Feature Articles
A Shift-Share Decomposition Analysis of Labour Productivity Growth in Singapore
14 February 2018
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In 2017, Singapore’s overall labour productivity, as measured by real value-added (VA) per actual hour worked (AHW), grew by 4.5 per cent, the highest recorded since the rebound year of 2010 following the Global Financial Crisis. This article examines the drivers of the strong productivity growth in 2017 using a shift-share analysis. It also traces the changes in the composition of Singapore’s Gross Domestic Product (GDP) growth over the years, and compares our recent productivity performance with other advanced economies.
GDP growth can be decomposed into productivity growth, employment growth and labour intensity growth
Broadly, output in an economy can grow either through an increase in labour input or through an improvement in the conversion rate of labour input to output (i.e., labour productivity):