Explanations of the Decline in Manufacturing Employment in Canada

Evan Capeluck

No 2015-17, CSLS Research Reports from Centre for the Study of Living Standards

Abstract: The objective of this report is to examine the reasons for the decline in manufacturing’s employment share in Canada, with particular attention paid to the roles of labour productivity growth, demand-side factors, and outsourcing. The results of the report suggest that above average labour productivity growth explains most of the decline in the manufacturing employment share before 2000, while below-average real output growth explains most of the decline after 2000. The slowdown in real output growth after 2000 reflects the sector’s poor export performance which is related to many factors, including: a loss in cost competitiveness linked to an appreciation of the Canadian dollar; increased competition in the U.S. import market; and a slowdown in domestic demand growth in the United States. However, the story becomes more complicated when manufacturing employment is broken down into its various components. In particular, the evolution of manufacturing employment was, in different periods, largely driven by the fortunes of specific industries.

Keywords: Manufacturing; Employment; Productivity; Canada; Demand Growth; Competition (search for similar items in EconPapers)
JEL-codes: E24 L60 M55 N22 N32 N62 (search for similar items in EconPapers)
Date: 2015-10
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (3)

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