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The Canadian productivity stagnation, 20022014

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  • Juan Carlos Conesa
  • Pau S. Pujolas

Abstract

Total factor productivity (TFP) growth in Canada between 2002 and 2014 has been only 0.16% per year. This figure is substantially smaller than that of the United States, or that of Canada in the past. We perform multiple counterfactual exercises to show that this small TFP growth cannot be accounted for by several compositional effects or mismeasurements of factors of production. We identify two key sectors (mostly Mining and to a lesser extent Manufacturing) that drive all of the TFP growth difference with the United States. Despite the lack of TFP growth, Canada has experienced sustained income growth due to a prolonged period of appreciation of the terms of trade (while US terms of trade have deteriorated), making real income in the two countries grow at similar rates.

Suggested Citation

  • Juan Carlos Conesa & Pau S. Pujolas, 2019. "The Canadian productivity stagnation, 20022014," Canadian Journal of Economics, Canadian Economics Association, vol. 52(2), pages 561-583, May.
    • Handle: RePEc:cje:issued:v:52:y:2019:i:2:p:561-583
    DOI: 10.1111/caje.12383
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    Cited by:

    1. Douwere Grekou & Jenny Watt & Horatio M. Morgan, 2023. "Gender productivity gap: does gender-equal ownership compensate for female entrepreneurs’ lack of prior industry experience?," Small Business Economics, Springer, vol. 60(4), pages 1543-1571, April.
    2. James (Jim) C. MacGee & Joel Rodrigue, 2024. "The Distributional Origins of the Canada-US GDP and Labour Productivity Gaps," Staff Working Papers 24-49, Bank of Canada.
    3. Morgan, Horatio M., 2024. "An Integrative Institutional Framework on the Canada-U.S. Business Performance Gap," MPRA Paper 119739, University Library of Munich, Germany.
    4. Shujiang Cao & Shutao Cao, 2025. "Worker Quality, Matching and Productivity Slowdown," Papers 2509.00516, arXiv.org.
    5. Mahone Zachary L. & Naval Joaquín & Pujolas Pau S., 2021. "The Neoclassical Growth Model and the Labor Share Decline," The B.E. Journal of Macroeconomics, De Gruyter, vol. 21(2), pages 607-628, June.

    More about this item

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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