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Why are Americans More Productive than Canadians?

  • Andrew Sharpe


Historically, per capita income in the United States has exceeded those in Canada and this difference has reflected higher labour productivity levels south of the 49th parallel. In this article, Andrew Sharpe of the Centre for the Study of Living Standards provides estimates of the size of the gap in aggregate labour productivity between the United States and Canada and discuss possible explanation of the gap. He points out that based on average weekly hours estimates from the U.S. household survey, total economy output per hour in Canada in 2002 was 89 per cent of the U.S. level, compared to 81 per cent using estimates from the establishment survey. Sharpe concludes that the Canada-U.S. aggregate labour productivity gap reflects Canada's lower capital intensity of production, an innovation gap manifested by lower R&D expenditure, a smaller and less dynamic high tech sector, less developed human capital at the top end of the labour market, and more limited economies of scale and scope.

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Article provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.

Volume (Year): 6 (2003)
Issue (Month): (Spring)
Pages: 19-37

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Handle: RePEc:sls:ipmsls:v:6:y:2003:2
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  1. Martin Neil Baily & Robert M. Solow, 2001. "International Productivity Comparisons Built from the Firm Level," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 151-172, Summer.
  2. Jianmin Tang & Frank C. Lee, 2000. "Productivity Levels and International Competitiveness between Canadian and U.S. Industries," American Economic Review, American Economic Association, vol. 90(2), pages 176-179, May.
  3. Dachraoui, Kais & Harchaoui, Tarek, 2003. "A Frontier Approach to Canada-U.S. Multifactor Productivity Performance," Economic Analysis (EA) Research Paper Series 2003010e, Statistics Canada, Analytical Studies Branch.
  4. James E. Anderson & Eric van Wincoop, 2001. "Gravity with Gravitas: A Solution to the Border Puzzle," NBER Working Papers 8079, National Bureau of Economic Research, Inc.
  5. 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.
  6. Lars Osberg & Andrew Sharpe, 2010. "The Index of Economic Well-Being," Challenge, M.E. Sharpe, Inc., vol. 53(4), pages 25-42, July.
  7. Tang, Jianmin & Baldwin, John R. & Jarmin , Ron S., 2002. "The Trend to Smaller Producers in Manufacturing: A Canada/U.S. Comparison," Economic Analysis (EA) Research Paper Series 2002003e, 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. W. Erwin Diewert, 2003. "Measuring Capital," NBER Working Papers 9526, National Bureau of Economic Research, Inc.
  10. Someshwar Rao & Ashfaq Ahmad & William Horsman & Phaedra Kaptein-Russell, 2001. "The Importance of Innovation for Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 11-18, Spring.
  11. Robert E. Hall & Charles I. Jones, . "The Productivity of Nations," Working Papers 96012, Stanford University, Department of Economics.
  12. Jeremy Smith, 2003. "International Productivity Comparisons: An Examination of Data Sources," International Productivity Monitor, Centre for the Study of Living Standards, vol. 6, pages 64-71, Spring.
  13. Someshwar Rao & Jianmin Tang & Weimin Wang, 2002. "The Importance of Skills for Innovation and Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 4, pages 15-26, Spring.
  14. 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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