Discussion Paper No. 212 of 2018 on Empirical Estimation of Productivity and its Determinants in Kenya

Abstract

The Republic of Kenya has put labour productivity among its key objectives since independence. Studying labour productivity can have strong implications for economic growth and welfare. This study sought to contribute to this national objective. Specifically, the study objectives were to estimate total factor productivity; labour productivity for the economy and at the sectors; and factors affecting economy labour productivity for the period 2000-2016. Data was obtained from the Kenya National Bureau of Statistics economic surveys and international data sources including United Nations Development Programme, the International Labour Organization employment database and World Bank. For total factor productivity, the approach used is close to the one proposed by Solow and Swan where the residue is estimated with the aid of a Cobb Douglas production function restricted to constant returns to scale, while the conventional approach of using the ratio of gross value added to number of persons working is used to estimate labour productivity.