New evidence of convergence across Canadian provinces: The role of urbanization

This paper uses the conditional convergence model for explaining the relati ve evolution of per capita income across the 10 provinces of the Canadian f ederation between 1950 and 1996. Provincial relative per capita income stea dy states are determined by the relative rates of urbanization. Empirical r esults indicate that the provinces have converged at a speed of about 5% pe r year and, since the mid-1980s, most provinces appeared to be in the neigh bourhood of their respective steady state. The analysis also indicates that for the provinces of Alberta and Quebec, the convergence process was distu rbed in the 1970s by different permanent level shocks to their long-run ste ady states.