Productivity dispersion in Australia

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Information Note 1

Productivity growth is the key determinant of improvements in living standards in the long run. However, looking at productivity trends only at the aggregate level hides the differences in productivity performance between businesses. Examining the productivity gap at the business level (known as productivity dispersion) can help our understanding of the economy and ultimately help to better inform policy advice. A recent joint Working Paper by Treasury and the Australian Bureau of Statistics, Measuring productivity dispersion in selected Australian industries, uses data from the Business Longitudinal Analysis Data Environment (BLADE) to find persistent yet declining differences between the most and least productive quartiles of businesses in all studied industries. The paper also explores potential drivers of productivity dispersion and its relationship with aggregate productivity.

[1] The views expressed in this note are those of The Treasury and do not necessarily reflect those of the Australian Government. This note was prepared by Simon Campbell in Macroeconomic Group, Alexander Sibelle in Revenue Group and Thai Nguyen and Franklin Soriano from the Australian Bureau of Statistics.