarm Business Sector (four lines total). Indexed all the lines to the start date (1947 Q1) so they all start at the 100 level. Then I subtracted 50 from the Nonfarm Business numbers to shift them down a bit on the graph. So we can compare productivity-and-compensation for the business sector (blue and red) to productivity-and-compensation for the nonfarm business sector (green and purple):

Graph #1: Productivity and Compensation 1947-1970 for Business & Nonfarm Business
The separation between productivity and compensation is greater for the business sector than for nonfarm business in these early years.

...and then I got distracted...

I suppose, if you subtract nonfarm business from business, you're left with farm business. I have to look.

I should say first that I'm not sure of this calculation

Business - NonFarm Business = Farm Business

It certainly seems right. But it might be right conceptually, and wrong mathematically. I'm only looking at this graph because I want to see what it looks like:

Graph #2: Productivity and Compensation 1947-1970 for Business & Farm Business
Almost flat. Farm productivity -- and farm wages -- are almost flat. Well, on Graph #1 the lower lines are almost parallel to the upper lines. If we subtract one from the other, the result should be almost flat.

But does it make sense? I don't think so. I added population to the graph, indexed it, and moved it down near the farm productivity line. Population grows faster than my measure of farm productivity. So that would mean farm employment would have to rise to keep up with demand. But farm employment has gone down, right?

I googled farm employment. Google thought I wanted a job.

1 comment:

The Arthurian said...


"In contrast with the widely held but rarely tested view that the rate of agricultural productivity growth is low, we find the rate of productivity growth in agriculture to be higher than in manufacturing both on average and for groups of countries at different stages of development. Further, there appears to be a stronger tendency for agricultural productivity levels to converge than is evident in manufacturing."
-- Will Martin and Devashish Mitra in PRODUCTIVITY GROWTH AND CONVERGENCE IN AGRICULTURE AND MANUFACTURING, CIES DISCUSSION PAPER 99/18, Development Research Group World Bank,Washington DC. September 1999.