Economic and Social Reports, May 2022

The May 2022 issue of Economic and Social Reports is now available and contains four articles.

The Daily

Gross domestic product per capita growth in Canada declined during the COVID-19 pandemic

During the COVID-19 pandemic, real gross domestic product (GDP) per capita dropped on average by 1.3% per year from 2019 to 2021. This recent decline in real GDP per capita is in contrast to its long-term annual average growth of 1.2% from 1981 to 2019. The article "The COVID-19 pandemic and gross domestic product per capita growth in Canada" shows that the decline was driven by declines in hours worked per employee, the employment rate and the participation rate. Although growth in GDP per hours worked slowed, it remained positive on average.

From 2019 to 2021, hours worked per employee declined on average by 0.8% per year, of which most (-0.6 percentage points) came from a decrease in hours worked by male employees. The employment rate and the participation rate declined on average by 0.9% and 0.4% per year, respectively, largely caused by young and senior workers.

This study also shows that labour productivity (GDP per hours worked) is the most important source of Canada's GDP per capita growth in the long-run. Over the period from 1981 to 2019, 92.5% of GDP per capita growth came from labour productivity growth. The remaining growth was accounted for by increases in the employment rate, the participation rate, especially the female participation rate, and the share of the working age population. The decline in hours worked per employee partially offset the impact of the other factors.

Wages grew more slowly for those working at home pre-pandemic

Canadian employees who worked from home both in 2005 and 2015 had higher wages but experienced slower long-term wage growth than their counterparts who worked outside the home in both years. The article "The long-term wage growth of teleworkers before the COVID-19 pandemic" used data from Statistics Canada's Longitudinal Worker File and the 2006 and 2016 Censuses of Population to produce the first comparison of long-term wage growth of teleworkers with that of other employees. With more people working from home since the start of the COVID-19 pandemic, this article provides a benchmark against which to gauge the future earnings trajectories of teleworkers.

Taking a gap year could impact future earnings

Taking a gap year between high school and postsecondary education could impact future earnings. The study "Is taking a gap year between high school and postsecondary education beneficial or detrimental in the long term?" produced the first Canadian estimates of the long-term implications of taking a gap year on various labour market indicators. It found that men who took a gap year before enrolling in a degree program earned $57,448 (2015 constant dollars), or 11.6%, less from the ages of 17 to 31 than their counterparts who did not take a gap year. Similarly, women who took a gap year prior to enrolling in a postsecondary degree program earned $49,788 (12.5%) less over the same time span than their counterparts who did not take a gap year.

However, men who took a gap year before entering a non-degree postsecondary program earned $70,416, or 14.6%, more compared with those who did not delay their studies. There was no association for women.

Increase in uptake of Registered Education Savings Plans is slowing

Canadian families continue to increase their use of Registered Education Savings Plans (RESPs), but at a much slower pace than in previous years. RESP use increased from 46.8% to 53.0% from 2012 to 2019 compared with 15.9% to 33.0% from 1999 to 2005. While the gap in use between higher and lower income families narrowed, the study "Recent trends in Registered Education Savings Plan holdings by income, immigrant status, Indigenous identity and province" found that the total value of RESPs held by higher income families were far greater, with average investments in 2019 almost seven times higher among families in the top 20% income bracket than those in the bottom 20%.

Immigrant parents invested more or less equally in RESPs compared with non-immigrant families. In contrast, Indigenous families living off-reserve invested considerably less in RESPs than non-Indigenous families. Average RESP investments also varied considerably by province. After accounting for socio-demographic differences, families in Newfoundland and Labrador, Alberta, and British Columbia tended to invest more in RESPs compared with those in other provinces.

Products

The May 2022 issue of Economic and Social Reports, Vol. 2, no. 5 (36280001) is now available. This issue contains the articles "The long-term wage growth of teleworkers before the COVID-19 pandemic," "The COVID-19 pandemic and gross domestic product per capita growth in Canada," "Recent trends in Registered Education Savings Plan holdings by income, immigrant status, Indigenous identity and province," and "Is taking a gap year between high school and postsecondary education beneficial or detrimental in the long term?."