Study: Testing for provincial industrial restructuring during the 2000s, 2000 to 2010
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The Canadian economy underwent considerable structural change from 2000 to 2010, shifting away from the manufacturing sector and towards resource-based industries and other sectors.
This study examines how these broad-based structural changes were distributed across the provincial economies and develops the first set of rigorous tests to examine whether the changes were statistically significant.
Regardless of whether structural change is measured in terms of real output or hours worked, the sector that lost the most across provinces was manufacturing. These losses were concentrated in Ontario and Quebec. The output share of manufacturing in Ontario fell by 9.5 percentage points and in Quebec by 8.3 percentage points. Meanwhile, the share of hours worked fell by 6.2 percentage points in Ontario and by 7.1 percentage points in Quebec.
While the manufacturing sectors in other provinces also experienced decreases in the share of output and hours worked in manufacturing, the magnitude of the decline did not match that of Central Canada.
Outside of manufacturing, the sector whose share declined the most across provinces was agriculture, forestry, fishing and hunting. These losses were larger for hours worked than for output, reflecting significant productivity gains in this sector relative to others.
The most broad-based gains in terms of the share of output were in retail trade, with nine provinces posting significant gains in output share.
Restructuring in other industries varied by province. Large output gains in mining and oil and gas extraction were seen in Newfoundland and Labrador. Alberta experienced large output gains in finance and professional services. Both Saskatchewan and Alberta saw large gains in hours worked in construction compared with other provinces.
Ontario had the largest gain in finance, insurance, real estate, and rental and leasing. In 2000, output in the finance industry was just over half that of manufacturing, but by 2010 each accounted for about one-fifth of business sector output.
Note to readers
Using a new Statistics Canada provincial database, this study examines changes in industrial output using real gross domestic product (GDP) and labour inputs using hours worked. Real GDP captures the extent to which the provincial output of goods and services is changing, exclusive of the effect of output prices. Hours worked measures the changing relative demand for labour services across industries. Hours worked may not move in the same direction as output, as relative changes in industry productivity may decouple the two measures. The study tests whether changes in output and hours worked over the 10-year period are random or are the result of persistent movements through time, which is indicative of structural change.
The research paper "Testing for Provincial Industrial Structural Change through the 2000s", part of the Economic Analysis Research Paper Series (Catalogue number11F0027M), is now available from the Browse by key resource module of our website under Publications.
Similar studies are available in the Update on Economic Analysis module of our website.
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To enquire about the concepts, methods or data quality of this release, contact Mark Brown (613-951-7292), Economic Analysis Division.
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