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What numbers are you using. I'm looking at SEPH for fed/prov/local and getting 27/41/81 2011 over 1997.

At the municipal level, is another story the possibility that city mergers decrease inter-jurisdiction competition for taxpayers? With multiple jurisdictions, a government with large/expensive public service (at least relative to the services provided) risks losing taxpayers to nearby jurisdictions. Merge those jurisdictions, and you make it more expensive for taxpayers to vote with their feet (moving from the downtown Toronto to Forest Hill (then a separate municipality), in the 1920s, to avoid municipal income tax, not too painful. Moving from downtown Toronto to Richmond Hill, in the 2000s, to avoid property tax, much more painful).

It's not quite on point (and its been a while), but I seem to recall Caroline Hoxby did some work on the impact of inter-jurisdictional competition on education outcomes (which the suggestion being that with more juridictions school boards had to keep quality up - though I gather that that paper has been the subject of heated bun fight with some of her peers. Mmmm, bun fights.).

I expect we are seeing the net results of: economies/diseconomies of scale; differences in productivity growth rates over time in services vs manufacturing; and income and price elasticities of demand. And causation could go both ways. Hard to disentangle, without some neat natural experiments.

"In my latest trolling across the web,..."

I thought/hoped that was a typo. But Merriam Webster told me it's also correct for "trawling". ;-)

Hi Mark:
I like your numbers; they certainly would have made for a more dramatic post. I used CANSIM numbers, Series v52302855 to v52302864. I also did not include residential care facility employment in my numbers.
Bob: Thanks for the Hoxby reference.
Nick: Funny you should mention that. I used to think it was 'trawling' also but my kids keep using the term trolling - it seems to be a a reference to the internet they use.

In Livio's defence, "trolling" is the usual pronunciation in Ontario for a perfectly innocent real-world fishing technique.

Livio:
There's a good reason public sector employment has grown faster than population since 1997. In the late 1990s, overall public sector employment reached the lowest ratio it had been as a share of total employment (18.8%) or of population (11.3%) since at least 1976, when LFS figures are available from.

Since the late 1990s, public sector employment has increased as governments, hospitals, schools, municipalities and colleges and universities too (as I'm sure you are aware!) have tried to restore the services cut during the the 1990s -- and at the municipal level in Ontario there was of course a lot of downloading from the province. I think this growth is a response to demands for more and diverse public services. At the municipal level we now have not just garbage, but also recycling and composting. We also have more community services and recreational services than when I was younger, serving the needs of families where both parents work. When polled a majority of Canadians have invariably expressed a preference for increased public services over tax cuts.

Even now, following stimulus spending and slow growth in overall employment, the ratio of public sector to total employment is 20.6% (average in 2011) -- lower than the average since 1976 and still lower than it was in any year prior to 1996 in the LFS stats.

Even the Globe's libertarian columnist Neil Reynolds, in a rare ideological lapse, recently acknowledged the magnitude to which the size of government had shrunk in Canada.

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