Provincial Income Disparity in Canada, 1951 to 1981

In the present paper, we have examined the pattern of the provincial income disparity in Canada in the benchmark years 1951, 1961, 1971 and 1981. The data reveal that the rankings of provinces have remained more or less the same though the extent of regional disparity in per capita GDP has considerably declined over the 30 year period. Contributions of four factors, viz., labour force participation rate, industrial structure, capital per worker and output-capital ratio in the observed disparity of provincial incomes in the four benchmark years are estimated. Capital per worker played a major role in accounting for the disparity in 1951, but its relative importance is declining over time. Of late, output-capital ratio seems to be more important in accounting for the regional disparity in income levels in Canada. Industrial structure did account for a substantial proportion of regional income inequality in some provinces in 1951. In 1981, however, its relative contribution has only been marginal in all the provinces in Canada.