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Productivity Growth in Canada and the United States: Recent Industry Trends and Potential Explanations

Author

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  • Wulong Gu
  • Michael Willox

Abstract

Labour productivity growth in Canada was weaker than that in the United States from the mid-1980s to 2010, leading to a decline in Canada’s relative productivity level. This situation was mainly due to the lower multifactor productivity (MFP) growth experienced in most Canadian industries in that period. After 2010, however, the pattern reversed itself as labour productivity growth in Canada exceeded that of the United States. Higher labour productivity growth in Canada for the 2010-2014 period was due to a relatively larger capital deepening effect and relatively higher MFP growth. Both these developments were associated with stronger output growth and stronger demand in Canada. In addition, the contributions of ICT producing and ICT intensive using industries to U.S. labour productivity growth waned after 2010. For Canada, ICT producing industries contributed little to overall labour productivity before and after 2010, while ICT intensive using industries exhibited stronger productivity growth after 2010. The latter may reflect the more moderate ICT investment in Canada compared to the United States in the 1990s and early 2000s and the more gradual realization of benefits of ICT usage.

Suggested Citation

  • Wulong Gu & Michael Willox, 2018. "Productivity Growth in Canada and the United States: Recent Industry Trends and Potential Explanations," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 73-94, Fall.
    • Handle: RePEc:sls:ipmsls:v:35:y:2018:4
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    File URL: http://www.csls.ca/ipm/35/Gu-Willox.pdf
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    References listed on IDEAS

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    Cited by:

    1. Audra Bowlus & Youngmin Park & Chris Robinson, 2022. "Contribution of Human Capital Accumulation to Canadian Economic Growth," Discussion Papers 2022-7, Bank of Canada.
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    3. Jacob Greenspon & Anna Stansbury & Lawrence H. Summers, 2021. "Productivity and Pay in the United States and Canada," International Productivity Monitor, Centre for the Study of Living Standards, vol. 41, pages 3-30, Fall.
    4. Michelle Alexopoulos and Jon Cohen, 2018. "Canadian Productivity Growth, Secular Stagnation, and Technological Change," International Productivity Monitor, Centre for the Study of Living Standards, vol. 35, pages 113-137, Fall.

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    More about this item

    Keywords

    Productivity; Canada; United States; multi-factor; capital; ICT;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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