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Sectoral Contributions to Labour Productivity Growth in Canada: Does the Choice of Decomposition Formula Matter?

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  • Ricardo de Avillez

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    Abstract

    Using three decomposition formulas (TRAD, CSLS, and GEAD), this article estimates sectoral contributions to business sector labour productivity growth in Canada during the 2000-2010 period. Although at the aggregate economy level there was substantial agreement among the three formulas, contribution estimates varied widely at the sectoral level. In particular, there were significant differences in the estimated contributions of construction, manufacturing, and mining and oil and gas extraction. Ultimately, these differences reflect the fact that traditional decomposition formulas (TRAD and CSLS) and the GEAD formula measure different economic phenomena. Instead of seeing estimates constructed by the GEAD and traditional formulas as “competing” narratives, the article concludes it is more useful to see them as providing complementing stories about the role of different sectors in driving aggregate labour productivity growth.

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    File URL: http://www.csls.ca/ipm/24/IPM-24-Avillez.pdf
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    Bibliographic Info

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

    Volume (Year): 24 (2012)
    Issue (Month): (Fall)
    Pages: 97-117

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    Handle: RePEc:sls:ipmsls:v:24:y:2012:9

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    1. William D. Nordhaus, 2000. "Alternative Methods for Measuring Productivity Growth," Cowles Foundation Discussion Papers 1282, Cowles Foundation for Research in Economics, Yale University.
    2. Diewert, Erwin, 2008. "On the Tang and Wang Decomposition of Labour Productivity Growth into Sectoral Effects," Economics working papers erwin_diewert-2008-6, Vancouver School of Economics, revised 16 Apr 2008.
    3. Jesus C. Dumagan, 2013. "A Generalized Exactly Additive Decomposition of Aggregate Labor Productivity Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(1), pages 157-168, 03.
    4. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 806-17, September.
    5. Jianmin Tang & Weimin Wang, 2004. "Sources of aggregate labour productivity growth in Canada and the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 421-444, May.
    6. Whelan, Karl, 2002. "A Guide to U.S. Chain Aggregated NIPA Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(2), pages 217-33, June.
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