The Productivity Differential between the Canadian and U.S. Manufacturing Sectors: A Perspective Drawn from the Early 20th Century

The Canadian Productivity Review, Catalogue No. 15-206-X, No. 022, 2008

35 Pages Posted: 24 Nov 2009

See all articles by John R. Baldwin

John R. Baldwin

Statistics Canada - Microeconomic Analysis Division

Alan G. Green

affiliation not provided to SSRN

Date Written: December 23, 2008

Abstract

Many historical comparisons of international productivity use measures of labour productivity (output per worker). Differences in labour productivity can be caused by differences in technical efficiency or differences in capital intensity. Moving to measures of total factor productivity allows international comparisons to ascertain whether differences in labour productivity arise from differences in efficiency or differences in factors utilized in the production process.

This paper examines differences in output per worker in the manufacturing sectors of Canada and the United States in 1929 and the extent to which it arises from efficiency differences. It makes corrections for differences in capital and materials intensity per worker in order to derive a measure of total factor efficiency of Canada relative to the United States, using detailed industry data. It finds that while output per worker in Canada was only about 75% of the United States productivity level, the total factor productivity measure of Canada was about the same as the United States level - that is, there was very little difference in technical efficiency in the two countries. Canada’s lower output per worker was the result of the use of less capital and materials per worker than the United States.

Keywords: historical comparisons, labour productivity, multifactor productivity, productivity

JEL Classification: D24, J24, O47, N12

Suggested Citation

Baldwin, John R. and Green, Alan G., The Productivity Differential between the Canadian and U.S. Manufacturing Sectors: A Perspective Drawn from the Early 20th Century (December 23, 2008). The Canadian Productivity Review, Catalogue No. 15-206-X, No. 022, 2008, Available at SSRN: https://ssrn.com/abstract=1511731

John R. Baldwin (Contact Author)

Statistics Canada - Microeconomic Analysis Division ( email )

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Alan G. Green

affiliation not provided to SSRN ( email )

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