KLEMS productivity accounts for the Polish economy Dariusz Kotlewski (University of Warsaw, Central Statistical Office of Poland) and Mirosław Błażej (Central Statistical Office of Poland) ♣ KLEMS

Structure of the presentation: Part I Basic methodology and specific issues Part II Solutions applied to Polish data problems Part III Results for Poland and some comparative observations ♣ KLEMS 2

Part I Basic methodology and specific issues ♣ KLEMS 3

♣ The foundations ♣ ► Methodology fundamentally based on: Jorgenson, D. W. and Z. Griliches (1967), ‛The Explanation of Productivity Change’, Review of Economic Studies, 34, pp Jorgenson, D. W., F.M. Gollop and B.M. Fraumeni (1987), Productivity and US Economic Growth, Cambridge MA: Harvard University Press. Jorgenson D. W., M. Ho and K. Stiroh (2005), Information Technology and the American Growth Resurgence, MIT. ► And summarized in: Timmer M., van Moergastel T., Stuivenwold E., Ypma G. (Groningen Growth and Development Centre) and O’Mahony M., Kangasniemi M. (National Institute of Economic and Social Research) [March 2007], EU KLEMS Growth and Productivity Accounts, EU KLEMS Consortium. Poland KLEMS 4

♣ Polish specific issues ♣ ► Capital ICT not extracted from total capital by industries ► Division into 18 types of labour (required for KLEMS) available only as representative sample surveys over firms employing more than 9 persons; total labour market divided only by industries ► The above-mentioned sample surveys available only every 2 years ► And available only in NACE 1 or NACE 2 not overlapping each other ► Short time series – no systematic regular data collection before 2004 (i.e. before the introduction of NACE 1) Poland KLEMS 5

Part II Solutions applied to Polish data problems ♣ KLEMS 6

► Issue: Capital ICT not extracted from total capital by industries ♣ Solution:  Total ICT amounts distributed by industries proportionally to a chosen structure (ICT services) taken from SUT  Quick depreciation of ICT capital allowed to ignore its older vintages  Therefore, accumulated and depreciated investments over had given total ICT stock in 2010 (American depreciation rates from KLEMS manuals)  For years before 2010 it was assumed that ICT stock is in the same proportion to total capital stock as in 2010  For the following years 2010 was treated as a base year  Works are carried out to shift this initial assessment to Poland KLEMS 7

► Issue: Division into 18 types of labour as required for KLEMS available only as representative sample surveys over firms employing more than 9 persons; total labour market divided only by industries ♣ Solution:  Total labour market structure by industries divided by equivalent total values (14/14) from the representative sample surveys (Z-12) used as a proportion to adjust upwards the full matrix structure of the Z-12 survey: Poland KLEMS / Eurostat transmission Z-12

 Total labour market structure by industries divided by equivalent total values (14/14) from the representative sample surveys (Z-12) used as a proportion to adjust upwards the full matrix structure of the Z-12 survey: 64 Eurostat transmission tables aggregations → 14 NACE-1/NACE-2 labour market corresponding aggregations Poland KLEMS / Eurostat transmission Z-12 Stage one

 Total labour market structure by industries divided (14/14) by equivalent total values from the representative sample surveys (Z-12) used as a proportion to adjust upwards the full matrix structure of the Z-12 survey: 64 Eurostat transmission tables aggregations → 14 NACE-1/NACE-2 labour market corresponding aggregations Poland KLEMS / Eurostat transmission Z-12 Stage one Stage two

 Total labour market structure by industries divided (14/14) by equivalent total values from the representative sample surveys (Z-12) used as a proportion to adjust upwards the full matrix structure of the Z-12 survey: Poland KLEMS / Eurostat transmission Z-12 The correct structure enlarged to EU KLEMS 34 industries thanks to Eurostat transmission 64 industries structure Stage two Stage three

► Issue: The above mentioned sample surveys available only every 2 years ♣ Solution: linear interpolation ► Issue: And available only in NACE 1 or NACE 2 not overlapping each other ♣ Solution: CSO department dealing with the labour market delivered data for 2008 in both classifications ► Issue: Short time series – no systematic regular data collection before 2004 (i.e. before the introduction of NACE 1) ♣ Solution: It was decided not to extend KLEMS beyond 2005 in the past Poland KLEMS 12

► Additional issue: some data only in ESA’95 or ESA 2010 ♣ Solution: Problem concerning the extraction of ICT capital; growths of stocks of capital by industries diverging only by less than few hundredth of percentage points in some cases; in most cases diverging only by less than few thousandth of percentage points or even less Ergo: the problem is negligible !! Poland KLEMS 13

Part III Results for Poland and some comparative observations ♣ KLEMS 14

Poland KLEMS 15 Main results: is secular stagnation approaching?

Poland KLEMS 16 Main results: spostrzeżenia : ♣ Two MFP growth pics seam to precede VA growth pics:

Poland KLEMS 17 Main results: spostrzeżenia : ♣ In the last years: negative MFP contribution despite a well growing economy:

Poland KLEMS 18 Main results: Little importance of ICT capital: USA, Sweden and Russia not extracting ICT capital !!

Poland KLEMS 19 Main results: … compared to ‟ICT countries”:

Poland KLEMS 20 Main results: : … and to ‟Non-ICT countries”:

Poland KLEMS 21 Main results: … and to Finland’s case (Nokia …?!):

Poland KLEMS 22 Main results: However, disparate results show perhaps a methodological problem:

Poland KLEMS 23 Main results: ♣ The so-called Polish ‟green island”:

Poland KLEMS 24 Main results: … compared to ‟MFP countries”:

Poland KLEMS 25 Main results: … and ‟Non-MFP countries”:

Poland KLEMS 26 Main results: ♣ High non-ICT capital contribution for Poland (after EU accession):

Poland KLEMS 27 Main results: … and its growing share in the value added growth:

Poland KLEMS 28 Main results: ♣ High hours worked contribution before the financial crisis:

Poland KLEMS 29 Main results: ♣ Highly changing wage contribution for Poland:

Poland KLEMS 30 Main results: … labour situation stabilizing in the last years:

Poland KLEMS 31 Hypotheses and observations for Poland: ♣ Poland is a Non-ICT country (with some misgivings on methodology as far as international comparativeness is considered) ♣ In Poland the technical progress is embodied sometimes in capital and other times in MFP, which suggest their exchangeability (observed also for e.g. the U.S.) ♣ The share of capital contribution in value added growth is continuously increasing in the long run (in the time frame of the analysis) ♣ Apart from capital, a great importance of the labour factor in the KLEMS accounting for Poland is observed ♣ A low and negative residual MFP growth in the last covered years is probably the result of ”demand evasion” through imported capital goods

Poland KLEMS 32 Analyses at industry level: ♣ Similarly to countries the industries can be also compared ♣ Moreover, it is possible to observe individual factors in the industries

♣ E.g. decomposition of the industry contribution: Poland KLEMS 33

♣ E.g. labour factor comportment by industries: Poland KLEMS 34

Poland KLEMS 35 Data sources: The CSO National Accounts Department supplied: ♣ Eurostat transmission tables: ♣ ESA95 Questionnaire 0301 – Output and income ♣ ESA2010 Questionnaire Output ♣ ESA95 Questionnaire 2000 – Cross-classification of fixed assets by industry and by non-financial fixed asset ♣ ESA95 Questionnaire 0302 – Capital formation ♣ ESA2010 Questionnaire 0302 – Capital formation ♣ The SUT for years ♣ Capital stocks tables for according to ESA′95 ♣ Capital stocks tables for according to ESA 2010

Poland KLEMS 36 Data sources: The CSO Demographic Surveys and Labour Market Department supplied: ♣ Eurostat transmission tables on the number of working persons and hours worked: ♣ ESA2_0303_A_M_Quest_NACE Rev2 ♣ ESA2_0303_A_H_Quest_NACE Rev2 ♣ ESA2010 Questionnaire Employment ♣ Tables of the Z-12 survey for 2004, 2006, 2008, 2010, 2012 and 2014 containing subdivisions into different labour types

Thank you for your kind attention! ♣ KLEMS 37