The impact of labour policies on Canadian gold mines in World War II

Abstract

This paper uses a financial and operational data set of Canadian gold mines between 1939 and 1945 to analyse the efficacy of two government labour market policies implemented in World War II. An early war policy designated the gold mining industry as vital for the war effort to boost gold output in order to purchase foreign reserves. The late war policy resulted in restrictions that prevented labour movement into and between the mines. We find that the first policy is largely ineffective in its goal. Although the market allocated labour to the lowest cost producers, the policy caused only a modest increase in gold output. To evaluate the second policy, we estimate the cost curves of the individual mines. The results indicate an inefficient allocation of labour across mines. The gold mining industry experiences operating costs 22% higher than with efficient labour allocation during this late war period. The estimated efficiency loss to the industry is nearly $58.4 million 1940 Canadian dollars.