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Regional Convergence and the Role of Federal Transfers in Canada

  • Phillip Swagel
  • Steven Vincent Dunaway
  • Martin David Kaufman

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.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/97.

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Length: 14
Date of creation: 01 May 2003
Date of revision:
Handle: RePEc:imf:imfwpa:03/97
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  1. Bayoumi, Tamim & Masson, Paul R., 1995. "Fiscal flows in the United States and Canada: Lessons for monetary union in Europe," European Economic Review, Elsevier, vol. 39(2), pages 253-274, February.
  2. Kevin Lee & M. Hashem Pesaran & Ron Smith, . "Growth and Convergence in a Multi-County empirical Stochastic Solow Model," Discussion Papers in Economics 96/14, Department of Economics, University of Leicester.
  3. Lee, Kevin & Pesaran, M Hashem & Smith, Ron, 1997. "Growth and Convergence in Multi-country Empirical Stochastic Solow Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 357-92, July-Aug..
  4. Costas Megir & Danny Quah, 1995. "Regional convergence clusters across Europe," LSE Research Online Documents on Economics 2188, London School of Economics and Political Science, LSE Library.
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