--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-29/on-the-relationship-between-gross-output-based-tfp-growth-and-value-added-based-tfp-growth-an-illustration-using-data-from-australian-industries/" title: "On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T07:40:47+00:00" date_modified: "2026-07-13T07:40:47+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Fall 2015" ipm_keyword: - "Australia" - "Diewert" - "empirical illustration" - "gross output" - "industry-level" - "intermediate inputs" - "magnification factor" - "TFP" - "value added" ipm_research_theme: - "Measurement and methodology" ipm_country_focus: - "Australia" - "International" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries Canonical URL: https://csls.ca/ipm-archive/ipm-issue-29/on-the-relationship-between-gross-output-based-tfp-growth-and-value-added-based-tfp-growth-an-illustration-using-data-from-australian-industries/ # On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-29-5-Calver.pdf) Cite this article × Cite this article as: Calver, Matthew. 2015. “On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries.” International Productivity Monitor, No. 29 (Fall 2015): 68–82. https://www.csls.ca/ipm-archive/ipm-issue-29/on-the-relationship-between-gross-output-based-tfp-growth-and-value-added-based-tfp-growth-an-illustration-using-data-from-australian-industries/ ## Author: - Matthew Calver Centre for the Study of Living Standards (CSLS) ## IPM Issue 29 Fall 2015 pp. 68–82 ## Related IPM articles [Efficiency Adjustment of Hours Worked: Two Possible Modifications of a Jorgensen Production Model Barbara Fraumeni Fall 2025 | IPM Issue 49 | pp. 103–115](https://csls.ca/ipm-archive/ipm-issue-49/efficiency-adjustment-of-hours-worked-two-possible-modifications-of-a-jorgensen-production-model/) [Labour Productivity as a Measure of Technological Change Ulrich Kohli Fall 2025 | IPM Issue 49 | pp. 64–81](https://csls.ca/ipm-archive/ipm-issue-49/labour-productivity-as-a-measure-of-technological-change/) [The Relationship between Efficiencies Defenses for Mergers and TFP Growth Robin Shaban Fall 2025 | IPM Issue 49 | pp. 82–102](https://csls.ca/ipm-archive/ipm-issue-49/the-relationship-between-efficiencies-defenses-for-mergers-and-tfp-growth/) [IPM Issue 49 Editors’ Overview Andrew Sharpe, Bart van Ark, Paul Schreyer Fall 2025 | IPM Issue 49 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-49/) [The UK Productivity Slowdown: A Review of Timing, Magnitude, and Drivers Josh Martin Spring 2025 | IPM Issue 48 | pp. 1–34](https://csls.ca/ipm-archive/ipm-issue-48/the-uk-productivity-slowdown-a-review-of-timing-magnitude-and-drivers/) [Appendix: UK Productivity Growth Rates Across Data Vintages and Studies Josh Martin Spring 2025 | IPM Issue 48 | pp. 65–73](https://csls.ca/ipm-archive/ipm-issue-48/appendix-uk-productivity-growth-rates-across-data-vintages-and-studies/) [Opportunities and Risks of Artificial Intelligence for Productivity Francesco Filippucci, Peter Gal, Katharina Laengle, Matthias Schief, Filiz Unsal Spring 2025 | IPM Issue 48 | pp. 1–26](https://csls.ca/ipm-archive/ipm-issue-48/opportunities-and-risks-of-artificial-intelligence-for-productivity/) [Cracking the Productivity Code: An International Comparison of UK Productivity John Van Reenen, Xuyi Yang Spring 2024 | IPM Issue 46 | pp. 60–82](https://csls.ca/ipm-archive/ipm-issue-46/cracking-the-productivity-code-an-international-comparison-of-uk-productivity/) [Appendix: EUKLEMS & INTANProd Industry Coverage and Intangible Asset Treatment Filippo Bontadini, Carol Corrado, Jonathan Haskel, Massimiliano Iommi, Cecilia Jona-Lasinio, Tsutomu Miyagawa Spring 2024 | IPM Issue 46 | pp. 1–4](https://csls.ca/ipm-archive/ipm-issue-46/appendix-euklems-intanprod-industry-coverage-and-intangible-asset-treatment/) [Intangible Capital, TFP Growth and Green Shoots in New Productivity Data Filippo Bontadini, Carol Corrado, Jonathan Haskel, Massimiliano Iommi, Cecilia Jona-Lasinio, Tsutomu Miyagawa Spring 2024 | IPM Issue 46 | pp. 3–37](https://csls.ca/ipm-archive/ipm-issue-46/intangible-capital-tfp-growth-and-green-shoots-in-new-productivity-data/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn Diewert (2015) develops simple expressions for the exact relationship between value added TFP growth and gross output TFP growth. These expressions suggest that the magnification factor relating the two TFP growth measures is approximately equal to the share of primary inputs in total costs. We apply these simple approximations to data on Australian industries, finding that they tend to provide very close approximations over short time periods, but are less reliable over longer time horizons. We find that magnification factors vary significantly across industries so that the results of comparative studies can be quite sensitive to the choice of output measure chosen to construct TFP. In particular, industries in which intermediate inputs account for a large share of total inputs exhibit much smaller TFP growth (in absolute value) compared to industries where intermediate inputs are relatively unimportant when gross output is used to construct TFP measures rather than value added. I T HAS LONG BEEN KNOWN THAT the mea- Diewert (2015) élabore des expressions simples pour la relation exacte entre la croissance de la PMF de la valeur ajoutée et la croissance de la PMF de la production brute. Ces expressions suggèrent que le facteur de magnification reliant les deux mesures de croissance de la PMF est approximativement égal à la part des intrants primaires dans les coûts totaux. Nous appliquons ces approximations simples aux données sur les industries australiennes, constatant qu’elles tendent à fournir des approximations très proches sur de courtes périodes, mais sont moins fiables sur des horizons plus longs. Nous constatons que les facteurs de magnification varient considérablement selon les industries, de sorte que les résultats des études comparatives peuvent être assez sensibles au choix de la mesure de la production utilisée pour construire la PMF. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-29-5-Calver.pdf)