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CPS1239 Valerie M.B. et al.
The suggested setup divides inputs into production units, not a good or a
service.
Figure 4: Accounting for labor productivity within the stages of servicification

Source: authors

This leads to understanding the activities as labor effort within the
production unit in time and space. Time use, through activity and technical
competence, becomes a more relevant unit of measurement. This would entail
classifying activities by degree of effort and valuing them according to
difficulty or technical competence as is already done for time use surveys.
An example illustrates how the mismeasurement of productivity of
services has as much to do with servicification as it does with the concept
of what constitutes “work.” Although the context of the activity should be
reported, as in national accounts, it becomes irrelevant from the point of view
of the valuation. The productivity of the activity is the labor effort within the
production unit in time and space. The unit value could be the price, but
should reflect a commonly defined social cost (as with public goods). Take the
activity of roof repair of a 2x2 hole, which takes 3 hours with standard tools. It
is performed by three men: Mr. A (who repairs the hole of his house’s roof);
Mr. B (a Church community volunteer) and Mr. C (a roofing repair worker at a
large shingles manufacturing company, RM)). Using national accounts
valuation, the marginal product of labor of Mr. C is higher, and equals his wage
wRM, which means manufacturing sector is measured as most productive:

∆Y ≡ W > Y ≡ > Y = 0, (1)
∆

where YJi measures the real output or activity in a unit of time performed by
individual i Є {A,B.C} in sector j Є {RM, CH, HH}. In the example, RM is the
roofing manufacturing and installation sector, CH is the charity and
community sector, and HH is the household sector. Li is the labor of person i.
If we value with time use survey--sectors CH and HH are in the services

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