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Aggregate Labour Productivity Growth in Canada and the United States: Definitions, Trends and Measurement Issues

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  • Jeremy Smith

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    Abstract

    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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    Bibliographic Info

    Paper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2004-04.

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    Date of creation: Sep 2004
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    Handle: RePEc:sls:resrep:0404

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    Keywords: Productivity; Labour Productivity; Productivity Growth; Canada; United States; Measurement; Data Sources; Comparability; Output; Hours; Hours Worked; Current Population Survey; CPS; Current Employment Statistics; CES;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Baldwin, John R. & Harchaoui, Tarek, 2002. "Productivity Growth in Canada," Productivity Growth in Canada, Statistics Canada, Economic Analysis, number stcb6e, December.
    2. 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.
    3. Andrew Sharpe, 2003. "Why Are Americans More Productive Than Canadians?," CSLS Research Reports 2003-03, Centre for the Study of Living Standards.
    4. Andrew Sharpe, 2002. "Recent Productivity Development in the United States and Canada: Implications for the Canada-U.S. Productivity and Income Gap," International Productivity Monitor, Centre for the Study of Living Standards, vol. 4, pages 3-14, Spring.
    5. Yanjun Liu & Nell Hamalainen & Bing-Sun Wong, . "Economic Analysis and Modelling Using Fisher Chain Data," Working Papers-Department of Finance Canada 2003-13, Department of Finance Canada.
    6. Nadim Ahmad & François Lequiller & Pascal Marianna & Dirk Pilat & Paul Schreyer & Anita Wölfl, 2003. "Comparing Labour Productivity Growth in the OECD Area: The Role of Measurement," OECD Science, Technology and Industry Working Papers 2003/14, OECD Publishing.
    7. Nicoletti, Giuseppe & Reichlin, Lucrezia, 1993. "Trends and Cycles in Labour Productivity in the Major OECD Countries," CEPR Discussion Papers 808, C.E.P.R. Discussion Papers.
    8. Benoît Robidoux & Bing-Sun Wong, 2003. "Has Trend Productivity Growth Increased in Canada?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 6, pages 47-55, Spring.
    9. Roland Spant, 2003. "Why Net Domestic Product Should Replace Gross Domestic Product as a Measure of Economic Growth," International Productivity Monitor, Centre for the Study of Living Standards, vol. 7, pages 39-43, Fall.
    10. Benoit Robidoux, 2003. "Future Productivity Growth in Canada: The Role of the Service Sector," International Productivity Monitor, Centre for the Study of Living Standards, vol. 7, pages 58-65, Fall.
    11. Someshwar Rao & Andrew Sharpe & Jianmin Tang, 2004. "Productivity Growth in Service Industries: A Canadian Success Story," CSLS Research Reports 2004-01, Centre for the Study of Living Standards.
    12. Dennis J Fixler & Marshall B Reinsdorf & Shaunda Villones, 2010. "Measuring the services of commercial banks in the NIPA," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The IFC's contribution to the 57th ISI Session, Durban, August 2009, volume 33, pages 346-349 Bank for International Settlements.
    13. Dirk Pilat & Paul Schreyer, 2004. "The OECD Productivity Database: An Overview," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 59-65, Spring.
    14. Tiff Macklem, 2003. "Future Productivity Growth in Canada: Comparing to the United States," International Productivity Monitor, Centre for the Study of Living Standards, vol. 7, pages 50-57, Fall.
    15. Andrew Sharpe, 2004. "Recent Productivity Developments in Canada and the United States: Productivity Growth Deceleration versus Acceleration," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 16-26, Spring.
    16. Kitchen, John, 2003. "A Note on the Observed Downward Bias in Real-Time Estimates of Payroll Jobs Growth in Early Expansions," MPRA Paper 21070, University Library of Munich, Germany.
    17. Paul Schreyer, 2001. "The OECD Productivity Manual: A Guide to the Measurement of Industry-Level and Aggregate Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 37-51, Spring.
    18. Jeffrey I. Bernstein & Richard G. Harris & Andrew Sharpe, 2002. "The Widening Canada-US Productivity Gap in Manufaturing," International Productivity Monitor, Centre for the Study of Living Standards, vol. 5, pages 3-22, Fall.
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    Cited by:
    1. Jeremy Smith, 2004. "Assessing Aggregate Labour Productivity Trends in Canada and the United States: Total Economy versus Business Sector Perspectives," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 47-58, Spring.
    2. Someshwar Rao & Andrew Sharpe & Jianmin Tang, 2004. "Productivity Growth in Service Industries: A Canadian Success Story," CSLS Research Reports 2004-01, Centre for the Study of Living Standards.
    3. Andrew Sharpe, 2004. "Ten Productivity Puzzles Facing Researchers," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 15-24, Fall.

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