<p>Your assumption is correct.  Value added is Gross Output-intermediate consumption(inputs). </p>

<p>value-added approach is a simple measure that ignores the difficulties of dealing with inter-industry and intra-industry flows of goods and services. Intermediate inputs are simply excluded here. </p>

<p>The value-added approach provides a simple link of industry-level MFP
and sectoral or aggregate MFP growth.</p>

<p>For gross output-based estimates of MFP growth they acknowledge and allow for intermediate inputs as a source of industry growth. In this method they provide a more complete picture of the production process.</p>

<p>If you need more information this manual can help: <a href="https://www.pc.gov.au/research/supporting/comparison-gross-output-value-added-methods/cgovam.pdf" rel="nofollow noreferrer">https://www.pc.gov.au/research/supporting/comparison-gross-output-value-added-methods/cgovam.pdf</a></p>

CC BY-SA 4.0
2020-05-28T02:46:16.003Z
2020-05-28T02:46:16.003Z
Mike J
<p>I am working with EU-KLEMS data, and I am using TFP growth as a proxy for technological change. However, there are 2 variables for TFP - TFP based on Gross Output and TFP based on Value Added. </p>

<p>I understand that Value added in this case might be Gross Output-intermediate consumption, but I am not sure whether this is indeed the case, as there is no such explanation in the EU-KLEMS dataset. The two TFP measures move in a similar fashion across industries, but there are indeed some differences - for example, the VA TFP average increases at a much slower rate than the GO TFP. </p>

<p>I would be eternally grateful if some clarification could be provided on these two measures. </p>

<macroeconomics><econometrics><labor-economics><productivity><technology>
Difference between Value-Added TFP and Gross-Output TFP?
Badalyan
# Difference between Value-Added TFP and Gross-Output TFP?

(Asked by: username_0 on 2017-03-26)

I am working with EU-KLEMS data, and I am using TFP growth as a proxy for technological change. However, there are 2 variables for TFP - TFP based on Gross Output and TFP based on Value Added.

I understand that Value added in this case might be Gross Output-intermediate consumption, but I am not sure whether this is indeed the case, as there is no such explanation in the EU-KLEMS dataset. The two TFP measures move in a similar fashion across industries, but there are indeed some differences - for example, the VA TFP average increases at a much slower rate than the GO TFP.

I would be eternally grateful if some clarification could be provided on these two measures.

**Tags:** macroeconomics, econometrics, labor-economics, productivity, technology

---

## 1 answers

### Answer by username_1 on 2020-05-28. Score: 4

Your assumption is correct. Value added is Gross Output-intermediate consumption(inputs).

value-added approach is a simple measure that ignores the difficulties of dealing with inter-industry and intra-industry flows of goods and services. Intermediate inputs are simply excluded here.

The value-added approach provides a simple link of industry-level MFP
and sectoral or aggregate MFP growth.

For gross output-based estimates of MFP growth they acknowledge and allow for intermediate inputs as a source of industry growth. In this method they provide a more complete picture of the production process.

If you need more information this manual can help: <https://www.pc.gov.au/research/supporting/comparison-gross-output-value-added-methods/cgovam.pdf>


---

