Total Factor Productivity Measurement Based on Labour and Capital Services

The article focuses on new possible approaches of total factor productivity measurement. The standard computation takes into account the number of hours worked as the labour input and net or gross fixed capital stock as the capital input. This article improves the computation by using labour services as the labour input (it is necessary to take into account the skills and efforts of the workers) and capital services as the capital input. Substitution of capital stocks by capital services means that only flow indicators are used for TFP measurement. This issue became more popular in recent time in line with the revision of the manual for national accounts - SNA 2008. This paper concentrates on the development of the Czech economy between the years 2002 and 2008.