Multifactor Productivity Growth Estimation in Canada and the United States: Do Different Methodologies Matter?

• Main Authors: Jiang Li, Larry Shute, Jianmin Tang
• Format: Article
• Language: English
• Published: Centre for the Study of Living Standards 2013-09-01
• Series: International Productivity Monitor
• Subjects: multifactor productivity; canada; economy; united states
• Online Access: http://www.csls.ca/ipm/26/IPM-26-Spiro.pdf

National statistics offices in different countries, as well as individual researchers, make a range of different assumptions and use different approaches to estimating multifactor productivity (MFP) growth. As a result, MFP growth estimates can vary for methodological reasons across countries and for a particular country over a given time period. These methodological choices typically reflect a combination of data availability and the objectives of the study. In this article, we use “reasonably” comparable data for output, labour and capital in Canada and the United States to investigate the sensitivity of MFP growth estimates (by industry and for the business sector in the two countries) to three alternative methodological assumptions. We show that MFP growth estimates for both countries and the Canada-U.S. MFP growth gap are fairly robust to the alternative methodologies and assumptions considered.