Product Market Competition, Skill Shortages and Productivity: Evidence from Canadian Manufacturing Firms

In this paper, we estimate the impacts of product market competition and skill shortages on the productivity level performance of Canadian manufacturing firms. We use firms’ perceptions of their competitive environment from the Statistics Canada 1999 Survey of Innovation to measure product market competition and skill shortages. We argue in the paper that such perceptions are important for productivity level performance. After controlling for other factors, we find that product market competition has a positive impact on the performance of medium-sized and large-sized firms, and that skill shortages have a negative impact on the performance of small-sized and medium-sized firms.