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Sectoral Contributions to Labour Productivity Growth: Does the Choice of Decomposition Formula Matter?

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  • Ricardo de Avillez

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    Abstract

    Using three decomposition formulas (TRAD, CSLS, and GEAD), this article estimates sectoral contributions to business sector labour productivity growth in Canada during the 2000-2010 period. Although at the aggregate economy level there was substantial agreement among the three formulas - with most of business sector labour productivity growth being explained by within-sector productivity improvements -, contribution estimates varied widely at the sectoral level. In particular, there were signi cant differences in the estimated contributions of construction, manufacturing, and mining and oil and gas extraction. Ultimately, these differences refl ect the fact that traditional decomposition formulas (TRAD and CSLS) and the GEAD formula measure distinct economic phenomena. Instead of seeing estimates constructed by the GEAD and traditional formulas as "competing" narratives, the article concludes it is more useful to see them as providing complementing stories about the role of di erent sectors in driving aggregate labour productivity growth.

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    File URL: http://www.csls.ca/reports/csls2012-09.pdf
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    Paper provided by Centre for the Study of Living Standards in its series CSLS Research Reports with number 2012-09.

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    Date of creation: Jan 2013
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    Handle: RePEc:sls:resrep:1209

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    1. Robert Dekle & Guillaume Vandenbroucke, 2006. "A quantitative analysis of China’s structural transformation," Working Paper Series 2006-37, Federal Reserve Bank of San Francisco.
    2. Dumagan, Jesus C., 2011. "A Generalized Exactly Additive Decomposition of Aggregate Labor Productivity Growth," Discussion Papers DP 2011-19, Philippine Institute for Development Studies.
    3. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 806-17, September.
    4. 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.
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