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What Explains the Canada-US Labour Productivity Gap?

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  • Someshwar Rao
  • Jianmin Tang
  • Weimin Wang

Abstract

This paper analyzes the reasons for the Canada-US labour productivity gap, which is mainly explained by the multifactor productivity (MFP) gap. Based on panel data for 41 industries, the regression results show that differences in the machinery and equipment (M&E) capital-labour ratio, trade openness, and capacity utilization explain differences in the Canada-US MFP gap across industries. The M&E capital intensity gap is the dominant source of the MFP gap. Lower wages, R&D intensity, and skills levels, as well as higher investment goods prices in Canada are the major determinants of the M&E capital intensity gap.

Suggested Citation

  • Someshwar Rao & Jianmin Tang & Weimin Wang, 2008. "What Explains the Canada-US Labour Productivity Gap?," Canadian Public Policy, University of Toronto Press, vol. 34(2), pages 163-192, June.
    • Handle: RePEc:cpp:issued:v:34:y:2008:i:2:p:163-192
    DOI: 10.3138/cpp.34.2.163
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    References listed on IDEAS

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    Cited by:

    1. Andrew Phiri & Chuma Mbaleki & Christian Nsiah, 2022. "Fiscal expenditures, revenues and labour productivity in South Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2062912-206, December.
    2. 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.
    3. Someshwar Rao, 2011. "Insights from Latin America for Canada: A Review Article on The Age of Productivity: Transforming Economies from the Bottom Up," International Productivity Monitor, Centre for the Study of Living Standards, vol. 21, pages 70-81, Spring.
    4. Alexander Bilson Darku & Stavroula Malla & Kien C. Tran, 2016. "Sources and Measurement of Agricultural Productivity and Efficiency in Canadian Provinces: Crops and Livestock," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(1), pages 49-70, March.
    5. Peter Nicholson, 2009. "Innovation and Business Strategy: Why Canada Falls Short," International Productivity Monitor, Centre for the Study of Living Standards, vol. 18, pages 51-71, Spring.
    6. Violeta Dimitrova, 2023. "Labour Productivity Gaps in the Trade Industries in Bulgaria and Some European Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 54-75.
    7. Eric C. Y. Ng & Ying Chu Ng, 2016. "What explains the total factor productivity gap between OECD economies and the U.S.?," Applied Economics, Taylor & Francis Journals, vol. 48(32), pages 3005-3019, July.
    8. Mr. Marcello M. Estevão & Ms. Evridiki Tsounta, 2010. "Canada's Potential Growth: Another Victim of the Crisis?," IMF Working Papers 2010/013, International Monetary Fund.
    9. Malick Souare, 2013. "Productivity growth, trade and FDI nexus: evidence from the Canadian manufacturing sector," The Journal of Technology Transfer, Springer, vol. 38(5), pages 675-698, October.
    10. Darku, Alexander B. & Malla, Stavroula, 2010. "Agricultural Productivity Growth in Canada: Concepts and Evidences," CAIRN Policy Briefs 273055, Canadian Agricultural Innovation and Regulation Network (CAIRN).

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