Category Productivity
Labour terms of trade and real wages
Several commenters on the previous post on the apparent disconnect between productivity and wages in the US pointed out that the choice of the deflator used to calculate real compensation might be a partial explanation. The standard theory of the firm expresses the real wage in terms of the price of output – not the […]
Why are wages tracking productivity in Canada, but not the US?
A well-known curiousity of this business cycle is that US wages are stagnant, notwithstanding quite impressive improvements in worker productivity: But in Canada, real wages are tracking productivity fairly closely: The Canadian counter-example provides a useful check for possible explanations for the US ‘disconnect’. For example, consider the hypothesis that US real wages are being […]
Factor shares: Cobb-Douglas vs Stolper-Samuelson
Labour’s share of income in the US is at the low end of its usual range of variation: The long-run stability of this ratio plays an important role in macroeconomic modelling, namely the widespread use of the Cobb-Douglas functional form for production functions. Over the past 25 years, the ratio of (exports + imports)/GDP has […]
Surprise! Foreign ownership is a good thing
Or at least, not as bad as we once feared. Foreign ownership has been a hot-button issue in Canada since, well, forever. In itself, foreign investment is a Good Thing of course, since it increases the demand for Canadian labour. But it is possible to imagine having too much of a good thing: foreign firms […]
Productivity: The demographic tipping-point
Real, per-capita GDP growth has averaged about 1.7% in Canada over the past 30 years – where has it come from? A less-than-exhaustive but more-than-cursory examination of the data suggests the following breakdown: Source Contribution Technical progress: 0.9% Capital deepening: 0.5% Decrease in hours worked per week: -0.2% Increase in employment rate: 0.25% Increase in […]
Productivity: Curiouser and curiouser
New Economist points us to a recent Bank of International Settlements study on productivity in OECD countries. The good news: Measures of productivity growth rates in Canada during 1995-2003 were about 0.5% higher than in 1986-1995. The disquieting comparison: The US improved its productivity growth rates by at least 1%. The puzzle: Notwithstanding the higher […]
Another view of the shift from manufacturing
Mark Thoma of Economist’s View is unconvinced by the optimistic tone of The Economist’s article on the shift from manufacturing in rich countries. As he notes in his comments page, he’s aware of the gains from trade, but he’s also concerned with the welfare of those who lose. That’s a sentiment I share. Mark’s quote […]
The Great Canadian Productivity Puzzle
Anyone who is interested in studying the Canadian economy invariably ends up spending a great deal of time poring over productivity numbers. The reason is simple: they stink. And no-one seems to know what’s causing the smell. Over the period 1984-2002 (the data are from the OECD, and that’s the longest available), Canada’s GDP per […]
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