Getting it backward? Economy and welfare in Ontario 1985-1995

The number of employable households on welfare remained steady in the province of Ontario from 1985-89 and then increased nearly five-fold in the early 1990s. Using labour market variables (employment levels and population) and welfare variables we show that the employment capacity of the economy expanded in 1985-89, contracting sharply during the recession of the early 1990s. Our analysis suggests that government policies sustained high caseloads in the 1980s, while in the 1990s government policies limited the number of welfare cases, notwithstanding that the employment capacity of the labour market remained low. We conclude that in the past decade welfare policies in Ontario failed to consider labour market conditions.