--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-31/the-mystery-of-tfp/" title: "The Mystery of TFP" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T07:40:54+00:00" date_modified: "2026-07-13T07:40:54+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Fall 2016" ipm_keyword: - "18 countries" - "1970-2007" - "capital" - "EU KLEMS" - "industry-level" - "measurement error" - "mystery" - "Oulton" - "structural change" - "TFP" ipm_research_theme: - "Measurement and methodology" ipm_country_focus: - "Europe" - "International" - "OECD" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # The Mystery of TFP Canonical URL: https://csls.ca/ipm-archive/ipm-issue-31/the-mystery-of-tfp/ # The Mystery of TFP [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-31-6-Oulton.pdf) Cite this article × Cite this article as: Oulton, Nicholas. 2016. “The Mystery of TFP.” International Productivity Monitor, No. 31 (Fall 2016): 68–87. https://www.csls.ca/ipm-archive/ipm-issue-31/the-mystery-of-tfp/ ## Author: - Nicholas Oulton London School of Economics; National Institute of Economic and Social Research (NIESR) ## IPM Issue 31 Fall 2016 pp. 68–87 ## 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/) [IPM Issue 46 Editors’ Overview Andrew Sharpe, Bart van Ark Spring 2024 | IPM Issue 46 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-46/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn The objective of this article is to critically examine explanations of Total Factor Productivity (TFP) growth. TFP growth is analysed at the sectoral and aggregate level, using data for 10 industry groups covering the market sectors of 18 countries over the period 1970-2007 drawn from the EU KLEMS dataset. In all countries resources have been shifting away from industries with high TFP growth towards industries with low TFP growth. Nevertheless structural change has favoured TFP growth in most countries. Errors in measuring capital or in measuring the elasticity of output with respect to capital are unlikely to substantially reduce the role of TFP in explaining growth. The article concludes that the mystery of TFP is likely to remain as long as measurement error persists. It is generally agreed that increases in labour L’objectif de cet article est d’examiner de façon critique les explications de la croissance de la productivité multifactorielle (PMF). La croissance de la PMF est analysée aux niveaux sectoriel et agrégé, à l’aide de données pour 10 groupes industriels couvrant les secteurs marchands de 18 pays sur la période 1970-2007 tirées de la base de données EU KLEMS. Dans tous les pays, les ressources se sont déplacées des industries à forte croissance de PMF vers les industries à faible croissance de PMF. Néanmoins, le changement structurel a favorisé la croissance de la PMF dans la plupart des pays. Les erreurs dans la mesure du capital ou dans la mesure de l’élasticité de la production par rapport au capital sont peu susceptibles de réduire substantiellement le rôle de la PMF dans l’explication de la croissance. L’article conclut que le mystère de la PMF persistera probablement tant que l’erreur de mesure perdurera. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-31-6-Oulton.pdf)