Ontario v. Michigan: Lessons From the Wolverine State

This paper begins by documenting the scope of Michigan’s economic turnaround, relative both to the rest of the United States and to Ontario. Taken together, the evidence presented here demonstrates that the introduction of Michigan’s reform package coincided with a resurgence in the economy overall, and in manufacturing in particular. Whereas in the pre-reform period Michigan was, generally speaking, an economic laggard within the United States, during the years since the economic reforms the Wolverine State has generally outperformed the rest of the union economically. Michigan’s strong economic performance since 2011 stands in contrast to Ontario, a jurisdiction that also has a large manufacturing base as a central feature of its economy but one that has not experienced an economic resurgence comparable to Michigan’s in recent years. while Ontario has experienced a dramatic and economically harmful run-up in public debt since 2011, Michigan has actually seen a slight decline in net public debt as a share of its economy. These results stand in stark contrast to the situation in the early years of this century, when Ontario consistently outperformed Michigan on most measures of economic performance. The paper shows that Michigan’s economic turnaround coincided chronologically with a period of substantial economic policy reforms. It documents some of the most important policy changes undertaken in the Wolverine State, and discusses how these reforms may have contributed to the economic turnaround in Michigan.

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