Three Policies to Improve Productivity Growth in Canada

Abstract

This paper makes the case that productivity is Canada’s economic destiny and that Canada’s dismal productivity performance, both from a historical and international perspective, therefore represents our biggest economic challenge. It then puts forward three specific policies to improve Canada’s productivity performance: foster the diffusion of best-practice technologies; remove the provincial sales tax on purchases of machinery and equipment; and promote interprovincial movement of workers by improving labour market information, removing professional barriers to labour mobility, and establishing a tax credit for interprovincial job search. It finds that the short-term costs of these policies would be greatly outweighed by the long-term benefits associated with their implementation.Productivity growth in Canada, Policy, Diffusion, Provincial sales tax, Interprovincial migration.