A Comparison of Canadian and U.S. Productivity Levels: An Exploration of Measurement Issues

Abstract

This paper examines the level of labour productivity in Canada relative to that of the United States in 1999. In doing so, it addresses two main issues. The first is the comparability of the measures of GDP and labour inputs that the statistical agency in each country produces. Second, it investigates how a price index can be constructed to reconcile estimates of Canadian and U.S. GDP per hour worked that are calculated in Canadian and U.S. dollars respectively. After doing so, and taking into account alternative assumptions about Canada/U.S. prices, the paper provides point estimates of Canada's relative labour productivity of the total economy in 1999 of around 94% that of the United States. The paper points out that at least a 10 percentage point confidence interval should be applied to these estimates. The size of the range is particularly sensitive to assumptions that are made about import and export prices.

Keywords: labour productivity, productivity growth, productivity measures

JEL Classification: D24, J24, N12