IDEAS home Printed from https://ideas.repec.org/p/sls/resrep/0701.html

Can Measurement Error Explain the Weakness of Productivity Growth in the Canadian Construction Industry?

Author

Listed:
  • Peter Harrison

Abstract

According to Statistics Canada productivity estimates, the rate of growth of real output per hour in the construction industry in Canada over the 1981-2006 period was 0.53 per cent per year, one-third of the of the business sector average. This report examines evidence for and against the hypothesis that measurement error explains this below average productivity performance. The report finds that the use of input cost indexes to adjust nominal output to obtain real output, instead of the more appropriate use of output price indexes, for certain sub-industries of the construction sector represents the most likely source of measurement error. This procedure may result in a downward bias to labour productivity growth in the construction sector of up to 0.44 percentage points per year. It is thus likely that measurement error explains some, but not all, of the gap in labour productivity growth between the construction industry and the business sector.

Suggested Citation

  • Peter Harrison, 2007. "Can Measurement Error Explain the Weakness of Productivity Growth in the Canadian Construction Industry?," CSLS Research Reports 2007-01, Centre for the Study of Living Standards.
    • Handle: RePEc:sls:resrep:0701
    as

    Download full text from publisher

    File URL: https://csls.ca/research/can-measurement-error-explain-the-weakness-of-productivity-growth-in-the-canadian-construction-industry/
    Download Restriction: no
    File URL: https://csls.ca/wp-content/uploads/2026/07/csls2007-01-1.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stokes, H Kemble, Jr, 1981. "An Examination of the Productivity Decline in the Construction Industry," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 459-502, November.
    2. Allen, Steven G, 1985. "Why Construction Industry Productivity Is Declining," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 661-669, November.
    3. Pieper, Paul, 1989. "Why Construction Industry Productivity Is Declining: Comment," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 543-546, August.
    4. Anna Dubois & Lars-Erik Gadde, 2002. "The construction industry as a loosely coupled system: implications for productivity and innovation," Construction Management and Economics, Taylor & Francis Journals, vol. 20(7), pages 621-631.
    5. Allen, Steven G, 1989. "Why Construction Industry Productivity Is Declining: Reply," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 547-548, August.
    6. Dirk Pilat & Paul Schreyer, 2003. "Measuring productivity," OECD Economic Studies, OECD Publishing, vol. 2001(2), pages 127-170.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tero Kuusi & Martti Kulvik & Juha-Matti Junnonen, 2022. "Productivity Growth in Construction Value Chains," International Productivity Monitor, Centre for the Study of Living Standards, vol. 42, pages 3-32, Spring.
    2. Hassan Nasir & Hani Ahmed & Carl Haas & Paul M. Goodrum, 2014. "An analysis of construction productivity differences between Canada and the United States," Construction Management and Economics, Taylor & Francis Journals, vol. 32(6), pages 595-607, June.
    3. Kevin Duncan & Peter Philips & Mark Prus, 2014. "Prevailing Wage Regulations and School Construction Costs: Cumulative Evidence from British Columbia," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(4), pages 593-616, October.
    4. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Greco, Marco & Grimaldi, Michele & Locatelli, Giorgio & Serafini, Mattia, 2021. "How does open innovation enhance productivity? An exploration in the construction ecosystem," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    2. Garcia, Daniel & Molloy, Raven, 2025. "Reexamining lackluster productivity growth in construction," Regional Science and Urban Economics, Elsevier, vol. 113(C).
    3. Paul, Saumik & Sen, Kunal, 2026. "Construction Productivity and Income Convergence," IZA Discussion Papers 18377, IZA Network @ LISER.
    4. Swei, Omar & Gillen, David & Onayev, Anuarbek, 2021. "Improving productivity measures of producing transportation infrastructure using quality-adjusted price indices," Transport Policy, Elsevier, vol. 114(C), pages 372-381.
    5. Daniel Garcia & Raven S. Molloy, 2023. "Can Measurement Error Explain Slow Productivity Growth in Construction?," Finance and Economics Discussion Series 2023-052, Board of Governors of the Federal Reserve System (U.S.).
    6. Dirk Pilat, 2001. "Productivity Growth in the OECD Area: Some Recent Findings," International Productivity Monitor, Centre for the Study of Living Standards, vol. 3, pages 32-44, Fall.
    7. Beerepoot, Milou & Beerepoot, Niels, 2007. "Government regulation as an impetus for innovation: Evidence from energy performance regulation in the Dutch residential building sector," Energy Policy, Elsevier, vol. 35(10), pages 4812-4825, October.
    8. Iancu, Aurel, 2009. "Real Economic Convergence," Working Papers of National Institute for Economic Research 090104, Institutul National de Cercetari Economice (INCE).
    9. Austan Goolsbee & Chad Syverson, 2022. "The Strange and Awful Path of Productivity in the US Construction Sector," NBER Chapters, in: Technology, Productivity, and Economic Growth, pages 119-138, National Bureau of Economic Research, Inc.
    10. Per Erik Eriksson & Ossi Pesamaa, 2007. "Modelling procurement effects on cooperation," Construction Management and Economics, Taylor & Francis Journals, vol. 25(8), pages 893-901.
    11. Allen, Steven G, 1985. "Why Construction Industry Productivity Is Declining," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 661-669, November.
    12. Wei Daojiang & Li Huimin, 2014. "An Empirical Study on the Influencing Factors of Knowledge Sharing in Project Context," Journal of Systems Science and Information, De Gruyter, vol. 2(2), pages 154-169, April.
    13. Colunga Ramos Luis Fernando & Torre Cepeda Leonardo E., 2015. "Patterns of Total Factor Productivity Growth in Mexico: 1991-2011," Working Papers 2015-24, Banco de México.
    14. Fischer, Christoph & Hossfeld, Oliver, 2014. "A consistent set of multilateral productivity approach-based indicators of price competitiveness," Discussion Papers 10/2014, Deutsche Bundesbank.
    15. Kesidou, Sofia & Sovacool, Benjamin K., 2019. "Supply chain integration for low-carbon buildings: A critical interdisciplinary review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 113(C), pages 1-1.
    16. Mumtaz, Rehma & Zaman, Khalid & Sajjad, Faiza & Lodhi, Muhammad Saeed & Irfan, Muhammad & Khan, Imran & Naseem, Imran, 2014. "Modeling the causal relationship between energy and growth factors: Journey towards sustainable development," Renewable Energy, Elsevier, vol. 63(C), pages 353-365.
    17. Antonelli, Cristiano & Gehringer, Agnieszka, 2015. "Knowledge externalities and demand pull: The European evidence," Economic Systems, Elsevier, vol. 39(4), pages 608-631.
    18. Sabrina Álvarez Cuccia, 2020. "Analysis of the role of financial and operational diversification on the economic performance of Catalan construction businesses (2005-2016)," TEC Empresarial, School of Business, Costa Rica Institute of Technology (ITCR), vol. 14(1), pages 54-70.
    19. Andreas Hornstein & Per Krusell, 1996. "Can Technology Improvements Cause Productivity Slowdowns?," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 209-276, National Bureau of Economic Research, Inc.
    20. Dirk Pilat & Paul Schreyer, 2004. "The OECD Productivity Database: An Overview," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 59-65, Spring.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sls:resrep:0701. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CSLS (email available below). General contact details of provider: https://edirc.repec.org/data/cslssca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.