Sectoral Contributions to Labour Productivity Growth in Canada: Does the Choice of Decomposition Formula Matter?

Using three decomposition formulas (TRAD, CSLS, and GEAD), this article estimates sectoral contributions to business sector labour productivity growth in Canada during the 2000-2010 period. Although at the aggregate economy level there was substantial agreement among the three formulas, contribution estimates varied widely at the sectoral level. In particular, there were significant differences in the estimated contributions of construction, manufacturing, and mining and oil and gas extraction. Ultimately, these differences reflect the fact that traditional decomposition formulas (TRAD and CSLS) and the GEAD formula measure different economic phenomena. Instead of seeing estimates constructed by the GEAD and traditional formulas as "competing" narratives, the article concludes it is more useful to see them as providing complementing stories about the role of different sectors in driving aggregate labour productivity growth.