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Real-time Analysis on Japan's Labor Productivity

First draft: October 2009
This version: July 2010
Naoko Hara *1
Hibiki Ichiue *2

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This paper analyzes the revision to Japan's labor productivity, measured using Japan's System of National Accounts (SNA) data. We draw three main findings from our analysis. First, SNA data has been substantially revised in and after the second comprehensive revisions, as well as at the earlier stage of revisions. We find that the past absolute revisions to the annual growth rate of labor productivity often went beyond 1 percentage point. Second, the annual growth rate of labor productivity has been revised upward by 0.4 percentage points on average. We show that part of its upward revisions reflects an underestimation of employment through an increase in 'non-response people,' people who do not respond in the Population Census. Third, revisions to source data such as the Population Census and the Employment Status Survey are helpful to predict revisions to labor productivity growth. Our regression results suggest that labor productivity is likely to be revised upward during expansions or with low real-time estimates of value added. We conclude that the three findings indicate that labor productivity during the 2000s will experience substantial revisions in the future. This conclusion takes into account the fact that the SNA after 2000 has experienced at most one comprehensive revision. The upcoming revisions to labor productivity can be positive rather than negative.

JEL classification
E17, O47

Real-time Data; Productivity; SNA; Monetary Policy; Survey Data

We thank Ichiro Fukunaga, Keiichiro Inaba, Seisaku Kameda, Kazushige Kamiyama, Tomiyuki Kitamura, Kazuo Monma, Shinya Nakamura, Toshitaka Sekine, and Tomohiro Sugo for their comments. We gratefully acknowledge comments from our discussant Yasuyuki Komaki and participants at the third University of Tokyo - Bank of Japan conference in November 2009, and those from participants at the 16th International Conference on Computing in Economics and Finance held by the Society for Computational Economics in July 2010. We thank the Department of National Accounts of the Economic and Social Research Institute of the Cabinet Office for their response to our questions. We are also grateful to Chie Arai, Daisuke Miyajima, Takanori Nitta, and Tomoaki Tanaka for excellent research assistance. The views expressed in this paper are solely those of the authors and should not be interpreted as reflecting the views of the Bank of Japan.

  •   *1 Research and Statistics Department, Bank of Japan
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  •   *2 Monetary Affairs Department, Bank of Japan
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