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Was there any explanation or hypothesis to the reason for the stagnant Canadian productivity growth? Is it because of higher focus on less value-added services, less income growth vs. other countries, or less new businesses? Was there simply less new business opportunity?

Labor productivity and labor force participation rate is a unique function of the growth rate of real GDP per capita. Two papers are accepted by the Journal of Applied Economic Sciences (http://jaes.uv.ro ). Will be published in October, 2008, but are also available as working papers.
Canada provides the best example for the link.

The Driving Force of Labor Force Participation in Developed Countries

The evolution of labor force participation rate is modeled using a lagged linear function of real economic growth, as expressed by GDP per capita. For the U.S., our model predicts at a two-year horizon with RMSFE of 0.28% for the period between 1965 and 2007. Larger part of the deviation between predicted and measured LFP is explained by artificial dislocations in measured time series induced by major revisions to the CPS methodology in 1979 and 1989. Similar models have been developed for Japan, the UK, France, Italy, Canada, and Sweden.

Keywords: labor force participation, real GDP per capita, prediction

The driving force of labor productivity

Labor productivity in developed countries is analyzed and modeled. Modeling is based on our previous finding that the rate of labor force participation is a unique function of GDP per capita. Therefore, labor productivity is fully determined by the rate of economic growth, and thus, is a secondary economic variable. Initially, we assess a model for the U.S. and then test it using data for Japan, France, the UK, Italy, and Canada. Results obtained for these countries validate those for the U.S. The evolution of labor force productivity is predictable at least at an 11-year horizon.

Keywords: productivity, labor force, real GDP, prediction, modeling

JEL Classifications: J2, O4

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