New Estimates of Real Income and Multifactor Productivity Growth for the Canadian Business Sector, 1961-2011

Abstract

Using new data from Statistics Canada, this article shows that the multifactor productivity (MFP) performance of the Canadian business sector has been reasonably satisfactory over the past half century. In particular, traditional gross income MFP growth averaged 1.03 per cent per year over the 1961-2011 period. This compares with the official Statistics Canada estimate of 0.28 per cent. The difference was mostly due to significantly higher capital input growth recorded by Statistics Canada. The study finds that quality adjusted labour input growth was the main driver of real income growth, followed by MFP growth, capital input growth, and finally by falling real import prices. The study encountered many data problems which should be addressed in future work on Canadian business sector productivity performance.

Keywords

• real income
• multifactor productivity