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The Progressive Economics Forum

Labour Market Regulation and Labour Market Performance

A release by the Fraser Institute – Measuring Labour Markets in Canada and the United States, 2012 Edition – registers as a spectacular own goal.

The Fraser Institute believes – and argues in this study – that strong unions, high minimum wages and high levels of public sector employment undermine labour market performance measured in terms of job growth and productivity.

Yet, if you read this report, you will find – Figure 1 – that the 10 Canadian provinces ranked in the top 21 out of a total of 60 states and provinces in terms of an overall index of labour market performance for the years 2007 to 2011. (This index weights equally total job growth, private sector job growth, average unemployment rates, duration of unemployment, and average labour productivity.)

Yet, Canadian provinces occupied the “bottom” 10 of 60 places in terms of unionization and union friendly labour laws, eight of the” bottom” 10 places in terms of the level of the minimum wage, and seven of the “bottom” 10 places in terms of the level of public sector employment.

The Fraser Institute fails to construct an overall index of labour market regulation and compare its rankings to its index of labour market performance. I strongly suspect that they fail to do so since there is no significant relationship between the two, despite the selective citing of various studies in the text.

I note that 12 of the bottom 20 jurisdictions on the index of labour market performance are right to work states.

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Comments

Comment from Toby Sanger
Time: August 30, 2012, 11:58 am

Great short post — pretty much all it deserves.

Not of course their first own-goal. The Fraser (and Heritage ) Institute’s indexes of market freedom have demonstrated strong negative correlations with economic performance among countries, as a number of studies have demonstrated.

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