Applying the Wage-Common to Canadian Provinces

As at the national level, available sources of hourly wage data for Canadian provinces sometimes send conflicting signals about wage growth. This note has two objectives. First, we develop a common measure of provincial wages (the provincial wage-common) to better capture the underlying wage pressures, reflecting the overall trend across all data sources. Second, we focus on recent wage developments in Quebec, Ontario, Alberta and British Columbia and the relationship between wage growth in these provinces and some macroeconomic drivers. We conclude that a provincial wage-common provides, for the most part, superior estimates than each of the data sources taken individually because of their timeliness, lower volatility and good relationships with fundamentals. A key finding of our analysis is that the wage-common measures of provinces with a strong energy sector, such as Alberta, are more closely correlated with the national measure and are also more sensitive to oil price shocks than the wage-common measures of the other provinces.