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New Estimates of Real Income and Multifactor Productivity Growth for the Canadian Business Sector, 1961-2011

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  • W. Erwin Diewert
  • Emily Yu

Abstract

Using new data from Statistics Canada, this article shows that the multifactor productivity (MFP) performance of the Canadian business sector has been reasonably satisfactory over the past half century. In particular, traditional gross income MFP growth averaged 1.03 per cent per year over the 1961-2011 period. This compares with the official Statistics Canada estimate of 0.28 per cent. The difference was mostly due to significantly higher capital input growth recorded by Statistics Canada. The study finds that quality adjusted labour input growth was the main driver of real income growth, followed by MFP growth, capital input growth, and finally by falling real import prices. The study encountered many data problems which should be addressed in future work on Canadian business sector productivity performance.

Suggested Citation

  • W. Erwin Diewert & Emily Yu, 2012. "New Estimates of Real Income and Multifactor Productivity Growth for the Canadian Business Sector, 1961-2011," International Productivity Monitor, Centre for the Study of Living Standards, vol. 24, pages 27-48, Fall.
    • Handle: RePEc:sls:ipmsls:v:24:y:2012:3
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Shutao Cao & Sharon Kozicki, 2015. "A New Data Set of Quarterly Total Factor Productivity in the Canadian Business Sector," Staff Working Papers 15-6, Bank of Canada.
    2. Paul Schreyer, 2012. "Comment on "Estimating Capital Input for Measuring Business Sector Multifactor Productivity Growth in Canada"," International Productivity Monitor, Centre for the Study of Living Standards, vol. 24, pages 73-75, Fall.
    3. Andrea De Michelis & Marcello Estevão & Beth Anne Wilson, 2013. "Productivity or Employment: Is It a Choice?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 41-60, Spring.
    4. Alexander Murray, 2016. "Partial versus Total Factor Productivity: Assessing Resource Use in Natural Resource Industries in Canada," CSLS Research Reports 2016-20, Centre for the Study of Living Standards.
    5. Diewert, W. Erwin & Fox, Kevin J., 2016. "Kevin J. Fox Interview of W. Erwin Diewert," Microeconomics.ca working papers erwin_diewert-2016-6, Vancouver School of Economics, revised 02 Jun 2016.
    6. Michael J. Harper & Alice O. Nakamura & Lu Zhang, 2012. "Difficulties Assessing Multifactor Productivity for Canada," International Productivity Monitor, Centre for the Study of Living Standards, vol. 24, pages 76-84, Fall.
    7. Erwin Diewert, 2015. "Reconciling Gross Output TFP Growth with Value Added TFP Growth," International Productivity Monitor, Centre for the Study of Living Standards, vol. 29, pages 60-67, Fall.
    8. Don Drummond & Annette Ryan & Michael R. Veall, 2013. "Improving Canada's Productivity Performance: The Potential Contribution of Firm-level Productivity Research," International Productivity Monitor, Centre for the Study of Living Standards, vol. 26, pages 86-93, Fall.
    9. Peter S. Spiro, 2013. "A Sectoral Analysis of Ontario's Weak Productivity Growth," International Productivity Monitor, Centre for the Study of Living Standards, vol. 25, pages 20-35, Fall.
    10. Shutao Cao & Sharon Kozicki, 2017. "Real GDI, Productivity, and the Terms of Trade in Canada," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 134-148, February.
    11. Kenneth G. Stewart & Jiang Li, 2018. "Are factor biases and substitution identifiable? The Canadian evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 528-548, May.
    12. W. Diewert, 2014. "US TFP growth and the contribution of changes in export and import prices to real income growth," Journal of Productivity Analysis, Springer, vol. 41(1), pages 19-39, February.
    13. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.
    14. Matthew Calver and Alexander Murray, 2016. "Decomposing Multifactor Productivity Growth in Canada by Industry and Province, 1997-2014," CSLS Research Reports 2016-19, Centre for the Study of Living Standards.
    15. Wulong Gu & Beiling Yan, 2017. "Productivity Growth and International Competitiveness," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 113-133, February.
    16. Wulong Gu, 2012. "Estimating Capital Input for Measuring Business Sector Multifactor Productivity Growth in Canada: Response to Diewert and Yu," International Productivity Monitor, Centre for the Study of Living Standards, vol. 24, pages 49-62, Fall.
    17. Diewert, W. Erwin, 2014. "A Note on Reconciling Gross Output TFP Growth with Value Added TFP Growth," Economics working papers erwin_diewert-2014-56, Vancouver School of Economics, revised 17 Dec 2014.
    18. Kenneth G. Stewart & Jiang Li, 2018. "Are factor biases and substitution identifiable? The Canadian evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 528-548, May.

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