Inter-regional Mobility and Government Policy Lars Osberg Economics Department Dalhousie University Sept. 18, 2006

Context: Net migration – small numbers !!

2005 inter-provincial migration: gross = 279,225 (0.87% pop.) net = 23,209 (0.07% pop.)

Highly integrated micro-markets  Gross flows <= matching across provinces within micro-markets  E.g. Coe & Emery (2006) 8 building trades & adjustments to shocks in 20 Canadian cities “rapid speeds of labour market adjustment”

What is the objective of “Government Policy on Inter-Regional Mobility”?  Maximize growth rate of Canada’s GDP? Encourage mobility whenever, wherever ?  Maintain & enhance Canada’s communities? Mobility =  “Jobs to people” or “People to Jobs” ??  Maximize Well-Being of Canadian citizens ? U i =u($ income, Leisure, Community attributes)

Suppose “Mobility Policy” equalized unemployment rates by net mobility……… Labour ForceUnemployed. if u rate = 6.8%* Emigration Nfld PEI NS NB PQ * 2005 Annual LFS Averages – total provincial employment held constant Source: Cansim

Federal policy & Inter-regional mobility: - Ambiguous objectives & limited tools  “Optimal mobility” is the objective Net: “Jobs to people” + “People to jobs” Gross: Facilitate matching  Some policies are working well Co-ordination of Regulation  Mutual recognition of credentials E.g. “Red Seal” certificates for building trades, AIT Public Sector Incentives  Equalization “to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation” Minimize tax competition & fiscally induced mobility.

The Policy Tool that isn’t: (Un)Employment Insurance & Mobility  UI/EI – long a focus of discussion No consistent evidence of significant impact of UI/EI on inter-provincial mobility – BUT anecdotes rule  Has poisoned discourse on regional differences EI - now clearly inadequate as social safety net  reached only 22% of Toronto unemployed in 2004  Little recognition of intra-provincial differences in EI incentives or employment or incomes  Rural-urban mobility within provinces dominates population trends

Rural-urban mobility dominates - despite large EI differentials EI Regions of Halifax, Eastern and Western Regions: Unemployment Rate & Benefit Table (for the period of September 10, 2006 to October 07, 2006) EI Unemployment Rate & Benefit Table (Sept. 10 to Oct. 7, 2006) unemp rate EI entrance EI duration benefits min hoursminmax Western Eastern Halifax

Future issues?  Airline deregulation & inter-provincial commuting ? Anecdotes abound re: Alberta – Cape Breton / Nfld bi- weekly flows  Numbers unknown but could be significant % of net flows  Reasonable adaptation to labour demand peaking  “Comparable public services at comparable levels of taxation” ? Social Assistance easily measured  large differences & declining real $ trend Health care delivery & Education  Ambiguous evidence – but emerging problem