41
jobs with different productivity levels. The former effect occurs when people move from
provinces with lower employment rates to provinces with higher employment rates. This
results in some persons who were unemployed or out of the labour force in the origin
province gaining employment in the destination province and creating output gains. The
latter is caused by already employed workers moving from provinces with low average
productivity levels to provinces with high average productivity levels. Assuming that
workers have, on average, the average productivity level of their province of residence,
they will become more productive as a result of migrating. Total national output will
increase by the difference in average productivity between high and low productivity
provinces for every worker who moves, also increasing aggregate labour productivity.29
The study found that in 2006 the total change in nominal output as a result of
interprovincial migration was $1,966.4 million, equivalent to 0.137 per cent of GDP.
About 70 per cent of the gains ($1,387 million equivalent to 0.097 per cent of GDP30)
were from the reallocation of workers and 30 per cent ($579 million equivalent to 0.04
per cent of GDP) from employment increases.31
It should be noted that the contribution of interprovincial migration to nominal
output in 2006 at 0.137 per cent of GDP was over three times the 0.04 average
contribution for the 1987-2006 period. This is explained by three factors: the very large
net interprovincial migration to Alberta in 2006 (62,291 persons); the widening gap in
nominal labour productivity levels between provinces with positive net migration and
those with negative net migration, due to rising energy prices; and the widening gap in
employment rates between provinces with positive net migration and those with negative
net migration.
The gains to aggregate productivity from interprovincial migration based on the
methodologies discussed above are not huge, although they are likely underestimated for
a number of reasons, including the fact that migrants self-select and likely have non-
29
In more concrete terms, gains in output due to employment changes are equal to the product of the
number of new jobs gained as a result of migration between provinces with different employment rates
(provinces with net gains will have higher employment rates) and the average productivity level of
provinces with net migration gains. The gains in output due to re-allocation are equal to the difference in
average productivity between provinces with net migration gains and provinces with net migration losses,
multiplied by the number of workers who leave provinces with net migration losses. Total gains in output
due to interprovincial migration are equal to the sum of the two factors. Many assumptions had to be made
concerning the migrants in order to quantify the effects of migration on output. It was assumed that the
migrating workers have had, on average, the average productivity of their province and that when they
moved to a new province, they obtained jobs with the average productivity of the new province. In
addition, it was assumed that migrants had the demographic structure of their province of origin. The
results obviously depend on the validity of the assumptions. The CSLS is currently examining
interprovincial migration data from the SLID and the census to assess the realism of these assumptions.
30 This is double the 0.05 per cent of GDP contribution found through the productivity impact of
interprovincial migration as measured by the effect on wages.
31 Measured in 1997 dollars, the contribution of interprovincial migration to output was about half the size,
at 0.074 per cent of GDP (883 million), with 0.041 per cent (485 million) from reallocation of workers and
0.033 per cent ($398 million) from employment increases (Sharpe, Arsenault and Ershov, 2007). The large
increase in commodity prices accounts for the difference.