Equalization in a Federal State: An Economic Analysis

Stephen J. Kees was Chief Librarian, Niagara College of Applied Arts and Technology, Welland, Ontario.

Although the federal government had been transferring funds to the provinces for a long time, the present system of equalization payments did not come into being until the late 1950s. Broadly it follows the recommendations of the Rowell-Sirois Report of 1940. Despite a number of modifications since, the system still endeavours to ensure that provinces are more or less able to provide an equal level of services to all Canadians.

The present study, by two economists from Queen’s University, examines the economic basis and need for any such program. Although much of this paper is written in straightforward language, it requires a lot of study to comprehend its arguments. This study only considers the Canadian situation, despite its title, and does not consider the arrangements in other federal states.