Insights into Canada’s Abysmal Post-2000 Productivity Performance from Decompositions of Labour Productivity Growth by Industry and Province

The Centre for the Study of Living Standards has released new estimates of labour, capital and multifactor productivity growth and levels at the market sector, two-digit, and three-digit NAICS industry level for the Canadian provinces during the 1997-2007 period. This article exploits this database to shed light on the nature of the slowdown in labour productivity growth in Canada after 2000. It identifies manufacturing as the sector that has accounted for most of the slowdown. Within manufacturing, transportation equipment and computers and electronics are found to be the industries that accounted for the lion’s share of the sector’s fall-off in labour productivity growth. Ontario was the province that contributed proportionately the most to the slowdown because of the concentration of manufacturing in this province. A fall in manufacturing output growth is identified as the factor most responsible for the decline in productivity growth in the sector.