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    Economic Insights

    Interprovincial Employment in Canada, 2002 to 2011

    Interprovincial Employment in Canada, 2002 to 2011

    by René Morissette and Hanqing Qiu, Social Analysis and Modelling Division

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    This article in the Economic Insights series presents an overview of interprovincial paid employment over the 2002-to-2011 period. Interprovincial workers are individuals who maintain a permanent residence in a given province or territory but work in another. The results are based on Statistics Canada’s Canadian Employer-Employee Dynamics Database and pertain to employees aged 18 or older who earned at least $1,000 in 2002 dollars.

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    Introduction

    In Canada, unemployment rates typically vary across regions. Over the past four decades, the Atlantic provinces have displayed higher rates than the central provinces of Quebec and Ontario or the Western provinces of Manitoba, Saskatchewan, Alberta, and British Columbia (Chart 1). Along with factors such as cross-regional differences in general economic performance and wage growth, these unemployment disparities provide employees with the incentives to migrate or to become interprovincial employees, that is, to accept jobs in other provinces while maintaining residence in their home province.

    Chart 1 Unemployment rate by region, 1976 to 2014

    Description for chart 1

    While several Canadian studies have analyzed the magnitude and correlates of interprovincial migration in the past,Note 1 far fewer studies have examined interprovincial paid employment. Recent research has partly filled this gap,Note 2 but many questions remain unanswered.

    One issue is the degree to which interprovincial employment represents a significant source of employment income for the home provinces of interprovincial employees. Interprovincial paid employment might be expected to be relatively more important in small sending provinces (for instance, Prince Edward Island and Newfoundland and Labrador) than in larger ones. The degree to which sending provinces’ aggregate employment income comes from interprovincial employment may also vary with the business cycle and world commodity prices.Note 3 Indeed, as labour market opportunities declined and oil prices fell after the onset of the 2008/2009 global economic recession, interprovincial employment may have become a less important source of income than it had been previously.

    A second issue is whether interprovincial employees derive their earnings mainly from interprovincial employment or use it as a secondary source of income. On average, what percentage of interprovincial employees’ earnings comes from interprovincial employment? How does this vary by sex and age group? More generally, how does the likelihood of being an interprovincial employee vary across these dimensions? This article answers these questions using data from Statistics Canada’s Canadian Employer-Employee Dynamics Database (CEEDD).

    Small provinces have a greater percentage of their workforce involved in interprovincial employment than larger ones

    From 2002 to 2004, about 340,000 individuals aged 18 or older were interprovincial employees, accounting for 2.7% of the paid workforce (Chart 2). With economic expansion and rising world oil prices in subsequent years, interprovincial employment grew almost steadily, reaching a peak of roughly 445,000 in 2008.Note 4 As the Canadian economy entered a recession and oil prices dropped, the number of interprovincial employees fell to 394,000 in 2009. The subsequent economic recovery and rebound in commodity prices brought the total to about 420,000 (or 3% of the paid workforce) in 2011.Note 5, Note 6

    Chart 2 Oil prices and number of interprovincial employees in Canada, 2002 to 2011

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    Small provinces had a larger percentage of their paid workforce involved in interprovincial employment than did larger ones. Throughout most of the 2002-to-2011 period, interprovincial employees who lived in Newfoundland and Labrador or Yukon represented at least 10% of the paid workforce of these jurisdictions.Note 7 The corresponding percentages generally varied between 5% and 10% for Prince Edward Island, Nova Scotia, New Brunswick, Saskatchewan, and the Northwest Territories (Table 1). By contrast, interprovincial employees residing in Ontario represented, at most, 1.7% of the paid workforce of that province. About 3% of Quebec’s employees were employed in another province or territory, a percentage that drops by more than half when Outaouais residents―many of whom work in Ottawa for the federal government―are excluded (Chart 3). Interprovincial employees from Manitoba, Alberta or British Columbia represented roughly 3% of the paid workforces of these provinces over the study period.

    Chart 3 Interprovincial employees as a percentage of paid employment in province of residence, 2011

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    Interprovincial employment accounts for a substantial percentage of aggregate wages and salaries of small provinces

    Because small provinces have proportionately more of their residents involved in interprovincial employment than do larger ones, they draw a greater percentage of their aggregate wages and salaries from interprovincial work. For example, 8.5% of the total wages and salaries earned in 2011 by all employees residing in Newfoundland and Labrador came from interprovincial employment (Table 2). This was more than twice as high as that for the territories or the four largest provinces—Quebec, Ontario, Alberta, and British Columbia. The corresponding percentages for Prince Edward Island, Nova Scotia and New Brunswick were 6.2%, 4.5%, and 4.6%, respectively.

    For Newfoundland and Labrador, Saskatchewan, and British Columbia, more than half of the interprovincial employment income received in 2011 came from Alberta (Table 3). Wages and salaries earned in Alberta also accounted for 31% to 45% of interprovincial employment income received that year by Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, and the Northwest Territories. Quebec drew 92% of its interprovincial employment income from Ontario, while Ontario obtained more than half of its interprovincial employment income from Quebec, partly owing to Outaouais residents working in Ottawa and Ottawa residents working in Gatineau for the federal government.Note 8 Almost half of Yukon’s interprovincial earnings were from British Columbia. The Northwest Territories, Ontario, and Quebec were the three largest sources of interprovincial earnings for Nunavut residents.

    Earnings from interprovincial employment also represent a major source of interprovincial employees’ total employment income. From 2002 to 2011, interprovincial employees from Quebec or Newfoundland and Labrador drew, on average, four-fifths of their annual wages and salaries from work done outside their province (Table 4). For all provinces except Alberta, an average of at least 60% of interprovincial employees’ earnings came from interprovincial employment. At the other end of the spectrum, interprovincial employees from the Northwest Territories or Nunavut obtained no more than half of their employment income from interprovincial work. Thus, for the majority of interprovincial employees, interprovincial employment was their main source of employment income (Chart 4).

    Chart 4 Percentage of interprovincial employees receiving 50% or more of wages and salaries from interprovincial employment, 2011

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    Differences by age and sex

    The incidence of interprovincial employment varies by sex and age. Men from all provinces and territories except Nunavut are more likely than women to be interprovincial employees (Chart 5).Note 9 During the 2002-to-2011 period, the incidence of interprovincial employment among males in Newfoundland and Labrador averaged 17.0%, three times the rate (5.5%) among women (Table 5). For Prince Edward Island, Nova Scotia, New Brunswick, Manitoba, and Saskatchewan, the rate of interprovincial employment among men was roughly twice that among women.

    Interprovincial employment is also most prevalent among younger employees. For all provinces and territories except Nunavut, women aged 18 to 24 were more likely to be interprovincial employees than were women aged 25 or older. Similarly, for all provinces and territories except Quebec and Yukon, men aged 18 to 24 were more likely than older men to be involved in interprovincial employment.

    The share of earnings that interprovincial employees obtained from interprovincial employment also varies by age and sex. Men typically derive a larger share of their annual wages and salaries from interprovincial employment than do women (Table 6). For instance, in 2011, 72% to 84% of the earnings of male interprovincial employees from the Atlantic provinces came from interprovincial employment, figures that exceed those of their female counterparts by about 12 percentage points. For all provinces and most territories, interprovincial employees aged 18 to 24 generally drew a smaller share of their total annual wages and salaries from interprovincial employment than did older employees. Hence, while young employees were involved in interprovincial employment more frequently than older employees, they relied on interprovincial employment as an income source to a lesser extent.

    Chart 5 Interprovincial employees as a percentage of paid employment in province or territory of residence, by sex, 2002-to-2011 average

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    Interprovincial employees in receiving provinces

    Thus far, interprovincial employment has been discussed from the perspective of the province or territory of residence (i.e. in terms of ‘sending’ provinces). It is also worthwhile considering it from the perspective of the province or territory of employment (or ‘receiving’ provinces).

    In absolute terms, 436,500 interprovincial employees worked in ‘receiving’ provinces or territories in 2011. Some of these individuals worked interprovincially in two or more provinces and hence the number of interprovincial employees in ‘receiving’ provinces exceeded the number from ‘sending’ provinces noted above. Ontario received the largest number of interprovincial employees in 2011 (Table 7) owing to the size of the provincial economy and employment flows within the Outaouais region. In Alberta, the number of interprovincial employees reached 132,500 in 2008, and after declining to about 100,000 in 2009 and 2010 rebounded to almost 111,000 in 2011.

    Throughout most of the 2002-to-2011 period, interprovincial employees working in Quebec represented about 1.5% of the paid workforce of that province. Interprovincial employees working in Newfoundland and Labrador, Ontario, Manitoba and British Columbia represented from 2.5% to 3.0% of the paid workforce of these provinces (Table 8).  The corresponding percentages for Saskatchewan and Alberta were about 6.5% in 2011, up from 4% to 5% in the early 2000s. Interprovincial employees working in Yukon, Nunavut, or the Northwest Territories represented at least one-fifth of the paid workforce of these territories in 2011.

    Interprovincial employees received approximately $13.7 billion in wages and salaries (expressed in 2002 dollars) in 2011 (Table 9). Of all receiving provinces, Saskatchewan registered the largest share of employment income paid to interprovincial employees in 2011, at 4.5%, followed by Alberta, at 3.7% (Chart 6 and Table 10). In the territories, the share of employment income paid to interprovincial employees that year was substantially larger and varied between 9.9% and 22.6%.

    Chart 6 Percentage of provincial T4 earnings paid to interprovincial employees, selected provinces of employment, 2002 to 2011

    Description for chart 6

    Summary

    This article assessed the relative importance of interprovincial paid employment from the perspective of sending and receiving provinces of interprovincial employees. After a steady rise from 2002 to 2008, the number of interprovincial employees fell in 2009, but increased thereafter. By 2011, interprovincial employees accounted for 3% of employees in Canada, and 9% to 11% of the paid workforce residing in Newfoundland and Labrador, Yukon, and Nunavut.

    In recent years, wages and salaries earned in other provinces made up a substantial percentage of aggregate earnings of residents of Saskatchewan, Yukon and the Atlantic provinces, especially Newfoundland and Labrador. Wages and salaries earned in other provinces were also the main source of employment income for the majority of interprovincial employees, indicating that interprovincial employment is, at least temporarily, a key determinant of the living standards of a subset of the workforce.

    Men were more likely than women to be interprovincial employees, and male interprovincial employees received a larger share of their total earnings from interprovincial employment than women did. For both sexes, employees younger than 25 were more likely to be interprovincial employees than were those aged 25 or older, but obtained a smaller share of their earnings from interprovincial employment.

    Of all provinces receiving interprovincial employees, Saskatchewan had the largest share of employment income paid to interprovincial employees in 2011 (4.5%). Using this metric, interprovincial employment played an even larger role in the territories.

    The data in this article are cross-sectional, and do not indicate whether spells of interprovincial employment are of short or long duration. As well, the series ends in 2011 and does not capture the impact of changing economic conditions since 2011, including the recent sharp drop in world oil prices (since the mid-2014) on the number of interprovincial employees. Investigating these issues as more recent data become available is a task for future analyses.

    References

    Day, K., and S.L. Winer. 2012. Interregional Migration and Public Policy in Canada. McGill-Queen’s University Press.

    Laporte, C., and Y. Lu. 2013. Inter-provincial Employees in Canada. Economic Insights, no. 29. Statistics Canada Catalogue no. 11-626-X. Ottawa: Statistics Canada.

    Laporte, C., Y. Lu, and G. Schellenberg. 2013. Inter-provincial Employees in Alberta. Analytical Studies Branch Research Paper Series, no. 350. Statistics Canada Catalogue no. 11F0019M. Ottawa: Statistics Canada.

    Tables

    Notes

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