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This paper examines the level of labour productivity in Canada relative to that of the United States in 1999. In doing so, it addresses two main issues. The first is the comparability of the measures of gross domestic product & labour inputs that the statistical agency in each country produces. The second is how a price index can be constructed to reconcile estimates of Canadian & US gross domestic product per hour worked that are calculated in Canadian & US dollars respectively. After constructing such an index and taking into account alternative assumptions about Canada/US prices, the paper provides point estimates of Canada's relative labour productivity of the total economy in 1999. The paper recommends a confidence interval to be applied to the estimates and notes the sensitivity of the interval to assumptions made about import & export prices.

This paper explores an alternate experimental measure of multifactor productivity growth based on the production frontier, a method that benchmarks observed units (firms or industries) against an estimated best-practice production frontier. This estimated frontier specifies the maximum possible output that can be produced from different combinations of inputs, based on the observed input-output mixes of sampled industries or firms. Benchmarking each unit against such a frontier generates a relative measure of its efficiency compared to what is theoretically possible by following best practice. This measure is based on distance from the estimated production frontier.