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Northern Ontario’s real trade deficit

Here’s a trick question that everyone can answer. What is Northern Ontario’s most valuable export? The most valuable regional export is the 1,500 young people between 15 and 34 that leave the region every year. Let’s do a quick calculation.
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David-RobinsonWEB
David Robinson, Economist, Laurentian University, drobinson@laurentian.ca.

Here’s a trick question that everyone can answer. What is Northern Ontario’s most valuable export?

The most valuable regional export is the 1,500 young people between 15 and 34 that leave the region every year. Let’s do a quick calculation. Say they average 14 years of education. Ontario spends about $11,450 per student, per year on schooling. Governments and students together spend roughly $20,000 per year on post-secondary education. That adds up to a direct investment of $177,400 per person. Over a quarter-billion dollars’ worth of education leaves the North every year.

Actually, these estimates are far too low. The real loss is the earning power, not the amount spent on education. The estimated lifetime earnings of a person between 15 and 34 with some post-secondary education was well over $700,000 in 2007. The average wages in Ontario are $50,000 per year in 2015. We are exporting earning machines.

Of course, we shouldn’t really call children an export. We get paid for exports; we give our children away. Instead, we should call children who leak out of the North an “education deficit” or a “brain drain.” Whatever we call it, whenever people think seriously about the Northern economy they seem to come up with the same line about exporting children.

It is always meant as a joke, and it always has an edge to it. It touches a painful truth. As parents we are glad if our kids find good jobs in Toronto, Vancouver or Saigon, but as parents we are sad that so many find jobs so far from home. We are conflicted.

Like parents, economists are also conflicted about children leaving. Like parents, economists hope education will create economic opportunities for the next generation. Like parents, economists feel compelled to give advice that is usually ignored.

Economists and parents know that educating talented young people is essential for the economy and essential for the kids themselves. We know the investment isn’t wasted — the kids take it with them. And it is good for the whole country because the kids make an important contribution to the dynamic economy of metropolitan Canada. The nagging question is why they can’t be part of a dynamic economy in Northern Ontario?

This is where economists and parents think differently. Parents advise children, so they focus on what is best for the individual child, economically. Economists advise policymakers, so they have to figure out what is best for the whole economy.

For an individual parent the question is: “What education combines with my child’s talents to give her the best earnings and lifestyle?” For the region, the question would be: “What education combines with our resources and our population to make the region wealthier?” There is a potential conflict.

Unfortunately, the question for the region is not being asked. There is no one to ask it. Local school boards aren’t responsible for the regional economy. The Ministry of Education doesn’t have an economic development strategy for Northern Ontario. Universities are working hard to become more customer-centred. More economists in Northern Ontario study development for the Third World than study development for Northern Ontario.

So let me make two entirely unsolicited suggestions. First, let’s think about the kinds of jobs we need, and train more Northern kids for those jobs. This is the opposite of the way that the Ministry of Colleges, Training and University thinks. The ministry trains for the jobs that already exist.

For example, the North needs to add value to its wood resources. Exporting value-added wood products takes design and fabrication skills that are scarce in the North. Since we don’t have those businesses, there is no current demand, so Northern Ontario doesn’t get an industrial design school focussing on wood products. We have to break this vicious circle.

Second, the biggest investment most people make is not a house or a car: it is the investment they make in their children. To keep young people here we have to convince them that we offer the best education they can get for their kids.

Northerners have been making babies faster than they make jobs. A really effective development strategy is to make better babies.




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