Transcript Social and Economic Trends

Presentation to the 2008 World Congress on National Accounts and
Economic Performance Measures for Nations
An Update on KLEMS data at
Statistics Canada
Wulong Gu
Micro Economic Analysis Division
Statistics Canada
May 13, 2008
1
Industry Productivity Database (KLEMS)

A new experimental industry productivity database
(KLEMS) was released in June 2007.

The database for the first time provides time series data for
output and inputs including capital (K), labour (L), energy
(E), materials (M) and purchased services (S) based on the
new North American Classification system back to 1961.
2
Access to Industry Productivity Database (KLEMS)

Available from CANSIM: Statistics Canada social economic statistics
database.
– Table 383-0021 provides a series for the aggregate business sector and
major sub-sectors, from 1961 to the most recent year.
– Table 383-0022 provides series at a detailed NAICS industry level, from
1961 to the most recent the input-output tables.
– Table 383-0023 provides series at a detailed SIC industry level, from 1961
to 1997.

Available at most universities (member of Data Liberation Initiative)
– KLEMS at the most detailed level of industry aggregation.

Available from free internet publication: The Canadian Productivity Accounts:
Data (Statistics Canada Catalogue no. 15-003-X)
3
Additional KLEMS data to be released soon

The data on hours worked and labour compensation by
types of workers and industries will be released this year.

The data on investment, capital stock and capital service by
asset and industries will be released, expected this year.
– The issue of confidentiality for asset-level investment
data need to be resolved.

The Canadian KLEMS data has been sent to EU KLEMS
and to be released soon.
4
Outline for the remainder of the talk

An overview of the KLEMS database at Statistics Canada

The findings from the KLEMS database at Statistics
Canada.
– Sources of aggregate productivity growth in Canada, and
– Canada-US. comparison of productivity growth.

The preliminary findings from the Canadian KLEMS data that
was sent to EU KLEMS.
5
The KLEMS database and MFP at Statistics Canada

Statistics Canada produces productivity statistics as
part of a regular production program.
– It is not something done as in some other countries, as an
occasional research exercise.

The production process for the Canadian
Productivity Accounts is embedded within the
System of National Accounts.
– The Canadian Productivity Accounts play an important
role as an integrator of data from different sources within
the agency.
6
Importance of the KLEMS database and MFP measures

MFP measures in the database are often used to assess the rate of
technological progress.

The database was developed to examine the sources of output growth:
the contributions of capital, labour and the residual MFP.

The database is used to examine the sources of labour productivity
growth: investment and capital deepening, education and labour
compositional changes, and the residual MFP and technical progress.

The industry database allows us to identify the industry origins of
economic and productivity growth in the aggregate business sector.
7
Output and intermediate input measures for the KLEMS database

Output is valued at basic prices, and intermediate inputs
are valued at purchaser prices.

We have produced three measures of MFP based on three
different output measures: gross output, sectoral output
and value added.

The data sources for output measures at the industry level
are the annual input/output tables.
8
Labour Input for the KLEMS database

The labour input takes into account the effect of
compositional changes of hours worked by education,
experience, and the class of workers.

Labour input = hours worked * labour composition
9
Labour composition

Various household surveys are used for estimating
labour composition:
– Census of Populations;
– Labour Force Survey (LFS);
– Survey of Labour and Income Dynamics
(SLID); and
– Survey of Consumer Finance (SCF).
10
Capital input for the KLEMS database

The capital input takes into account the effect of compositional
changes of different types of capital assets.

Estimates of aggregate capital services for the business sector
are constructed using the “bottom-up approach” involving
– estimation of capital stock;
– aggregation of capital stock of various asset types within
each industry to estimate industry capital services; and
– aggregation of capital services across industries to derive
capital services in the business sector.
11
User cost of capital services

The user cost of capital approach for estimating capital
services in Canada has the following features:
– Endogenous rate of return specification (vs. exogenous
rate of return)
– Takes into account a large number of tax parameters in
Canada
12

Findings from the KLEMS database at Statistics Canada
13
Substantial changes in the structure of capital

There has been a long-term shift towards M&E and away
from structures, land and inventories in the business sector.

In the M&E category, investment in information and
communications technologies (ICTs) have increased most
rapidly.
14
Substantial changes in the composition of labour

There have also been dramatic changes in the educational
characteristics of the labour force.
– The proportion of workers with only a high school
education has declined steadily, while the percentage
with postsecondary degrees has risen.
15
Sources of labour productivity growth

Over the period 1961-2006, annual labour productivity
growth was 2.0%.
– Capital deepening: 50% of the labour productivity
growth.
– Labour compositional changes: a quarter of labour
productivity growth in the business sector.
– MFP: the remaining quarter of labour productivity
growth.
16
The importance of ICT for labour productivity growth

During the 1960s and early 1970s, ICTs accounted for only
a small portion of the contribution that the growth in capital
services made to the growth in labour productivity.

However, during the 1990s and into the new millennium,
ICTs accounted for most of the total contribution of capital
to labour productivity growth.
17
Industry sources of aggregate productivity growth

The manufacturing sector was the most important
contributor to aggregate productivity growth.

A number of services sectors, such as wholesale and retail
trade industries, and information and communication
industries also experienced rapid productivity growth.
18
Canada-US comparisons of productivity growth
based on data from Statistics Canada and the BLS

Over 1961-2005, labour productivity in the two countries
grew at about the same rate.
– But Canadian growth exceeded that of the United States up
to the early 1980s.
– Since then U.S. labour productivity growth has exceeded
Canadian growth. The gap has widened particularly after
2000.
19
Canada-US comparisons of productivity growth
based on data from Statistics Canada and the BLS

The sources of labour productivity growth in the two
countries differ.
– Investment and skill upgrading are more important sources
in Canada.
– MFP growth (the residual often referred to as
technological progress) was larger in the United States.

The lower relative labour productivity growth in Canada in
recent years is mostly due to slower MFP growth. Investment
played a minor role.
20

The preliminary findings from the Canadian KLEMS data
that was sent to EU KLEMS
21
Differences in methodologies between EU and Canada KLEMS

Difference in capital input estimates
– Asset details that are used for calculating capital services differ between the two
databases. 11 asset in EU KLEMS and 30 assets in Canadian KLEMS.
– Land and inventories are not included in EU KLEMS, but included in Can
KLEMS.
– The depreciation rates differ in the two databases. Depreciation rates are higher
in the Canadian KLEMS database, especially for structures.

Differences in labour input estimates
– The number of workers types differ: 18 types of workers in EU KLEMS, 56
types of workers in Canadian KLEMS

Differences in industry coverage
– Total economy vs. business sector
22
The history of Canadian productivity growth
based on the Canadian data sent to EU KLEMS

The Canadian data sent to the EU KLEMS show a similar history of
labour and multifactor productivity growth for Canada as the data in the
Canadian KLEMS at Statistics Canada.
1961-04
1961-1980
1980 to 1996
1996 to 2004
Labour productivity
2.0
2.7
1.0
1.7
Real GDP
3.7
4.7
2.3
3.9
Hours worked
1.7
2.0
1.3
2.2
Multifactor productivity
0.5
1.0
-0.4
0.7
The Canadian market sector, EU KLEMS
The Canadian business sector, CANSIM 383-0021
Labour productivity
2.1
2.9
1.2
1.6
Real GDP
3.9
5.0
2.6
3.9
Hours worked
1.8
2.0
1.3
2.2
Multifactor productivity
0.4
0.7
-0.2
0.5
23
Canada-US comparisons of market-sector productivity growth,
based on data in EU KLEMS
U.S.
Canada
1981-2004
1981-2000
2000-2004
1981-2004
1981-2000
2000-2004
GDP growth
3.5
3.8
2.5
3
2.9
3.3
Contribution of labour input
0.7
1.1
-0.6
1.1
1.1
1.3
Contribution of capital input
1.6
1.7
1
1.7
1.7
1.4
Contribution of ICT capital
0.9
1
0.8
0.6
0.7
0.5
Contribution of non-ICT capital
0.6
0.7
0.3
1
1.1
0.9
TFP growth
1.2
1
2.1
0.1
0.3
0.2
Labour productivity growth
2.4
2.2
3.1
1.4
1.6
1.1
24
Canada-US comparisons of productivity growth
based on data in EU KLEMS

The Canadian and U.S. data in EU KLEMS show similar
relative productivity performance in the two countries as
the official data from the statistical agencies in the two
countries.
– labour productivity growth in the Canadian market
sector was lower than that in the U.S. after 1981, and
– much of the difference was due to slower TFP growth
in Canada
25
The industry sources of Canada-US productivity growth
differences, 1981-2004

Canada had slower TFP growth in 18 out of the 30
industries in the EU KLEMS for the period 1981 to 2004.
– The largest difference is in the electrical and optical
equipment manufacturing.

Canada had slower labour productivity growth in 18 out of
the 31 industries in the EU KLEMS for the period.

A lot more to be learned from EU KLEMS on how
Canadian productivity performance is compared to that of
the U.S. and EU countries.
26

A lot more will be learned from the EU KLEMS on how
Canadian productivity performance is compared to that of
the U.S. and EU countries.
27