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by John R. Baldwin and Michael Willox
This paper examines how much of the slowdown in productivity growth observed in Canada’s business sector between the 1990s (1990 to 1999) and the 2000s (2000 to 2014) was due to weaker productivity growth within industries and how much was due to structural adjustment. 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. The approach developed here reveals that the inter-period slowdown was attributable almost entirely to weaker productivity growth within industries and that structural adjustment had a slight mitigating effect on the slowdown. Lower productivity growth within three industries—manufacturing; finance, insurance and real estate; and mining, oil and gas—accounted for much of the moderation in business-sector labour productivity growth in the 2000s.
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