Regardless of its source, however, the possibility that some of the productivity improvement - and some of the job cuts - of recent years are permanent suggests that the weak labor market may, in part, be associated with an increase in the economy’s potential output.
For example, the reallocation of production resources across sectors, in response to changing economic conditions over the 1980-2000 period, was quite high in Canada compared with other major industrialized countries (except the United States) - indicating a high degree of economic flexibility. The IMF also compared rates of firm turnover, and of job creation and destruction, across countries.