Is monopsony power a potent candidate to explain Quebec’s divergence within Canada? Alongside Alex Arsenault Morin and Vadim Kufenko, I make this case in a new working paper.
Basically, we argue that the land tenure system created a series of localized monopsonies on the non-farm labor market. We argue that this depressed wages and labor demand (we have no measure of total employment in the non-farm sector). The abstract is below and the link is here (ungated):
We argue that the system of seigneurial tenure used in the province of Quebec until the mid-nineteenth century – a system which allowed significant market power in the establishment of plants, factories and mills, combined with restrictions on the mobility of the labor force within each seigneurial estate – is best understood as a system of regionalized monopsonies in the non-farm sector. Seigneurs had incentives to reduce their employment in those sectors to reduce wage rates. We use the fact that later, with the Constitutional Act of 1791, all new settled lands had to be settled under a different system (British land laws). This natural experiment allows us to test our hypothesis that seigneurial tenure was a monopsony, using data from the 1831 and 1851 Lower Canada censuses. We find strong evidence that this difference in tenure partially explains the gap in industrial development between Quebec and the neighboring colony of Ontario
A few months ago, I posted the first version of a paper that considered the issue of living standards in Lower Canada in 1831. It was co-authored with Vadim Kufenko and Remy Villeneuve. Since then, we have reworked the paper and integrated it with another paper. In this paper, we also ask the question of whether or not seigneurial tenure (the peculiar institution of Lower Canada) could have mattered. The abstract is below and the paper can be found here.
This paper uses the price and wage data contained in the 1831 census of Lower Canada to provide regional estimates of disparities in living standards within Quebec in 1831. Combining these data with price data for the colony as a whole, we compare living standards in Quebec with those of numerous American and Canadian cities at the same point in time. The results show that Quebec was overall poorer in comparison. However, there are wide variations within the colony—mostly along institutional lines. As a whole, Quebec was significantly poorer than the United States at the same time.
I have a new working paper out there that I am about to submit. It is co-written with my old-time partner in crime, Germain Belzile (HEC Montreal) and it concerns the electricity business in Quebec before nationalization. The abstract is below and the paper can be consulter here on SSRN or here on Academia:
Upon opening history books about the electrical industry in the Canadian province of Quebec prior to nationalization (which was realized in two steps between 1944 and 1962), one is often confronted with the claim that the industry was monopolistic and was gouging consumers especially when compared to the neighbouring province of Ontario. Even though it is hard to collect price data at the level of firms, it is possible to collect some overall—but often ignored—data about the industry to evaluate this claim. With the use of such data over time, we observe the opposite: electrical firms in Quebec increased production faster than elsewhere while prices fell constantly. Moreover, there is strong evidence that productivity growth was higher in Quebec than in Ontario and the Canadian average. The main reason for this divergence between facts and history books is most likely the choice of comparing Quebec’s private industry with Ontario’s nationalized industry.