cover image: The Post-2001 Productivity Growth Divergence between Canada and the United


The Post-2001 Productivity Growth Divergence between Canada and the United

22 Dec 2023

When the markup the output price in Canada is higher than µ = 1, the left-hand side of equation 1 is in the United States, the difference can be the Solow residual and TFP growth pub- interpreted as a measure of the industry’s lished by Statistics Canada and the U. [...] terfactuals The aggregate impact on business sector labour productivity growth is calculated by The decision to use a counterfactual summing the industry value added markup to evaluate the competitive intensity of weighted by industry shares of business sec- the information and cultural services in- 48 NUMBER 45, Fall 2023 Chart 7: The Impact of the Markup in the Information and Cultural Services. [...] (2015) used to correct contribution to the growing divergence in for measurement errors in input variables business sector labour productivity growth and to isolate the influence of productiv- and changes in relative prices between ity shocks in the estimation of TFP are Canada and the United States following the only free of bias when researchers observe dot-com recession as illustrated in Charts. [...] In this case, the change in growth would Overall, the counterfactual results pre- filter through to the rest of the Canadian sented in this article may be regarded as economy in proportion to the information confirming that market power in the infor- and cultural services industry’s share of mation and cultural services industry has gross output by industry and would have had a negative impact on. [...] For example, in that had prices for the information and the computer and electronic product man- cultural services industry in Canada fol- ufacturing industry, professional service, lowed the same trajectory as in the United and oil and gas sector, Canada had much States the information and cultural ser- slower labour productivity growth than the vices industry would have experienced a United Stat.
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