Despite improvement in the 2000s, a Fraser Institute study says the income gap has returned to that of the nineties
Canadians living in the Maritimes saw a narrowing gap between the region’s average income per person and that of other parts of Canada.
But in the past decade, that gap has widened again according to a new study from Fred McMahon, resident fellow at the Fraser Institute, using per person GDP data.
McMahon’s study, Catching Up and Falling Behind: The Five Economic Eras of Atlantic Canada, 1961– 2019, found that the income lag in the Maritimes reduced from $11,169 in 1997 to $7,907 by 2010.
However, from 2011-2019, the gap once again widened to around $11,000.
McMahon says that reduced government spending as a share of GDP reduced during the years of greater prosperity and increased again in the years that the income gap has widened again.
Additionally, significant Employment Insurance reforms coincided with the years where income per person closed the gap with the rest of Canada, but changes since have seen a rise in unemployment.
Private sector growth
Lower government spending and EI reforms left more room for private sector growth.
“Government policies matter, and Atlantic Canada’s history is rife with examples of when good policy choices led to economic growth and increased prosperity, and bad policy choices caused the reverse,” McMahon said. “Atlantic Canadians can enjoy the same levels of prosperity that other Canadians enjoy, but only if policymakers across the region understand the ties between government policy and economic growth.”
