Can Measurement Error Explain the Weakness of Productivity Growth in the Canadian Construction Industry?
AbstractAccording to Statistics Canada productivity estimates, the rate of growth of real output per hour in the construction industry in Canada over the 1981-2006 period was 0.53 per cent per year, one-third of the business sector average. This article examines evidence for and against the hypothesis that measurement error explains this below average productivity performance. The article finds that the use of input cost indexes to adjust nominal output to obtain real output, instead of the more appropriate use of output price indexes, for certain sub-industries of the construction sector represents the most likely source of measurement error. This procedure may result in a downward bias to labour productivity growth in the construction sector of up to 0.44 percentage points per year. It is thus likely that measurement error explains some, but not all, of the gap in labour productivity growth between the construction industry and the business sector.
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Bibliographic InfoPaper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2007-01.
Date of creation: Apr 2007
Date of revision:
Find related papers by JEL classification:
- C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
- C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
- C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data
- L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
- O51 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-14 (All new papers)
- NEP-CSE-2007-04-14 (Economics of Strategic Management)
- NEP-EFF-2007-04-14 (Efficiency & Productivity)
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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"Why Construction Industry Productivity Is Declining,"
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MIT Press, vol. 67(4), pages 661-69, November.
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- Dirk Pilat & Paul Schreyer, 2001. "Measuring productivity," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 127-170.
- Stokes, H Kemble, Jr, 1981. "An Examination of the Productivity Decline in the Construction Industry," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 459-502, November.
- Allen, Steven G, 1989. "Why Construction Industry Productivity Is Declining: Reply," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 547-48, August.
- Anna Dubois & Lars-Erik Gadde, 2002. "The construction industry as a loosely coupled system: implications for productivity and innovation," Construction Management & Economics, Taylor and Francis Journals, vol. 20(7), pages 621-631.
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