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Sources of aggregate labour productivity growth in Canada and the United States

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  • Jianmin Tang
  • Weimin Wang

Abstract

In this paper we propose a decomposition technique to examine the sources of industrial contribution to aggregate labour productivity growth. We show that in terms of pure labour productivity growth, the manufacturing and service sectors contributed equally to the aggregate Canada-U.S. labour productivity growth gap during the 1987-98 period. But, in terms of total industrial contributions, which also take into account the contributions from a change in relative size, the service sector was the largest contributor. We also find that high labour productivity growth industries did not attract resources from stagnant industries - a phenomenon consistent with Baumol's cost disease of stagnant industries.

Suggested Citation

  • 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.
    • Handle: RePEc:cje:issued:v:37:y:2004:i:2:p:421-444
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    References listed on IDEAS

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    1. William D. Nordhaus, 2002. "Productivity Growth and the New Economy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(2), pages 211-265.
    2. De Jong, Gjalt, 1996. "Canada's Post-war Manufacturing Performance: A Comparison with the United States," GGDC Research Memorandum 199632, Groningen Growth and Development Centre, University of Groningen.
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    4. Stefano Scarpetta & Philip Hemmings & Thierry Tressel & Jaejoon Woo, 2002. "The Role of Policy and Institutions for Productivity and Firm Dynamics: Evidence from Micro and Industry Data," OECD Economics Department Working Papers 329, OECD Publishing.
    5. 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 806-817, September.
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    7. Dirk Pilat, 1996. "Labour Productivity Levels in OECD Countries: Estimates for Manufacturing and Selected Service Sectors," OECD Economics Department Working Papers 169, OECD Publishing.
    8. Someshwar Rao & Jianmin Tang, 2001. "The Contribution of ICTs to Productivity Growth in Canada and the United States in the 1990s," International Productivity Monitor, Centre for the Study of Living Standards, vol. 3, pages 3-18, Fall.
    9. Thijs ten Raa & Ronald Schettkat (ed.), 2001. "The Growth of Service Industries," Books, Edward Elgar Publishing, number 2137.
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    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
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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