Wages and labour productivity in Canada: Across the provinces and over the rural/urban divide

Regional economic disparities are a widely noted characteristic of the Canadian economy. This thesis examines regional disparities in terms of wages and labour productivity in the manufacturing sector. Regional disparities are analysed along three dimensions: provinces, rural/urban areas and industrial structure. Various competing theories are discussed and compared to the findings. Shift-share based decomposition analyses the magnitude and pattern of disparity and controls for industrial structure. Weighted regression is used to combine provincial and rural/urban effects. The findings support theories that emphasize provinces as units of analysis. The rural/urban results gave qualified support to urban theory. Accounting for industrial structure impacted both the rural/urban and provincial results. The regression analysis found the rural/urban dimension was significant; however, industrial structure and provincial effects were more significant. These results suggest industrial location and provincial economic policies can influence regional economic disparities in Canada.