The Industry Origins of Canada's Weaker Labour Productivity Performance and the Role of Structural Adjustment in the Post-2000 Period

This article examines how much of the slowdown in labour productivity growth observed in Canada's business sector after 2000 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 decomposition approaches commonly found in the literature and allows for the contributions of changes in the importance of individual industries to be calculated. The approach reveals that the post-2000 slowdown was attributable 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 all of the slowdown in business sector labour productivity growth in the 2000s.