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The purpose of this chapter is to provide an overview of productivity measurement. This overview is selective: productivity measurement has a long history, much of which is not touched on here. Instead, the focus here is on relatively recent developments; especially those dealing with the measurement of total factor productivity and the relationship between productivity and efficiency. The goal is to sketch the empirical options with special emphasis on those which explicitly include consideration of efficiency.

By worrying about efficiency as a component of productivity I obviously have a particular definition of productivity in mind. Although many consider productivity growth and technical progress as synonymous, I belong to a small but growing group who distinguish the two concepts. I define productivity growth as the net change in output due to change in efficiency and technical change, where the former is understood to be the change in how far an observation is from the frontier of technology and the latter is understood to be shifts in the production frontier. To motivate the discussion, this chapter begins with a section called" thinking about productivity." Here the notation used throughout this chapter is introduced. Included is a graphical description of what I mean by productivity, technical change, and change in efficiency. This section is intended to clarify the difference between