Transcript Canada

The Comparative Level of GDP per
Capita in Canada and the United
States: A Decomposition into
Labour Productivity and Work
Intensity Differences
By Jean-Pierre Maynard
Canadian Productivity Accounts
Micro-economic Analysis Division
Statistics Canada
OECD Seminar, Bern, October 2006
1
Context


Mandated in the fall of 2003 to attempt a comparison
of productivity levels between Canada and the
United States
Published two studies in January 2005:
– Baldwin & al, A comparison of Canada-US Productivity
Levels : An exploration of measurement issues
– Baldwin, Maynard et Wong (BMW), The output gap
between Canada and the United States: the role of
productivity (1994-2002)



Canada and the United States are neighbours
The two economies are highly integrated
About 80% of Canadian external trade are with the
United States.
2
Objective of this presentation

Presenting the results of a third study:
– With emphasis on the comparability of labour
measures between the two countries
– Updating the level comparison to 2005
The selection of labour sources matter :
 Sometimes the best practice to compare levels
between two countries consists in using a
combination of labour data from different surveys
 For level comparisons, we should care about the
comparability of the concept, the coverage and the
accuracy or quality of the labour estimates used.
3
Three different measures : gap in favour of the United
States (%) - 2000
Work Intensity
LP
GDP /
Pop
=
Y/H
M1 – BMW
Study
-20
-7
M2 – LFS /
CPS
-20
M3 – Official Productivity
Accounts
-20
H/ Pop
H/E
E / Pat
Pat /
Pop
-13
-6
-10
3
-11
-9
-8
-5
4
-14
-6
1
-10
3
4
Focus is on the relative labour market
performance

Source of these differences:
– Average Hours worked
– Employment
– Population

Methodology used for BMW :

Σ Σ(Jin x Hin) = Vhin
–
–
–
–
J = Number of jobs
H = Average hours worked per job
Vh = Volume of hours worked
Where i= industry and n=class of worker
5
Similar surveys in both countries…
Canada
 Household surveys :
Labour Force
Survey (EPA)
 Establishment
survey (SEPH)
 Other surveys and
administrative data

United States
 Household surveys:
Current Population
Survey (CPS)
 Establishment
survey : Current
Employment
Statistics (CES)
 Other surveys and
administrative data

6
…but different measurement challenges
 Canada
and United States dispose of
very similar surveys to measure their
population and labour market.
 However, the statistical agency/ies of
each country face different challenges
– Geography (more borders, weather,
migration…)
– Different labour regulations
7
Impact on level comparisons when labour and population estimates
are taken from the LFS for Canada and the CPS for the U.S. 2000
M
Item
Y/H
H / POP
H/E
E / PAT
PAT / Pop
1
Canada
33.0
864.6
1766
60.6%
80.8%
1
United States
38.1
980.3
1871
66.70%
79,0%
1
Diff (Can-US
(%))
-7
-13
-6
-10
3
2
Canada
32.5
877.4
1824
61.3%
78.5%
2
United States
36.2
959.1
1979
64.4%
75.3%
2
Diff (Can-US
(%))
-11
-9
-8
-5
4
8
Figure 1 - An Illustration of the Difference between the
Concepts of Jobs and Persons, Canada
18,000
99.0
Sources: Jobs (CPA); Persons (LFS)
16,000
98.5
98.0
12,000
97.5
10,000
97.0
8,000
96.5
6,000
Jobs (Left Scale)
Persons (Left Scale)
Persons over Jobs in Percent (Right Scale)
4,000
2,000
Percent
Thousands
14,000
96.0
95.5
-
95.0
1994
1996
1998
2000
2002
2004
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Figure 2 - An Illustration of the Difference between the
Concepts of Jobs and Persons, United States
Thousands
140,000
Sources: Jobs (CES); Persons
(CPS)
93.0
92.5
120,000
92.0
100,000
91.5
80,000
91.0
60,000
90.5
40,000
90.0
Jobs (Left Scale)
Persons (Left Scale)
Persons over Jobs in Percent (Right Scale)
20,000
Percent
160,000
89.5
-
89.0
1994
1996
1998
2000
2002
2004
10
From persons employed (LFS / CPS) to the number of
jobs used in productivity accounts
Canada
USA
Canada as a
% of the USA
15 310
136 485
11.2%
+
Multiple job holders LFS /
CPS
756
7 691
9.8%
-
Unpaid absentees
674
2 076
32.5%
+
Military personnel
82
1 464
5.6%
+
Other adjustments for
coverage
87
2 386
3.6%
=
Number of SNA jobs (2)
15 559
145 950
10.7%
2%
7%
-5%
In thousands
Persons employed LFS /
CPS (1)
Percentage change (2 / 1)
Note : Employees includes incorporated self employed (SNA concept)
Self-employed includes unpaid family related workers (SNA concept)
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26.0
Resident Population 16+ (Census)
Civilian Population 16+ (LFS)
Ratio of LFS to Census
Millions
25.0
100.0
99.5
99.0
98.5
24.0
98.0
23.0
97.5
22.0
Percent
27.0
Accuracy of Canadian Population Estimates of the Civilian
Population Using the LFS Compared with the Actual Resident
Population
97.0
21.0
96.5
20.0
96.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
12
230.0
Millions
225.0
100.0
Resident Population 16+ (Census) (Left Scale)
Civilian Population 16+ (CPS) (Left Scale)
Ratio CPS to Census (Right Scale)
99.5
220.0
99.0
215.0
98.5
210.0
98.0
205.0
200.0
97.5
195.0
97.0
Percent
235.0
Accuracy of the U.S. Civilian Population Estimates from
the CPS compared to Resident population
190.0
96.5
185.0
180.0
96.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
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Consequences



The CPS measure of employment and working
age population would be underestimated for
part of the period
The characteristics of the population
underestimated is different than the overall
population
– Highly hispanophone, many unauthorized
migrants and temporary migrants.
Because of this underestimation, it can
potentially bias downward the employment to
population ratio.
14
Employment-population ratio : Canada-U.S. (when comparing
household surveys)
68,0%
66,0%
64,0%
62,0%
60,0%
58,0%
56,0%
54,0%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
LFS 16+
CPS 16+
LFS 15+
15
68.0%
Employment / population 15+ based on
Canadian Productivity Accounts estimates
66.0%
64.0%
USA
Canada
62.0%
60.0%
58.0%
56.0%
54.0%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
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Impact on level comparisons when hours worked from
the BLS productivity growth are used for the U.S. - 2000
M
Item
Y/H
H / POP
H/E
E / PAT
PAT / Pop
1
Canada
33.0
864.6
1766
60.6%
80.8%
1
United States
38.1
980.3
1871
66.70%
79,0%
1
Diff (Can-US
(%))
-7
-13
-6
-10
3
33.0
864.6
1766
60.6%
80.8%
3 (1) Canada
3
United States
38.1
913.1
1743
66.7%
78.6%
3
Diff (Can-US
(%))
-14
-6
1
-10
3
17
Adjusted vs Unadjusted Hours Worked Per
Person
2000.0
1950.0
Canada-Unadjusted
Canada-Adjusted
1900.0
U.S.-Unadjusted
U.S.-Adjusted
1850.0
1800.0
1750.0
Note: Adjusted for holidays and other specific events
1700.0
1994
1995
1996
1997
1998
1999
2000
2001
2002
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Comparing apples and oranges

What do we get for Canada if we use a similar
methodology than the US productivity program?
Hours per job, 2003
U.S.
Canada
Difference
Adjusted CPS-LFS
(BMW)
1,844.4
1,733.1
111 hours
BLS-SEPH
1,714.8
1,607.8
107 hours
130
125
Difference
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More comparable and better data



Many studies comparing Time Use Survey data
collected through time diary seem to confirm that
household surveys like the Labour Force Survey
produce reliable and comparable estimates between
countries. (UK, Canada, USA, Finland)
Some of these studies indicates as well that deriving
hours worked from hours paid underestimate the
hours worked. (UK study)
Our adjustment to CPS hours data reduce the annual
estimate by 4,7%. An ATUS-CPS study mention that
the CPS weekly data on actual hours overestimate
the annual hours worked by 5%. [Frazis and Stewart,
MLR, Dec 2004]
20
U.S . =100
Canadian GDP per capita relative to the United States - 1994 to
2005
100
GDP per capita
Labour productivity
Hours worked per capita
98
96
94
92
90
88
86
84
82
80
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
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Concluding remarks



What is the level of GDP per capita in Canada? How does
it compare to that of the U.S.? To what extent labour
productivity or work intensity contributes to it?
Answering these questions involves an empirical exercise
that seems simple since it depends only on a small
number of variables – GDP, population, employment and
hours that have been published on a regular basis since
World War II by most statistical agencies.
But in reality, making international comparisons even
between countries as similar as Canada and the United
States is not simple. Statistical agencies produce
different variants of these primary indicators for different
purposes and analysts that focuses on international
comparisons should be very careful about the
international comparability of these indicators.
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