International Productivity Monitor (Sep 2018)
The Stylized Facts about Slower Productivity Growth in Canada
Abstract
Productivity growth in the Canadian economy has been considerably slower in the post-2000 period than in the pre-2000 period, with important implications for the growth in the living standards of Canadians. Output per hour in the business sector in Canada advanced at a 0.9 per cent average annual rate from 2000 to 2016 compared to 1.6 per cent from 1981 to 2000. The objective of this article is to highlight the stylized facts of this important development. It first examines trends in both labour productivity and total factor productivity (TFP) at the aggregate level. It discusses growth accounting estimates of changes in the sources of labour productivity growth. Labour and total factor productivity estimates are provided for 15 industries, highlighting which industries experienced the largest slowdown in absolute terms and the industry contributions to the slowdown. Manufacturing is found to be the industry making the largest contribution to both the labour productivity and TFP slowdowns. Contributions of within-industry productivity growth and re-allocation effects to aggregate productivity growth are also examined.
