August 2020

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CENTRE FOR THE
STUDY OF LIVING
STANDARDS

The Index of Economic Well-being for
Newfoundland and Labrador, 1981-2018

Kimberly Wong, Alex Stephens and Andrew Sharpe

Prepared for Collaborative Applied Research in
Economics, Memorial University, St. John’s,
Newfoundland and Labrador
August 2020

The Index of Economic Well-being for
Newfoundland and Labrador, 1981-2018
Table of Contents
Abstract ........................................................................................................................................... 1
List of Charts................................................................................................................................... 2
List of Tables .................................................................................................................................. 3
List of Exhibits................................................................................................................................ 4
Executive Summary ........................................................................................................................ 5I.

The Index of Economic Well-being: Motivation and Framework.......................................... 9II.

Overall Trends in the Index of Economic Well-being .......................................................... 15
A. Index of Economic Well-being .......................................................................................... 15
B. The Four Domains of the IEWB ........................................................................................ 18

III.

Trends in the Consumption Flows Domain ....................................................................... 20

A. Personal Consumption ....................................................................................................... 20
B. Average Family Size .......................................................................................................... 22
C. Government Expenditures ................................................................................................. 23
D. Unpaid Work ...................................................................................................................... 25
E. Regrettable Expenditures ................................................................................................... 28
F. Life Expectancy ................................................................................................................. 30
G. Total Consumption Flows .................................................................................................. 31
IV.

Trends in the Stocks of Wealth Domain ............................................................................ 35

A. Physical Capital ................................................................................................................. 36
B. R&D Capital ...................................................................................................................... 38
C. Natural Resources .............................................................................................................. 40
D. Net International Investment Position ............................................................................... 42
E. Human Capital ................................................................................................................... 43
F. Social Cost of Environmental Degradation ....................................................................... 45
G. Total Wealth Stocks ........................................................................................................... 47

V.

Trends in the Economic Equality Domain ............................................................................ 51
A. Income Inequality .............................................................................................................. 51
B. Poverty Intensity ................................................................................................................ 53
C. Index of Economic Equality .............................................................................................. 56

VI.

Trends in Economic Security Domain ............................................................................... 58

A. Risk from Unemployment.................................................................................................. 58
B. Financial Risk from Illness ................................................................................................ 61
C. Risk from Single-Parent Poverty ....................................................................................... 63
D. Risk from Poverty in Old Age ........................................................................................... 66
E. Index of Economic Security............................................................................................... 68
VII.

Conclusion ......................................................................................................................... 71

References ......................................................................................Error! Bookmark not defined.

The Index of Economic Well-being for
Newfoundland and Labrador, 1981-2018
Abstract
This report presents estimates of the Index of Economic Well-being (IEWB) and its fourdomains (consumption flows, stocks of wealth, economic equality and economic security) for
Newfoundland and Labrador from 1981 to 2018. We find that the IEWB for Newfoundland andLabrador increased at an average annual rate of 1.75 per cent per year over the period. All fourdomains grew between 1981 and 2018, with the strongest growth in consumption and wealth.
However, at the end of the period between 2014 and 2018, the IEWB along with the fourdomains deteriorated. Nevertheless, Newfoundland and Labrador enjoyed significant
improvement between 1981 and 2018, especially compared to the other provinces.
Newfoundland and Labrador achieved the fourth highest IEWB level of the ten provinces in2018 and, most impressively, the highest growth between 1981 and 2018.

1

List of Charts
Chart 1: Index of Economic Well-being by Province, 2018 ......................................................... 15
Chart 2: Index of Economic Well-being in Newfoundland and Canada, 1981-2018 ................... 16
Chart 3: Compound Annual Growth Rates of the Index of Economic Well-being and
GDP per Capita in Newfoundland and Labrador, 1981-2018 ...................................................... 17
Chart 4: Domains of the Index of Economic Well-being in Newfoundland and Labrador,
1981 and 2018 ............................................................................................................................... 19
Chart 5: Components of the Consumption Domain in Newfoundland, 1981, 2000, 2008,2014 and 2017 ............................................................................................................................... 20
Chart 6: Personal Consumption Per Capita by Province, 2018 .................................................... 21
Chart 7: Personal Consumption Per Capita in Newfoundland and Canada, 1981-2018 .............. 21
Chart 8: Average Economic Family Size in Newfoundland and Canada, 1981-2018.................. 22
Chart 9: Government Expenditures per Capita by Province, 2018 ............................................... 23
Chart 10: Government Expenditures per Capita in Newfoundland and Canada, 1981-2018 ....... 24
Chart 11: Value of Unpaid Work per Capita by Province, 2018 .................................................. 26
Chart 12: Value of Unpaid Work per Capita in Newfoundland and Canada, 1981-2018 ............ 27
Chart 13: Unpaid Work Wage Rate in Newfoundland and Canada, 1981-2018 .......................... 28
Chart 14: Hours of Unpaid Work in Newfoundland and Labrador, 1981-2018 ........................... 28
Chart 15: Regrettable Expenditures per Capita by Province, 2018 .............................................. 29
Chart 16: Regrettable Expenditures per Capita in Newfoundland and Canada, 1981-2018 ........ 30
Chart 17: Life Expectancy at Birth in Newfoundland and Canada, 1981-2018 ........................... 31
Chart 18: Total Consumption (Adjusted) per Capita by Province, 2018 ...................................... 32
Chart 19: Total Consumption Flows per Capita in Newfoundland and Canada, 1981-2018 ....... 33
Chart 20: Components of the Stocks of Wealth Domain for Newfoundland and Labrador
in 1981, 2000, 2008, 2014, and 2018 ............................................................................................ 36
Chart 21: Net Capital Stock per Capita by Province, 2018 .......................................................... 37
Chart 22: Net Capital Stock per Capita in Newfoundland and Canada, 1981-2018..................... 37
Chart 23: R&D Stock per Capita by Province, 2018 .................................................................... 39
Chart 24: R&D Stock per Capita in Newfoundland and in Canada, 1981-2018 .......................... 39
Chart 25: Natural Resources Stock per Capita by Province, 2018 ............................................... 40
Chart 26: Natural Resources Stock per Capita in Newfoundland and in Canada, 1981-2018 ..... 41
Chart 27: Net International Investment per Capita in Newfoundland and Canada, 1981-2018 ... 42
Chart 28: Net International Investment per Capita in Newfoundland and Canada, 1981-2018 ... 43
Chart 29: Human Capital Stock per Capita by Province, 2018 .................................................... 43
Chart 30: Human Capital Stock per Capita in Newfoundland and Canada, 1981-2018............... 44
Chart 31: Total Social Cost of Greenhouse Gas Emissions per Capita by Province, 2018 .......... 46
Chart 32: Social Cost of Greenhouse Gas Emissions per Capita in Newfoundland andCanada, 1981-2018 ....................................................................................................................... 46
Chart 33: Total Wealth per Capita by Province, 2018 .................................................................. 47
2

Chart 34: Total Wealth per Capita in Newfoundland and Canada, 1981-2018 ............................ 48
Chart 35: Components of the Economic Equality Domain in Newfoundland and Labrador,
1981, 2000, 2008, 2014 and 2018 ................................................................................................. 51
Chart 36: Index of Income Equality by Province, 2018 ............................................................... 52
Chart 37: Index of Income Equality in Newfoundland and Canada, 1981-2018.......................... 53
Chart 38: Index of Poverty by Province, 2018 ............................................................................. 54
Chart 39: Index of Poverty and its Subcomponents in Newfoundland and Canada, 1981-2018.. 55
Chart 40: Index of Economic Inequality by Province, 2018 ........................................................ 56
Chart 41: Index of Economic Equality in Newfoundland and Canada, 1981-2018 ..................... 56
Chart 42: Components of the Economic Security Domain in Newfoundland andLabrador, 1981, 2000, 2008, 2014, 2018 ...................................................................................... 58
Chart 43: Index of Security from the Risk Imposed by Unemployment by Province, 2018 ........ 59
Chart 44: Risk from Unemployment and its Subcomponents in Newfoundland and Canada,
1981-2018 ..................................................................................................................................... 60
Chart 45: Index of Security from the Risk Imposed by Illness by Province, 2018 ...................... 62
Chart 46: Risk from Illness in Newfoundland and Canada, 1981-2018 ....................................... 63
Chart 47: Index of Security from the Risk Imposed by Single-Parent Poverty by
Province, 2018 .............................................................................................................................. 64
Chart 48: Risk from Single-Parent Poverty and its Subcomponents in Newfoundland andCanada, 1981-2018 ....................................................................................................................... 65
Chart 49: Index of Security from the Risk Imposed by Poverty in Old Age by Province, 2018.. 66
Chart 50: Risk from Poverty in Old Age and its Subcomponents in Newfoundland andCanada, 1981-2018 ....................................................................................................................... 67
Chart 51: Index of Economic Security by Province, 2018 ........................................................... 69
Chart 52: Index of Economic Security by Province, 1981-2018 .................................................. 69

List of Tables
Table 1: Compound Annual Growth in the Domains of the Index of Economic Well-being in
Newfoundland and Labrador, 1981-2018 ..................................................................................... 19
Table 2: Sub-Components of Government Expenditures per Capita in Newfoundland andLabrador, 1981-2018..................................................................................................................... 25
Table 3: Summary of Consumption Components in Newfoundland and Labrador, 1981-2018 .. 34
Table 4: Sub-Components of Net Capital Stock per Capita in Newfoundland, 1981-2018 ......... 38
Table 5: Sub-Components of Total Natural Resources per Capita in Newfoundland, 19812018............................................................................................................................................... 41
Table 6: Sub-components of Human Capital per Capita in Newfoundland, 1981-2018 .............. 44
Table 7: Summary of Stocks of Wealth Components per Capita in Newfoundland andLabrador, 1981-2018..................................................................................................................... 49

3

Table 8: Summary of Components of the Economic Equality Domain in Newfoundland andLabrador, 1981-2018..................................................................................................................... 57
Table 9: Summary of Consumption Components in Newfoundland and Labrador, 1981-2018 .. 70

List of Exhibits
Exhibit 1: Ranking by Index of Economic Well-being and its Components, Canada and theProvinces ......................................................................................................................................... 8
Exhibit 2: Conceptual Framework for the Index of Economic Well-being .................................. 11
Exhibit 3: CSLS Index of Economic Well-being, Weighting Tree for Canada and theProvinces ....................................................................................................................................... 14
Exhibit 4: Ranking by Index of Economic Well-being and Per-Capita GDP, Canada and theProvinces ....................................................................................................................................... 18

4

The Index of Economic Well-being for
Newfoundland and Labrador, 1981-2018
Executive Summary
In 1998, the Centre for the Study of Living Standards (CSLS) released the first estimatesof the Index of Economic Well-being for Canada (Osberg and Sharpe, 1998), which is acomposite index based on a conceptual framework developed by Osberg (1985). Over the past
decade, the CSLS has extended the geographical coverage of the Index to the Canadianprovinces and to major OECD countries and has made a number of methodological changes tothe Index.
The IEWB is comprised of four domains of economic welfare: per-capita consumption,
per-capita wealth, economic equality, and economic security. These four domains reflecteconomic well-being in both the present and the future, and account for both average access toeconomic resources and the distribution of that access among members of society. By basing the
IEWB on data from each of these domains, we attempt to capture the multifaceted nature of
economic well-being. Our domain approach also allows individuals to assign weights inaccordance with their value judgments (e.g. consumption versus economic equality).
This report presents updated estimates of the IEWB for Newfoundland and Labrador overthe 1981 to 2018 period, with a particular emphasis on developments post-2000. The reportoutlines trends in the four domains of economic well-being that make up the IEWB. This reportfinds that economic well-being in Newfoundland and Labrador has improved significantly
between 1981 and 2018.

Trends in the Index of Economic Well-being, 1981-2018
Since 1981, the IEWB for Newfoundland and Labrador has enjoyed considerable growth.
The overall IEWB rose 0.270 points from 0.301 in 1981 to 0.571 in 2018. This improvement
amounts to an impressive 89.9 per cent change over the period, or growth of 1.75 per cent per
year. However, growth of the IEWB fluctuated over the period:

1981-2000: The IEWB for Newfoundland and Labrador grew 1.87 per cent per year from
0.301 in 1981 to 0.427 in 2000.

5

2000-2018: The IEWB grew 1.62 per cent per year from 0.427 in 2000 to 0.571 in 2018.
The IEWB experienced faster growth in the period before 2000.



2000-2008: The IEWB increased 4.99 per cent per year from 0.427 in 2000 to 0.631 in
2008. The IEWB saw the fastest growth in this sub-period, likely due to growth in themining and oil and gas extraction sector, on which the province’s economy largely
depends.

Post-2008: Following 2008, however, the IEWB deteriorated. Between 2008 and 2018,
the IEWB declined at a rate of 0.99 per cent per year. This deterioration reflects thecollapse in oil prices during the 2008 recession. Between 2014 and 2018, the IEWB for
Newfoundland and Labrador experienced the most severe deterioration at 1.36 per centper year.

Trends in the Four Domains of the Index of Economic Well-being, 1981-2018
The overall increase in economic well-being was largely driven by robust growth inconsumption and stocks of wealth. The domains of economic equality and economic security
also improved, though less significantly than the other two domains.


The index of consumption had the highest growth among the components of the IEWB.
The scaled consumption domain increased 0.570 points or 5.72 per cent per year from
0.083 in 1981 to 0.653 in 2018. This growth was driven primarily by significant increases
in personal consumption and government expenditures over the period. However, due toa decrease in the value of unpaid work and increase in regrettable expenditures after
2008, the consumption domain experienced much slower growth in the 2000-2018 subperiod compared to the 1981-2000 sub-period (2.57 per cent versus 5.72 per cent).



The wealth domain had the second highest growth among the components of the IEWB.
The index of wealth increased 0.224 points or 1.30 per cent per year from 0.366 points in1981 to 0.590 points in 2018. However, growth in the wealth domain was concentrated
in the 1981-2000 sub-period, due to volatility in the stock of natural resources. Between
2008 and 2018, the stock of natural resources deteriorated 17.65 per cent per year,
reflecting the plunge in oil prices during this period. Given the province’s dependence onnatural resources, and more specifically oil, the wealth domain in Newfoundland andLabrador fell at a rate of 4.31 per cent per year from 2008 to 2018.



The index of economic equality grew by 0.161 points or 0.96 per cent per year from
0.378 in 1981 to 0.539 in 2018. This improvement was driven by developments in the6index of poverty, which in turn resulted from falls in Newfoundland and Labrador’s
poverty rate and poverty gap. In contrast, income inequality increased over the period.


The index of economic security showed the least improvement of the IEWB components.
The index of economic security rose 0.126 points or 0.79 per cent annually from 0.375 in
1981 to 0.502 in 2018, largely as a result from improvements in the risk imposed byillness (due to lower private medical expenditures as a share of income since 1981) andpoverty in old age. However, the risk imposed by unemployment worsened over theperiod, which drove down the index of economic security for Newfoundland andLabrador.

In summary, all four domains improved between 1981 and 2018. The four domains also
shared similar trends in growth across sub-periods. The indexes of consumption, wealth, andeconomic security experienced stronger growth in the 1981-2000 sub-period than the 2000-2018
sub-period. In contrast, economic equality deteriorated between 1981 and 2000 but improved
between 2000 and 2018. All four domains had strong growth between 2000 and 2008,
particularly the wealth domain. However, in the last sub-period, between 2014 and 2018, alldomains deteriorated.

Rankings for the Index of Economic Well-being by Province, 1981-2018
Newfoundland and Labrador enjoyed high rankings among the provinces for the IEWB in
terms of both levels and growth (Exhibit 1). For the overall IEWB, Newfoundland and Labrador
ranked fourth of the ten provinces. Newfoundland and Labrador was exceptionally strong in theindex of wealth, ranking first. However, the province did not fare as well in the indexes ofconsumption, economic equality, and economic security, ranking seventh in all three domains.
Most impressive were Newfoundland and Labrador’s rankings for growth. Apart from the index
of economic equality (in which the province ranked a strong fourth), Newfoundland andLabrador had the highest growth rates from 1981 to 2018 for the overall IEWB and indexes ofconsumption, wealth, and economic security. These findings indicate that economic well-being
in Newfoundland and Labrador improved considerably between 1981 and 2018.

7

Exhibit 1: Ranking by Index of Economic Well-being and its Components, Canada and theProvinces
Panel A: Levels
Levels in 2018
Rank

Index of Economic
Well-being

Index ofConsumption

Index of WealthIndex of Economic
Equality

Index of
Economic
Security

1

British Columbia

Alberta

Newfoundlandand Labrador

Alberta

Alberta2

Alberta

Ontario

British Columbia

New Brunswick

Saskatchewan

3

Ontario

British Columbia

QuebecBritish Columbia

BritishColumbia

4

CanadaCanadaOntarioPrince Edward
IslandCanada5

Newfoundland andLabrador

Nova Scotia

CanadaQuebecManitoba

6

QuebecManitoba

Manitoba

CanadaQuebec7

Manitoba

QuebecSaskatchewan

Ontario

Ontario8

Saskatchewan

Newfoundland andLabrador

New Brunswick

Newfoundland andLabrador

9

New Brunswick

Saskatchewan

Alberta

Manitoba

Newfoundlandand Labrador
New
Brunswick

10

Nova Scotia

Prince Edward
IslandNova Scotia

Saskatchewan

Nova Scotia

11

Prince Edward
IslandNew Brunswick

Prince Edward
IslandNova Scotia

Prince Edward
IslandPanel B: Growth Rate
Growth Rates, 1981-2018
Rank

Index of Economic
Well-being

Index ofConsumption

Index of WealthIndex of Economic
Equality

Index of
Economic
Security1

Newfoundland andLabrador

Newfoundland andLabrador

Newfoundlandand Labrador

New Brunswick

Newfoundland

2

New Brunswick

New Brunswick

QuebecSaskatchewan

3

Prince Edward
IslandQuebecOntario4

QuebecPrince Edward
IslandBritish Columbia

5

Manitoba

Manitoba

6

British Columbia

7

Prince Edward
IslandNewfoundland andLabrador

Prince Edward
IslandBritishColumbia
New
Brunswick

CanadaManitoba

QuebecOntario

Manitoba

Alberta

Manitoba

Nova Scotia

CanadaNova Scotia

QuebecAlberta8

CanadaNova Scotia

New Brunswick

Nova Scotia

Canada9

Saskatchewan

British Columbia

Saskatchewan

British Columbia

Saskatchewan

10

Ontario

Saskatchewan

AlbertaCanadaNova Scotia

11

Alberta

Alberta

Prince Edward
IslandOntario

Ontario8

The Index of Economic Well-being for
Newfoundland and Labrador, 1981-20181I.

The Index of Economic Well-being: Motivation andFramework

The literature on social indicators commonly, and correctly, asserts that there is more to‘well-being’ than material prosperity. The IEWB agrees and argues, furthermore, that although
access to economic resources plays a key role in overall well-being, there is more to economic
well-being than money income. Although money income – specifically, real Gross Domestic
Product (GDP) per capita - currently is the single most often mentioned statistic used to indicate
economic progress, it is an inadequate measure of economic well-being. Our calculation of theIEWB is, therefore, intended to provide a better measure of trends in economic well-being, as
part of “well-being” more broadly conceived.
The compilers of the national accounts have long protested that their attempt to measure
in GDP the aggregate money value of marketed economic output was never intended as a fullmeasure of economic well-being. Nevertheless, it has often been used as such, despite the factthat GDP accounting omits important aspects of individuals’ command over resources (forexample, leisure time and longevity of life) and ignores the sustainability of aggregate
consumption and the inequality and insecurity which individuals experience. In this paper, ourcalculation of the IEWB demonstrates that an alternative measure of “access to economic
resources” is possible, plausible, and capable of making some difference.
However, we emphasize that in focusing on purely economic aspects of well-being, we
do not intend to downplay the importance of non-economic dimensions of life for “well-being”,
more broadly conceived. On the contrary, we think that some non-economic dimensions of life
are too important to be combined with economic variables in an over-all index. We see, forexample, political liberties such as freedom of speech and assembly as crucial for a broader
conception of well-being. However, including non-economic issues in an aggregate well-being
index along with economic variables would build in the implicit trade-off assumption that a little
more income can always offset a little less in non-economic goods – and we reject thatperspective. We hope instead to provide a better measure of “access to resources needed for adecent standard of living”. To this end, we place particular emphasis on sustainability and the1This report is based on a presentation made at Memorial University, St. John’s, Newfoundland and Labrador,
September 5, 2019.

9

sensitivity of measures of aggregate “command over resources” to the omission or inclusion of
measures of income distribution and economic security.
In our view, indices of societal well-being are calculated in the hope that they can help
guide social decision-making. No individual needs any indices of societal well-being to evaluate
the impact of a public policy decision on their own personal well-being. However, civil servantsand politicians are called upon on a daily basis to answer questions such as “Would public policy
X make Canada better off?” More infrequently, voters also have to think about the same issues.
As long as some individuals care, some of the time, about societal well-being as well as caring
about their own personal well-being, indices of societal well-being can be useful guides for
decision-making.
In developing an Index of Economic Well-Being, based on four dimensions of economic
well-being (consumption, wealth accumulation, economic equality, and economic security), thisreport attempts to construct better measures of effective consumption, economic security andsocietal accumulation. However, unlike other indices, we do not argue that the weights assigned
to these dimensions of economic well-being are unique and that “Canada’s economic wellbeing” is a single, objective number. As individuals differ in their values, in our view it is notpossible to define an objective index of societal well-being independent of the preferences ofindividuals. Because societal well-being has multiple component dimensions and because
individuals differ in their subjective valuation of each dimension’s relative importance,
individuals differ in their evaluations of social states. When well-informed groups are asked fortheir personal assessment of the relative importance of each of these four dimensions of wellbeing, the central tendency of the distribution of weights is reasonably close to our “base case”
of equal weighting, but there is a large range of value preferences on each dimension.
Hence, one should think of each individual member of society as subjectively evaluating
the objective data available to them and then coming to a personal conclusion about society’s
well-being. And although many public policies have outcomes that cannot be measured indirectly comparable units, as a practical matter, individuals often have to come to a summativedecision in order to decide between policies – that is, have a way of “adding everything up”
across conceptually dissimilar domains. Since individuals, particularly in democracies,
participate in decisions that will affect the collectivity, they face the problem of coming to a
subjective evaluation of social states. The motivation for constructing the IEWB is that they needorganized, objective data if they are to do it in a reasonable way, so an index of society’s wellbeing can be useful in helping individuals to make these evaluations.
Indices of social well-being can best help individuals to come to reasonable answers
about social choices if information is presented in a way that highlights the objective trends inmajor dimensions of well-being, and thereby helps individuals to come to summative judgments
10without assuming that they all share exactly the same values. In our perspective, the purpose ofindex construction should be to assist individuals – e.g. as voters in elections and as bureaucrats
in policy making – to think systematically about public policy, regardless of their personal value
positions.
The logic of our identification of four components of well-being is that it recognizes both
trends in average outcomes and in the diversity of outcomes, both now and in the future, as
Exhibit 2 illustrates.
Exhibit 2: Conceptual Framework for the Index of Economic Well-being
Concept
Present
FutureAggregate accumulation of“Typical Citizen”/
Average flow of current income
productive stocks“Representative Agent”
Distribution of potential
consumption – income inequality Insecurity of future incomes
Heterogeneity in Experiences
and poverty

When an average income flow variable like GDP per capita or average personal income
is used as a summative index of well-being, the analyst is implicitly stopping in the first quadrantof Exhibit 2. He or she is assuming that the experience of a representative agent can summarize
the well-being of society and that the measured income flow optimally weighs consumption andsavings, so that one need not explicitly distinguish between present consumption flows and theaccumulation of asset stocks which will enable future consumption flows.
However, society is composed of diverse individuals living in an uncertain world who
typically “live in the present, anticipating the future”. Each individual’s estimate of societal
economic well-being depends on both current consumption and on the importance they assign tofuture consumption – i.e. the proportion of national income saved for the future. GDP is ameasure of the aggregate market income of a society. It does not reveal the savings rate, andthere is little reason to believe that the national savings rate is automatically optimal. Indeed, if
citizens have differing rates of time preference, any given savings rate will only be “optimal”
from some persons’ points of view. Hence, a better estimate of the well-being of society should
enable citizens to apply their differing values and allow analysts to distinguish between current
consumption and the accumulation of productive assets which determines the sustainability ofcurrent levels of consumption.
Some individuals may also be concerned about the degree to which all citizens will sharein prosperity – there is a long tradition in economics that “social welfare” depends on bothaverage incomes and the degree of inequality and poverty in the distribution of incomes. Because
the future is uncertain, and complete insurance is unobtainable (either privately or through thewelfare state), individuals also care about the degree to which the economic future is secure forthemselves and others.
11

If the objective of index construction is to assist public policy discussion, one must
recognize that discussion can easily be overwhelmed by complexity when too many categories
have to be considered simultaneously. We, therefore, do not adopt the strategy of simply
presenting a large battery of indicators. However, as reasonable people may disagree in therelative weight they would assign to each dimension (e.g. some will argue that inequality inincome distribution is highly important while others will argue the opposite), the IEWB is
explicit and open about the relative weights assigned to components of well-being, rather thanleaving them implicit and hidden. As well, for policy purposes it is not particularly useful toknow only that well-being has gone “up” or “down”, without also learning which aspect of wellbeing has improved or deteriorated. We specify explicit weights to the components of well-being
and test the sensitivity of aggregate trends to changes in those weights, in order to enable others
to assess whether, based on their own personal values about what is important in economic wellbeing, they would agree with an overall assessment of trends in the economy.2
This report’s basic hypothesis – that a society's economic well-being depends on total
consumption and accumulation and on the individual inequality and insecurity that surround the
distribution of resources – is consistent with a variety of theoretical perspectives. We, therefore,
do not present here a specific, formal model. In a series of papers (Osberg and Sharpe, 1998,
2002, and 2005) we have already described the details of the calculation of the four components
or dimensions of economic well-being:effective per capita consumption flows – which include consumption of marketed goods
and services, government services, and adjustment of effective per-capita consumption
flows for household production, changing household economies of scale, leisure,
regrettable expenditures, and life expectancy;net societal accumulation of stocks of productive resources – which consists of net
accumulation of physical capital plus accumulation of human capital plus changes in thevalue of natural resources stocks, net international investment position and R&D stocks,
minus an adjustment for costs associated with environmental degradation;



income distribution – the intensity of poverty (incidence and depth) and the inequality ofincome;

economic security from the financial consequences of job loss and unemployment, illness
and family breakup, and from poverty in old age.

2

Sensitivity analysis is omitted from this report on the IEWB for Newfoundland and Labrador. See the forthcoming
CSLS report on the IEWB for Canada, 1981 to 2018, for sensitivity analysis for Canada and the provinces.

12Each domain of economic well-being is itself an aggregation of many underlying
variables, on which the existing data can be of uncertain quality. By contrast, the System of
National Accounts has had many years of development effort by international agencies(particularly the UN and the IMF), and has produced an accounting system for GDP that is
rigorously standardized across countries. However, using GDP per capita as a measure of“command over resources” would implicitly:(1) assume that the aggregate share of income devoted to accumulation (including net
changes in the public capital stock, human capital, research and development and thevalue of unpriced environmental assets) is always optimal, and(2) set the weight of income distribution and economic insecurity to zero, by ignoring theirinfluence entirely.
These assumptions do not seem justifiable, and they are not innocuous.
Due to data limitations, estimates of the Index of Economic Well-being computed for
different geographical regions may differ in the number of variables that can be included in thecalculations. Exhibit 3 illustrates the components that are used in our estimates of the Index of
Economic Well-being for Canada and the provinces, based on the four domains outlined above.
For illustrative purposes, we present below trends in the aggregate IEWB when each of the four
components (Current Average Consumption, Net Accumulation, Economic Security andInequality) receives equal weight. The data for each component are also available in an online
EXCEL file at www.csls.ca/reports/csls2020-05-data.xlsx. It is straightforward to alter theweights assigned to each component and to calculate what difference, if any, that makes fortrends in the IEWB.

13

Exhibit 3: CSLS Index of Economic Well-being, Weighting Tree for Canada and the Provinces

14

II.

Overall Trends in the Index of Economic Well-being

The Index of Economic Well-being is comprised of four domains of economic wellbeing: consumption flows, stocks of wealth, economic equality, and economic security. Thissection examines the overall trends in the IEWB and its four domains in Newfoundland andLabrador from 1981 to 2018. The next four sections look at each domain in depth, analyzing
developments in the components and subcomponents.3

A. Index of Economic Well-being
In 2018, the Index of Economic Well-being for Newfoundland and Labrador scored0.571, ranking fourth in Canada (Chart 1). The province had a relatively strong performance
among the Atlantic provinces, achieving the highest value of the overall index in the Atlantic
region. The other Atlantic provinces had the lowest values of IEWB in Canada.
Chart 1: Index of Economic Well-being by Province, 2018
British Columbia
Alberta
Ontario
Canada
Newfoundland and Labrador
QuebecManitoba
Saskatchewan
New Brunswick
Nova Scotia
Prince Edward Island

0.639
0.638
0.594
0.594
0.571
0.569
0.562
0.545
0.535
0.516
0.454
0.0

0.1

0.2

0.3
0.4
Index Level

0.5

0.6

0.7

Source: IEWB Database 2018, Table 9

The IEWB for Newfoundland and Labrador increased 0.270 points from 0.301 in 1981 to
0.571 in 2018 (Chart 2). The province’s overall index grew more significantly than Canada’s
over the period; the IEWB for Canada increased 0.111 points from 0.483 in 1981 to 0.594 in
2018. In terms of growth rates, the IEWB for Newfoundland and Labrador increased at an annual
rate of 1.75 per cent from 1981 to 2018 (Chart 3).
The IEWB for Newfoundland and Labrador relative to Canada’s also experienced
significant growth, increasing 33.9 percentage points from 62.3 per cent of Canada’s IEWB in
1981 to 96.2 per cent in 2018 (Chart 2). In 2006, the province’s IEWB finally exceeded3

The complete excel database for Canada and the provinces is publicly available on the CSLS website. Refer to the
database posted with this report.

15

Canada’s, eventually peaking at 112.9 per cent of Canada’s in 2007. However, in 2016, theIEWB for Newfoundland and Labrador relative to Canada’s began declining. Between 2016 and2018, the IEWB for Newfoundland and Labrador was once again lower than Canada’s.
Chart 2: Index of Economic Well-being in Newfoundland and Canada, 1981-2018
Panel A: Absolute IEWB
0.7

Index Level

0.6
0.5
0.4
0.3
0.2
0.1
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland and Labrador

CanadaPanel B: Relative to Canada
120

Per Cent

100
80
60
40
20
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland and Labrador

CanadaSource: IEWB Database 2018, Table 9

The IEWB is a much broader and, many argue, more meaningful metric of economic
well-being than real GDP per capita. Consequently, it is useful to compare trends in the two
measures (Chart 3). Over the 1981-2018 period, GDP per capita in Newfoundland and Labrador
grew 1.3 times faster than the rate of the IEWB (2.27 per cent versus 1.75 per cent per year). In
each sub-period, GDP per capita and the IEWB exhibited similar patterns of growth. However,GDP per capita enjoyed more favourable growth than the IEWB in every sub-period, with the
exception of the 2008-2014 sub-period (in which GDP per capita decreased at a greater rate).
The province saw the fastest growth in the IEWB during the 2000 to 2008 sub-period at
4.99 per cent per year; GDP per capita also had the greatest growth over this sub-period at 5.39
per cent annually, which exceeded the IEWB’s growth (Chart 3). However, after 2008, the16

IEWB deteriorated, which drove down the growth rate for the 2000 to 2018 sub-period. The
2014-2018 sub-period, in particular, saw the worst growth in Newfoundland and Labrador’s
IEWB at negative 1.36 per cent per year. As a result, the IEWB grew at a higher rate in the 19812000 sub-period than in the 2000-2018 sub-period.
Chart 3: Compound Annual Growth Rates of the Index of Economic Well-being and GDP per
Capita in Newfoundland and Labrador, 1981-2018
6
4.99

5.39

5

Per Cent

4
3
2

2.27
1.75

2.66
1.87

1.62 1.87

10-1-0.99-0.86

-0.74
-1.04

2008-2018

2008-2014-2
1981-2018

1981-2000

2000-2018

2000-2008

Index of Economic Well-being

-0.60
-1.36
2014-2018

GDP per Capita (Chained 2012$)

Source: IEWB Database 2018, Table 9

Exhibit 4 shows the rankings of Canada and the provinces by the levels and growth ratesof the Index of Economic Well-being and GDP per Capita. Among the provinces and Canada,
Newfoundland and Labrador had relatively high levels in both the IEWB and GDP per capita.
The province ranked fifth for the IEWB, but ranked higher in third place for GDP per capita.
Most impressively, Newfoundland and Labrador had the highest growth in the IEWB and GDP
per capita between 1981 and 2018.

17

Exhibit 4: Ranking by Index of Economic Well-being and Per-Capita GDP, Canada and theProvinces
Rank

Levels in 2018
Index of Economic
Well-being

GDP per Capita

Growth Rate, 1981-2018
Index of Economic
GDP per Capita
Well-being
Newfoundland and
Newfoundland andLabradorLabrador

1

British Columbia

Alberta2

Alberta

Saskatchewan

New Brunswick

Prince Edward Island

3

Ontario

Newfoundland andLabrador

Prince Edward Island

New Brunswick

4

CanadaCanadaQuebecNova Scotia

5

Newfoundland andLabrador

Ontario

Manitoba

Saskatchewan

6

QuebecBritish Columbia

British Columbia

Manitoba

7

Manitoba

Manitoba

Nova Scotia

Canada8

Saskatchewan

QuebecCanadaQuebec9

New Brunswick

New Brunswick

Saskatchewan

Ontario10

Nova Scotia

Nova Scotia

Ontario

Alberta11

Prince Edward Island

Prince Edward Island

Alberta

British Columbia

B. The Four Domains of the IEWBIn 2018, the consumption domain had the highest score among the four domains in
Newfoundland and Labrador at 0.653 (Chart 4). The wealth domain ranked second with a scoreof 0.590, followed by economic equality at 0.539. The domain of economic security comprised
the lowest share of the IEWB, scoring 0.502.
The improvement in the Index of Economic Well-being between 1981 and 2018 wasprimarily driven by improvements in the consumption and wealth domain (Chart 4). The
consumption domain increased by 0.570 points, while the wealth domain rose 0.224 points overthe period. The domains of economic equality and economic security also improved, though lesssignificantly, by 0.161 points and 0.126 points, respectively.

18

Chart 4: Domains of the Index of Economic Well-being in Newfoundland and Labrador, 1981 and
2018
0.7

0.653
0.590

0.6

0.571

0.539

0.502

Index Level

0.5
0.378

0.366

0.4

0.375
0.301

1981

0.3

2018
0.2
0.1

0.083

0.0
Consumption
DomainWealth Domain

Economic Equality Economic Security Index of Economic
Well-being

Source: IEWB Database 2018, Table 9

While all domains increased between 1981 and 2018, they also shared similar trends ingrowth across sub-periods (Table 1). Apart from economic equality, the domains experienced
stronger growth in the 1981-2000 sub-period than the 2000-2018 sub-period. In contrast,
economic equality deteriorated between 1981 and 2000. All four domains had strong growth in
the 2000 to 2008 sub-period, particularly the wealth domain at an impressive 7.60 per cent per
year. However, in the last sub-period, between 2014 and 2018, all domains deteriorated.
Table 1: Compound Annual Growth in the Domains of the Index of Economic Well-being in
Newfoundland and Labrador, 1981-2018
1981-2018

1981-2000

2000-2018

2000-2008

2008-2018

2008-20142014-2018

Per Cent
Index of Economic
Well-being
Consumption Flows(Scaled)Stocks of Wealth(Scaled)Index of Economic
Equality
Index of Economic
Security

1.75

1.87

1.62

4.99

-0.99

-0.74

-1.36

5.72

8.80

2.57

4.80

0.82

1.73

-0.52

1.30

1.76

0.81

7.60

-4.31

-6.46

-0.99

0.96

-1.07

3.15

5.79

1.08

3.57

-2.53

0.79

1.27

0.28

1.11

-0.38

0.42

-1.56

Source: IEWB Database 2018, Table 919

III. Trends in the Consumption Flows Domain
This section examines the components of consumption flow. The consumption domain
consists of three components: personal consumption expenditures, government expenditures on
goods and services, and unpaid work. The consumption domain is adjusted by three factors.
First, personal consumption expenditures are adjusted for family size to account for the
economies of scale that exist in private household consumption. Second, regrettable
expenditures—those that do not increase well-being—are subtracted from total consumption
flows. Lastly, the percent increase in life expectancy is applied to total consumption flows toadjust for the positive impact of increased life expectancy.
Chart 5 shows the levels of consumption components for Newfoundland in 2012 constantdollars per capita in 1981, 2000, 2008, 2014, and 2018. In every year, personal consumption
constituted the largest share of total consumption, followed by either government expenditures or
unpaid work.
Chart 5: Components of the Consumption Domain in Newfoundland, 1981, 2000, 2008, 2014 and2017
60,000

2012$ per Capita

50,00040,0001981

30,0002000
2008

20,0002014
10,0002018

0
Personal
Consumption(Unadjusted)

Government
Expenditures

Unpaid Work

Regrettable
Expenditures

Total Consumption(Adjusted)

Source: IEWB Database 2018, Table 1

A. Personal Consumption
In 2018, personal consumption in Newfoundland and Labrador was $30,479 per capita,
which constituted 60.1 per cent of total consumption flows. Among the provinces,
Newfoundland ranked sixth in terms of personal consumption per capita (Chart 6). Alberta had
the highest personal consumption per capita of the provinces at $34,525 per capita, exceeding
Newfoundland’s by 13.3 per cent.

20

Chart 6: Personal Consumption Per Capita by Province, 2018
Source: IEWB Database 2018
Alberta
British Columbia
Ontario
CanadaSaskatchewan
Nova Scotia
Newfoundland and Labrador
New Brunswick
Manitoba
QuebecPrince Edward Island

34,52534,382
31,76331,402
30,77930,76930,47929,18828,84928,28728,2710

5,000

10,00015,00020,00025,000
2012$ Per Capita

30,00035,00040,000Source: IEWB Database 2018, Table 1

Newfoundland and Labrador experienced significant growth in personal consumption percapita between 1981 and 2018 (Chart 7). During this period, personal consumption per capita inthe province increased by 155.7 per cent or at a rate of 2.57 per cent per year. Personal
consumption grew the most during the 2000-2018 period at 3.57 per cent per year. However,between 2008 and 2018, growth in personal consumption slowed to 1.80 per cent per year. In
comparison, Canada’s personal consumption grew less significantly over the period, increasing
by 87.6 per cent since 1981 or 1.71 per cent annually. Despite its substantial growth over theperiod, personal consumption in Newfoundland and Labrador has never reached the national
value. However, by the end of the period, the province came close to Canada’s personal
consumption of $31,402 per capita.
Chart 7: Personal Consumption Per Capita in Newfoundland and Canada, 1981-2018
35,000

2012$ per Capita

30,00025,00020,00015,00010,000
5,000
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

Source: IEWB Database 2018, Table 1

21

CanadaB. Average Family Size
As noted previously, personal consumption must be adjusted for family size to reflecteconomies of scale in household consumption. When people live together in groups rather than
individually, they can achieve greater effective consumption.4 To account for this issue, we use
the Luxembourg Income Study equivalence scale, which is the square root of family size. 5
In 2018, the average family size in Newfoundland and Labrador was 2.27 persons, which
was slightly lower than the national average of 2.35 persons (Chart 8). In contrast, in 1981, theprovince’s average family size of 3.55 persons exceeded Canada’s at 2.72 persons. Between
1981 and 2018, the average family size in the Newfoundland and Labrador shrunk significantly,
decreasing by 36.2 per cent. The decline in family size in the province over the period was likely
driven by a rise in single persons living alone, falling birth rates, an exodus of working-age
people, and a rapidly aging population. A smaller average family size, however, dampens theability of households in the province to reap the aforementioned economies of scale inconsumption.
Chart 8: Average Economic Family Size in Newfoundland and Canada, 1981-2018
4.00
Number of Persons

3.50
3.00
2.50
2.00
1.50
1.00
0.50
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.00

Newfoundland

CanadaSource: IEWB Database 2018, Appendix Table 2

4

For example, they can cooperate in household production (e.g. one person can cook for the household) and share
fixed costs (e.g. the household shares one refrigerator rather than each person buying one).
5“Family” is categorized into two types: ‘economic families,’ which are groups of two or more persons related byblood, marriage, common-law, or adoption and living in the same dwelling, and ‘unattached individuals,’ which arepersons either living alone or sharing a dwelling with persons to whom they are unrelated. It should be noted thatunattached individuals living together (i.e. roommates) enjoy many benefits of economies of scale in household
consumption. However, as the data used in this report considers roommates as separate families, our adjustment forfamily size does not capture these benefits. Although our estimates are underestimated, the issue is minor.

22

C. Government Expenditures
The IEWB defines government expenditures per capita as spending by all levels ofgovernment on current goods and services and on fixed capital and inventories, minus capitalconsumption allowances.6 In 2018, Newfoundland and Labrador (Chart 9) spent $15,136 percapita on government expenditures. Government expenditures represented the second largest
share of total consumption flows at 29.9 per cent. Among the provinces, Newfoundland andLabrador ranked second in terms of government expenditures per capita. The Atlantic Provinces,with the exception of Prince Edward Island, had the highest levels of per-capita government
expenditures. Nova Scotia topped the rankings at $15,269 per capita, while New Brunswick
followed Newfoundland and Labrador with $13,932 per capita.
Chart 9: Government Expenditures per Capita by Province, 2018
Nova Scotia
Newfoundland and Labrador
New Brunswick
Manitoba
AlbertaCanadaOntarioPrince Edward Island
Saskatchewan
QuebecBritish Columbia

15,26915,137
13,932
13,124
12,187
11,85911,81911,812
11,576
11,339
9,951
0

2,000

4,000

6,000

8,000
10,000
2012$ Per Capita

12,00014,00016,00018,000Source: IEWB Database 2018, Table 1

Government expenditures in Newfoundland and Labrador grew substantially between
1981 and 2018 (Chart 10). The province saw a 130.2 per cent increase over the period, or anannual increase of 2.28 per cent. At the national level, government expenditures grew muchslower; Canada’s government expenditures increased 26.2 per cent over the period at a modest
rate of 0.63 per cent per year. Consequently, government expenditures in Newfoundland andLabrador surpassed Canada’s in 1998, remaining above the national value for the rest of theperiod.

6

Capital consumption allowances data are not available post-2009. The values for 2010 through 2018 are
extrapolated using the compound average annual growth rate from 2004 to 2009.

23

Chart 10: Government Expenditures per Capita in Newfoundland and Canada, 1981-2018
18,000

2012$ per Capita

16,00014,00012,00010,000
8,000
6,000
4,000
2,000
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

CanadaSource: IEWB Database 2018, Table 1

Table 2 shows the absolute values of each sub-component of total government
expenditures, as well as the annual growth rates in several periods. Of the three sub-components,
fixed capital and inventories had the strongest growth between 1981 and 2018 at 4.87 per centper year, while government expenditures increased by 1.61 per cent per year and capitalconsumption allowance by 1.31 per cent per year. After 2000, fixed capital and inventories
generally exceeded capital consumption allowance, which drove the overall growth in total
government expenditures.7
However, despite being positive between 1981 and 2018, growth in total government
expenditures slowed after 2000 (Table 2). Between 1981 and 2000, total government
expenditures grew by 3.08 per cent per year, but this growth rate decreased to 1.44 per cent per
year from 2000 to 2018. Faster growth in capital consumption allowance was likely responsible
for this slowdown. Between 2014 and 2018, capital consumption allowance grew at a significant
rate of 5.09 per cent per year, compared to only 3.34 per cent per year for fixed capital andinventories and 1.24 per cent per year for government expenditures.

7

In the post-2000 period, fixed capital and inventories were below capital consumption allowance from 2002 to
2004. This situation was likely driven by the negative growth in fixed capital and inventories between 2000 and2008; fixed capital and inventories declined at a rate of 2.02 per cent per year over the eight year period.

24

Table 2: Sub-Components of Government Expenditures per Capita in Newfoundland andLabrador, 1981-2018
Panel A: Absolute Values
Government
Expenditures
Fixed Capitaland Inventories
CapitalConsumption
Allowance

1981

2000

2008
Millions of 2012$

2014

2018

4,153

5,964

6,822

7,128

7,488

254

954

810

1,295

1,477

624

740

680

827

1,009

14,382

15,1372012$ per Capita
Total
Government
Expenditures per
Capita6,576

11,702

13,590Panel B: Compound Annual Growth Rates
Government
Expenditures
Fixed Capital andInventories
Capital Consumption
Allowance
Total Government
Expenditures per
Capita1981-2018

1981-2000

2000-2018

2000-2008
Per Cent

2008-2018

2008-20142014-2018

1.61

1.92

1.27

1.69

0.94

0.73

1.24

4.87

7.21

2.46

-2.02

6.19

8.13

3.34

1.31

0.90

1.74

-1.05

4.03

3.33

5.09

2.28

3.08

1.44

1.89

1.08

0.95

1.29

Source: IEWB Database 2018, Appendix Table 6

D. Unpaid Work
Statistics Canada (1995) classifies unpaid work into five major categories:
1) Domestic work, which includes meal preparation, cleaning, clothing care, repairs andmaintenance, and other domestic work
2) Help and care, for children and adults
3) Management and shopping4) Transportation and travel5) Volunteer WorkAs data is not available, we calculate the monetary value of this component. First,
estimates of hours of unpaid work per capita performed by working aged persons (persons 15
years of age or older) in the years 1981, 1986, and 1992 are taken from Statistics Canada (1995),
and from Statistics Canada’s General Social Survey for the years 1998, 2005, 2010, and 2015.
As the survey is only performed every five years, we interpolate the hours worked in any given
year between surveys by multiplying the hours of the previous year by the growth rate implied
for its five year period by the Statistics Canada data. For years after the last survey, we25

extrapolate the hours worked using the growth rate of the previous five-year period. Second, toestimate the value of these hours, we use data for the total value of unpaid work per year from
Statistics Canada (1995) for the years 1981, 1986, and 1992, which uses a generalist replacement
wage. To calculate the values after 1992, we multiply the hours worked by the total labour
compensation per hour for the total economy (which we refer to as ‘wages’) in constant dollars
for that year.8
In 2018, the value of unpaid work per capital in Newfoundland and Labrador was$10,677 per capita, which constituted 21.1 per cent of total consumption flows (Chart 11).
Among the provinces, Newfoundland and Labrador had the lowest value of unpaid work. Allfour Atlantic provinces ranked below the Canadian average.
Chart 11: Value of Unpaid Work per Capita by Province, 2018
Ontario
Alberta
British Columbia
CanadaNova Scotia
QuebecManitoba
Prince Edward Island
Saskatchewan
New Brunswick
Newfoundland and Labrador

15,825
15,237
14,996
14,41014,306
13,413
12,952
11,31911,008
10,838
10,677
0

2,000

4,000

6,000

8,000
10,000 12,000
2012$ Per Capita

14,00016,000Source: IEWB Database 2018, Table 1

The value of unpaid work per capita in Newfoundland and Labrador increased between
1981 and 2018 (Chart 12). Over the period, the value of unpaid work per capita in the province
grew by 53.7 per cent or 1.17 per cent per year, though it never reached Canada’s value of
unpaid work. This growth, however, was lower than Canada’s over the period. The national
value of unpaid work per capita increased by 59.9 per cent over the period or 1.28 per centannually, exceeding Newfoundland’s growth rates.
Despite the overall increase, the value of unpaid work in Newfoundland and Labrador
experienced a downward trend after peaking in 2010 at $12,765 per capita (Chart 12). During the
1981-2000 period, the value of unpaid work grew at a robust 2.40 per cent per year; however,during the 2000-2018 period, it deteriorated by 0.12 per cent per year. This negative growth was

8

The values of hours after 1992 are extrapolated using the growth rate of real wages over the 1992-2018 period. The
wage in a given year is calculated by multiplying the wage of the previous year by the change in the index of labour
compensation, which are taken from Statistics Canada’s Labour Productivity Measures Survey and deflated by CPI.

26

18,000most concentrated towards the end of the period. Between 2014 and 2018, the value of unpaid
work decreased by 2.86 per cent annually.

20,00018,00016,00014,00012,00010,000
8,000
6,000
4,000
2,000
0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

2012$ per Capita

Chart 12: Value of Unpaid Work per Capita in Newfoundland and Canada, 1981-2018

Newfoundland

CanadaSource: IEWB Database 2018, Table 1

Changes in the per-capita value of unpaid work reflect trends in three factors: thegeneralist replacement wage, the working-age population, and hours of unpaid work. The unpaid
wage rate and working-age population both increased between 1981 and 2018 in Newfoundlandand Labrador, contributing to the growth in the province’s value of unpaid work. The unpaid
wage rate increased by 47.2 per cent from $8.31 in 1981 to $12.23 in 2018 in 2012 dollars,
though it remained well below the Canadian wage (Chart 13). The working-age population
increased by 10.4 per cent from 402,000 in 1981 to 444,000 in 2018. In contrast, the number of
unpaid work hours in Newfoundland and Labrador decreased overall over the period, due tonegative growth after 2010; unpaid work hours totaled 459 million in 2018, 4.6 per cent lower
than the 1981 level of 481 million hours. As shown in Chart 14, between 2010 and 2018, thenumber of hours of unpaid work decreased each year. This decline corresponds to the downward
trend in the value of unpaid work during the post-2010 period.

27

20
18
16
14
12
10
8
6
4
2
0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

2012$ per Hour

Chart 13: Unpaid Work Wage Rate in Newfoundland and Canada, 1981-2018

Newfoundland

CanadaSource: IEWB Database 2018, Appendix Table 5-1 & 5-2

600
580
560
540
520
500
480
460
440
420
400
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Millions of Hours

Chart 14: Hours of Unpaid Work in Newfoundland and Labrador, 1981-2018

Source: IEWB Database 2018, Appendix Table 5-2

E. Regrettable Expenditures
Although most expenditures increase economic well-being, some—known as regrettable
expenditures—are spent to prevent or ameliorate undesirable outcomes. As people would bebetter off if such expenditures were not necessary, these expenditures represent a reduction inwell-being. This report defines regrettable expenditures as the cost of commuting (including
traveling and time costs), the cost of crime (such as security measures, repairing damaged
property, and medical and legal expenses), the cost of household pollution abatement (including
expenses on devices to improve air and water quality in the home), and the cost of automobile
accidents (including repair costs and medical and legal expenses). As the sum of these costs does28not contribute to or may actively detract from well-being, regrettable expenditures are subtracted
from total consumption flows.9
In 2018, regrettable expenditures in Newfoundland and Labrador were $5,067 per capita(Chart 15).10 Compared to the other provinces, Newfoundland fared modestly, ranking sixth. The
provinces with the most regrettable expenditures, however, did not exceed Newfoundland by alarge margin. Alberta, which had the highest regrettable expenditures per capita, surpassed
Newfoundland by $673 or 13.3 per cent.
Chart 15: Regrettable Expenditures per Capita by Province, 2018
Alberta
British Columbia
Ontario
CanadaSaskatchewan
Nova Scotia
Newfoundland and Labrador
New Brunswick
Manitoba
QuebecPrince Edward Island

5,740
5,716
5,281
5,221
5,117
5,116
5,067
4,853
4,796
4,703
4,700
0

1,000

2,000

3,000
4,000
2012$ Per Capita

5,000

6,000

Source: IEWB Database 2018, Table 1

Regrettable expenditures in Newfoundland and Labrador increased continuously during
the 1981-2018 period (Chart 16). Regrettable expenditures rose 232.9 per cent or 3.30 per centannually. Although regrettable expenditures in the province never exceeded the Canadian
average during the period, their growth rates were much larger than Canada’s. Regrettable
expenditures in Canada increased 144.2 per cent over the period, at a rate of 2.44 per centannually. By 2018, Newfoundland and Labrador was close to reaching Canada’s regrettable
expenditures of $5,221 per capita.
Regrettable expenditures in the province grew more significantly after 2000. Between
1981 and 2000, the growth rate was 2.72 per cent per year, much lower than the annual growthrate of 3.92 per cent between 2000 and 2018. Interestingly, this higher growth was mostly
concentrated in the 2008-2014 sub-period, which saw annual growth of 4.57 per cent. Between
2014 and 2018, growth slowed to 3.15 per cent per year, though it remained positive andsubstantial.
9

For further discussion on methodologies, see Wong (2020) for a report on the concept of regrettable expenditures.
Estimates of regrettable expenditures for the 1981-94 period are from Messinger (1997). Estimates after 1994 areextrapolations based on the assumption of constant growth rates. Furthermore, estimates for the provinces were
calculated by multiplying personal expenditures by Canada’s ratio of regrettable expenditures to personal
expenditures.
10

29

7,000

Chart 16: Regrettable Expenditures per Capita in Newfoundland and Canada, 1981-2018
6,000

2012$ per Capita

5,000
4,000
3,000
2,000
1,000

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

CanadaSource: IEWB Database 2018, Table 1

F. Life Expectancy
Life expectancy is the final adjustment to consumption. Total consumption flows are
multiplied by an index of life expectancy, as an increase in longevity increases total consumption
flows.11 In 2018, life expectancy at birth in Newfoundland and Labrador was 78.8 years, up 4.7
per cent from 75.3 years in 1981 (Chart 17). Between 1981 and 2018, life expectancy advanced
steadily at a rate of 0.12 per cent per year.
However, despite increasing since 1981, life expectancy in Newfoundland and Labrador
remained below the Canadian average throughout the period (Chart 17). Life expectancy in
Canada rose 10.6 per cent or 0.27 per cent annually from 1981 to 2018, reaching 83.5 years by
the end of the period. Among the provinces, life expectancy in Newfoundland and Labrador was
the lowest in 2018. As such, compared to the rest of Canada, Newfoundland and Labrador could
not fully enjoy the benefits to total consumption from increased longevity.

11

Calver (2016) estimates that approximately 41 per cent of the improvement in Canada’s standards of living from2000 to 2011 can be attributed to changes in life expectancy. Therefore, we may be underestimating the impact of
the benefits of increased life expectancy on overall economic well-being.

30

Chart 17: Life Expectancy at Birth in Newfoundland and Canada, 1981-2018
86
84
82
Age

80
78
76
74
72

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

70

Newfoundland

CanadaSource: IEWB Database 2018, Appendix Table 3

G. Total Consumption Flows
To calculate total per-capita consumption, we sum family size-adjusted personal
consumption, government expenditures on goods and services, and unpaid work, then subtract
regrettable expenditures. Finally, we adjust the total for the increase in life expectancy. Thisadjusted total consumption is scaled to generate the index of the consumption domain of theoverall Index of Economic Well-being.12
In 2018, total adjusted consumption flows in Newfoundland and Labrador was $50,699
per capita, while its index of the consumption domain was 0.653 (Chart 18). Among theprovinces, Newfoundland and Labrador ranked seventh. The other Atlantic provinces similarlyranked below the Canadian average. Alberta had the highest per-capita total consumption flows
with $58,718 per capita and a score of 0.835, which were significantly higher than
Newfoundland and Labrador’s.

12

To calculate the scores for the index of the consumption domain, we apply a linear scaling procedure to the total
adjusted consumption flows for each province. This scaling procedure does not affect the rankings of the provinces.

31

Chart 18: Total Consumption (Adjusted) per Capita by Province, 2018
Panel A: Per Capita
Alberta
Ontario
British Columbia
CanadaNova Scotia
Manitoba
QuebecNewfoundland and Labrador
Saskatchewan
Prince Edward Island
New Brunswick

58,71858,35356,48955,59455,08952,85550,871
50,69950,43050,381
49,92944,00046,00048,00050,00052,00054,000
2012$ Per Capita

56,00058,00060,000Panel B: Scaled (Index of the Consumption Domain)
Alberta
Ontario
British Columbia
CanadaNova Scotia
Manitoba
QuebecNewfoundland and Labrador
Saskatchewan
Prince Edward Island
New Brunswick

0.835
0.827
0.785
0.764
0.753
0.702
0.657
0.653
0.647
0.646
0.636
0.0

0.1

0.2

0.3

0.4
0.5
Index Level

0.6

0.7

0.8

0.9

Source: IEWB Database 2018, Table 1

Although Newfoundland and Labrador had relatively low per-capita total consumption
flows and never reached Canada’s level during the period, the province saw drastic improvementin the consumption domain between 1981 and 2018 (Chart 19). Over the period, total
consumption flows per capita grew 98.4 per cent or 1.87 per cent annually from its 1981 level of$25,560 per capita. This improvement was more impressive than Canada’s, which experienced
an increase of 68.4 per cent or 1.42 per cent per year. The index of the consumption domain for
Newfoundland and Labrador also grew by 0.57 points since 1981, compared to Canada’s
increase of 0.51 points.

32

Chart 19: Total Consumption Flows per Capita in Newfoundland and Canada, 1981-2018
Panel A: Absolute Values
60,000

2012$ per Capita

50,00040,00030,00020,00010,000

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

CanadaPanel B: Scaled
0.9
0.8
Scaled per Capita

0.7
0.6
0.5
0.4
0.3
0.2
0.1
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland

CanadaSource: IEWB Database 2018, Table 1

Table 3 summarizes the overall findings for the consumption domain in Newfoundlandand Labrador. By 2018, personal expenditures, average family size, regrettable expenditures, andlife expectancy remained slightly below the national level. Government expenditures and unpaid
work were the outliers among the components. Government expenditures in Newfoundland andLabrador exceeded the Canadian level by 27.6 per cent, while unpaid work per capita was
exceptionally low at 74.1 per cent of Canada’s.
Most components improved considerably over the period (Table 3). In particular,
personal consumption and government expenditures saw the greatest improvement. However,33unpaid work per capita decreased and regrettable expenditures increased between 1981 and2018, specifically in the sub-periods after 2008. Nevertheless, despite experiencing slower
growth towards the end of the period between 2008 and 2018, Newfoundland and Labrador’s
index of the consumption domain enjoyed an impressive improvement since 1981.
Table 3: Summary of Consumption Components in Newfoundland and Labrador, 1981-2018
Panel A: Per Capita
Personal Consumption(Unadjusted)
Family Size
Adjustment
Personal
Consumption(Adjusted)
Government
Expenditures
Unpaid Work
Regrettable
Expenditures
Total Consumption(Adjusted)
Life
Expectancy
Adjustment
Total
Consumption(Unadjusted)

1981

2000

2008
2012$ per Capita

2014

2018

11,921

19,251

25,492

29,38930,479

1,706

-279

-1,640-2,375-2,652

13,626

18,97323,85227,014

27,827

6,576

11,702

13,59014,382

15,137

6,948

10,90812,265

11,991

10,677-1,522-2,537-3,424-4,477-5,06725,56040,132

48,42851,30750,699

-68

1,086

2,146

2,397

2,125

25,62839,046

46,283

48,91048,574

Panel B: Relative to Canada
Personal
Consumption(Unadjusted)
Average Family
SizeGovernment
Expenditures
Unpaid Work
Regrettable
Expenditures
Life Expectancy
Total
Consumption(Adjusted)

1981

2000

2008
Per Cent of Canada’s

2014

2018

71.2

85.4

92.2

99.0

97.1

130.7

107.2

99.5

97.5

96.3

70.0

111.6

111.9

122.6

127.6

77.1

74.3

74.4

73.7

74.1

71.2

85.4

92.2

99.0

97.1

99.7

98.0

97.8

96.8

94.4

77.4

87.7

89.0

92.7

91.2

34

Panel C: Compound Annual Growth Rates
1981-2018

1981-2000

2000-2018

2000-2008

2008-2018

2008-20142014-2018

Per Cent
Total
Consumption(Adjusted)
Total
Consumption(Scaled)Index of Life
Expectancy
Personal
Consumption(Unadjusted)
Index of Square
Root of Family
SizeGovernment
Expenditures
Unpaid Work
Regrettable
Expenditures

1.87

2.40

1.31

2.38

0.46

0.97

-0.30

5.72

8.80

2.57

4.80

0.82

1.73

-0.52

0.12

0.16

0.09

0.22

-0.02

0.04

-0.13

2.57

2.55

2.59

3.57

1.80

2.40

0.91

-0.61

-0.78

-0.42

-0.65

-0.24

-0.30

-0.17

2.28

3.08

1.44

1.89

1.08

0.95

1.29

1.17

2.40

-0.12

1.48

-1.38

-0.37

-2.86

3.30

2.72

3.92

3.82

4.00

4.57

3.15

Source: IEWB Database 2018, Table 1

IV. Trends in the Stocks of Wealth Domain
Society’s stocks of wealth—both man-made and natural—determine the sustainability of
its current level of consumption. The wealth domain could, therefore, also be called thesustainability domain. This section examines the five main components of the wealth domain:
physical capital stock, R&D stock, the stock of natural resources, net international position, andhuman capital. The sum of the five components is adjusted to account for the social costs ofenvironmental degradation by subtracting the estimated annual cost of greenhouse gas emissions
from the total stock of wealth. Chart 20 shows the components of the wealth domain for
Newfoundland and Labrador in 1981, 2000, 2008, 2014, and 2018.

35

Chart 20: Components of the Stocks of Wealth Domain for Newfoundland and Labrador in 1981,
2000, 2008, 2014, and 2018
500,000

400,000

2012$ per Capita

300,000

1981
200,000

2000
2008
2014

100,0002018

0-100,000Net Capital
Stock

R&D Stock

NaturalNet
HumanGreenhouse Total WealthResources International Capital Stock Gas Social
Stock
Investment
Cost
Position

Source: IEWB Database 2018, Table 2

A. Physical Capital
The Index of Economic Well-being defines net capital stock as residential and nonresidential capital stock based on geometric depreciation. In 2018, Newfoundland and Labrador
had a net capital stock of $180,613 per capita, which represented the largest share of total wealthat 62.6 per cent (Chart 21). Compared to the rest of Canada, the province ranked a notablesecond. In contrast, the other Atlantic provinces had the lowest net capital stocks per capita,
remaining below $100,000 per capita. Top-ranking Alberta exceeded Newfoundland andLabrador by a wide margin at $228,804 per capita.

36

Chart 21: Net Capital Stock per Capita by Province, 2018
Alberta
Newfoundland and Labrador
Saskatchewan
CanadaBritish Columbia
Ontario
Manitoba
QuebecNova Scotia
New Brunswick
Prince Edward Island

228,804
180,613
148,839
120,255
110,472
103,543
101,517
96,62292,00285,33371,563050,000100,000
150,000
2012$ Per Capita

200,000

250,000

Source: IEWB Database 2018, Table 2

Newfoundland and Labrador enjoyed strong growth in per-capita net capital stock overthe period and continuously exceeded Canada’s from 1997 to 2018 (Chart 22). The province’s
net capital stock per capita grew an impressive 225.1 per cent or 3.24 per cent annually since
1981, compared to Canada’s 71.6 per cent or 1.47 per cent annually over the period.
Newfoundland and Labrador’s growth in net capital stock per capita was stronger in the latter
half of the period; per-capita net capital stock grew 2.88 per cent annually in the 1981-2000 subperiod, but increased even faster in the 2000-2018 sub-period at 3.62 per cent per year. It grew
the fastest from 2008 to 2014 at 4.87 per cent annually.
Chart 22: Net Capital Stock per Capita in Newfoundland and Canada, 1981-2018
200,000
180,000
2012$ per Capita

160,000
140,000
120,000
100,000
80,00060,00040,00020,000
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

CanadaSource: IEWB Database 2018, Table 2

Net capital stock per capita in Newfoundland and Labrador has consistently comprised alarger share of non-residential capital than residential (Table 4). In 2018, non-residential capital37

made up 67.6 per cent of total net capital stock. In addition, non-residential capital grew fasterthan residential capital over the period, particularly after 2008 (Table 4). In the 2008-2018 subperiod, non-residential capital increased dramatically by 6.70 per cent per year, while residential
capital grew at the much slower annual rate of 2.50 per cent. As a result, the province’s rapid
growth in total net capital stock per capita was mostly driven by the growth in non-residential
capital.
Table 4: Sub-Components of Net Capital Stock per Capita in Newfoundland, 1981-2018
Panel: A: Absolute Values
1981

2000

2008

2014

2018

Millions of 2012$
Non-Residential

20,61831,38434,50250,90264,171

Residential

11,347

18,91324,02029,47030,760152,174

180,6132012$ per Capita
Net Capital Stock(Total)55,562

95,266

114,394

Panel B: Compound Annual Growth Rates
1981-2018

1981-2000

2000-2018

2000-2008

2008-2018

2008-20142014-2018

Per Cent
Non-Residential

3.12

2.24

4.05

1.19

6.40

6.70

5.96

Residential

2.73

2.73

2.74

3.03

2.50

3.47

1.08

Net Capital
Stock (Total)

3.24

2.88

3.62

2.31

4.67

4.87

4.38

Source: IEWB Database 2018, Appendix Table 7

B. R&D Capital
In 2018, R&D stock in Newfoundland and Labrador was $1,431 per capita, which
comprised the smallest share of total wealth at 0.50 per cent (Chart 23). Newfoundland andLabrador ranked fourth of the ten provinces and first of the Atlantic provinces. Similar to therankings for net capital stock, Newfoundland and Labrador was exceptional in the Atlantic
region, as the other Atlantic provinces had the lowest R&D stock in Canada.

38

Chart 23: R&D Stock per Capita by Province, 2018
QuebecOntario
CanadaAlberta
Newfoundland and Labrador
British Columbia
Manitoba
Saskatchewan
Nova Scotia
Prince Edward Island
New Brunswick

2,268
2,172
1,906
1,689
1,431
1,385
1,348
1,316
1,308
1,048
952
0

500

1,000
1,500
2012$ Per Capita

2,000

2,500

Source: IEWB Database 2018, Table 2

Growth in R&D stocks was strong over the period (Chart 24). Between 1981 and 2018,
Newfoundland and Labrador’s R&D capital grew 145.0 per cent or 2.45 per cent per year,
though it never reached the national level. In contrast, Canada’s R&D stocks increased only 35.0
per cent or 0.82 per cent annually. Similar to net capital stock, Newfoundland and Labrador’s
R&D stock grew faster in the 2000-2018 sub-period at 3.00 per cent annually than in the earlier
1981-2000 sub-period at 1.94 per cent annually. In particular, R&D stock in the province
accelerated between 2008 and 2014 at 4.39 per cent per year.
Chart 24: R&D Stock per Capita in Newfoundland and in Canada, 1981-2018
2,500

2012$ per Capita

2,000

1,500

1,000

500

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

Source: IEWB Database 2018, Table 2

39

CanadaC. Natural Resources
In 2018, the total value of natural resources in Newfoundland and Labrador was $40,270
per capita, which accounted for 14.0 per cent of total wealth (Chart 25). Newfoundland andLabrador had the highest level of natural resources among the provinces. The value of natural
resources differed significantly across Canada. Prince Edward Island, for example, had thelowest value of natural resources at $291 per capita, only 0.72 per cent of Newfoundland andLabrador’s.
Chart 25: Natural Resources Stock per Capita by Province, 2018
Newfoundland and Labrador
Saskatchewan
British Columbia
CanadaNew Brunswick
Alberta
QuebecOntario
Nova Scotia
Manitoba
Prince Edward Island

40,27035,446
19,796
18,291
16,507
16,293
9,214
4,317
4,290
3,279
291
0

5,000

10,00015,00020,00025,000
2012$ Per Capita

30,00035,00040,00045,000Source: IEWB Database 2018, Table 2

The value of natural resources in Newfoundland and Labrador generally increased overthe period, but experienced much volatility (Chart 26). By 2018, the value of natural resources
increased 80.6 per cent from its 1981 level of $22,294 per capita. However, the growth in thevalue of natural resources was unstable between 2000 and 2018. From 2000 to 2008, the value ofnatural resources grew at a rate of 19.95 per cent per year, peaking at $280,877 per capita in
2008. Following this period, however, the value of natural resources declined substantially. In
the 2008 to 2014 sub-period, the value of natural resources in Newfoundland and Labrador
decreased by 18.74 per cent per year. Towards the end of the period, between 2014 and 2018, thegrowth rate improved slightly, but the value of natural resources still faced significant decline at-16.0 per cent annually. Canada, by contrast, experienced relatively stable though negative
growth between 1981 and 2018, decreasing at an annual rate of 1.05 per cent.

40

Chart 26: Natural Resources Stock per Capita in Newfoundland and in Canada, 1981-2018
300,000

2012$ per Capita

250,000
200,000
150,000
100,000
50,000

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

CanadaSource: IEWB Database 2018, Table 2

We define the value of natural resources as the value of timber stocks, mineral resources,and energy resources. After 2008, energy resources comprised the largest share of natural
resources in Newfoundland and Labrador, followed by mineral resources (Table 5). These
sectors play key roles in the province’s economy. As a result, these two sub-components werethe main drivers behind the volatile trends in the value of natural resources in Newfoundland andLabrador over the period. Between 2000 and 2008, mineral resources and energy resources grewby 31.6 per cent and 29.7 per cent per year, respectively, reflecting growth in the mineral and oil
and gas extraction sectors. In the 2008-2014 sub-period, however, mineral resources declined by
19.2 per cent annually and energy resources by 16.8 per cent annually, due to a collapse in oil
and gas output following the 2008 recession. The rising value of timber stocks between 2008 and2014 partially cushioned the impact of the falling values of mineral and energy resources on total
natural resources.
Table 5: Sub-Components of Total Natural Resources per Capita in Newfoundland, 1981-2018
Panel A: Absolute Values

Timber Stocks
MineralResources
EnergyResources

1981

2000

2014

2018

5,139

2008
Millions of 2012$
1,828

1,667

2,352

3,470

2,694

3,224

29,017

8,102

6,269

0

12,649101,063

33,466

11,97780,89240,270

2012$ per Capita
NaturalResources (Total)

22,29465,562

280,87741

Panel B: Compound Annual Growth Rates
1981-2018

1981-2000

2000-2018

2000-2008

2008-2018

2008-20142014-2018

Per Cent
Timber Stocks
MineralResources
EnergyResources
NaturalResources(Total)

2.00

6.10

-2.16

-12.12

6.62

4.29

10.21

2.31

0.95

3.76

31.61

-14.21-19.15

-6.21

0.00

0.00

-0.30

29.66

-19.21-16.82-22.65

1.61

5.84

-2.67

19.95

-17.65-18.74-16.00Source: IEWB Database 2018, Appendix Table 10, 11, 12, & 13

D. Net International Investment Position
In 2018, Newfoundland and Labrador’s net international investment position was
estimated to be negative $4,011 per capita (Chart 27).13 Among the provinces, Newfoundlandand Labrador ranked eighth. The province was an outlier among the Atlantic region, as the threeother Atlantic provinces had the lowest international debt per capita in Canada.
Chart 27: Net International Investment per Capita in Newfoundland and Canada, 1981-2018
Prince Edward Island
Nova Scotia
New Brunswick
QuebecManitoba
British Columbia
Ontario
Canada
Newfoundland and Labrador
Saskatchewan
Alberta-2,674-2,730-2,801-3,063-3,242-3,435-3,539-3,612-4,011-4,844-5,243-6,000-5,000-4,000-3,000
2012$ Per Capita-2,000-1,0000

Source: IEWB Database 2018, Table 2

Between 1981 and 2018, Newfoundland and Labrador improved its net international
investment position (Chart 28). By 2018, the province decreased its international indebtedness by
59.5 per cent from its 1981 level of negative $9,892 per capita. This improvement was mostly
concentrated in the 2000-2018 sub-period. In particular, between 2014 and 2018, the province’s
net international investment position improved at a significant rate of 23.5 per cent per year.

13

No data are available on the provincial distribution of foreign assets and liabilities. We estimate provincial data byweighting the national value by provincial shares of national GDP, assuming that such assets and liabilities directly
relate to the amount of economic activity in a province.

42

Chart 28: Net International Investment per Capita in Newfoundland and Canada, 1981-2018
0-2,000-4,000-6,000-8,000-10,000-12,000-14,000-16,000
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

-18,000

Newfoundland

CanadaSource: IEWB Database 2018, Table 2

E. Human Capital
The Index of Economic Well-being defines human capital as the accumulated private andpublic expenditures on education.14 In 2018, the value of human capital in Newfoundland andLabrador was $156,681 per capita, which comprised the second largest share of total wealth after
net capital stock (Chart 29). Compared to the other provinces, Newfoundland and Labrador had
low human capital stock, ranking ninth. The other Atlantic provinces, apart from Prince Edward
Island, ranked low in Canada in terms of human capital stock per capita.
Chart 29: Human Capital Stock per Capita by Province, 2018
Saskatchewan
Manitoba
OntarioPrince Edward Island
QuebecCanadaBritish Columbia
New Brunswick
Alberta
Newfoundland and Labrador
Nova Scotia

236,363
189,029
187,399
186,526
177,868
175,460
173,391
170,694
157,568
156,681
143,2560

50,000100,000
150,000
2012$ Per Capita

200,000

Source: IEWB Database 2018, Table 2
14

The value of human capital is based on estimates of the cost of education in 2009/2010 and enrolment numbers
from different years.

43

250,000

Although it never reached the national level, human capital stock per capita in
Newfoundland and Labrador improved from 1981 to 2018, increasing 66.1 per cent or 1.38 percent per year from its 1981 level of $94,319 per capita. The province’s overall growth in humancapital stock was greater than Canada’s, which grew 50.9 per cent or 1.12 per cent annually overthe period. Human capital per capita in Newfoundland and Labrador grew much faster in the
1981-2000 sub-period at 1.83 per cent per year than the post-2000 sub-period at 0.91 per cent per
year.
Chart 30: Human Capital Stock per Capita in Newfoundland and Canada, 1981-2018
200,000
180,000
160,000
140,000
120,000
100,000
80,00060,00040,00020,000
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

CanadaSource: IEWB Database 2018, Table 2

Growth in post-secondary education spending largely drove the growth in total humancapital in Newfoundland and Labrador (Table 6). Between 1981 and 2018, the values of postsecondary and university education increased by 3.82 per cent and 3.18 per cent annually. In
contrast, the values of primary and secondary education decreased, driving down the growth rateof total human capital. Moreover, the growth in spending at the post-secondary level slowed
between 2000 and 2018, which in turn led to slower growth in total human capital during thissub-period.
Table 6: Sub-components of Human Capital per Capita in Newfoundland, 1981-2018
Panel A: Absolute Values

0-8 Years
Some Secondary
Education
Graduated fromHigh SchoolSome Post-

1981

2000

2014

2018

6.54

2008
Billions of 2012$
4.92

13.38

3.97

3.10

21.08

11.36

9.20

7.94

7.46

N/A
4.34

9.55
6.16

10.58
6.02

11.21
4.26

12.29
3.56

44

1981

2000

2008

2014

2018

SecondaryPost-Secondary
Certificate/Diploma
University Degree

8.11
7.34

23.77
12.94

26.02
17.90
2012$ per Capita

30.35
24.15

32.48
23.47

Human Capital(Total)94,319133,179

145,899

155,037

156,681

Part B: Compound Annual Growth Rates

0-8 Years
Some Secondary
Education
Graduated fromHigh SchoolSome PostSecondary
Post-Secondary
Certificate/Diploma
University Degree
Human Capital(Total)1981-2018

1981-2000

2000-2018

2008-2018

2008-20142014-2018-4.05

2000-2008
Per Cent
-3.48

-3.87

-3.70

-4.51

-3.50

-5.99

-2.77

-3.20

-2.31

-2.61

-2.08

-2.42

-1.56

N/A

N/A

1.41

1.29

1.51

0.98

2.31

-0.54

1.85

-3.00

-0.29

-5.12

-5.61

-4.38

3.82

5.82

1.75

1.14

2.24

2.60

1.71

3.19

3.03

3.36

4.14

2.75

5.12

-0.71

1.38

1.83

0.91

1.15

0.72

1.02

0.26

Source: IEWB Database 2018, Appendix Table 15

F. Social Cost of Environmental Degradation
Environmental degradation negatively affects the sustainability of stocks of wealth.
Although placing a value on environment is controversial,15 the Index of Economic Well-being
includes estimates of the social costs of greenhouse gases (GHG) to highlight the importance ofthe environment to economic well-being. To adjust for environmental degradation, we subtractthe estimated social costs of GHG emissions from total wealth. The social cost of emissions ineach year is derived by multiplying the amount of greenhouse gas emissions by their social
cost.16 As we assume that the costs of environmental degradation are not dissipated each year,
we sum the social costs of the previous years to estimate the total accumulated social costs of agiven year.
In 2018, the total cumulative social cost of GHG emissions since 1981 was $86,588 per
capita in Newfoundland and Labrador (Chart 31). Among the provinces, Newfoundland andLabrador ranked sixth, exceeding the national level. In the Atlantic region, Newfoundland andLabrador had the lowest total social cost of greenhouse gases, but every Atlantic province hadhigher social costs than the Canadian average.

15

See Sharpe et al. (2008) for a brief discussion of the methodological challenges on the estimation of marginal
social costs of GHG emissions.
16
The social cost is assumed to be $125 CAD per ton in 2012 dollars.

45

Chart 31: Total Social Cost of Greenhouse Gas Emissions per Capita by Province, 2018
Prince Edward Island
Saskatchewan
Alberta
New Brunswick
Nova Scotia
Newfoundland and Labrador
CanadaManitoba
Ontario
British Columbia
Quebec478,735
247,475
235,789
106,915
96,911
86,58885,02867,71859,39054,021
46,8240

100,000

200,000

300,000
400,000
2012$ Per Capita

500,000

600,000

Source: IEWB Database 2018, Table 2

Between 1981 and 2018, Newfoundland and Labrador’s accumulated social cost of GHG
emissions increased 10.7 per cent annually (Chart 32). The province’s annual social cost grew
0.79 per cent annually from $2,013 per capita in 1981 to $2,698 per capita in 2018.
Newfoundland and Labrador exceeded Canada’s per-capita accumulated social cost in 2018 andper-capita marginal cost in 2015. The annual social cost of GHG in the province grew fastest in
the 2000-2018 sub-period at 1.43 per cent per year, compared to only 0.19 per cent per year
between 1981 and 2000. In particular, between 2014 and 2018, the annual social cost of GHG
increased at an annual rate of 2.38 per cent.
Chart 32: Social Cost of Greenhouse Gas Emissions per Capita in Newfoundland andCanada, 1981-2018
100,000
90,00080,00070,00060,00050,00040,00030,00020,00010,000
0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

2012$ per Capita

Panel A: Accumulated Social Cost

Newfoundland

46

CanadaPanel B: Annual Social Cost
3,500

2012$ per Capita

3,000
2,500
2,000
1,500
1,000
500
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

Newfoundland

CanadaSource: IEWB Database 2018, Appendix Table 9

G. Total Wealth Stocks
To estimate the total stock of wealth, we sum the five components and adjust for thesocial cost of greenhouse gases. Total wealth is then scaled to generate the index of the stock of
wealth domain of the overall Index of Economic Well-being. In 2018, Newfoundland andLabrador totaled $288,396 per capita in wealth stocks, scoring 0.59 in the index of the stock of
wealth domain (Chart 33). Among the provinces, Newfoundland and Labrador had the highest
total wealth per capita. In contrast, the other Atlantic provinces had the lowest, which reveals
that Newfoundland and Labrador was an outlier in the region.
Chart 33: Total Wealth per Capita by Province, 2018
Panel A: Per Capita
Newfoundland and Labrador
British Columbia
QuebecOntario
CanadaManitoba
Saskatchewan
New Brunswick
Alberta
Nova Scotia
Prince Edward Island

288,396247,588
236,086
234,502227,272
224,212
169,645
163,770
163,322
141,2160050,000100,00047

150,000
200,000
2012$ Per Capita

250,000

300,000

350,000

Panel B: Scaled (Index of the Stock of Wealth Domain)
Newfoundland and Labrador
British Columbia
QuebecOntario
CanadaManitoba
Saskatchewan
New Brunswick
Alberta
Nova Scotia
Prince Edward Island

0.590
0.519
0.498
0.496
0.483
0.477
0.382
0.371
0.370
0.332
0.083
0.0

0.1

0.2

0.3
0.4
2012$ Per Capita

0.5

0.6

0.7

Source: IEWB Database 2018, Table 2

Similar to total consumption, Newfoundland and Labrador enjoyed a significant
improvement in total wealth between 1981 and 2018 (Chart 34). Total wealth stocks grew 79.3
per cent or 1.59 per cent annually from its 1981 level of $160,854 per capita. In comparison,
Canada’s total wealth grew 14.2 per cent or 0.36 per cent per year. During this period, the index
of the stock of wealth domain for Newfoundland and Labrador increased 0.22 points, compared
to Canada’s increase of 0.05 points.
Chart 34: Total Wealth per Capita in Newfoundland and Canada, 1981-2018
Panel A: Absolute Values
500,000
450,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

2012$ per Capita

400,000

Newfoundland and Labrador

48

Canada

1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Index Level

Panel B: Scaled (Index of the Stock of Wealth Domain)

Newfoundland and Labrador

CanadaSource: IEWB Database 2018, Table 2

Table 7 summarizes the findings for the components of the wealth domain in
Newfoundland and Labrador from 1981 to 2018. By 2018, net capital stock and natural resources
exceeded the national level by a significant margin, which likely explains the province’s hightotal wealth relative to Canada. However, net international investment position and the social
cost of GHG emissions (total and marginal) in the province were also much larger than
Canada’s. Furthermore, among the components, R&D stock and human capital stock had thelowest levels relative to Canada, though they had increased since 1981.
All components, with the exception of the social cost of GHG, improved between 1981
and 2018 (Table 7). Net capital stock, R&D capital, and net international investment position
experienced the strongest improvement at annual rates of 3.24, 2.45, and 2.41 per cent,respectively, over the period. However, the social cost of GHG emissions (total and marginal)
increased, while natural resources declined significantly after 2008. As a result, growth in total
wealth slowed towards the end of the period between 2000 and 2018, and was even negative
between 2008 and 2018.

Table 7: Summary of Stocks of Wealth Components per Capita in Newfoundland and Labrador,
1981-2018
Panel A: Absolute Values
Net Capital StockR&D Stock
Natural Resources
Stock
Net International
Investment Position
Human Capital
Stock

1981

2000

2014

2018

95,266841

2008
2012$ per Capita
114,394
1,099

55,562
584

152,174
1,422

180,613
1,431

22,29465,562

280,877

80,89240,270-9,892-9,704-4,243-11,695-4,011

94,319133,179

145,899

155,037

156,68149

Greenhouse Gas
Social Cost (Total)
GHG
SocialCost(Marginal)
Total Wealth

1981

2000

2008

2014

2018

-2,013-42,382-63,949-75,855-86,588

2,013

2,089

2,549

2,456

2,698

160,854242,762474,077

301,974

288,396

1981

2000

2014

2018

79.3
41.4

109.1
48.9

2008
Per Cent of Canada’s
109.9
51.2

130.4
68.7

150.2
75.1

82.6

188.7

568.4

282.4

220.2

76.5

93.8

128.6

116.4

111.0

81.1

90.4

90.5

91.3

89.3

71.4

84.5

93.6

96.1

101.8

71.4

70.1

90.2

97.2

113.5

80.8

115.2

193.3

132.4

126.9

Panel B: Relative to Canada’s
Net Capital StockR&D Stock
Natural Resources
Stock
Net International
Investment Position
Human Capital
Stock
Greenhouse Gas
Social Cost (Total)
GHG
SocialCost(Marginal)
Total WealthPanel C: Compound Annual Growth Rates
1981-2018

1981-2000

2000-2018

2000-2008

2008-2018

2008-20142014-2018

Per Cent
Net Capital Stock

3.24

2.88

3.62

2.31

4.67

4.87

4.38

R&D Stock

2.45

1.94

3.00

3.40

2.68

4.39

0.15

1.61

5.84

-2.67

19.95

-17.65-18.74-16.00

-2.41

-0.10

-4.79

-9.82

-0.56

18.41

-23.47

1.38

1.83

0.91

1.15

0.72

1.02

0.26

10.70

17.39

4.05

5.28

3.08

2.89

3.36

0.79

0.19

1.43

2.04

0.95

0.01

2.38

1.59

2.19

0.96

8.73

-4.85

-7.24

-1.14

Natural Resources
Stock
Net International
Investment Position
Human Capital
Stock
Greenhouse Gas
Social Cost (Total)
GHG
Social Cost
(Marginal)
Total Wealth

Source: IEWB Database 2018, Table 2
Note: For the compound annual growth rates of net international investment position, positive growth indicatesincreased indebtedness. Thus, negative growth indicates an improvement.

50

V.

Trends in the Economic Equality Domain

A fall in equality has a negative impact on economic well-being, and vice versa. Thissection examines the two components of economic equality: income inequality and poverty.
Chart 35 shows the components of the economic equality domain in Newfoundland andLabrador between 1981 and 2018. We measure income inequality by using the scaled Gini
coefficient, constructed by Statistics Canada, and we measure poverty by using scaled poverty
intensity, which is the product of the poverty rate and poverty gap.17 The poverty rate is definedin relative terms, using Statistics Canada’s Low Income Measure (LIM), as the share of
Canadians who live below the poverty line (fifty per cent of median family income). The poverty
gap is the average difference between the poverty line and incomes of those in poverty.
Chart 35: Components of the Economic Equality Domain in Newfoundland and Labrador, 1981,
2000, 2008, 2014 and 2018
0.7

Index Level

0.6
0.5

1981

0.4

2000

0.3

2008
2014

0.2

2018
0.1
0.0
Index of Income Inequality

Index of Poverty

Index of Economic Equality

Source: IEWB Database 2018, Table 3

The weighting of these two components is not equal. As we consider poverty to be moredetrimental to well-being than income inequality, we assign poverty intensity a weight of threequarters and income a weight of one quarter to determine the overall Index of Economic
Equality. Therefore, changes in poverty, as opposed to changes in the Gini coefficient, will moresignificantly drive the trends in economic equality.

A. Income Inequality
In 2018, Newfoundland and Labrador’s index of income equality, which is the scaledGini coefficient, scored 0.439, ranking seventh of the provinces (Chart 36). Newfoundland and
17

The Gini coefficient for all families in Canada is based on after-tax income. While increases in most economic
indicators signify an improvement, an increase in the Gini coefficient indicates a decrease in equality. As such,when scaling the Gini coefficient to generate the index of income equality, we transformed it such that a higherscore indicates an increase in equality. Similarly, for the index of poverty, a higher score indicates an improvementin poverty intensity.

51

Labrador ranked much lower than the other Atlantic provinces, which were the most equitable interms of after-tax income in Canada. Only Alberta, British Columbia, and Ontario had worse
income inequality than Newfoundland and Labrador.
Chart 36: Index of Income Equality by Province, 2018
Prince Edward Island
New Brunswick
QuebecNova Scotia
Saskatchewan
Manitoba
Newfoundland and Labrador
Alberta
British Columbia
CanadaOntario

0.585
0.569
0.553
0.528
0.496
0.488
0.439
0.423
0.415
0.391
0.326
0.0

0.1

0.2

0.3
0.4
Index Level

0.5

0.6

Source: IEWB Database 2018, Table 3

Income equality in Newfoundland and Labrador deteriorated between 1981 and 2018
(Chart 37). Over the period, the province’s index of income equality decreased 0.11 points from0.544 in 1981 to 0.439 in 2018, indicating higher inequality. This decline in the index was
equivalent to a 0.013 point increase in the province’s Gini coefficient. The province’s score wasalso consistently higher than the national level over the period. Although income inequality in
Newfoundland and Labrador did worsen over the period, Canada’s deterioration was slightly
more severe; the index of income equality at the national level decreased 0.15 points.
The decline in income equality was mostly concentrated in the 1981-2000 sub-period(Chart 37). Between 1981 and 2000, the province’s index of income equality deteriorated 1.62
per cent annually, while it improved 0.54 per cent annually between 2000 and 2018. The index
improved the most in the 2008-2014 sub-period at 2.49 per cent. However, between 2014 and2018, the province’s score deteriorated at a rate of 1.76 per cent per year.

52

0.7

Chart 37: Index of Income Equality in Newfoundland and Canada, 1981-2018

Panel A: Gini Coefficient
0.34

Gini Coefficient

0.32
0.3
0.28
0.26
0.24
0.22
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.2

Newfoundland and Labrador

CanadaPanel B: Index of Income Equality (Scaled Gini Coefficient)
0.8

Index Level

0.7
0.6
0.5
0.4
0.3

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.2

Newfoundland and Labrador

CanadaSource: IEWB Database 2018, Appendix Table 17

B. Poverty Intensity
In 2018, Newfoundland and Labrador’s index of poverty, based on scaled estimates ofpoverty intensity, was 0.572 (Chart 38). Identical to its provincial ranking for the index ofincome equality, Newfoundland and Labrador ranked seventh among the provinces, signifying
relatively high poverty intensity. Only Manitoba, Saskatchewan, and Nova Scotia received lower
scores.

53

Chart 38: Index of Poverty by Province, 2018
Alberta
British Columbia
New Brunswick
CanadaPrince Edward Island
Ontario
QuebecNewfoundland and Labrador
Manitoba
Saskatchewan
Nova Scotia

0.824
0.712
0.661
0.641
0.637
0.614
0.601
0.572
0.546
0.542
0.497
0.0

0.1

0.2

0.3

0.4
0.5
Index Level

0.6

0.7

0.8

Source: IEWB Database 2018, Table 3

Despite its relatively low score in Canada, Newfoundland and Labrador’s index ofpoverty did improve over the period, unlike the index of income equality (Chart 39). Between
1981 and 2018, the index of poverty improved 0.25 points from 0.322 in 1981 to 0.572 in 2018.
Comparatively, Canada’s score deteriorated 0.01 points since 1981, though its score by 1981 was
generally higher than Newfoundland and Labrador’s over the period. Similar to the index ofincome equality, improvement in the index of poverty mostly occurred after 2000. Between 2000
and 2018, the province’s score increased 4.09 per cent annually, while it decreased by 0.78 percent per year from 1981 to 2000. Growth was most impressive between 2000 and 2008 at a rateof 7.86 per cent annually but, after peaking in 2011, the province’s score deteriorated again
Improvements in Newfoundland and Labrador’s poverty rate and poverty gap fueled theoverall improvement in the index of poverty between 1981 and 2018 (Chart 39). The poverty rate
decreased 3.9 points from 19.9 per cent in 1981 to 16.0 per cent in 2018, while the poverty gap
also decreased 3.0 points from 29.1 per cent in 1981 and 26.1 per cent in 2018. Although thepoverty rate in the province remained higher than the national average by 2018, the two
subcomponents of the index of poverty still improved significantly over the period.

54

0.9

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

Chart 39: Index of Poverty and its Subcomponents in Newfoundland and Canada, 1981-2018

Panel A: Poverty Rate
30

25

20

15

10

5

0

Newfoundland and Labrador

Newfoundland and Labrador

Newfoundland and Labrador

Source: IEWB Database 2018, Appendix Table 18

55

CanadaPanel B: Poverty Gap

34

32

30

28

26

24

22

20

CanadaPanel C: Index of Poverty

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0

CanadaC. Index of Economic Equality
As discussed previously, the index of the economic equality domain is the weighted sumof the index of income inequality and the index of poverty intensity, with more weight on theformer. In 2018, the index of economic inequality in Newfoundland and Labrador was 0.539,
ranking seventh (Chart 40). Alberta, the highest-ranked province at 0.724, exceeded
Newfoundland and Labrador by a wide margin.
Chart 40: Index of Economic Inequality by Province, 2018
Alberta
New Brunswick
British Columbia
Prince Edward Island
QuebecCanadaOntario
Newfoundland and Labrador
Manitoba
Saskatchewan
Nova Scotia

0.724
0.638
0.638
0.624
0.589
0.579
0.542
0.539
0.532
0.531
0.505
0.0

0.1

0.2

0.3

0.4
Index Level

0.5

0.6

0.7

0.8

Source: IEWB Database 2018, Table 3

Newfoundland and Labrador’s score for the index of economic equality generally
increased over the period (Chart 41). The province’s score rose 0.16 points from its 1981 scoreof 0.378, though it fell below Canada’s score in 2018. The index grew 0.96 per cent annuallyfrom 1981 to 2018 and, consistent with the index of poverty, experienced the highest growth
between 2000 and 2008 at a rate of 5.79 per cent per year.
Chart 41: Index of Economic Equality in Newfoundland and Canada, 1981-2018
0.8
0.7
Index Level

0.6
0.5
0.4
0.3
0.2
0.1
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland and Labrador

Source: IEWB Database 2018, Table 3

56

CanadaTable 8 summarizes the findings for the components of the economic equality domain in
Newfoundland and Labrador from 1981 to 2018. By 2018, only the province’s index of income
equality exceeded the national score. However, scores for both the index of poverty and index of
economic equality in 2018 were significantly higher than their 1981 levels. Among the five years
examined in Table 7, all three indexes had their highest scores relative to Canada’s in 2014,
signifying deterioration by 2018.
Newfoundland and Labrador enjoyed better economic equality by the end of the period.
The index of income equality deteriorated between 1981 and 2018, but the index of poverty
improved, which drove the improvement in the index of economic equality. All indexes declinedin the 1981-2000 sub-period, but grew in the 2000-2018 sub-period. The index of poverty andindex of economic equality had the highest growth between 2000 and 2008, while the index ofincome equality had its greatest rate of improvement between 2008 and 2014. At the end of theperiod between 2014 and 2018, however, all three indexes saw deterioration.
Table 8: Summary of Components of the Economic Equality Domain in Newfoundland andLabrador, 1981-2018
Panel A: Index Level
Index of Income
Equality
Index of Poverty
Index of Economic
Equality

1981

2000

2008
Index Level

2014

2018

0.544

0.399

0.407

0.472

0.439

0.322

0.278

0.509

0.639

0.572

0.378

0.308

0.484

0.597

0.539

Panel B: Relative to Canada

Index of Income
Equality
Index of Poverty
Index of Economic
Equality

1981

2000

2008
Per Cent

2014

2018

101.5

143.7

134.9

144.7

112.4

49.6

46.8

86.3

107.1

89.2

60.8

59.9

93.4

112.9

93.1

Panel C: Compound Annual Growth Rates
1981-2018

1981-2000

2000-2018

2000-2008

2008-2018

2008-20142014-2018

Per Cent
Index of Income
Equality
Index of Poverty
Index of
Economic
Equality

-0.58

-1.62

0.54

0.25

0.77

2.49

-1.76

1.56

-0.78

4.09

7.86

1.17

3.85

-2.72

0.96

-1.07

3.15

5.79

1.08

3.57

-2.53

Source: IEWB Database 2018, Table 3

57

VI. Trends in Economic Security Domain
The economic security domain is the final and most complex domain of the Index of
Economic Well-being.18 Its methodology has evolved since the Index’s introduction in 1998.
The economic security domain has four components concerning the risks to economic wellbeing: risk imposed by unemployment, financial risk from illness, risk from single-parent
poverty, and risk of poverty in old age. Chart 42 compares the components of the economic
security domain in Newfoundland and Labrador between 1981 and 2018.19

Index Level

Chart 42: Components of the Economic Security Domain in Newfoundland and Labrador, 1981,
2000, 2008, 2014, 2018
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0

1981
2000
2008
2014
2018
Risk Imposed by
Unemployment

Risk Imposed by
Illness

Risk Imposed by Risk Imposed by
Overall Index ofSingle-Parent
Poverty in Old Age Economic Security
Poverty(weighted)

Source: IEWB Database 2018, Table 4, 5, 6, 7, & 8

A. Risk from Unemployment
Three variables comprise the index of the risk imposed by unemployment: theunemployment rate, the proportion of the unemployed receiving EI benefits, and the proportionof earnings that are replaced by EI benefits. We multiply the proportion of the unemployedreceiving benefits and the proportion of earnings to obtain an index for financial protection fromunemployment. To generate the index of risk from unemployment, we sum the scaled
unemployment rate, which is assigned a weight of four-fifths, and scaled financial protection for
unemployment, which is assigned a weight of one-fifth.20 As a result, the unemployment rate is
the primary driver of changes in the index of risk from unemployment.

18

See Heslop (2009) for a discussion of the role of economic security in an index of economic well-being and anassessment of the CSLS approach to the measurement of economic security.
19
As linear scaling procedures are applied to all sub-components, an increase in any of the indexes translates to lessrisk, an improved outcome.
20
The unemployment rate receives a heavier weight, as it signifies the relative ease of obtaining employment.
Compared to financial protection from unemployment, the unemployment rate is a more important indicator of
economic security for most of the working population.

58

In 2018, the index of security from unemployment in Newfoundland and Labrador scored0.414, the lowest value among the provinces (Chart 43). In Canada, those in Newfoundland andLabrador faced the highest risk to economic security imposed by unemployment.
Newfoundland’s score was significantly lower than the rest of Canada, whose scores ranged
from 0.608 to 0.714. The province had the highest unemployment rate in Canada in 2018 at 13.6
per cent, which explains Newfoundland and Labrador’s low score for the risk fromunemployment.
Chart 43: Index of Security from the Risk Imposed by Unemployment by Province, 2018
British Columbia
QuebecCanadaOntario
Saskatchewan
Manitoba
New Brunswick
Nova Scotia
Alberta
Prince Edward Island
Newfoundland and Labrador

0.714
0.694
0.675
0.669
0.669
0.668
0.650
0.649
0.634
0.608
0.414
0.0

0.1

0.2

0.3

0.4
Index Level

0.5

0.6

0.7

Source: IEWB Database 2018, Table 4

The index of risk from unemployment in Newfoundland and Labrador decreased 0.034
points from 1981 to 2018 and remained below Canada’s score throughout the period (Chart 44).
This decrease was driven by an increase in the unemployment rate and decrease in financial
protection for unemployment. The unemployment rate increased slightly by 0.30 percentage
points from 13.5 per cent in 1981 to 13.8 per cent in 2018. However, after peaking in 1993 at
20.1 per cent, the unemployment rate in Newfoundland and Labrador generally declined until
2014, which suggests a trend of improvement towards the end of the period. While the earnings
replacement rate increased 4.97 percentage points from 35.1 per cent in 1981 to 40.0 per cent in
2018, the EI coverage rate declined by 38.2 percentage points from 137.4 per cent in 1981 to
99.2 per cent in 2018. As a result, the scaled value of financial protection for unemployment
decreased 0.085 points between 1981 and 2018.
Although Newfoundland and Labrador’s index of risk from unemployment declined overthe period, this deterioration occurred mostly before 2000 (Chart 44). Between 1981 and 2000,
the index declined at a rate of 2.13 per cent per year, while it grew 1.85 per cent per year
between 2000 and 2018. The index grew the fastest during the 2000-2008 sub-period at an
impressive 5.32 per cent per year. However, between 2014 and 2018, the index of risk fromunemployment once again deteriorated, declining 3.86 per cent annually.

59

0.8

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

Chart 44: Risk from Unemployment and its Subcomponents in Newfoundland and Canada, 19812018
Panel A: Unemployment Rate
25

20

15

10

5

0

Newfoundland and Labrador

Newfoundland and Labrador

Newfoundland and Labrador

60

CanadaPanel B: EI Coverage Rate

200

150

100

50

0

CanadaPanel C: Earnings Replacement Rate

50
45
40
35
30
25
20
15
10
5
0

CanadaPanel D: Financial Protection for Unemployment
1.0
Index Level

0.8
0.6
0.4
0.2
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland and Labrador

Canada

0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Index Level

Panel E: Index of Risk from Unemployment

Newfoundland and Labrador

CanadaSource: IEWB Database 2018, Table 4

B. Financial Risk from Illness
Canadian citizens have access to universal health care, which provides medicallynecessary procedures free of charge. As a result, they face significantly less risk than citizens incountries without universal coverage, such as the United States. However, Canadians still facesignificant private expenditures on health care, as many services, such as dental care,pharmaceuticals, and medically unnecessary procedures, are not covered. These expenditures,
which disproportionately affect low-income Canadians, are rapidly rising. We use scaled private
medical expenditures as a proxy for the risk imposed by illness.21
In 2018, the index of security from the risk imposed by illness in Newfoundland andLabrador was 0.455, the fourth highest score in Canada (Chart 45). With a relatively high level21

Private expenditures include all out-of- pocket expenditures made by individuals for the following: health caregoods and services; health insurance claims paid to individuals by commercial and not-for-profit insurance firms, aswell as the costs of administering those claims; non-patient revenues received by health care institutions, such as
donations and investment income; private spending on health- related capital construction and equipment; and healthresearch funded by private sources.

61

of security from illness, Newfoundland and Labrador was the outlier in the Atlantic region. The
other Atlantic provinces received the lowest scores for risk from illness.
Chart 45: Index of Security from the Risk Imposed by Illness by Province, 2018
Saskatchewan
British Columbia
Alberta
Newfoundland and Labrador
Manitoba
CanadaQuebecOntario
Nova Scotia
Prince Edward Island
New Brunswick

0.554
0.526
0.525
0.455
0.402
0.398
0.366
0.318
0.305
0.291
0.291
0.0

0.1

0.2

0.3
Index Level

0.4

0.5

Source: IEWB Database 2018, Table 5

Newfoundland and Labrador’s high score for risk from illness stemmed from decreasing
private medical expenditures between 1981 and 2018 (Chart 46). Over the period, the share ofprivate medical expenditures declined 0.92 percentage points from 3.70 per cent in 1981 to 2.79
per cent of income in 2018, falling below the national level. As a result, the index of risk from
illness increased 0.29 points from 0.166 in 1981 to 0.455 in 2018. In comparison, Canada’s
private medical expenditures increased 1.21 percentage points from 1.75 per cent in 1981 to 2.97
per cent of income in 2018.
While the index of risk from illness in Newfoundland and Labrador increased over theperiod, growth was concentrated between 1981 and 2000. During this sub-period, the index
increased 6.58 per cent per year, but between 2000 and 2018, it decreased 1.12 per cent per year.
Since its lowest level of 1.89 per cent in 1989, the share of private medical expenditures inpersonal income has slowly increased, which explains the decrease in the index of risk from
illness after 2000. Between 2014 and 2018, the index declined at a rate of 4.78 per cent annually,
which suggests that security from illness will continue to face a downward trend.

62

0.6

Chart 46: Risk from Illness in Newfoundland and Canada, 1981-2018
Panel A: Private Non-Reimbursed Medical Expenditures as a Proportion of Personal Disposable
Income4.0
3.5
Per Cent

3.0
2.5
2.0
1.5
1.0
0.5
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland and Labrador

Canada

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Index Level

Panel B: Index of Risk from Illness (Scaled Private Medical Expenditures)

Newfoundland and Labrador

CanadaSource: IEWB Database 2018, Table 5

C. Risk from Single-Parent Poverty
The index of security from the risk imposed by single-parent poverty consists of threevariables: the divorce rate, the poverty rate for lone parent families, and the poverty gap for thesefamilies.22 The poverty rate is the proportion of lone-parent families whose total after-tax
incomes fall below fifty percent of the median equivalent income, and the poverty gap is theaverage difference between the poverty line and the incomes of those families. We multiply thethree variables to generate the index of the risk from single-parent poverty.
In 2018, Newfoundland and Labrador scored 0.781 for the index of risk from singleparent poverty (Chart 47). The province enjoyed the highest level of security from single-parent
22

The divorce rate is included as divorce pushes many people, especially women, into poverty.

63poverty in Canada. This high score was likely driven by the province’s relatively low divorce
rate of 0.47 per cent (the lowest in Canada) and poverty gap of 23 per cent in 2018.
Chart 47: Index of Security from the Risk Imposed by Single-Parent Poverty by Province, 2018
Newfoundland and Labrador
New Brunswick
Alberta
British Columbia
QuebecPrince Edward Island
Saskatchewan
CanadaNova Scotia
Manitoba
Ontario

0.781
0.767
0.743
0.735
0.714
0.707
0.703
0.684
0.657
0.646
0.621
0.0

0.1

0.2

0.3

0.4
0.5
Index Level

0.6

0.7

0.8

Source: IEWB Database 2018, Table 6

Between 1981 and 2018, the index of the risk from single-parent poverty in
Newfoundland and Labrador increased 0.13 points from 0.655 in 1981 to 0.781 in 2018 (Chart48). Improvements in the poverty rate and poverty gap among single families largely accounted
for the overall increase in the index. Despite remaining above the national level throughout theperiod, the province’s poverty rate decreased 0.3 percentage points or 0.02 per cent annuallyfrom 46.3 per cent in 1981 to 46.0 per cent in 2018. Most impressively, the province’s poverty
rate saw a substantial decrease of 22.70 percentage points or 1.84 per cent annually from 45.7
per cent in 1981 to 23 per cent in 2018. In comparison, Canada’s poverty gap decreased muchless at 10.6 percentage points or 0.88 per cent annually. The divorce rate in Newfoundland andLabrador increased slightly by 0.02 percentage points since its 1981 rate of 0.453 per cent, but
the divorce rate was significantly lower than Canada’s throughout the period.
Growth in the index of risk from single-parent poverty was concentrated between 2000
and 2018, as the index deteriorated between 1981 and 2000 at a rate of 1.10 per cent annually(Chart 48). In the 2000-2018 sub-period, the index grew 2.17 per cent per year and consistently
surpassed Canada’s score after 2000. The index experienced the fastest growth between 2014
and 2018 at a rate of 5.48 per cent annually.

64

0.9

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Per Cent

Chart 48: Risk from Single-Parent Poverty and its Subcomponents in Newfoundland and Canada,
1981-2018
Panel A: Divorce Rate
1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0

Newfoundland and Labrador

Newfoundland and Labrador

Newfoundland and Labrador

65

CanadaPanel B: Poverty Rate among Single-Parent Families

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0

CanadaPanel C: Poverty Gap among Single-Parent Families

50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0

CanadaPanel D: Index of Risk from Single-Parent Poverty
0.9
0.8
Index Level

0.7
0.6
0.5
0.4
0.3
0.2
0.1
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland and Labrador

CanadaSource: IEWB Database 2018, Table 6

D. Risk from Poverty in Old AgeThis final component of the economic security domain is the risk of poverty in old age.
As data on old age poverty rates are not available, this component uses the poverty rate andpoverty gap of families headed by persons 65 and over as a proxy. We scale and multiply thesevariables by a constant of 1.89 to obtain the index of security from risk imposed by poverty in
old age.
In 2018, Newfoundland and Labrador’s index of risk from poverty in old age scored0.573, ranking fifth of the provinces (Chart 49). In the Atlantic region, the province ranked
second, falling a few points behind New Brunswick. Nova Scotia and Prince Edward Island,
however, had the lowest levels of security from poverty in old age.
Chart 49: Index of Security from the Risk Imposed by Poverty in Old Age by Province, 2018
Alberta
Ontario
Saskatchewan
CanadaNew Brunswick
Newfoundland and Labrador
British Columbia
Manitoba
QuebecNova Scotia
Prince Edward Island

0.799
0.686
0.636
0.614
0.580
0.573
0.547
0.543
0.510
0.489
0.419
0.0

0.1

0.2

0.3

Source: IEWB Database 2018, Table 7

66

0.4
0.5
Index Level

0.6

0.7

0.8

0.9

Although Newfoundland and Labrador had an average ranking among the provinces, its
growth in the index of risk from old-age poverty exceeded that of Canada’s (Chart 50). From1981 to 2018, the province’s index improved 0.35 points or 2.57 per cent annually from 0.224 in1981 to 0.573 in 2018; at the national level, the index grew 0.27 points or 1.59 per cent annually
over the period. Substantial declines in the poverty rate and poverty gap among the elderly in
Newfoundland and Labrador fueled the improvement in the index. Between 1981 and 2018, thepoverty rate for the elderly declined 4.70 percentage points or 0.5 percent annually from 28.0 per
cent in 1981 to 23.3 per cent in 2018, though it remained above Canada’s for most of theperiod.23 The poverty gap among the elderly experienced the most significant decline at 6.0
percentage points or 1.21 per cent per year, achieving the lowest gap in Canada by 2018.
Newfoundland and Labrador saw the fastest growth in the index of risk from poverty in
old age between 1981 and 2000 at a rate of 5.02 per cent per year (Chart 50). Growth between
2000 and 2018 was still positive but slowed considerably to 0.05 per cent annually. This slowdown was driven by a decrease in the 2008-2014 sub-period at 3.42 per cent per year. However,between 2014 and 2018, the province’s score in the index grew 4.38 per cent per year, signalinga return to growth.
Chart 50: Risk from Poverty in Old Age and its Subcomponents in Newfoundland and Canada,
1981-2018
Panel A: Poverty Rate for the Elderly
30.0

Per Cent

25.0
20.0
15.0
10.0
5.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland and Labrador

23

CanadaWithin this period, growth in the poverty rate exhibited much variation. This volatility reflects how the poverty
rate from LIM is a relative measure. After 1995, the poverty rate for the elderly increased, as the rising real incomeof the general population experienced faster growth than the income of the elderly, which follows the inflation rate.
See Andrews (2015) for further discussion on the linkages between the IEWB and the use of absolute versus relative
measures of poverty.

67Panel B: Poverty Gap among the Elderly
25.0

Per Cent

20.0
15.0
10.0
5.0

1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland and Labrador

Canada

1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Index Level

Panel C: Index of Risk from Poverty in Old Age

Newfoundland and Labrador

CanadaSource: IEWB Database 2018, Table 7

E. Index of Economic Security
We generate the scaled index for the domain of economic security by aggregating thescaled values of the four components. The contribution of each component is the product of its
scaled value and weight. The weights used for this aggregation procedure are constructed fromthe relative sizes of the populations subject to each risk.
In 2018, the index of the economic security domain in Newfoundland and Labrador was
0.502, ranking seventh in Canada (Chart 51). Within the Atlantic region, Newfoundland andLabrador had the highest level of economic security. The Atlantic provinces had the lowest
scores in Canada for this index.
68Chart 51: Index of Economic Security by Province, 2018
Alberta
Saskatchewan
British Columbia
CanadaManitoba
QuebecOntario
Newfoundland and Labrador
New Brunswick
Nova Scotia
Prince Edward Island

0.623
0.621
0.615
0.548
0.535
0.530
0.511
0.502
0.496
0.476
0.462
0.0

0.1

0.2

0.3
0.4
Index Level

0.5

0.6

Source: IEWB Database 2018, Table 8

The index of economic security in Newfoundland and Labrador improved 0.126 points
between 1981 and 2018, though it remained below Canada’s level by the end of the period(Chart 52). The index grew overall at an annual rate of 0.79 per cent from 1981 to 2018, but
decreased by 1.56 per cent per year between 2014 and 2018.
Chart 52: Index of Economic Security by Province, 1981-2018
0.7
0.6

Index Level

0.5
0.4
0.3
0.2
0.1
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0.0

Newfoundland and Labrador

CanadaSource: IEWB Database 2018, Table 8

Table 9 summarizes the findings for the components of the economic security domain in
Newfoundland and Labrador from 1981 to 2018. By 2018, the indexes of the risk from illness
and risk from single-parent poverty exceeded their respective national levels. The index of therisk from poverty in old age came close at 93.2 per cent of Canada’s. However, the index of therisk from unemployment was only 61.3 per cent of Canada’s, which drove down the overall
index of economic security to 91.5 per cent of the national level.
69

0.7

Newfoundland and Labrador achieved a higher level of economic security by 2018
(Table 9). The indexes of risk from illness and risk from old-age poverty grew the fastest in the
1981-2000 sub-period, while the risk from unemployment and risk from single-parent poverty
saw the most improvement in the 2000-2018 sub-period. The overall index of economic security
experienced the most improvement between 1981 and 2000. However, between 2014 and 2018,
the index deteriorated at an annual rate of 1.56 per cent, which was driven by lower security
from risk imposed by unemployment and illness.
Table 9: Summary of Consumption Components in Newfoundland and Labrador, 1981-2018
Panel A: Index Level
Risk Imposed by
Unemployment
Risk Imposed by
Illness
Risk Imposed bySingle-Parent Poverty
Risk Imposed by
Poverty in Old Age
Index of Economic
Security (weighted)

1981

2000

2008
Index Level

2014

2018

0.447

0.297

0.450

0.484

0.414

0.166

0.558

0.492

0.553

0.455

0.655

0.531

0.684

0.631

0.781

0.224

0.567

0.594

0.483

0.573

0.375

0.477

0.521

0.534

0.502

1981

2000

2008
Per Cent

2014

2018

71.0

46.4

67.5

77.1

61.3

21.3

113.1

116.3

121.0

114.2

153.1

91.9

112.9

108.1

114.1

65.2

72.1

91.4

73.7

93.2

60.1

82.1

94.5

97.0

91.5

Panel B: Relative to Canada
Risk Imposed by
Unemployment
Risk Imposed by
Illness
Risk Imposed bySingle-Parent Poverty
Risk Imposed by
Poverty in Old Age
Index of Economic
Security (weighted)

Panel C: Compound Annual Growth Rates
1981-2018

1981-2000

2000-2018

2000-2008

2008-2018

2008-20142014-2018

Per Cent
Risk Imposed by
Unemployment
Risk Imposed by
Illness
Risk Imposed bySingle-Parent Poverty
Risk Imposed by
Poverty in Old Age
Index of Economic
Security (weighted)

-0.21

-2.13

1.85

5.32

-0.84

1.22

-3.86

2.76

6.58

-1.12

-1.56

-0.77

1.99

-4.78

0.48

-1.10

2.17

3.21

1.34

-1.33

5.48

2.57

5.02

0.05

0.58

-0.37

-3.42

4.38

0.79

1.27

0.28

1.11

-0.38

0.42

-1.56

Source: IEWB Database 2018, Table 870VII. Conclusion
This report presents estimates of the Index of Economic Well-being for Newfoundlandand Labrador from 1981 to 2018. Since 1981, the IEWB for Newfoundland and Labrador has
improved significantly. The overall IEWB rose 0.270 points from 0.301 in 1981 to 0.571 in 2018
in Newfoundland and Labrador. This improvement amounts to an impressive 89.9 per centchange over the period, or growth of 1.75 per cent per year.
However, on a less positive note, growth in the IEWB for Newfoundland and Labrador
was higher in the 1981-2000 sub-period. Annual growth in the 1981-2000 sub-period was 1.87
per cent, which was slightly higher than the growth in the 2000-2018 period at 1.62 per cent per
year. Although the IEWB experienced the fastest growth during the 2000 to 2008 sub-period at
4.99 per cent per year, it declined after 2008, reflecting the collapse in oil prices at the time. In
particular, the IEWB for Newfoundland and Labrador saw the worst growth at the end of theperiod between 2014 and 2018 at negative 1.36 per cent per year.
The overall increase in economic well-being was driven by robust growth in consumption
and stocks of wealth. The index of consumption increased 0.570 points or 5.72 per cent per year
from 0.083 in 1981 to 0.653 in 2018. Significant increases in personal consumption andgovernment expenditures mainly accounted for the growth in the consumption domain over theperiod. However, due to a decrease in the value of unpaid work and increase in regrettable
expenditures after 2008, the consumption domain experienced much slower growth in the 20002018 sub-period compared to the 1981-2000 sub-period (2.57 per cent versus 5.72 per cent).
The wealth domain had the second highest growth among the components of the IEWB.
The index of wealth increased 0.224 points or 1.30 per cent per year from 0.366 points in 1981 to
0.590 points in 2018. However, growth in the wealth domain occurred mostly in the 1981-2000
sub-period, due to instability in the stock of natural resources. Between 2008 and 2018, the stockof natural resources deteriorated 17.65 per cent per year, signifying the impact of the plunge inoil prices on the province during this period. Given the province’s dependence on natural
resources, and more specifically oil, the wealth domain in Newfoundland and Labrador fell at a
rate of 4.31 per cent per year from 2008 to 2018.
The domains of economic equality and economic security also improved, though lesssignificantly than the other two domains. The index of economic equality grew by 0.161 points
or 0.96 per cent per year from 0.378 in 1981 to 0.539 in 2018. This improvement was driven by
growth in the index of poverty, as the index of income inequality deteriorated over the period.
The index of economic security showed the least improvement of the IEWB components. The
index of economic security rose 0.126 points or 0.79 per cent annually from 0.375 in 1981 to
71

0.502 in 2018, largely as a result from improvements in the risk imposed by illness and poverty
in old age. The risk imposed by unemployment worsened over the period, which drove down theindex of economic security for Newfoundland and Labrador.
Among the provinces, Newfoundland and Labrador enjoyed high rankings for the IEWB
in terms of both levels and growth (Exhibit 5). For the overall IEWB in 2018, Newfoundland andLabrador ranked fourth among the ten provinces and received the highest score for the index of
wealth. The province did not fare as strongly for the indexes of consumption, economic equality,and economic security, ranking seventh among the provinces in all three. Most impressive were
Newfoundland and Labrador’s rankings for growth. Apart from the index of economic equality(in which the province ranked fourth), Newfoundland and Labrador had the highest growth rates
from 1981 to 2018 for the overall IEWB and indexes of consumption, wealth, and economic
security. These findings indicate that economic well-being in Newfoundland and Labrador has
achieved significant improvement since 1981.
Exhibit 5: Ranking by Index of Economic Well-being and its Components, Canada and theProvinces
Panel A: Levels
Levels in 2018
Rank

Index of Economic
Well-being

Index ofConsumption

Index of WealthIndex of Economic
Equality

Index of
Economic
Security

1

British Columbia

Alberta

Newfoundlandand Labrador

Alberta

Alberta2

Alberta

Ontario

British Columbia

New Brunswick

Saskatchewan

3

Ontario

British Columbia

QuebecBritish Columbia

BritishColumbia

4

CanadaCanadaOntarioPrince Edward
IslandCanada5

Newfoundland andLabrador

Nova Scotia

CanadaQuebecManitoba

6

QuebecManitoba

Manitoba

CanadaQuebec7

Manitoba

QuebecSaskatchewan

Ontario

Ontario8

Saskatchewan

Newfoundland andLabrador

New Brunswick

Newfoundland andLabrador

9

New Brunswick

Saskatchewan

Alberta

Manitoba

Newfoundlandand Labrador
New
Brunswick

10

Nova Scotia

Prince Edward
IslandNova Scotia

Saskatchewan

Nova Scotia

11

Prince Edward
IslandNew Brunswick

Prince Edward
IslandNova Scotia

Prince Edward
Island72

Panel B: Growth Rate
Growth Rates, 1981-2018
Rank

Index of Economic
Well-being

Index ofConsumption

Index of WealthIndex of Economic
Equality

Index of
Economic
Security1

Newfoundland andLabrador

Newfoundland andLabrador

Newfoundlandand Labrador

New Brunswick

Newfoundland

2

New Brunswick

New Brunswick

QuebecSaskatchewan

3

Prince Edward
IslandQuebecOntario4

QuebecPrince Edward
IslandBritish Columbia

5

Manitoba

Manitoba

6

British Columbia

7

Prince Edward
IslandNewfoundland andLabrador

Prince Edward
IslandBritishColumbia
New
Brunswick

CanadaManitoba

QuebecOntario

Manitoba

Alberta

Manitoba

Nova Scotia

CanadaNova Scotia

QuebecAlberta8

CanadaNova Scotia

New Brunswick

Nova Scotia

Canada9

Saskatchewan

British Columbia

Saskatchewan

British Columbia

Saskatchewan

10

Ontario

Saskatchewan

AlbertaCanadaNova Scotia

11

Alberta

Alberta

Prince Edward
IslandOntario

Ontario73

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