The Pandemic and Short-Run Changes in Output, Hours Worked and Labour Productivity: Canadian Evidence by Industry

Abstract

The official measure of Canadian labour productivity rose by about 15 per cent (not annualized) during the first two quarters of 2020, reflecting a decline in total hours worked that exceeded an exceptional decline in output. We analyze this short-run change using monthly data disaggregated to 87 industries, focusing for analytical reasons on changes from April 2018 to April 2020 and August 2018 to August 2020. Just over one-fifth of the April labour productivity increase, and just under three-fifths of the smaller August increase, can be associated with the changing hours composition across industries. Estimated indices for the feasibility of working from home, the degree of worker health (COVID) risk, and the extent workers in the industry are customer-facing are not associated with the short-run changes in labour productivity by industry. However, there is clear evidence that industries with high work from home index values tended to have smaller reductions in output and hours.