Canada-United States Labour Productivity Gap Across Firm Size Classes - ARCHIVED

Articles and reports: 15-206-X2014033

Description:

This paper examines and compares labour productivity in Canada and the United States for small and large firms over the period from 2002 to 2008. It quantifies the relative importance of small and large firms in Canada and the United States and measures the relative productivity levels of small versus large firms.

Small firms are relatively more important in the Canadian economy. Small firms are less productive than large firms in both countries. But the productivity disadvantage of small relative to large firms was higher in Canada.

The paper provides an estimate of the impact that these differences have on the gap in productivity levels between Canada and the United States. It first estimates the changes that would occur in Canadian aggregate labour productivity if the share of hours worked of large firms in Canada was increased to the U.S. level. It then quantifies the impact of increasing the relative productivity of small to large firms in Canada up to the relative productivity ratio of small firms to large firms that existed in the United States.

Together, decreasing the relative importance of small firms in the economy and increasing their relative productivity compared to large firms accounts for most of the gap in productivity levels between Canada and the United States in 2002. However, changes in the economy that occurred between 2002 and 2008 reduced the contribution of the small-firm sector to the gap in productivity levels.

Issue Number: 2014033
Author(s): Baldwin, John; Leung, Danny; Rispoli, Luke
FormatRelease dateMore information
HTMLJanuary 8, 2014
  • Correction: March 14, 2014

    Canada/U.S. comparisons in the original version of this paper were based on U.S. data derived from the EU KLEMS / EUROSTAT Website that were incorrectly labelled on that site as being measured at basic prices when they were really measured at market prices. Corrections have been made to harmonize the metric used in the numerators and denominator of the Canada/U.S. labour productivity ratios presented here. Comparisons of statistics that involve gross domestic product (GDP) are now standardized so that GDP in both countries is measured in basic prices.

PDFJanuary 8, 2014
  • Correction: March 14, 2014

    Canada/U.S. comparisons in the original version of this paper were based on U.S. data derived from the EU KLEMS / EUROSTAT Website that were incorrectly labelled on that site as being measured at basic prices when they were really measured at market prices. Corrections have been made to harmonize the metric used in the numerators and denominator of the Canada/U.S. labour productivity ratios presented here. Comparisons of statistics that involve gross domestic product (GDP) are now standardized so that GDP in both countries is measured in basic prices.