ER8 Productivity distribution and drivers of productivity growth in the construction industry (May 2016)

This study draws on firm-level data from the Longitudinal Business Database to examine productivity in the New Zealand construction industry. It finds that, over the period 2001-2012, on average, labour productivity in this industry grew by 1.7% annually and multi-factor productivity by 0.5% annually, compared with 0.5% and 0.1% annually respectively for firms in the overall measured sector.

Within the construction industry, productivity growth rates vary markedly by subindustry and other firm characteristics. Labour productivity is more widely dispersed across the construction industry than is multi-factor productivity. High-productivity firms tend to be younger, more likely to be a new start-up, to belong to a business group and to locate in Auckland than low-productivity firms.

Working-proprietor-only firms are slightly less productive on average than employing firms and also exhibit much greater productivity variation. Overall, however, productivity variation or dispersion is no greater in construction than in other industries.