Productivity Change in State and Local Governments

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Abstract
A model is developed in this paper which allows the growth rate of public sector productivity to be estimated without an explicit measure of sectoral output. In this model, communities are regarded as generalized households, and the goods and services provided by the community's government are interpreted as internally produced household goods. The model is then fitted to quarterly data from the U.S. National Income and Product Accounts, and the rate of productivity change is found to average -0.50% per year for the period 1959-1979.

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