In this report, we estimate the contribution of labour reallocation to productivity growth in the Canadian manufacturing sector. We find that most of productivity growth comes from within firm improvements, leaving a limited role for labour reallocation. Still, we also find that the importance of labour reallocation increase over time. This is both due to increasing net-entry and inter-firm effects. These effects are much more important post 2000 than in the 1990s. We also find that lost production from exiting firms is now most likely replaced by production from existing firms, while previously, it was more likely to be replaced by production from new firms.
Bérubé, Charles, Benoit Dostie and Lars Vilhuber. Estimation de la contribution de la réallocation de la main-d’œuvre à la croissance de la productivité au Canada, Centre for Productivity and Prosperity, HEC Montréal, September 2013. (Available in French only)