SKILLS,EDUCATION, AND CANADIAN PROVINCIAL DISPARITY*

ABSTRACT We derive synthetic time series over the 1951–2001 period of the skills of labor market entrants for the 10 Canadian provinces from the 2003 ALL survey. The effect of the skills variable on regional income is significant and substantial. Skills acquired by one extra year of schooling result in an increase in per capita income of around 5 percent, which is close to microeconomic Mincerian estimates. Our literacy indicator does not outperform human capital indicators based on education. This contrasts sharply with recent cross‐country evidence and suggests substantial measurement error in cross‐country schooling data.