THE EUROPE–U.S. PRODUCTIVITY GAP IN A REAR‐VIEW MIRROR: WILL MEASUREMENT DIFFERENCES IN THE SERVICES SECTOR OUTPUT PLEASE RISE?

The deterioration in 1995 of Europe's productivity performance relative to the U.S. coincided with the ‘renaissance’ of the U.S. statistical system, which can be regarded, by now, as the 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 for the existing productivity gap. My retrospective review of the development path in the services sector productivity statistics suggests that Europe lags significantly behind the U.S. in the services producer price index program, both in terms of scope and timing of its implementation. Accordingly, the role of these measurement differences in the post‐1995 Europe–U.S. productivity story cannot reasonably be ruled out. The paper concludes with a ‘structured guess’ that provides a circumstantial evidence on the benefits generated by the upgrades in the U.S. services sector statistics. The results show that these enhancements led to two kinds of benefits during the post‐1995 period – a considerable reduction in the contribution of industries that traditionally dampened the aggregate productivity trend combined with a larger contribution of those that generally lifted it. This contrasts markedly with Europe where the contribution of these two sources remained unchanged in the meantime.