Regional Convergence and the Role of Federal Transfers in Canada

By Phillip L Swagel, Steven V Dunaway, Martin D Kaufman

May 1, 2003

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Phillip L Swagel, Steven V Dunaway, and Martin D Kaufman. Regional Convergence and the Role of Federal Transfers in Canada, (USA: International Monetary Fund, 2003) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Disposable income, Employment, Expenditure, Labor, Migration, National accounts, Population and demographics, Public expenditure review, Unemployment

Keywords: Canada, Disposable income, EI benefit, EI generosity, EI transfer, Employment, Employment insurance, Employment insurance system, Equation, Federal transfers, Migration, Migration equation, Public expenditure review, Regional convergence, Unemployment, WP

Publication Details

Pages:

14
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2003/097
Stock No:

WPIEA0972003
ISBN:

9781451852042
ISSN:

1018-5941

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