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Three Policies to Improve Productivity Growth in Canada

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  • Andrew Sharpe

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Abstract

This paper makes the case that productivity is Canada’s economic destiny and that Canada’s dismal productivity performance, both from a historical and international perspective, therefore represents our biggest economic challenge. It then puts forward three specific policies to improve Canada’s productivity performance: foster the diffusion of best-practice technologies; remove the provincial sales tax on purchases of machinery and equipment; and promote interprovincial movement of workers by improving labour market information, removing professional barriers to labour mobility, and establishing a tax credit for interprovincial job search. It finds that the short-term costs of these policies would be greatly outweighed by the long-term benefits associated with their implementation.

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Bibliographic Info

Paper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2007-05.

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Date of creation: Dec 2007
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Handle: RePEc:sls:resrep:0705

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Keywords: Productivity growth in Canada; Policy; Diffusion; Provincial sales tax; Interprovincial migration.;

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References

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  1. Andrew Sharpe, 2006. "Future Productivity Growth in Canada and Implications for the Canada Pension Plan," CSLS Research Reports 2006-01, Centre for the Study of Living Standards.
  2. Edward N. Wolff, 2000. "Productiivity Convergence among OECD Countries: The Postwar Experience," International Productivity Monitor, Centre for the Study of Living Standards, vol. 1, pages 17-22, Fall.
  3. Grady, Patrick & Macmillan, Kathleen, 2007. "Interprovincial Barriers to Labour Mobility in Canada:Policy, Knowledge Gaps and Research Issues," MPRA Paper 2988, University Library of Munich, Germany.
  4. Kenneth J. McKenzie, 2005. "Tax Subsidies for R&D in Canadian Provinces," Canadian Public Policy, University of Toronto Press, vol. 31(1), pages 29-44, March.
  5. Someshwar Rao & Jianmin Tang & Weimin Wang, 2003. "Canada's Recent Productivity Record and Capital Accumulation," International Productivity Monitor, Centre for the Study of Living Standards, vol. 7, pages 24-38, Fall.
  6. Maximilian Baylor & Louis Beauséjour, . "Taxation and Economic Efficiency: Results from a Canadian CGE Model," Working Papers-Department of Finance Canada 2004-10, Department of Finance Canada.
  7. Finnie, Ross, 2001. "The Effects of Inter-provincial Mobility on Individuals' Earnings: Panel Model Estimates for Canada," Analytical Studies Branch Research Paper Series 2001163e, Statistics Canada, Analytical Studies Branch.
  8. Andrew Sharpe, 2002. "Productivity Concepts, Trends And Prospects: An Overview," The Review of Economic Performance and Social Progress, in: Andrew Sharpe, Executive Director & France St-Hilaire, Vice-President , Research & Keith Banting, Di (ed.), The Review of Economic Performance and Social Progress 2002: Towards a Social Understanding of Productivity, volume 2 Centre for the Study of Living Standards & The Institutute for Research on Public Policy.
  9. Andrew Sharpe & Jean-Francois Arsenault & Daniel Ershov, 2007. "The Impact of Interprovincial Migration on Aggregate Output and Labour Productivity in Canada, 1987-2006," CSLS Research Reports 2007-02, Centre for the Study of Living Standards.
  10. Lipsey, Richard G. & Carlaw, Kenneth I. & Bekar, Clifford T., 2005. "Economic Transformations: General Purpose Technologies and Long-Term Economic Growth," OUP Catalogue, Oxford University Press, number 9780199290895, September.
  11. Jean-Philippe Cotis, 2006. "Benchmarking Canada's Economic Performance," International Productivity Monitor, Centre for the Study of Living Standards, vol. 13, pages 3-20, Fall.
  12. Andrew Sharpe, 2004. "Ten Productivity Puzzles Facing Researchers," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 15-24, Fall.
  13. Don Drummond, 2006. "The Economists' Manifesto for Curing Ailing Canadian Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 13, pages 21-26, Fall.
  14. Osberg, Lars & Sharpe, Andrew, 2002. "An Index of Economic Well-Being for Selected OECD Countries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 291-316, September.
  15. Aled ab Iorwerth & Jeff Danforth, . "Is Investment Not Sensitive to its User Cost? The Macro Evidence Revisited," Working Papers-Department of Finance Canada 2004-05, Department of Finance Canada.
  16. Alberto Isgut & Lance Bialas & James Milway, 2006. "Explaining Canada-U.S. Differences in Annual Hours Worked," International Productivity Monitor, Centre for the Study of Living Standards, vol. 13, pages 27-45, Fall.
  17. Michael Smart, 2006. "The GST Cut and Fiscal Imbalance," International Tax Program Papers 0604, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto.
  18. Tanguay, Marc & Wong, Fanny & Baldwin, John R. & Maynard, Jean-Pierre & Yan, Beiling, 2005. "A Comparison of Canadian and U.S. Productivity Levels: An Exploration of Measurement Issues," Economic Analysis (EA) Research Paper Series 2005028e, Statistics Canada, Analytical Studies Branch.
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Citations

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Cited by:
  1. Andrew Sharpe & Alexander Murray, 2011. "State of the Evidence on Health as a Determinant of Productivity," CSLS Research Reports 2011-04, Centre for the Study of Living Standards.
  2. Jean-Francois Arsenault & Andrew Sharpe, 2008. "An Analysis of the Causes of Weak Labour Productivity Growth in Canada since 2000," International Productivity Monitor, Centre for the Study of Living Standards, vol. 16, pages 14-39, Spring.

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