The Labour Intensity Gap between the U.S. and Canada - Essay Example

Two of the most significant factors are its productivity and labour employment. Although the country’s Gross Domestic Product (GDP) is the basis of prosperity, there are various issues that contribute to its results. However, for countries like the United States and Canada, an expected zero prosperity gap since both countries are regarded as two of the most prosperous countries in the world. But research results found that there has been a huge prosperity gap between the US and Canada. In 2004, Canada has a 15 per cent prosperity gap when compared to the United States because Canadians invest to achieve a 15 per cent shortfall, according to a report from the Ontario Institute for Competitiveness & Prosperity and the Rotman School of Management.

(“More Investment”) The intensity gap – the difference in hours worked by workers in Ontario and its North American peer jurisdictions is the second most important factor after productivity in explaining Ontario’s prosperity gap. (“Institute”) Over the 1977-98 period, productivity growth in U.S. manufacturing surpassed that of Canadian manufacturing--according to data from the Bureau of Labor Statistics international comparisons program, U.S. manufacturing productivity grew by 3.0 percent per year over the period, while Canadian manufacturing productivity grew by 2.

0 percent per year. Of particular interest is the way this differential or gap has grown since the early 1990s. From 1992 to 1998, for example, productivity growth in U.S. manufacturing increased al a rate more than twice that of Canadian manufacturing productivity--4.1 percent per year for the United States versus 2.0 percent per year for Canada. (Sherwood, 2001) The gap in productivity performance between the U.S. and Canadian manufacturing sectors is illustrated in Chart 1. The two lines represent each countrys output per hour relative to its own performance in 1977.

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