How to Enhance the Productivity of Service Industries: Suggestions from recent studies and agenda for future research

Author Name MORIKAWA Masayuki  (Senior Fellow)
Creation Date/NO. July 2008 08-J-031
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In this paper I conduct selective surveys of research, including some of my own studies, relating to the productivity of service industries. After giving an overview of observations based on aggregate data relating to the productivity of the Japanese service sector, I then identify what is known concerning the productivity of service industries and consider future research themes and the data necessary to conduct rigorous empirical analyses.

Some research findings offer suggestions as to what types of service companies and workplace environments have positive effects on productivity, and to what policies will help improve productivity. With regard to policies, it is necessary to implement a wide range of measures, including the diffusion of practices carried out in companies with high productivity, increasing their market share, facilitating the exit of inefficient companies, constructing mechanisms for good labor management and corporate governance, and establishing laws and regulations compatible with efficient operation of service provision.

The reality, however, is that many unknowns remain, including the fundamental question of whether the level of productivity of service industries is high or low. There are a number of cases in which the productivity problems of service industries are discussed impressionistically on the basis of limited data and anecdotal evidence. In order to plan appropriate policy measures for raising the productivity of service industries, it would be desirable to collate and enhance statistics at both company and establishment levels and to make full use of them.