Employment and Political Regimes: Some Ontario Evidence

According to a recent Nanos poll conducted for the Globe and Mail, after health care, the economy/jobs is the top concern of Ontario voters this fall election.  Ontario voters may be interested on how employment growth has fared in their particular neck of the woods under various political regimes. 

I’ve calculated from Statistics Canada data the average annual growth rate in employment for Ontario as a whole and for each Ontario economic region for three time periods: the NDP regime for the period 1990 to 1995, the Conservative era from 1995 to 2003 and the Liberal epoch from 2003 to 2011.  Of course these figures do not take into account the length of term, the state of the business cycle (for example the NDP period from 1990 to 1995 was the shortest of the three periods and more dominated by recession) or control for particular regional conditions.  Yet, they do provide an average indicator of economic performance via employment growth.  Moreover, even with good economic conditions, it is possible to botch the economy with bad policy but mistakes are better tolerated in a robust economic environment.

For Ontario as a whole average employment growth was greatest during the period of Conservative rule from 1995 to 2003, which of course also coincided with a long and spectacular economic boom.  It was, not surprisingly, lowest during the recessionary period from 1990 to 1995 – a period of NDP governance.  As for the Liberal period, it saw employment growth greater than the NDP but lower than the Conservatives.  This period caught the tail end of the boom era as well as the Great Recession.

 

 

 

What is more interesting is the regional variation.  During the NDP era, though Ontario as a whole saw negative employment growth, some regions weathered the recession reasonably well – namely, Muskoka-Kawarthas, Kitchener-Waterloo-Barrie, London, and Northwestern Ontario.  However, vote-rich regions like Ottawa, the GTA, Hamilton Niagara and Windsor-Sarnia saw negative growth, which upon reflection may have been another factor during the election that saw the defeat of the Rae government.

During the Conservative era, a rising tide lifted all boats in terms of employment growth rates but growth was the greatest in the GTA, Kitchener-Waterloo-Barrie, Hamilton-Niagara, Ottawa and the Muskokas.  As for the Liberal period, growth is again the greatest in these regions but there was also negative employment growth in Windsor-Sarnia and the Northwest.

For the most part, whatever the regime, the Muskoka region, the GTA and Kitchener-Waterloo-Barrie has tended to do better than the provincial average when it comes to employment growth.  All the other regions have generally performed more poorly.  This may be more a reflection of the concentration of economic activity in central Ontario than any specific comment on the effect of political party in power on the economy.  I suppose it would be even more interesting to see how these regions actually voted but it may not be as important as you think.  For example, Northwestern Ontario did not elect Conservatives during the 1995-2003 period and elected mainly Liberals for the 2003 to 2011 period and yet performed much worse during the latter period.  I suppose political representation is ultimately no protection from exogenous economic shocks.

Comments

[Leo]

I think it's a bit disingenuous to attribute much of this to the party in power, or equate early 90s NDP or late 90s Conservatives to today's variants in capability or intent.

[Patrick]

Leo: Disingenuous? Did you even read the post? How is it lacking in candor or calculating to state conclude: "I suppose political representation is ultimately no protection from exogenous economic shocks."

[Neil]

It's not just a question of exogenous shocks. Intuitively, we can expect to see correlation between economic growth and political party in power because the state of the economy has an impact on how people vote. Given this possible causation (good economic conditions lead to more right-wing government), any correlation between party and economic growth is meaningless without a significantly more detailed study.

[Andrew F]

I think you'd need to back out general economic climate for this to be at all interesting. Maybe compare employment growth between Ontario and surrounding US border states (ie, peers).

[Livio Di Matteo]

Well, I'm intrigued. Why would an comparison of employment of Ontario regions according to political party in power be more interesting if we compared employment growth between Ontario and U.S. Border states? All of Ontario is highly integrated with the U.S economy (even the North) so I'm not sure what the diferential effect of the border would be? Also, would we not then need to control for American political parties in power during the same period? Any thoughts?

[hosertohoosier]

I don't think there is a causal link between partisanship and growth - if you look at the US, or Canada federally, the parties of the right perform worse (in terms of jobs and GDP growth, and roughly the same in terms of inflation).

@Neil: "good economic conditions lead to more right-wing government"
If right wing parties are most likely to take power at the peak of a boom, wouldn't that lower their average performance? Democrats have tended to win at the trough of recessions, meaning that the recovery tends to happen during their terms (although the current crisis hasn't have much a recovery yet), eg.
Obama: recovery from 2008 crisis
Clinton: recovery from 1990/1 recession
Carter: recovery from oil shock/73-75 recession
LBJ: no recession
JFK: recovery from 60/61 recession
Truman: no recession
FDR: recovery from great depression

Contrast that to Republicans, among whom only Reagan governed through a recovery (from a recession that started before he came into office), without leading through the recession itself. In other words, Republicans are more likely to take power around the peak of the economic cycle.

Bush: recession of 2001 hit as he was taking office, so he gets to downturn and recovery
Bush sr: no recession
Reagan: 79/80 recession preceded his taking office
Nixon/Ford: mild recession in 69/70 started after Nixon took office
Ike: recession of 53 started as Nixon entered office

[Andrew F]

Livio, it might give you a sense of relative performance. Absolute performance is probably dominated by other factors. You would also expect some lag in the effect, if there is one.

I'm not sure how you could isolate the effect of any given party. I just think that both politicians and the general public tend to overstate the influence of politicians on economic performance, particularly in the short term.

[Kelly Ash]

Interesting observation, i.e., "overstating the influence of politicians on economic performance" - here, in the U.S. we seem to have overextended ourselves, paid little attention to debt (2 or is it 3 wars we're putting on the National credit card ) little attention has been paid to health care, education, maintenance of roads, bridges, you name it -- all on the Republican watch. The Republicans were voted out -- The Democrats were then expected to clean up the mess which was way too great for a quick turnaround especially with the Republicans attacking at every turn and so now we are faced with the Republicans screaming for cuts in healthcare, education, etc. That seems like political parties at work to me.