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Measuring the Canada-U.S. Productivity Gap: Industry Dimensions

Author

Listed:
  • Someshwar Rao

    ()

  • Jianmin Tang

    ()

  • Weimin Wang

    ()

Abstract

A key objective of economic policy in Canada is to reduce the productivity gap with the United States. The development of appropriate policies to attain this goal requires a thorough understanding of the nature of the gap, including its industry dimensions. Unfortunately, statistical agencies do not currently produce estimates of Canada-U.S. productivity gaps by industry. To fill this data lacuna, Someshwar Rao, Jianmin Tang, and Weimin Wang of Industry Canada in the first article present benchmark estimates of the Canada-U.S. labour productivity and total factor productvity gap for 29 industries for 1999 and extend the industry estimates back to 1997 and forward to 2001. They report that in 2001 output per hour in the business sector in Canada was 82 per cent and total factor productivity was 87 per cent of the U.S. level. Lower capital intensity was responsible for about 30 per cent of the business sector labour productivity gap. Three of four major sectors in Canada had a labour productivity level below its U.S. counterpart – manufacturing (80 per cent), the service sector (81 per cent), and primary industries (87 per cent) – while the level of labour producivity in the construction industry was well above that in the United States (129 per cent). Within manufacturing, the largest productivity gaps were found in electronic and electrical products, fabricated metal, and machinery and computers. Within the service sector, finance, insurance and real estate and information and cultural industries had particularly large productivity gaps. In contrast, labour productivity levels in a number of Canadian natural resource industries exceeded U.S. levels.

Suggested Citation

  • Someshwar Rao & Jianmin Tang & Weimin Wang, 2004. "Measuring the Canada-U.S. Productivity Gap: Industry Dimensions," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 3-14, Fall.
  • Handle: RePEc:sls:ipmsls:v:9:y:2004:1
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    Citations

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    Cited by:

    1. Michelle Alexopoulos & Jon Cohen, 2012. "The Effects of Computer Technologies on the Canadian Economy: Evidence from New Direct Measures," International Productivity Monitor, Centre for the Study of Living Standards, vol. 23, pages 17-32, Spring.
    2. Pamfili Antipa & Marie-Elisabeth de la Serve, 2010. "International Comparisons of Industry-based Productivity Levels in the Financial and Business Service Sectors," International Productivity Monitor, Centre for the Study of Living Standards, vol. 19, pages 66-81, Spring.
    3. Grady, Patrick, 2010. "Immigration and the Growing Canada-U.S. Productivity Gap," MPRA Paper 27454, University Library of Munich, Germany.
    4. Simona E. Cociuba & Alexander Ueberfeldt, 2008. "Driving Forces of the Canadian Economy: An Accounting Exercise," Staff Working Papers 08-14, Bank of Canada.
    5. Andrew Sharpe, 2005. "What Explains the Canada-US ICT Investment Gap?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 11, pages 21-38, Fall.
    6. Andrew Sharpe, 2007. "Lessons for Canada from International Productivity Experience," International Productivity Monitor, Centre for the Study of Living Standards, vol. 14, pages 20-37, Spring.
    7. Matt Kellison, 2004. "The McKinsey Global Institute Productivity Studies: Lessons for Canada," CSLS Research Reports 2004-10, Centre for the Study of Living Standards.
    8. Richard Dion & Robert Fay, 2008. "Understanding Productivity: A Review of Recent Technical Research," Discussion Papers 08-3, Bank of Canada.
    9. Andrew Sharpe, 2004. "Ten Productivity Puzzles Facing Researchers," International Productivity Monitor, Centre for the Study of Living Standards, vol. 9, pages 15-24, Fall.
    10. Someshwar Rao & Andrew Sharpe & Jeremy Smith, 2005. "An Analysis of the Labour Productivity Growth Slowdown in Canada since 2000," International Productivity Monitor, Centre for the Study of Living Standards, vol. 10, pages 3-23, Spring.

    More about this item

    Keywords

    Productivity; Productivity Levels; Canada; United States; Productivity Gap; Purchasing Power Parity; Industry; Industry Level;

    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
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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