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Contribution of Human Capital Accumulation to Canadian Economic Growth

Author

Listed:
  • Audra Bowlus
  • Youngmin Park
  • Chris Robinson

Abstract

This paper quantifies the contribution of human capital accumulation to the growth of real gross domestic product (GDP) in Canada. GDP growth is decomposed into contributions from physical capital, hours worked, human capital supplied per hour and total factor productivity. Using a “flat spot” identification strategy, we separately estimate the price and quantity of human capital using wage data from the Labour Force Survey. We find that growth in human capital supplied per hour explains around one-fifth of GDP growth and two-thirds of the Solow residual over the period from 1997 to 2018. While growth in hours worked is expected to slow down in the near future, human capital supplied per hour is expected to continue to be an important driver of GDP growth.

Suggested Citation

  • Audra Bowlus & Youngmin Park & Chris Robinson, 2022. "Contribution of Human Capital Accumulation to Canadian Economic Growth," Discussion Papers 2022-7, Bank of Canada.
    • Handle: RePEc:bca:bocadp:22-7
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    References listed on IDEAS

    as
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    3. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    4. Audra J. Bowlus & Chris Robinson & Haoming Liu, 2019. "Different Paths? Human Capital Prices, Wages, and Inequality in Canada and the United States," Journal of Labor Economics, University of Chicago Press, vol. 37(S2), pages 689-734.
    5. James Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explanations With A Dynamic General Equilibrium Model of Labor Earnings With Heterogeneous Agents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 1-58, January.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Econometric and statistical methods; Labour markets; Potential output; Productivity;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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