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The Role of Productivity in Long-Term Economic and Fiscal Projections for the Canadian Provinces and Territories, 2014-2038

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  • Don Drummond
  • Evan Capeluck

Abstract

This article presents long-term projections for labour productivity and labour supply growth for the provinces and the territories for the 2014-2038 period, and discusses their implications for budgetary balance at the provincial/territorial level. We find that under our realistic assumptions, most provinces and territories will not be able to meet the test of balancing revenue growth with growth in public spending without either raising taxes or cutting program spending. Given the relative distaste for higher taxes and spending cuts, provincial/territorial governments in Canada must find ways to boost productivity and labour supply growth, and hence revenue growth, to maintain fiscal balance to 2038.

Suggested Citation

  • Don Drummond & Evan Capeluck, 2015. "The Role of Productivity in Long-Term Economic and Fiscal Projections for the Canadian Provinces and Territories, 2014-2038," International Productivity Monitor, Centre for the Study of Living Standards, vol. 29, pages 3-17, Fall.
    • Handle: RePEc:sls:ipmsls:v:29:y:2015:1
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    File URL: http://www.csls.ca/ipm/29/drummondandcapeluck.pdf
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    References listed on IDEAS

    as
    1. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.
    2. Matthew Calver, 2015. "Closing the Aboriginal Education Gap in Canada: Assessing Progress and Estimating the Economic Benefits," CSLS Research Reports 2015-03, Centre for the Study of Living Standards.
    3. Jeremy Smith, 2004. "Assessing Aggregate Labour Productivity Trends in Canada and the United States: Total Economy versus Business Sector Perspectives," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 47-58, Spring.
    4. Nicholas-James Clavet & Jean-Yves Duclos & Bernard Fortin & Steeve Marchand & Pierre-Carl Michaud, 2013. "Les dépenses en santé du gouvernement du Québec, 2013-2030 : projections et déterminants," CIRANO Working Papers 2013s-45, CIRANO.
    5. David A. Dodge & Richard Dion, 2011. "Chronic Healthcare Spending Disease: A Macro Diagnosis and Prognosis," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 327, April.
    6. Don Drummond & Evan Capeluck, 2015. "Long-term Fiscal and Economic Projections for Canada and the Provinces and Territories, 2014-2038," CSLS Research Reports 2015-08, Centre for the Study of Living Standards.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Andrew Sharpe, 2016. "Productivity to the Rescue: Review Article on the McKinsey Global Institute Report Global Growth: Can Productivity Save the Day in an Aging World?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 30, pages 98-110, Spring.
    2. Andrew Agopsowicz & Dany Brouillette & Shutao Cao & Natalia Kyui & Pierre St-Amant, 2016. "April 2016 Annual Reassessment of Potential Output in Canada," Staff Analytical Notes 16-4, Bank of Canada.

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    More about this item

    Keywords

    Projections; Labour Productivity; Labour Supply; Demographics; Canada; Fiscal Projections; Taxes;
    All these keywords.

    JEL classification:

    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • N12 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: 1913-
    • N32 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - U.S.; Canada: 1913-
    • N42 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: 1913-
    • N92 - Economic History - - Regional and Urban History - - - U.S.; Canada: 1913-

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