Did Separatism Hurt Quebec's Economy? The Causal Effects of the Election of the Parti Québécois in 1976

Most separatist movements overlap with ethnic tensions and are associated with violent and economically destructive outcomes. In this paper, we consider a (largely) peaceful separatist movement. Specifically, we use the synthetic control method to study the economic consequences of the surprising victory of the Parti Québécois in Quebec in 1976 and the subsequent referendum on Quebec's independence in 1980. We find that, relative to our control, the election of separatists had a small positive effect on economic activity until 1980 after which a small negative effect appears. We further find that the size of the provincial government (relative to GDP) constantly and significantly exceeded its synthetic control. We argue that the economic costs of separatism may arise from the frequently associated violence and not be intrinsic to any sort of political disintegration