Sources of the Canada–US Productivity and GDP Divide

Discover the compelling reasons behind the enduring economic performance gap between Canada and the United States in "Sources of the Canada–US Productivity and GDP Divide." This course challenges conventional aggregate analyses, revealing that the persistent 20-30% disparity in GDP per adult and labor productivity is not uniform across the population.

You will explore how this historical divergence, dating back over a century, is predominantly driven by specific segments of the income distribution, particularly the top 10% of earners. While both nations share similar institutions and open borders, the course dissects why Canada's GDP per adult has consistently remained between 70% and 90% of the US level, and why this gap has recently widened.

Upon completion, you will be able to:

• Identify the core distributional hypothesis: the GDP and productivity gap is concentrated among the top 10% of earners, especially business owners and university graduates.
• Analyze how data from the World Inequality Database, household surveys, and administrative records reveal contrasting income trends for high- versus low-income groups.
• Decompose the roles of labor productivity and hours worked, including the surprising compositional effects of lower-paid workers on aggregate statistics.
• Evaluate structural causes such as selective emigration (the "brain drain") of high-ability individuals.
• Understand the impact of an innovation deficit and the rise of "superstar firms" in the US on the widening divide.
• Distinguish between symptoms and root causes of low investment in Canada, considering capital outflows as a response to perceived lower returns.
• Formulate nuanced policy perspectives that move beyond traditional macroeconomic prescriptions to target retention and attraction of high-value activities and talent.

This course provides a rigorous, evidence-based investigation into one of North America's most significant economic puzzles, offering critical insights for policymakers, economists, and anyone interested in the dynamics of national productivity and income inequality.