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 i n the early 1990s. Using labour market variables (employment levels an d population) and welfare variables we show that the employment capaci ty of the economy expanded in 1985-89, contracting sharply during the recession of the early 1990s. Our analysis suggests that government po licies sustained high caseloads in the 1980s, while in the 1990s gover nment policies limited the number of welfare cases, notwithstanding th at the employment capacity of the labour market remained low. We concl ude that in the past decade welfare policies in Ontario failed to cons ider labour market conditions.