Can Measurement Error Explain the Weakness of Productivity Growth in the Canadian Construction Industry?

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Can Measurement Error Explain the Weakness of Productivity Growth in the Canadian Construction Industry?

Author Info

Peter Harrison

Abstract

According to Statistics Canada productivity estimates, the rate of growth of real output per hour in the construction industry in Canada over the 1981-2006 period was 0.53 per cent per year, one-third of the business sector average. This article examines evidence for and against the hypothesis that measurement error explains this below average productivity performance. The article finds that the use of input cost indexes to adjust nominal output to obtain real output, instead of the more appropriate use of output price indexes, for certain sub-industries of the construction sector represents the most likely source of measurement error. This procedure may result in a downward bias to labour productivity growth in the construction sector of up to 0.44 percentage points per year. It is thus likely that measurement error explains some, but not all, of the gap in labour productivity growth between the construction industry and the business sector.

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Publisher Info
Article provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.

Volume (Year): 14 (2007)
Issue (Month): (Spring)
Pages: 53-70
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Handle: RePEc:sls:ipmsls:v:14:y:2007:4

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Find related papers by JEL classification:
C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data
L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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