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Downtown Halifax. After almost 30 years, the Atlantic Provinces saw a positive interprovincial migration in 2009 and again in 2010. (Getty Images)
Downtown Halifax. After almost 30 years, the Atlantic Provinces saw a positive interprovincial migration in 2009 and again in 2010. (Getty Images)

Economy Lab

Maritimes needs its workers to come back up 'the road' Add to ...

The 1970 film Goin' Down the Road tells the compelling story of two men from the Maritimes who move to Toronto in order to find a better life. It is still considered to be one of the best Canadian films of all time. It touched on a central theme of Canadian life for generations -- Atlantic Canadians migrating to central and western Canada to find work and more opportunity.

Until recently, this trend continued unabated. In fact, cheaper and more accessible air travel created a whole new class of migrant workers. There are thousands of mostly blue collar workers who are employed in the West but still live in Atlantic Canada.

In 1971, Newfoundland and Labrador was the youngest province in Canada (median age). In 2011, it is now the oldest province in Canada -- and the other Atlantic Provinces are not far behind.

Michael Haan, associate professor and Canada Research Chair in population and social policy at the University of New Brunswick, has done considerable research into migration trends from New Brunswick to the rest of Canada.

Prof. Haan recently developed a demographic profile of people born in New Brunswick who had moved away and were currently living elsewhere in Canada. He found these expatriate New Brunswickers were twice as likely to own a business, three times more likely to have a university education and four times more likely to earn more than $100,000 a year.

Most economists believe the mobility of labour is critical to a successful national economy over time. In theory this makes perfect sense. If one region of a country is struggling and another is booming, restricting the mobility of labour on either end will lead to inefficient labour markets and suboptimal national economic performance.

In a test tube economic model, this mobility should be temporary. The jurisdiction losing workers will adjust policies and refocus economic development efforts to strengthen its economic potential.

At the same time, the fast growing jurisdiction will start to over-heat and suffer from escalating costs and a more onerous regulatory environment as governments seek to manage fast growth. Companies will push back against tight labour markets, higher costs and burdensome regulation and seek out jurisdictions that are attractive for business investment and turn back to the very areas that were losing workers a few years before.

We see this cycle repeating itself every generation in the United States. In the 1990s, as the U.S. south began to attract the bulk of multinational investment, states in the northeast that had been overheating started to decline and had to make a substantial adjustment. The Governor of New York talked about reducing or eliminating more than 90 taxes and fees on business. It is hard to believe there were 90 different taxes and fees to begin with.

When the migration road runs only one way for generations -- when there isn’t this recalibration -- you end up with the long term systemic challenges currently facing the Maritime Provinces.

You end up with the effect discovered by Dr. Haan. A large percentage of the population with higher levels of education and entrepreneurial potential leave the region creating an almost structural impediment to the region becoming prosperous.

Economists in western Canada have called for even more aggressive policies to promote migration from Atlantic Canada to jobs in Alberta and Saskatchewan. I am not sure how much labour is left to poach.

In the past few years, we have started to see positive migration trends in the other direction -- at least in Atlantic Canada’s urban centres. After almost 30 years, the Atlantic Provinces saw a positive interprovincial migration in 2009 and again in 2010.

This could have been the result of the recession of 2007/2008. It will be interesting to see if the trend holds up as western Canada turns hot again.

In the short term, labour mobility is an important tool for a prosperous national economy. In the long term, it can lead to permanently weakened regional economies requiring billions of dollars in annual transfer payments from more prosperous regions.

We need to break down barriers to labour mobility across Canada but at the same time we need to foster policies that promote economic growth in all regions of the country.

Author's note: Visit my blog to see a chart on interprovincial migration from Atlantic Canada to the rest of Canada over the past 40 years.

David Campbell is an economic development consultant and columnist based in Moncton. He also authors a daily blog on economic issues in Atlantic Canada which can be found at www.davidwcampbell.com.

Economy Lab, winner of the 2011 Eppy Award for best business blog. Follow Economy Lab on twitter

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