--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-16/an-analysis-of-the-causes-of-weak-labour-productivity-growth-in-canada-since-2000/" title: "An Analysis of the Causes of Weak Labour Productivity Growth in Canada since 2000" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T06:54:03+00:00" date_modified: "2026-07-13T06:54:03+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Spring 2008" ipm_keyword: - "adjustment costs" - "Canada" - "goods sector" - "labour market" - "labour productivity" - "post-2000" - "productivity slowdown" - "structural change" - "United States" ipm_research_theme: - "Productivity trends and comparisons" ipm_country_focus: - "Canada" - "United States" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # An Analysis of the Causes of Weak Labour Productivity Growth in Canada since 2000 Canonical URL: https://csls.ca/ipm-archive/ipm-issue-16/an-analysis-of-the-causes-of-weak-labour-productivity-growth-in-canada-since-2000/ # An Analysis of the Causes of Weak Labour Productivity Growth in Canada since 2000 [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-16-2-Arsenault-Sharpe.pdf) Cite this article × Cite this article as: Arsenault, Jean-François, and Andrew Sharpe. 2008. “An Analysis of the Causes of Weak Labour Productivity Growth in Canada since 2000.” International Productivity Monitor, No. 16 (Spring 2008): 14–39. https://www.csls.ca/ipm-archive/ipm-issue-16/an-analysis-of-the-causes-of-weak-labour-productivity-growth-in-canada-since-2000/ ## Authors: - Jean-François Arsenault Centre for the Study of Living Standards (CSLS) - Andrew Sharpe Centre for the Study of Living Standards (CSLS) ## IPM Issue 16 Spring 2008 pp. 14–39 ## Related IPM articles [The Relationship between Efficiencies Defenses for Mergers and TFP Growth Robin Shaban Fall 2025 | IPM Issue 49 | pp. 82–102](https://csls.ca/ipm-archive/ipm-issue-49/the-relationship-between-efficiencies-defenses-for-mergers-and-tfp-growth/) [Labour Productivity as a Measure of Technological Change Ulrich Kohli Fall 2025 | IPM Issue 49 | pp. 64–81](https://csls.ca/ipm-archive/ipm-issue-49/labour-productivity-as-a-measure-of-technological-change/) [Appendix: Variable Definitions and Country/Sector Coverage for Regulatory Reform Analysis Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 1–18](https://csls.ca/ipm-archive/ipm-issue-49/appendix-variable-definitions-and-country-sector-coverage-for-regulatory-reform-analysis/) [The Potential Impact of Pro-competitive Regulatory Reforms on Productivity and Growth in Canada Gilbert Cette, Jimmy Lopez, Giuseppe Nicoletti, Océane Vernerey Fall 2025 | IPM Issue 49 | pp. 3–40](https://csls.ca/ipm-archive/ipm-issue-49/the-potential-impact-of-pro-competitive-regulatory-reforms-on-productivity-and-growth-in-canada/) [IPM Issue 49 Editors’ Overview Andrew Sharpe, Bart van Ark, Paul Schreyer Fall 2025 | IPM Issue 49 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-49/) [De-industrialization and the Great Productivity Slowdown: What Comes Next? Paul Fisher Spring 2025 | IPM Issue 48 | pp. 115–138](https://csls.ca/ipm-archive/ipm-issue-48/de-industrialization-and-the-great-productivity-slowdown-what-comes-next/) [The UK Productivity Slowdown: A Review of Timing, Magnitude, and Drivers Josh Martin Spring 2025 | IPM Issue 48 | pp. 1–34](https://csls.ca/ipm-archive/ipm-issue-48/the-uk-productivity-slowdown-a-review-of-timing-magnitude-and-drivers/) [How Does Industrial Policy Impact Output, Hours and Productivity? The Canadian Experience Tim Sargent Fall 2024 | IPM Issue 47 | pp. 39–53](https://csls.ca/ipm-archive/ipm-issue-47/how-does-industrial-policy-impact-output-hours-and-productivity-the-canadian-experience/) [IPM Issue 47 Editors’ Overview Andrew Sharpe, Bart van Ark Fall 2024 | IPM Issue 47 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-47/) [Accounting for the Decline of Canada’s Real GDP Per Capita since Mid-2022 Philip Smith Spring 2024 | IPM Issue 46 | pp. 83–100](https://csls.ca/ipm-archive/ipm-issue-46/accounting-for-the-decline-of-canadas-real-gdp-per-capita-since-mid-2022/) ## Abstract ## Résumé EN FR Copy link Email LinkedIn Since 2000, business sector labour productivity growth in Canada has averaged 0.95 per cent, 0.60 percentage points below the long-term trend established over the 1973-2000 period (1.55 per cent). In the United States productivity growth has continued to be robust beyond 2000, averaging 2.60 per cent per year. This article argues that Canada’s weak productivity growth since 2000 is temporary, and mostly associated with over-hiring and the adjustment costs of moving from a labour surplus to a labour shortage economy. The concentration of weak productivity growth since 2000 in the goods sector, the sector which shouldered the brunt of the structural adjustment, gives additional credence to this explanation. Moreover, most of the increased Canada-US productivity growth gap since 2000 relates to developments south of the 49th parallel. Given that the state of the factors driving productivity growth has not deteriorated in Canada relative to the United States in recent years, it is unlikely that long-term productivity growth in Canada and the United States have decoupled. Indeed, the current widening opens more room for convergence. Future productivity growth in Canada is likely to revert to its 1973-2000 trend. SINCE 2000, GROSS DOMESTIC product (GDP) Depuis 2000, la croissance de la productivité du travail dans le secteur des entreprises au Canada a été en moyenne de 0,95 %, soit 0,60 point de pourcentage en dessous de la tendance à long terme établie sur la période 1973-2000 (1,55 %). Aux États-Unis, la croissance de la productivité a continué d’être robuste après 2000, atteignant en moyenne 2,60 % par année. Cet article soutient que la faible croissance de la productivité au Canada depuis 2000 est temporaire et principalement associée à un sur-embauche et aux coûts d’ajustement du passage d’une économie en surplus de main-d’œuvre à une économie en pénurie de main-d’œuvre. La concentration de la faible croissance de la productivité depuis 2000 dans le secteur des biens, le secteur qui a supporté l’essentiel de l’ajustement structurel, renforce cette explication. De plus, la majeure partie de l’élargissement de l’écart de croissance de la productivité Canada-États-Unis depuis 2000 est liée aux développements au sud du 49e parallèle. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-16-2-Arsenault-Sharpe.pdf)