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The Stylized Facts about Slower Productivity Growth in Canada

Author

Listed:
  • Andrew Sharpe
  • John Tsang

Abstract

Productivity growth in the Canadian economy has been considerably slower in the post-2000 period than in the pre-2000 period, with important implications for the growth in the living standards of Canadians. Output per hour in the business sector in Canada advanced at a 0.9 per cent average annual rate from 2000 to 2016 compared to 1.6 per cent from 1981 to 2000. The objective of this article is to highlight the stylized facts of this important development. It first examines trends in both labour productivity and total factor productivity (TFP) at the aggregate level. It discusses growth accounting estimates of changes in the sources of labour productivity growth. Labour and total factor productivity estimates are provided for 15 industries, highlighting which industries experienced the largest slowdown in absolute terms and the industry contributions to the slowdown. Manufacturing is found to be the industry making the largest contribution to both the labour productivity and TFP slowdowns. Contributions of within-industry productivity growth and re-allocation effects to aggregate productivity growth are also examined.

Suggested Citation

  • Andrew Sharpe & John Tsang, 2018. "The Stylized Facts about Slower Productivity Growth in Canada," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 52-72, Fall.
    • Handle: RePEc:sls:ipmsls:v:35:y:2018:3
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    File URL: http://www.csls.ca/ipm/35/IPM-35-Sharpe-Tsang.pdf
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    Citations

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    Cited by:

    1. Andrew Sharpe & John Tsang, 2019. "A Detailed Analysis of Newfoundland and Labrador's Productivity Performance, 1997-2018," CSLS Research Reports 2019-06, Centre for the Study of Living Standards.
    2. Thomas Ziesemer, 2023. "Labour-augmenting technical change data for alternative elasticities of substitution: growth, slowdown, and distribution dynamics," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 32(4), pages 449-475, May.
    3. Jacob Greenspon & Anna Stansbury & Lawrence H. Summers, 2021. "Productivity and Pay in the United States and Canada," International Productivity Monitor, Centre for the Study of Living Standards, vol. 41, pages 3-30, Fall.
    4. David M. Williams, 2021. "Pay and Productivity in Canada: Growing Together, Only Slower than Ever," International Productivity Monitor, Centre for the Study of Living Standards, vol. 40, pages 3-26, Spring.
    5. Wulong Gu & Michael Willox, 2018. "Productivity Growth in Canada and the United States: Recent Industry Trends and Potential Explanations," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 73-94, Fall.
    6. Chris Haun & Tim Sargent, 2023. "Decomposing Canada’s Post-2000 Productivity Performance and Pandemic Era Productivity Slowdown," International Productivity Monitor, Centre for the Study of Living Standards, vol. 45, pages 5-27, Fall.

    More about this item

    Keywords

    Productivity; Canada; TFP; labour; manufacturing;
    All these keywords.

    JEL classification:

    • N37 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Africa; Oceania
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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