The impact of strikes on Canadian trade balance

Abstract

Studies abound which systematically analyse the economic impact of work stoppages on the two protagonists as well as on specific industries. The results of such micro studies are a mixed bag. The findings of the first macro study, involving Canada were published in 1975. Employing input-output analysis, it measured the impact of strike losses on the Canadian economy as a whole, and found the strike impact statistically insignificant. This study is flawed on two counts: (a) it depends on an arbitrarily chosen sample, and (b) it covers a period of only one year. The current study measures the impact of strikes on the Canadian economy, which heavily depends for its growth on external trade, via their impact on its merchandise trade. Using a simultaneous approach towards export and import functions, it covers a period from 1971 to 1993. The results indicate that strikes seem to exert some impact on those categories of trade which constitute a small percentage of total Canadian external trade. Major trade sectors experience a statistically insignificant impact. Put together, therefore, there is little evidence of a negative strike impact on merchandise trade and, hence, on the national economy as a whole over a significant period of time.