The Industry Origins of Canada’s Weaker Labour Productivity Performance and the Role of Structural Adjustment in the 1990s and the 2000s /

The analysis makes use of a decomposition method that differs from many of the standard labour productivity decomposition approaches commonly found in the literature and allows the contributions of changes in the importance of individual industries to be calculated. [...] At the same time, the examination of the structural adjustment component allows a determination of the extent to which the overall slowdown in productivity growth came not from the performance of specific industries but from industrial restructuring. [...] The third term on the right-hand side in square brackets measures the inter-industry structural adjustment and is the additional term—it accounts for the corresponding change in all 5. Denison (1979, Chapter 5) is one of the few that have calculated the structural effect explicitly and expressed the need for a counterfactual. [...] The largest improvements between the two periods occurred in the industries that had the poorest performance in the 1990s (arts and entertainment, other private services and accommodation and food), which continued to perform poorly in the 2000s compared with the business sector as a whole. [...] This suggests that total structural adjustment for the manufacturing sector subtracted almost nothing from productivity growth in the business sector and reflects the fact that the manufacturing sector’s level of labour productivity in the 2000s was only moderately higher than the average for the business sector.