Human capital and regional convergence in Canada

Abstract

Proposes an empirical analysis of regional convergence in Canada based on the growth model of Barro et al. In an open economy with perfect capital mobility, if domestic residents cannot borrow abroad with human capital as collateral, the dynamics of human capital accumulation is the driving force of per capita income growth. Empirical results indicate that, as predicted by the theoretical model, various indicators of the stock of human capital did converge at the same speed as per capita income during the 1951‐1996 period. A substantial part of the relative growth of per capita income indicators across Canadian provinces since the early 1950s could be explained by the convergence process of human capital indicators based on the percentage of the population, both sexes and males, who have at least a university degree. The estimates of the human capital share in national income based on those indicators are in the neighbourhood of 0.5, a number consistent with other measures of the implicit income share of human capital. The convergence speed of per capita income at the regional level might have been two to three times faster, if all persons had invested in education at the same rate as the young.

Human capital and state-level economic growth: what is the contribution of schooling?

“…At the sub-national level, Gundlach (1997) uses secondary enrollment rates and estimates an education share of 40% for Chinese provinces. Similarly, Coulombe and Tremblay (2001) include the percentage of population with a university degree and find an education share of one-half for Canadian provinces. However, Kosfeld et al (2006) use a measure of university degrees along with civil service attainment and estimate a human capital share of 20% for regional labor markets in Germany.…”

Education and economic growth in the United States: cross-national applications for an intra-national path analysis

“…Chen and Feng (2000) find a positive association between enrollments in higher education and income growth in the provinces of China, while Gonzalez-Paramo and Martinez's (2003) research concludes that there is an unclear connection between public investment in education and income growth in the states of Spain. Coulombe and Tremblay (2001) find that, like initial per capita income, initial educational attainment in the provinces of Canada demonstrates convergence, or a negative relationship with per capita income growth.…”

The impact of trade liberalization and the fiscal equalization transfer policy on provincial income disparities in Canada: an application of GMM estimation

“…The Solow growth model provides the theoretical basis for a large number of studies on income convergence (Barro and Sala-i-Martin, 1992; The impact of trade liberalization and the fiscal equalization transfer policy Mankiw et al, 1992;Quah, 1993;Lee, 1994, 1995;Islam, 1995;Coulombe and Tremblay, 2001;Weeks and Yao, 2003). Although most of these studies have used either pooled time series and crosssection or simple cross-sectional data approach to estimate the convergence rate, Islam (1995) and Weeks and Yao (2003) have provided a good background to a panel data approach to the convergence hypothesis.…”