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Quebec’s surprising economic performance

The myth of a lagging Quebec doesn’t stand up to the facts

by Pierre Fortin

There’s a general impression that Quebec is dragging down the Canadian economy and is propped up by taxpayers in English Canada. This impression is based on a number of statistical measures: rate of growth of the Gross Domestic Product, GDP per capita and the unemployment rate. However, an analysis based on real income per capita1 – an estimate of what the average person can buy with an average income – presents a very different picture, especially when leisure time is also taken into account.

Real income per capita has been growing faster in Quebec

Over the past half century, Quebec’s real income per capita has been growing faster than Ontario’s (chart 1). In 1961 Quebec’s average real income was 80 per cent of Ontario’s; in 2007 it was 92 per cent. The process of convergence toward Ontario’s standard of living has been slow but persistent. There have been ups and downs, of course: for example, Quebec’s average real income grew relatively quickly during construction of the James Bay megaproject in 1976–81; and relatively slowly throughout the 1980s as the economy digested the economic and social excesses of the previous period.

The convergence process was driven by two main factors: changing demographics in the 1960s and 1970s, and a rising employment rate since 1980. First, after 1960, baby boomers entered adult life in large numbers, but had few children. The mathematical consequence of more adults at work and fewer children at home was a sharp increase in real income per capita. Although common to all parts of Canada, this passage from baby boom to baby bust was more pronounced in Quebec. From 1960 to 1980 Quebec, to a larger extent than Ontario, got richer by making fewer babies.

Second, after declining relative to Ontario’s beginning in the mid-1950s, the employment rate of Quebec’s working-age population started to increase in the early 1980s. Quebec’s employment rate was 85 per cent of Ontario’s in 1982 and 96 per cent in 2007 (chart 2). This explains why, as chart 1 shows, Quebec’s real income per capita continued to increase faster than Ontario’s long after the demographic transition from baby boom to baby bust had been completed around 1980. The crucial fact here is that, over the last 25 years, Quebec has improved its relative income performance by putting more people to work.

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About the Author

Pierre Fortin
Pierre Fortin is Professor of Economics at the Université du Québec à Montréal.




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