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those who work full time, full year. Among those who graduated from university, higher degrees
usually translate into larger incomes (Appendix Table 11).
Chart 4 also highlights the fact that full-time, full-year workers earned significantly more
than others. This reflects the larger amount of hours worked by these workers, which in turn may
reflect the greater employment opportunities for persons with higher education. It may also
reflect personal preferences as there is a higher opportunity cost to idleness when well educated.
Average income for workers with employment income was lower as it includes seasonal and
part-time workers. However, despite reducing the level of income, including such workers does
not significantly affect the obvious beneficial effect of education.5 Finally, the average income
level of the total population is drastically lower than the other two as it also include individuals
with no income. The returns to education, however, still remain clear with average employment
income increasing in line with the level of educational attainment.
ii. Evidence from the Literature
Coulombe et al. (2004) examined levels of human capital in OECD countries in relation
to economic growth. Instead of measuring human capital using the usual years of schooling, they
developed an indicator of human capital based on worker literacy scores. They found a strong
relationship between human capital and growth, concluding that human capital had a positive
and significant impact on the GDP level as well as a positive effect on the growth rate of the
economy. Providing workers with opportunity for higher educational attainment would
consequently yield higher GDP per capita, due to the increasing share of high skilled workers.
The increase in overall productivity would increase GDP per capita and could potentially make
everyone better off in term of standards of living.
In this context, a higher skilled worker benefits not only him or herself. In fact, an
improvement in the quality of the workforce also benefits the wider population through the far
reaching benefits stemming from increased productivity. The opposite can also be said for low
skilled workers; low or unskilled workers reduce the quality of the labour force, dragging
productivity down. Thus, ensuring an adequate level of human capital, both through formal
education and better workplace skills development, has the potential to increase Canada‘s global
competitiveness and profit all Canadians.
Coulombe et al. (2004:28) also found that two fifths of wages are due to basic labour,
while the other three fifths represent the returns to skill. Therefore a larger share of workers‘
wages is related to their levels of skill, which in turn are highly affected by education. This also
implies that as wages rise for skilled workers, the returns to schooling increase. The increase in
wages for skilled workers is creating a gap between skilled and unskilled workers as the new and
increasingly efficient technologies of the workplace are accelerating skilled workers productivity
at a rate incomparable to that of the unskilled. Those who have lower levels of educational
achievement are therefore falling farther behind.
5 To the exception of the group with some college education but without certificates which do not have a larger
income than workers with trade certificate or diploma.