Labor Markets: Two Solitudes (Quebec and Canada)

I have decided to dive into a long debate about Canadian economic intergration since the beggining of the 20th century. According to most of the litterature, Canada developped itself economically but the numerous provinces did not converge, especially with regards to labor markets. There are significant contributions to this debate. Foremost amongst them is the paper by Emery and Coe (2002) in the Canadian Journal of Economics and the integration of labor markets in Canada before 1950.

However, the paper by Coe and Emery does not possess any data regarding unemployment before 1950 and uses only real wage rates. Consequently, I have taken the time to collect some data on unemployment rates for the period from 1920 to 2000. Up to 1946, the data used is the month of june of every year for unemployment in trade unions (I also have monthly data for the 1920s) . It provides the following image. I admit that I fail to see any convergence between the two largest provinces and the country as a whole.

If we take a closer look and create a ratio of these data points as a 5-years moving average, we can see that for most of the 20th century, Quebec is unable to catch back on Ontario. Towards the 1990s, it does seem to close the gap with Ontario. However, it seems like Ontario is loosing ground relative to the rest of Canada. Is Quebec convergence the result of Ontario relative slow down?

I think that it is also worthwhile to point out that each time there is a recession, Quebec fares worse than Ontario except for the most recent financial crisis.


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