Canada’s economic output per person is lower than it is in the United States, but the gap has narrowed since the turn of the millennium, according to a new study released by Statistics Canada.

The gap has narrowed as hours worked has increased, but weak productivity has prevented it from narrowing further.

Canada’s gross domestic product per capita stood at 84.3% of GDP per capita in the U.S. in 2005, an improvement from the low of 81.0% in 1998. This was also slightly above the average of 83.2% for the 12-year period between 1994 and 2005, it said.

The gap in GDP per capita between Canada and the U.S. is driven by two factors: the differences in labour productivity (which are measured as GDP per hour worked), and the differences in the number of hours worked per capita between the two countries.

The relative importance of these factors has been changing over time, Statscan says. Prior to 2000, both components were relatively constant. However, since 2000, relative productivity in Canada has declined, while relative hours worked per capita variable has gone up dramatically.

The study found that in the 1990s, over two-thirds of the gap in GDP per capita between the two countries was due to differences in hours worked per capita and about one-third due to differences in labour productivity. By 2005, on the contrary, differences in labour productivity between the two countries accounted for two-thirds of this gap.

It notes that, starting in 2001, Canada has experienced large gains in hours worked per capita relative to the US, driven by stronger job growth in Canada. These strong gains have narrowed the gap between Canada and the US in terms of the ratio of jobs to the working age population.

However, recent gains in the relative number of hours worked per capita in Canada have been partially offset by reductions in Canada’s relative labour productivity, it reports. In 2000, productivity in Canada was 94.1% of that in the United States. By 2005, this proportion had declined to 89.0%.