Human Capital and Rural Development: What Are the Linkages?

Rural Canada is experiencing considerable "demographic pressure" as 1.76 rural persons are now looking for a job for each rural person retiring from the workforce. Rural Canada appears disadvantaged. Among OECD countries, Canada has the biggest urban-rural gap in the share of the workforce (aged 25 to 44) with university or college graduation. New jobs in the globalising economy require a high capacity to deal with disequilibria. Improving the human capital of the local workforce is essential to provide opportunities for the individuals in the workforce, regardless of where they will work. However, local economic development strategies should focus on more than human capital development to stimulate local job growth. We offer 4 measures of local community development. Our equations explain only 21 to 34 percent of the variability in these measures of local community development in the 1980s. Contrary to the research findings in the United States, the findings reported in this paper suggest that the human capital complement in Canada's communities did provide a positive (albeit weak) boost to job growth in the locality during the 1980s. Thus, what are the linkages between human capital and rural development? First, the literature suggests human capacity is largely developed by the nutrition and nurturing of children, specifically in the period of minus nine months to plus three years. Secondly, a higher human capacity in a community (as proxied by years of schooling) is weakly associated with a higher growth in community employment but is weakly associated with a lower growth in wages that appears to cause a weak association with lower aggregate community earnings. Investment in nutrition and nurturing of children is a key factor. A higher education level in a community provided only a weak employment boost during the 1980s.