In another paper, John Fernald of the Federal Reserve Bank of San Francisco divided potential growth into its individual components labour force, capital and TFP and concluded that growth in both labour productivity and TFP began slowing before the recession.
This makes India odd: most countries have not seen rapid TFP growth in traditional services and productivity growth has generally been slower in services than in industry.The authors tentatively suggest that the growth in services output (and hence TFP) may be overstated in India.
But how reliable are the data An earlier paper† by Mr Bosworth, Ms Collins and Arvind Virmani, an adviser at India's Planning Commission, suggests that such strong TFP growth in services is suspicious.
The £1.2bn savings figures is based on rough, self-reported estimates by councils who (in theory) have a financial interest in presenting optimistic assessments of their own TFP performances (they get paid by the number of families they "turn around").
Experts therefore question Cameron's decision to expand the TFP.
It teased out the underlying growth of labour, capital and "total factor productivity" (TFP), a proxy for technology that captures the efficiency with which capital and labour are used.
At the more optimistic end, researchers at the World Bank think TFP added nearly three percentage points a year to growth from 2000 to 2010 but even they reckon that is 40% lower than in the 1990s.
He finds that since 2007 TFP has actually been a drag on the economy, denting growth by about 0.9 percentage points a year.
Since 2004, TFP growth has probably spurted (the figures are not yet available), but this may reflect a cyclical boom.In this section Beggar thy neighbour Can't pay?
An estimate of TFP derived from their McWage analysis closely matches economists' estimates by more traditional means.A quick look at fast-food wages can shed light on the globe's vast gulfs in productivity and welfare.
The resulting fall in labour-productivity growth might cause alarm among some analysts, but TFP would remain strong.
