A Quarter of a Century Progress Report on the Services Sector Productivity Statistics. A Europe-United States Perspective

The deterioration in 1995 of Europe productivity performance relative to the U.S. coincided with the ?renaissance? of the U.S. statistical system, which has been upgraded in many important respects. With these efforts, there is now a consensus in the economics profession that the U.S. statistical system has set a new frontier in official statistics. This paper raises the natural question whether the European statistical system was ?left at the station? while its U.S. counterpart ?departed,? making it possible for measurement differences to become the primary suspect of the existing productivity gap. Our retrospective examination at the development of the services sector productivity statistics in both Europe and the U.S. suggests the presence of a circumstantial evidence in support of measurement differences. The evidence based on a ?structured guess? suggests that the upgrade in the U.S. services sector statistics translated into enhancements of two kinds in the post-1995 period?a considerable reduction in the contribution of industries that traditionally dampened the aggregate productivity trend combined with a higher contribution of those that generally lifted it. This contrasts markedly with Europe where the contribution of these two sources remained unchanged in the meantime, reflecting important gaps in terms of scope of the service producer price index program and the timing of its implementation.