Demand for labour and unemployment : Canada's Maritime Provinces

In Canada, as in most other industrial countries, concern is expressed over the existence of regional unemployment imbalances. If these imbalances were quickly alleviated, by action of labor and capital markets, there would be no regional problem. Unfortunately, this is not the case. Not only do regional unemployment differentials exist, but, more importantly, they tend to exist in spite of migration. This phenomenon suggests that, in the depressed region, there is some exogenous change, declining export demand, taking place concurrently with net out-migration. In addition, net out-migration itself reduces employment levels to some extent in the loser region. Changes in the demand for labor in a region are related to: changes in the export demand for its commodities which form the employment base; and changes in population size resulting from regional mobility. This relationship is essentially founded in a type of multiplier relation between the employment base of a region and its total employment. In this paper a model is developed from which the above theoretical relationship can be empirically investigated. Debate on policy measures for reducing regional unemployment, industrial location and mobility policies, have proceeded largely without knowledge of relative magnitudes. For a more objective approach we need estimates of regional multipliers. With this information we would be better equipped to judge the employment effects of out-migration and changes in export demand on depressed regions. The estimation technique used in this paper is cross-sectional multiple regression analysis. The counties of the Maritime Region serve as the population sample for the analysis. Data comes mainly from the Censuses of 1951 and 1961; both provide considerable information for such series as employment by industry and changes in population due to migration. It is concluded from the analysis carried out in this paper that emigration does indeed contain a de-stabilizing element for the loser region, in the form of income depression. We cannot expect out-migration of the unemployed to reduce unemployment on a one for one basis. Also, the regional employment multiplier may be larger in the case of declines in the employment base than for increases in it. The results suggest that mobility policy and industrial location policy may not reduce regional unemployment as quickly as we might suppose, a priori.Arts, Faculty ofVancouver School of EconomicsGraduat