Regional Convergence and the Role of Federal Transfers in Canada
14 Pages Posted: 29 Jan 2006
Date Written: May 2003
Differences in per capita output across Canadian provinces have narrowed less than disparities in per capita income in past decades. Using a panel regression framework, this paper studies the differential impact of federal transfer programs on output convergence. The evidence suggests that while the Employment Insurance (EI) system seems to have had a significant negative effect on output convergence - by discouraging migration within Canada - the Equalization transfers may have helped spur convergence. The EI system, despite reforms introduced in the 1990s, still appears to contain features that deter labor mobility.
Keywords: Canada, regional convergence, federal transfers, migration
JEL Classification: R12, R23, H59
Suggested Citation: Suggested Citation