Regulation and Growth: The Canadian Experience

This report aims at identifying the role played by product market regulation on the level and growth of productivity in Canada. More specifically, the report builds a comprehensive database directly from the acts and regulations characterizing the principal regulatory variables that describe three different industries (electricity, natural gas and retail) in each of the ten Canadian provinces. It then builds a ‘regulation index’ that characterizes the level of regulation in each industry in each province from 1984 to 2008. We then link this measure with a measure of labor productivity in an attempt to determine whether there is a relationship between the two. Our results suggest that there is an important link between regulation and productivity in the electricity sector. In the natural gas and retail sectors we find no evidence of such.