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The Newfoundland inshore cod fishery: a study on fisheries' management and labour allocation Edgecombe, Roberta Marjorie

Abstract

This study examines the criteria for efficient fisheries' management, and an efficient allocation of fisheries' labour in the Newfoundland inshore cod fishery. The first part of this thesis (fisheries' management) is an outline of H. Scott Gordon's theoretical model of the fisheries, which deals with the maximization of the social rent from a common property resource. An additional section has been included on the applicability of Gordon's model to the Newfoundland case. This was found necessary, because the organization of effort on the total Newfoundland cod stock, i.e. the inshore and the offshore sectors, present certain practical constraints on the feasibility of optimizing the social rent to this fishery. Indeed, the analysis of this section indicates that, for the present at least, it might be very difficult, administratively, to operate the inshore fishery according to Gordon's efficiency criterion. The second aspect of this study is the problem of low returns to fishermen in the inshore sector of the fishing industry. The theoretical framework used in this section is the staple-mobility theory approach, which maintains that the returns to labour and capital in declining areas need not decline below the returns in occupations of comparable skills, providing, both factors, capital and labour, are mobile. It is hypothesized, therefore, that the low returns to fisheries’ labour is a result of diminishing marginal returns in the fishing industry plus immobility of the fishermen. This necessitated a discussion of possible reasons for this immobility before any policy recommendation is offered. The arguments of high psychic costs, additional remuneration to fishermen from seasonal employment, and the general high unemployment rates in Newfoundland, are presented as likely barriers to mobility from the fishing industry. It is thought, however, that the latter problem, high unemployment rates throughout the rest of the economy, is the most plausible explanation of the immobility of the fisheries' labour force. That is to say, mobility has not been high, because the opportunity cost of this labour is not high. In order to correct this problem of surplus labour in the fishery, it is therefore necessary to improve the alternative employment situation for these men. To do this, some indication of the causes of high unemployment in Newfoundland must be provided. There are two possible explanations of this problem of unemployment. The first, an aggregate demand defficiency argument, is rejected on the grounds that stimulating demand in Newfoundland may not have any employment effects on the island because of import leakages. The second possibility, a structural imbalance, is more acceptable. Assuming a downward flexibility of wages, it is possible to have full employment in Newfoundland, therefore, it could be said that the unemployment problem is a result of a wage rigidity. However, given the present level of resources on the island, and the size of the labour force, it is possible that full employment would take place only at a general level of income considerably lower than Canadian standards. It is suggested therefore that the cause of the unemployment problem in Newfoundland is the result of a lack of mobility of the surplus labour in Newfoundland with respect to the higher income markets outside the province. There would seem to be two ways to correct this problem. (a) To provide incentives for the emigration of labour from Newfoundland, or (b) given sociological barriers to mobility, import suitable industry to the island. Both of these alternatives are briefly examined in the text. The final analytical section of this study deals with government policy for the fishery. The actions of the government can have considerable effects on the type of labour adjustment made between the fishery and other industries. The general conclusion of this thesis, i.e. labour mobility from the fishing industry, is in accordance with certain aspects of government fisheries' policy, but not with others. The government’s emphasis on training and transference of labour to the offshore fishery is acceptable, however it is thought that the subsidization programs for the inshore fishery are defeating the general aim of mobility from this sector. Such a policy is deemed unacceptable from the economic standpoint of an effective utilization of Newfoundland's fisheries' resources and labour.

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