Total Factor Productivity Growth in the Canadian Life Insurance Industry: 1979-1989

This is the first paper to directly measure and decompose total factor productivity growth (TFPG) for the Canadian life insurance industry. TFPG averaged 1.0 percent per year over the period from 1979 to 1989, thereby outperforming many manufacturing industries. The rate of TFPG was 0.2 percent in the first half of the 1980's due to the depressed economy and 1.9 percent in the last half of the decade. Technological change was the major element contributing to TFPG. There was a large residual element in the decomposition of TFPG, reflecting possible adjustment costs associated with new information processing technologies.