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The measurement of labour productivity using the annual enterprise survey and LEED

Abstract

This paper reports the findings of a feasibility study in which data from the Annual Enterprise Survey (AES) were linked to data from the Linked Employer-Employee Database (LEED) and enterprise-level measures of labour productivity and financial performance were constructed. An assessment was then made of the strengths and weaknesses of these data for research purposes. The overall purpose of the exercise was to explore the benefits that may be gained from linking business data to LEED.

In the course of the project, many useful insights were gained into the strengths and weaknesses of both AES and LEED at unit record level. This paper summarises those insights for the benefit of researchers who are considering the use of AES microdata in their own research, with or without other data sources such as LEED.

The paper covers issues such as the size and representativeness of the AES sample; whether AES can provide a representative longitudinal sample for use in longitudinal analysis; the longitudinal correlation of AES responses; the quality of the match obtained between AES and LEED records; and whether labour productivity measures that are constructed using AES measures of value-added and LEED employment data are comparable with other firm-level labour productivity measures.

The findings of the investigation indicate that a longitudinally-linked AES-LEED dataset is complete enough and of sufficiently good quality to be used in exploring a class of research problems that require longitudinal enterprise data. However, there is measurement error in the data, caused by non-response in AES and other data collection limitations. Researchers need to be aware of the data quality issues that exist and take care when drawing inferences from the data.

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