The purpose of this paper is to provide a thorough discussion of the definitional and data issues associated with the measurement of aggregate labour productivity growth in Canada and the United States. The paper examines all data sources for output, employment and hours estimates in the two countries, and attempts to identify the series that are the most appropriate for the calculation of aggregate labour productivity ?both from the perspective of the methodological merits of each series and of cross-country comparability. It also assesses the sensitivity of Canada-U.S. aggregate labour productivity growth comparisons to the choice of monitoring trends at the total economy or business sector level, investigates the sources of the differences between trends and comparisons assessed at each level, and discusses the advantages and disadvantages of making comparisons at each level. The paper finds compelling reasons to believe that the monitoring of total economy productivity trends is desirable in addition to the more common practice of focusing on the business sector. Canada has lagged the United States in terms of aggregate labour productivity growth over 1981-2003 to a much smaller degree according to total economy trends than according to business sector trends. This is caused by very high measured labour productivity growth in the non-business sector in Canada relative to the United States, which calls into question the reliability of productivity growth comparisons made at the total economy level. This also raises questions about the comparability of GDP growth between the two countries.
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Paper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number
2004-04.
Find related papers by JEL classification: O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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