Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateClosing the First Nations
Education Gap in Canada:
Assessing Progress and Estimating
the Economic Benefits —An UpdateFINAL REPORT
Centre for the Study of Living Standards
November 8, 2022

Prepared for the
Assembly of First Nations
55 Metcalfe Street, Suite 1600
Ottawa, ON K1P 6L5

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Abstract
This report estimates the economic benefits associated with the closure of key labour market gaps
facing First Nations people in Canada relative to non-Indigenous Canadians. We are primarily
interested in the educational attainment gap. However, we also estimate the benefits of closing gaps inaverage employment income and employment rates between the two populations, conditional on
educational attainment. In doing so, we provide an update to earlier reports by the CSLS on thesubject. By comparing labour market outcomes recorded in the 2016 Census to those observed inprevious Censuses, this report gauges the progress made over the last decade or so in eliminatingthese gaps. It then offers updated estimates of the economic benefits which would result from closing
these gaps in terms of gains in GDP, employment income, employment rates, and productivity. By
mobilizing individual-level Census microdata, we are able to breakdown these gains across age group,
sex, province, and educational attainment category. Ultimately, we estimate that the cumulative
economic benefits associated with the closure of the education gap could be as large as $265 billion,
and that the cumulative economic benefits associated with the closure of all three gaps of interest
could be as large as $457 billion.

2

Table of Contents
Executive Summary...................................................................................................2
Part I: Overnight Model............................................................................................15
Understanding the Gaps..........................................................................................17
The Education Gap: Distributional Approach........................................................17
The Education Gap: Average Years Approach.......................................................20
The Income Gap Conditional on Education...........................................................22
The Employment Rate Gap Conditional on Education..........................................25
Methodology.............................................................................................................29
Closing the Education Gap.....................................................................................29
Closing the Income Gap Conditional on Education...............................................31
Closing the Employment Rate Gap Conditional on Education.............................32
Closing All Three Gaps Simultaneously................................................................32
Assumptions & Limitations...................................................................................33
Results.....................................................................................................................34
Closing the Education Gap.....................................................................................36
Closing the Income Gap Conditional on Education...............................................37
Closing the Employment Rate Gap Conditional on Education.............................40
Closing All Three Gaps Simultaneously................................................................42
Conclusion...............................................................................................................45
Part II: Longitudinal Model......................................................................................47
Methodological Overview.........................................................................................47
Results.....................................................................................................................52
Aggregate Results..................................................................................................56
The Full Closure of the Education Gap..................................................................56
The Half Closure of the Education Gap.................................................................59
The Closure of the Conditional Employment Rate Gap........................................61
The Closure of the Conditional Income Gap.........................................................64
The Closure of All Three Gaps...............................................................................66
Discussion & Variable Breakdown...........................................................................69
Province/Territory..................................................................................................76
Age Group...............................................................................................................78
Sex..........................................................................................................................80
Educational Attainment.........................................................................................81
Comparing The Models............................................................................................82
Population Differences..........................................................................................85
Omitted Control Variables......................................................................................86
Conclusion...............................................................................................................88

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Executive Summary
Introduction
By most social and economic metrics, First Nations people tend to experience poorer outcomes thantheir non-Indigenous counterparts. On average, First Nations people earn markedly lower market
incomes than non-Indigenous Canadians. In 2016, for example, despite comprising 2.4% of theworking-age population, First Nations people only accounted for 1.4% of Canada’s total employment
income. Moreover, while Canadians at large enjoyed an employment rate of 60.5%, the employment
rate of First Nations people was significantly lower at only 46.8% in 2016 (Statistics Canada, 2017b): a
figure that reflects both high rates of unemployment and low rates of labour-force participation within
the First Nations population. These inequalities are widely recognized as the products of racist andcolonial policy which has systematically disenfranchised Canada’s Indigenous peoples (often
deliberately so), with many of these institutions and their legacies enduring to this day.
This report represents the newest addition to a series of research reports published by the Centre for
the Study of Living Standards (CSLS) on labour market disparities faced by the Indigenous Peoples ofCanada compared to non-Indigenous Canadians. The 2007 report titled “The Potential Contribution ofAboriginal Canadians to Labour Force, Employment, Productivity and Output Growth in Canada,
2001-2017” observed these disparities in labour market outcomes and linked them to the large gap in
educational attainment between the two populations. The report proceeded to project Indigenous
income, output, and productivity in 2017 under various assumptions about how the educational
attainment gap might change over that period, noting the significant economic gains associated withboosting Indigenous educational attainment. The 2009 report titled “The Effect of Increasing Aboriginal
Educational Attainment on the Labour Force, Output and the Fiscal Balance” updated the projections,extending the framework to 2026 and analyzing these gains might manifest in a sounder fiscal balanceby boosting tax revenues and reducing the need for spending on Indigenous social well-being.
Most recently, the 2015 report titled “Closing the Aboriginal Education Gap in Canada: Assessing
Progress and Estimating the Economic Benefits” assessed progress made in eliminating these labour
market gaps between 2001 and 2011 and updated projections to the year 2031. This report again
utilized the projection methodology developed in the CSLS’s original 2007 report on the matter,although some modifications were made to account for the distribution of the Indigenous population
across age, sex, and geographic categories.
Following with these previous reports by the CSLS, this report identifies the “education gap” or the
disparity we observe in educational attainment between First Nations people and non-Indigenous
Canadians, as a primary contributor to the market and non-market outcome gaps noted above. Still,this report utilizes a narrower scope. Unlike our 2015 report, which produced projections for all
Indigenous Peoples of Canada, including the First Nations population, this report focuses solely onFirst Nations people.
The objective of this report is three-fold; given the established relationship between education andlabour market outcomes, we aim a) to describe the education gap and how it has evolved since our2Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updateanalysis in the 2015 report, b) to produce updated estimates of the economic benefits, both to First Nations
people and to Canada generally, of closing the education gap by 2041, and c) to provide a broader outlook on
the projected economic performance of the First Nations population, particularly in the labour market
context. The data used for the analysis in this report is provided by the 2016 edition of the national
quinquennial census conducted by Statistics Canada; at the time of writing, this is the most up-to-date data
for the First Nations population with respect to key variables of interest.
It is imperative to note that this report is divided into two parts, each utilizing a distinct methodology toestimate the economic benefits of closing the labour market gaps facing First Nations people. The approach
we employ in Part I – what we call the ‘overnight model’ – is less detailed in some respects compared to theapproach we use in Part II – what we call the ‘longitudinal model’. Still, we contend that both of theseapproaches are valuable given their distinct time horizons.
In simulating gap closure in the present day, the overnight model offers a detailed account of the present
state of the education gap; in fact, the economic gains reported in the overnight model might also beinterpreted as the current costs of maintaining these gaps in the present day, or the economic benefits
which Canadians are foregoing today by allowing them to continue. Conversely, the longitudinal approach
offers a more realistic account of what the gap closure process might actually look like and the kind of
economic benefits which might accrue to First Nations people and Canada as a whole along the way. Still,
the exercises are fundamentally similar in that they both try to quantify the economic importance of closing
the key labour market disparities facing First Nations people. As such, we hold that the remarkableconsistency between the findings of the two approaches is a testament to the credibility of the estimatesoffered in this report.
This report is structured in the following manner. The first section provides a brief introduction to thebackground and context of the report. The next section outlines the methodology we employ for closing eachof three primary gaps we explore. In this section, we also note the various assumptions and limitations of
the overnight model before delineating the key differences between the overnight and longitudinal models.
The following section has us present, discuss, and interpret the results from the overnight model. We thenconclude Part I with a brief summary of our findings and their significance.
A brief description of objective and structure opens Part II. Next, we provide a methodological overview ofthe longitudinal method, describing each of the five gap closure scenarios we explore (Scenarios 1-5) as
well as the baseline projection which we compare these scenarios to. The following section presents theresults from the longitudinal model, first in aggregate terms and then broken down for each age group, sex,
province/territory, and educational attainment category. We supplement this discussion with an additional
section comparing the results of the overnight and longitudinal models and identifying possible sources ofvariation between the approaches. The final section concludes.

3Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Understanding the Gaps
In virtually every dimension, First Nations people experience poorer labour market outcomes than nonIndigenous Canadians. Consider the following statistics documenting the gap in the labour market
outcomes of the two populations, as observed in the 2016 Census and 2016 Labour Force Survey (Statistics
Canada, 2017b; 2022).
•	The average employment income for individuals of working age (15+) who reported a non-zero
employment income was $33,079 for First Nations people and $46,449 for non-Indigenous Canadians.1•	The employment rate of working-age First Nations people was 46.8% compared to 60.5% for
non-Indigenous Canadians.
•	The unemployment rate was 15.2% for First Nations people compared to 6.9% for non-Indigenous
Canadians.
•	The labour market participation of the working-age First Nations population was 61.3% compared
to 65.6% for the non-Indigenous population.
In the interest of understanding these labour market dynamics, this report investigates three separate gaps
experienced by First Nations people compared to non-Indigenous Canadians: a) the educational attainment
gap, b) the income gap conditional on educational attainment, and c) the employment rate gap conditionalon educational attainment. While the aforementioned educational attainment gap is our primary concern,
we contend that all three gaps are interrelated and relevant to the elimination of outcome gaps experienced
by First Nations people.

The Education Gap
The educational attainment gap, or simply the “education gap”, refers to the observation that First Nationsindividuals tend to occupy low levels of educational attainment in much greater proportions than nonIndigenous individuals, and conversely, that non-Indigenous individuals tend to occupy high levels of
educational attainment in much greater proportions than First Nations individuals. We identify two
approaches to measuring this gap.

1

A
 ll dollar figures in this report are expressed in 2015 Canadian dollars unless stated otherwise.

4

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

The first method – what we call the distributional approach – involves comparing the proportion of either
population which occupies a given level of educational attainment. The advantage of this approach is that ityields a series of category-specific gaps rather than one aggregate gap. This increased granularity allows
us to see precisely which educational categories either population is concentrated in, and therein develop abetter understanding of the nature of the gap.

Highest educational attainment for working-age First Nations vs. non-Indigenous, 2016

45.0%
40.0%

38%

35.0%

First Nations

30.0%

Non-Indigenous

25% 26%

25.0%
20.0%

18%

17%

19%

16%

15.0%

10% 10%

10.0%

8%
5%

5.0%

2%

3%

2%

0.0%

No educational
credential

High school
diploma or
equivalent

Apprenticeship or Non-university
trades certificate/certificate/
diploma
diploma

University below
bachelor’s

Bachelor’s
degreeUniversity above
bachelor’s

Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178.

As visualized in the chart above, the disparity in the overall educational attainment of the two populations islargely driven by gaps in three educational attainment categories. First Nations people are much likely toreport no educational credentials (38% of the First Nations working-age population) than non-Indigenous
Canadians (18% of the non-Indigenous working-age population). Conversely, First Nations people are
significantly less likely to have a bachelor’s degree or a degree above the bachelor level as their highest
credential (5% and 2% of the working-age population, respectively) than non-Indigenous Canadians (16%and 8%, respectively).
The second method of measuring the education gap is what we call the average years approach. Eacheducational category is assigned a single value representing the expected number of years of schoolingrequired to obtain that credential. The average years of education of a population is derived simply by taking
the arithmetic mean of each individual’s assigned years of education value. This allows us to describe thegap as the simple difference in the average years figure between the two populations. The advantage of thisapproach is that, unlike the distributional approach, it produces a single numerical measurement of theeducation gap that is easier to transform or compare over time relative to the distributional approach. The

5

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updatetable below presents the average years of education for both groups for both 2011 and 2016, with additional
measures to quantify the gap and how it has changed between the 2011 National Household Survey and the2016 Census.
Years of education for working-age (15+) First Nations vs. non-Indigenous, 2011 vs. 2016
Avg Years of EducationGap(absolute)(3)

FN as a proportionof non-Indigenous(4)

Gap(relative)(5) = 1.00 –(4)First Nations(1)

Non-Indigenous
(2)

2011

11.93

13.23

1.30

90.15%

9.85pp

2016

12.07

13.34

1.26

90.53%

9.47ppAbsolute change

0.15

0.11

-0.04

0.38pp-0.38pp

Compound Annual
Percentage Change

0.25%

0.16%

-0.63%

0.08%-0.79%

Sources: Statistics Canada, 2011 National Household Survey, Statistics Canada Catalogue no. 99-011-X2011037; Statistics Canada,
2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178.

In 2016, the average number of years of education for First Nations people was 12.1, corresponding to ahigh school level of education. Non-Indigenous individuals meanwhile had an average of 13.3 years ofeducation, or over a full year more than Canada’s First Nations population. The gap, which is derived bysubtracting the average years of education for First Nations individuals from the same for non-Indigenous
individuals, was about 1.26 years in 2016 compared to 1.30 years in 2011: a miniscule 3% reduction in thesize of the gap over the 5-year interval between the censuses.
The bottom row of the table quantifies the change in terms of an annual percentage change, however, theseestimates of the yearly change in the size of the gap are quite small. Still, it is worth noting that the rate ofchange in the average years of education is higher for the First Nations population than for the nonIndigenous population (0.25% per year vs. 0.16% per year). In other words, although both groups are
becoming more educated over time, educational attainment is rising at a faster rate for First Nations people
than for non-Indigenous people. As a result, the size of the education gap is, in fact, decreasing over time.
Still, at the rates described in Table 2, we estimate it would take about 117 years for the gap to disappear
completely. Overall, the years of education measure paints a picture of a significant education gap that isshrinking, albeit quite slowly.

6Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

The Conditional Income Gap
In addition to having a lower average level of educational attainment, First Nations also tend to earnsignificantly less from employment than non-Indigenous people, with First Nations people earning only
about 71% of what non-Indigenous people earn, on average. The core variable which we are most interested
in as we grapple with this gap in earnings is the level of educational attainment. As seen in the previous
subsection, the distribution of educational attainment differs between First Nations people and nonIndigenous Canadians, and it is likely, given the positive relationship between education and earnings, thatdiffering levels of education between the two groups is the primary driver of the income gap we observe.
For this reason, we are not particularly interested in the aggregate income gap as we estimate the potential
economic benefits of boosting the labour market performance of First Nations people. Rather, we areinterested in the income gap conditional on, or controlling for, one’s level of education.
Clearly, even when we compare within educational categories, the income gap persists, although admittedly
no individual gap quite matches the $13,370 figure that we find when we do not control for educational
attainment. This suggests that distributional differences in educational attainment between the two
populations were indeed driving much of the overall disparity in earnings, although, as evidenced by theresidual gaps, these differences do not explain the entire discrepancy. Still, when we control for educational
attainment, about half of the aggregate income gap disappears, with the average First Nations employment
income constituting between 83% and 88% of the non-Indigenous figure, compared to 71% when we do notcontrol for education.
The dollar value of the gap rises in absolute terms as the level of educational attainment rises, with thelargest gap of $10,630 occurring at the highest level of educational attainment (“above bachelor level”).
However, average employment income rises for both groups alongside this gap—for this reason, we might
be more interested in relative measures which take changes in income into account. One such measure,which expresses the average employment income of First Nations people as a proportion of non-Indigenous
average employment income, finds that the relative size of the income gap falls slightly as educational
attainment rises: a finding which reinforces the importance of higher educational attainment for First
Nations people as a means of closing the income gap.

7

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

The Conditional Employment Rate Gap
Finally, First Nations people also tend to experience lower rates of employment than their non-Indigenous
counterparts. As outlined in the previous section, at least some of this discrepancy is likely attributable to
distributional differences in variables which are related to employability and labour market participation likeage, province, gender, and education. Once again however, we can control for education by comparing within
educational categories, as the chart below does.

100%

Employment Rate for First Nations versus non-Indigenous by Educational Attainment, 2016
First Nations

90.0%
80.0%
70.0%

65%

61%

58%

60.0%
50.0%

57%

77%
73%

65% 64%

52%

47%

40.0%

26%

30.0%

66%

76% 74%70%

Non-Indigenous

33%

20.0%
10.0%
0.0%

Overall

No education
credential

High school
diploma or
equivalent

Apprenticeship ortrade certificate/
diplomaNon-university
certificate/
diploma

University below
bachelor’s

Bachelor’s
degreeUniversity above
bachelor’s

Although gaps in employment rate persist once we control for education, none of the gaps within categories
carry the same magnitude as the overall gap, with the size of the gap dropping from about 14 percentage
points to about 6 to 7 percentage points on average. This again suggests that distributional differences in
educational attainment between First Nations people and non-Indigenous Canadians are responsible forabout half of the gap in employment rates that we observe. The largest employment rate gap within
educational categories, in both absolute and relative terms, occurs in the “no certificate category”. Here,the employment rate for First Nations people is exceedingly low at 25.6%, while the rate for non-Indigenous
Canadians is significantly higher at 33.5%: a gap of about 8 percentage points. A similarly sized gap is also
observed in the “apprenticeship or trades” category.
Interestingly, at the highest levels of educational attainment (specifically those involving a university
certification of some kind), the direction of the gap becomes reversed; that is to say, within these categories,
First Nations individuals actually enjoy a higher employment rate than non-Indigenous people. It is likelythat this is purely the result of distributional differences between the groups which we have not controlled
for, with differences in age being the most likely candidate. The First Nations population is younger on
average than the non-Indigenous population, and this is especially true in the highest categories of8

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updateeducational attainment. On average, highly educated non-Indigenous Canadians tend to be significantly
older than highly educated First Nations individuals (Statistics Canada, 2019a). Moreover, older individuals
tend to be less interested in working compared to younger individuals. Thus, when we do not control fordifferences in age between the two populations, the comparatively young First Nations population in theseeducational categories appears to enjoy higher rates of employment than their older non-Indigenous
counterparts.

Methodology
A core objective of this report is to estimate the economic benefits that would accrue a) to First Nations
people and b) to Canadians generally if these three gaps – the educational attainment gap, the conditional
income gap, and the conditional employment gap – were to be closed. As part of this estimation process, wewill assess the impact of closing each of the three gaps individually, as well as the cumulative impact ofclosing all three gaps simultaneously.
In Part I of this report, we envision these gaps closing instantaneously or “overnight”. In order to estimate
the benefits associated with closing a given gap, we develop hypothetical versions of the 2016 economy
where that gap has closed. We define the closure of the education gap as a scenario where the proportion of
the First Nations population in any given educational category is equal to the observed proportion of the
non-Indigenous population in that category in 2016. We define the closure of the conditional income gap as
the First Nations population having the same average employment income within educational categories as
the non-Indigenous population. Similarly, we define the closure of the conditional employment rate gap as
the First Nations population experiencing the same employment rate within educational categories as thenon-Indigenous population.
To calculate the economic benefits associated with a given scenario, we simply replace the share/average
employment income/employment rate of the First Nations population within each educational category withthe relevant figure for the non-Indigenous population. We then proceed to calculate the total employment
income and total employment for the First Nations population and the Canadian population, defining theestimated economic benefit for a given scenario as the difference in total employment income andemployment between that scenario and the measures as observed in 2016.
In Part II of this report, we envision these gaps closing slowly over the course of 20 years, from 2021 to 2041
– what we call the longitudinal model of gap closure. We begin by producing a baseline scenario, projecting
how Canadian GDP, total employment income, employment, and productivity will progress over this period
based on economic projections produced by the CSLS and population projections published by Statistics
Canada. We then consider 5 gap closure scenarios: (i) the education gap closing halfway, (ii) the education
gap fully closing, (iii) the conditional income gap closing, (iv) the conditional employment rate gap closing,and (v) all three gaps closing fully. In a similar manner to Part I, we calculate the economic benefits
associated with a given gap closure scenario by taking the difference of key economic measures like GDP
and employment between the scenario of interest and the baseline scenario. However, unlike Part I, where
gap closure was assumed to be instantaneous, we calculate these gains for each year in the 2021 to 2041
period, and therein we are able to quantify the cumulative economic benefits accumulated over the 20-yearperiod through the gradual closure of these gaps.

9Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateIn the longitudinal model, we employ a number of additional measures in order to render a more robust andrealistic picture of how the gap closure process might actually occur. By leveraging individual-level 2016
Census microdata, we are able to observe the employment rate and average employment income for eachdistinct combination of the following variables: age group, sex, educational attainment and province or
territory of residence. This provides a more granular perspective on the labour market outcomes of First
Nations and non-Indigenous individuals compared to the overnight model, where we simply utilize theaverage employment income and employment rate for each educational category.
In total, this framework gives us 1188 variable combinations or “bins” (11 province/territories x 6 age
groups x 2 sexes x 9 educational attainment categories). Through the use of these bins, we are able tocontrol for differences between the First Nations and the non-Indigenous populations in the distribution ofindividuals across these variables. This means that when we simulate each gap closure scenario, we are
only comparing individuals of the same sex, age group, and province or territory of residence.
We construct the projected level of educational attainment for both populations in the following manner.
First, we observe the within-bin distribution of individuals across educational attainment categories asreported in the 2016 Census. Next, we observe how the educational attainment for each population changed
over the 2006-2016 period at the national level. We then apply this rate of change to the nation-wide
educational attainment distributions of each population, extrapolating to the year 2041. In order to make ouranalysis more tractable and accommodate the small size of many of the bins, we make the simplifying
assumption that, under the baseline scenario, the educational attainment distribution in each bin matches
the projected nation-wide distribution for that population; that is, all First Nations bins have an identicaleducational attainment distribution which matches the projected national First Nations distribution, and all
non-Indigenous bins have an identical educational attainment distribution which matches the projectednational non-Indigenous distribution.
To simulate the closing of the educational attainment gap in this model, we simply apply the projected
non-Indigenous educational attainment distribution to every First Nations bin, such that the educational
attainment distribution is identical for all bins, regardless of whether that bin contains First Nations or
non-Indigenous individuals. To simulate the closing of the conditional income gap, we replace the average
employment income in each bin of First Nations people with the projected 2041 average employment
income of non-Indigenous people in the bin with the same educational attainment and age-sex-province
characteristics. Similarly, to simulate the closing of the conditional employment rate gap, we replace theemployment rate in each bin of First Nations people with the projected 2041 employment rate (which we
assume to be the same as the rate observed in 2016) of the matching non-Indigenous bin.
In controlling for these additional variables like age, sex, and geography, we are able to mobilize a morecausal definition of these gaps. This is to say, compared to a situation where we do not control for thesevariables, the labour market disparities we observe and close here are more likely to reflect the true effecton employment rates and incomes of being First Nations as opposed to non-Indigenous. In other words, by
only comparing labour market outcomes between bins with the same age, sex, and geographicalcharacteristics, we are able to eliminate the elements of the aggregate labour market gaps which are due
simply to differences in the demographics of the two populations (ex. the First Nations population being
younger and younger individuals tending to earn lower wages on average).

10

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Estimated Benefits

Using the overnight model articulated in Part I of this report, we estimate significant benefits associatedwith the closure of each gap. In particular, we estimate that:•	The instantaneous closure of the education gap is associated with about a $5.0 billion increase inFirst Nations total employment income, representing a 44.8% increase over observed First Nations
total employment income in 2016. Moreover, we estimate that employment would grow by about
68,500 jobs, raising the share of Canadian employment made up by First Nations people (the First
Nations “employment share”) from 1.88% to 2.27%.
•	The instantaneous closure of the conditional income gap is associated with a $2.0 billion increase inFirst Nations total employment income, representing a 18.2% increase over pre-closure levels.
Given that the closure of this gap within our estimation strategy only sees us adjusting employment
incomes and does not involve any manipulation of First Nations employment rates, there are no
employment gains in this scenario.
•	The instantaneous closure of the conditional employment rate gap is associated with a $1.1 billion
increase in First Nations total employment income, representing a 10.0% increase in total
employment income compared to pre-closure levels. The closure of the gap is also associated withan increase in First Nations employment of about 40,900 jobs, raising the First Nations employment
share to 2.11%.
•	The simultaneous closure of all three gaps is associated with about an $8.6 billion increase in First
Nations total employment income, representing a massive 77.4% over pre-closure levels. This
scenario is also associated with an increase in First Nations employment of about 94,800 jobs,
raising the First Nations employment share to 2.42%
We posit that the results from the overnight model of gap closure provide strong evidence in support ofpolicy measures to close labour market disparities facing the First Nation population, with particularemphasis placed on the educational attainment gap as the most economically impactful of the three gaps.
These estimated economic benefits might also be interpreted as estimates of the opportunity costs incurredin 2016 by allowing these gaps to persist. Hence, our results across all four scenarios are unequivocal in
portraying these gaps, and particularly the education gap, as tremendous constraints on the economic
performance of Canada’s First Nations population: constraints which impede the growth and flourishing of
not only First Nations communities but the Canadian economy writ large.
Using the longitudinal model articulated in Part II of this report, we find results which are remarkably
consistent with those reported above. These results are collected in the tables below.

11Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Main Results, Projections for First Nations in 2041 by Scenario
Scenario

1

2

3

4

5

68.35

98.57

83.46

79.49

77.02

116.79

-

44.2%

22.1%

16.3%

12.7%

70.9%

3,081.35

3,111.57

3,096.46

3,092.50

3,090.02

3,129.79

-

1.0%

0.5%

0.4%

0.3%

1.6%

34.17

49.28

41.73

39.75

38.51

58.39

-

44.2%

22.1%

16.3%

12.7%

70.9%

1,540.67

1,555.79

1,548.23

1,546.25

1,545.01

1,564.90

-

1.0%

0.5%

0.4%

0.3%

1.6%

674.82779.43727.13814.27674.82862.59

-

15.5%

7.8%

20.7%

0.0%

27.8%

23,284

23,38823,33623,42323,284

23,471

-

0.4%

0.2%

0.6%

0.0%

0.8%

FN Labour Productivity

101,280

126,463

114,777

97,626

114,127

135,393% change over baseline

-

24.9%

13.3%

-3.6%

12.7%

33.7%

132,340

133,040

132,691

132,028

132,712133,345

-

0.5%

0.3%

-0.2%

0.3%

0.8%

GDP Gains
Total FN Contribution to GDP(billions)% change over baseline
Total Canadian Contribution to
GDP (billions)% change over baseline
Employment Income Gains
Total FN Employment Income(billions)% change over baseline
Total Canadian Employment
Income (billions)% change over baseline
Employment Gains (thousands)
Total FN Employment% change over baseline
Total Canadian Employment% change over baseline
Labour Productivity Gains

Aggregate Canadian Labour
Productivity% change over baseline

12Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Notably, we project that:•The closure of the education gap is associated with an increase in GDP of about $30 billion in 2041
compared to the baseline scenario and about 105,000 additional jobs. Furthermore, over the 20212041 period, the gradual closure of the education gap is associated with a cumulative $285 billion in
additional GDP and a gain of about 1.03 million job-years (additional yearly employment incomes forFirst Nations people) compared to the baseline scenario. These gains manifest in a 0.05 percentage
point boost to the annual GDP growth rate over the period, raising the figure from 1.71% to 1.76% per
year. Similarly, the annual growth rate of Canadian employment is augmented from 0.95% per year to
0.97% per year, and the annual growth rate of labour productivity from 0.75% per year to 0.78% peryear.
•	The closure of all three gaps simultaneously is associated with an increase in GDP of about $48.4
billion in 2041 compared to the baseline scenario and about 188,000 additional jobs. The gradualclosure of the three gaps, meanwhile, is associated with a cumulative $457 billion in GDP gains andan increase of 1.86 million job-years compared to the baseline scenario. Altogether, the closure of
the three gaps raises the annual growth rate of GDP for the 2021-2041 from 1.71% per year to
1.79% per year: a 0.08 percentage point increase. Moreover, the annual growth rate of Canadian
employment rises from 0.95% per year to 0.99% per year, and the annual growth rate of labour
productivity from 0.75% per year to 0.79% per year.

Cumulative Economic Benefits of the Full Closure of the Education Gap (Scenario 1), Estimates for2021-2041
Total GDP(billions)

Total
Employment(Job-Years)

(1)

(2)

Annual GDP
Growth Rate

AnnualEmployment
Growth Rate

Annual
Productivity
Growth Rate

(3)

(4)

(5)

Baseline

54,904.8

445,572,763

1.71%

0.95%

0.75%

Scenario 1

55,190.3

446,607,635

1.76%

0.97%

0.78%

absolute change

285.5

1,034,872

0.05pp0.02pp0.03pppercentage changeover baseline

0.5%

0.2%

2.9%

2.4%

3.53%

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

13

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Cumulative Economic Benefits of the Closure of All Three Gaps (Scenario 5), Estimates for 2021-2041
Total GDP(billions)

Total
Employment(Job-Years)

(1)

(2)

Annual GDP
Growth Rate

AnnualEmployment
Growth Rate

Annual
Productivity
Growth Rate

(3)

(4)

(5)

Baseline

54,904.8

445,572,763

1.71%

0.95%

0.75%

Scenario 5

55,362.1

447,429,345

1.79%

0.99%

0.79%

absolute change

457.3

1,856,582

0.08pp0.04pp0.04pppercentage changeover baseline

0.8%

0.4%

4.6%

4.3%

5.06%

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Conclusion
We present these gains as evidence of the great economic benefits which would accrue both to First Nations
people and Canadians generally, should policymakers and community leaders pursue the elimination of thelabour market disparities facing First Nations people vis-à-vis non-Indigenous people. We hold that
economic benefits of this size are remarkable, no matter the context. Still, we posit that our findings
become even more salient when situated in the context of present-day concerns about economic stagnation
and Canada’s slow growth trajectory. At a time when economists and business leaders speculate that the
Canadian labour market is all “tapped out”, the First Nations population remains a chronically overlooked
and underinvested-in resource for the Canadian economy. Put simply, the economic costs of maintaining
these gaps – to say nothing of the humanitarian costs – are enormous and they have scarcely been as
relevant as they are today.

14

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePart I: Overnight Model
Closing the First Nations Education Gap in Canada: Assessing Progress and Estimating the Economic Benefits — An Update, Part I 2
By most social and economic metrics, First Nations people tend to experience poorer outcomes than theirnon-Indigenous counterparts. They are, on average, much more likely than non-Indigenous Canadians todevelop severe health conditions like diabetes and substance dependencies, and they are significantly more
likely to become homeless or incarcerated (Kim 2019; Government of Canada 2020; Belanger et al. 2013).
They are also at a disadvantage in terms of labour market outcomes. On average, they earn markedly lower
market incomes than non-Indigenous Canadians. In 2016, for example, despite comprising 2.4% of theworking-age population, First Nations people only accounted for 1.4% of Canada’s total employment
income. Moreover, while Canadians at large enjoyed an employment rate of 60.5%, the employment rate ofFirst Nations people was significantly lower at only 46.8% in 2016 (Statistics Canada, 2017b): a figure thatreflects both high rates of unemployment and low rates of labour-force participation within the First
Nations population. These inequalities are widely recognized as the products of racist and colonial policy
which has systematically disenfranchised Canada’s Indigenous peoples (often deliberately so), with many ofthese institutions and their legacies enduring to this day.
In its discussion of the widespread outcome gaps between First Nations people and non-Indigenous
Canadians, this report will update the CSLS’s 2015 report “Closing the Aboriginal Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits” in focusing on the “education gap”, or the
disparity we observe in educational attainment between First Nations people and non-Indigenous
Canadians (Calver, 2015). We posit that this phenomenon—wherein Indigenous Peoples of Canada, includingFirst Nations people, possess a much lower average level of educational attainment than non-Indigenous
Canadians—is a primary contributor to both the market and non-market outcome gaps identified above. As
outlined in detail in our 2015 report, there are significant, well-evidenced linkages between educational
attainment and earnings, employment, health, and crime, wherein higher levels of education produce better
market and non-market outcomes across the board. As such, this report will aim to assess the potential
economic benefits and impacts of reducing or fully closing this education gap.
Whereas our 2015 report focused on Canada’s entire Indigenous population, this report will utilize anarrower scope, focusing solely on First Nations people. The objective of this report is three-fold; given
the established relationship between education and labour market outcomes, we aim a) to describe theeducation gap and how it has evolved since our analysis in the 2015 report, b) to produce updated
estimates of the economic benefits, both to First Nations people and to Canada generally, of closing the2This report was written by Chris Haun under the supervision of Andrew Sharpe. They wish to thank Don Drummond, Bert Waslander, Matt
Calver, and the participants of the June 14th seminar at the Assembly of First Nations office for their thoughtful comments and feedbackon this report.

3

As well as the CSLS’s 2007 report “The Potential Contribution of Aboriginal Canadians to Labour Force, Employment, Productivity and
Output Growth in Canada, 2001-2017” and the 2009 follow-up report “The Effect of Increasing Aboriginal Educational Attainment on the
Labour Force, Output and the Fiscal Balance”

4This report uses the term “education gap” as shorthand for the “educational attainment gapbetween First Nations and Non-Indigenous
Canadians” for the sake of brevity.

5

Although the 2015 report was broader in scope, it broke down key projections by Indigenous heritage group, including by First Nations
identity. In this way, this report is very much an update to the 2015 report. As such, this report compares key results for First Nations withthe previous report where appropriate.

15

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updateeducation gap by 2041, and c) to provide a broader outlook on the projected economic performance of theFirst Nations population, particularly in the labour market context. The data used for the analysis in thisreport is provided by the 2016 edition of the national quinquennial census conducted by Statistics Canada;
at the time of writing, this is the most up-to-date data for the First Nations population with respect to key
variables of interest.6
This report has been prepared at the request of the Assembly of First Nations (AFN). It is imperative to notethat this report is divided into two parts, each utilizing a distinct methodology to estimate the economic
benefits of closing the labour market gaps facing First Nations people. The approach we employ in Part I –what we call the ‘overnight model’ – is less detailed in some respects compared to the approach we use inPart II – what we call the ‘longitudinal model’. Still, we contend that both of these approaches are valuable
given their distinct time horizons. In simulating gap closure in the present day, the overnight model offers adetailed account of the present state of the education gap; in fact, the economic gains reported in theovernight model might also be interpreted as the current costs of maintaining these gaps in the present day,or the economic benefits which Canadians are foregoing today by allowing them to continue. Conversely, thelongitudinal approach offers a more realistic account of what the gap closure process might actually look
like and the kind of economic benefits which might accrue to First Nations people and Canada as a wholealong the way. Still, the exercises are fundamentally similar in that they both try to quantify the economic
importance of closing the key labour market disparities facing First Nations people. As such, we hold thatthe remarkable consistency between the findings of the two approaches is a testament to the credibility ofthe estimates offered in this report.
This report now moves to describe in detail the three labour market gaps between First Nations and nonIndigenous people which we address in our models. The next section outlines the methodology we employ
for closing each of these gaps, as well as for an additional scenario where we close all three gaps
simultaneously. In this section, we also note the various assumptions and limitations of the overnight model
before delineating the key differences between the overnight and longitudinal models. The following section
has us present, discuss, and interpret the results from the overnight model. We then conclude Part I with abrief summary of our findings and their significance.
A brief description of objective and structure opens Part II. In the following section, we then move to provide
a methodological overview of the longitudinal method, describing each of the five gap closure scenarios we
explore (Scenarios 1-5) as well as the baseline projection which we compare these scenarios to. The next
section presents the results from the longitudinal model, first in aggregate terms and then broken down foreach age group, sex, province/territory, and educational attainment category. We supplement this
discussion with an additional section comparing the results of the overnight and longitudinal models andidentifying possible sources of variation between the approaches. The final section concludes.

6Data from the 2021 Census on the topic of First Nations people will not be available until September 2022. Data pertaining to education
will not be available until November 2022. For these reasons, the analyses in this report will focus primarily on data from the 2016
Census, however the report can be updated once the relevant data from the 2021 Census is released.

16

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Understanding the Gaps
Following our 2015 report on the subject, we will investigate three separate gaps experienced by First
Nations people compared to non-Indigenous Canadians: a) the education gap, b) the income gap conditionalon education, and c) the employment rate gap conditional on education.7 While the aforementioned
education gap is our primary concern, we contend that all three gaps are interrelated and relevant to theelimination of outcome gaps experienced by First Nations people. This report will now move to detail eachof these gaps in turn.

The Education Gap: Distributional Approach
The education gap is the simplest as well as the most important of the three gaps in our view. It refers to theobservation that, on average, First Nations individuals have lower levels of educational attainment thannon-Indigenous Canadians. One approach to measuring educational attainment entails recording thehighest educational credential or degree that an individual has earned. Box 1 describes one way ofquantifying the gap in educational
As Chart 1 shows, the distribution of educational attainment levels for the First Nations population is very
different than that for non-Indigenous Canadians. First Nations people disproportionately occupy the lowest
categories of this variable—what we call ‘bins’—with about 38% of First Nations people reporting no
educational credentials at all. Conversely, less than 8% of First Nations people have a bachelor’s degree ora more advanced credential. The distribution of non-Indigenous individuals across these bins, however, isspread out much more evenly. Only about 18% of non-Indigenous individuals report having no educational
credentials, and about 24% of non-Indigenous Canadians have a bachelor’s degree or higher. While there isgreat variation in educational attainment within both the First Nations and non-Indigenous populations,comparing the two distributions shows a clear distinction: First Nations individuals tend to occupy low levelsof educational attainment in much greater proportions than non-Indigenous individuals, and nonIndigenous individuals tend to occupy high levels of educational attainment in much greater proportions
than First Nations individuals. Box 1 describes in detail this manner of quantifying the educational
attainment gap between First Nations and non-Indigenous individuals.

6

For the sake of brevity, the income gap conditional on education is sometimes referred to as the “conditional income gap”. Similarly, theemployment rate gap conditional on education is sometimes referred to as the “conditional employment rate gap”. In both cases, unlessexplicitly stated otherwise, these gaps are conditional on levels of educational attainment. Words like overall or aggregate are sometimes
used to refer to the unconditional gaps.

17

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateBox 1: Measuring the Education Gap — The Distributional Approach
We call this the distributional approach to measuring the education gap. In observing the
distribution of educational attainment—the highest educational degree or certification one hasachieved—within the two populations, we see the share of each population which falls into any givenbin. We can then identify individual bins where the difference between the shares in the two
populations is significant. The advantage of this approach is that it yields a series of categoryspecific gaps rather than one aggregate gap. This increased granularity allows us to see precisely
which educational categories either population is concentrated in, and therein develop a better
understanding of the nature of the gap. The trade-off to this precision comes in the form oftractability though; comparing these gaps over time is cumbersome and the results of thisapproach are more difficult to grasp and visualize than an approach which produces a single gap.

Table 1: Educational attainment for working-age (15+) First Nations vs. non-Indigenous, 2016
Nocertificate,
diploma or
degreeSecondary(high)
schooldiploma or
equivalency
certificate

Apprenticeship ortradescertificate
or diploma

College,
CEGEP orother
non-university
certificate
or diploma

University
certificate
or diploma
below
bachelor
level

Bachelor's
degreeUniversity
certificate,
diploma or
degreeabove bachelor level691,405

264,425

175,315

67,480117,785

15,52037,67013,210

100%

38.2%

25.4%

9.8%

17.0%

2.2%

5.4%

1.9%

27,418,100

4,827,400

7,253,640

2,669,080

5,327,705

786,105

4,365,815

2,188,355-20.6pp

1.1pp<-0.1pp

2.4pp

0.6pp

10.5pp6.1pp

First Nations
as a proportionof nonIndigenous

217.2%

95.8%

100.3%

87.7%

78.3%

34.2%

23.9%

Relative GAP(100% - First
Nations as
Proportion of
nonIndigenous)-117.2pp

4.2pp-0.3pp12.3pp21.7pp65.8pp76.1pp

Total

First Nations# of individuals
proportion ofindividuals

Non-Indigenous# of individuals
Absolute GAP(nonIndigenous lessFirst Nations)

Note: *pp = percentage points, negative numbers represent categories which First Nations people are more likely to occupy thannon-Indigenous people
Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178.

18

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 1 records the gap for each educational category. Here we define the gap as the difference in the
proportion of the two populations that falls into a given bin. The largest gap, in both absolute and relative
terms, is the “no certificate” category which First Nations people are about 20 percentage points more likely
to occupy compared to non-Indigenous people. The next largest gap, in relative terms, is the “above
bachelor level” category where the disparity runs in the opposite direction; First Nations people are about 6
percentage points less likely to inhabit this bin than non-Indigenous people. This discrepancy may not seemparticularly large, but only because the absolute proportion of non-Indigenous people with this qualificationis already a small number. Expressed in relative terms, the likelihood that a First Nations individual
occupies this category is less than a quarter of the likelihood that a non-Indigenous person does the same:the largest relative gap of any educational attainment category. This is followed by the “bachelor’s degree”
category which First Nations people are about 10 percentage points less likely to occupy than nonIndigenous people. Expressed in relative terms, the proportion of First Nations people in the category
makes up barely a third of the proportion of non-Indigenous people.

250%
200%

Chart 2: Share of First Nations in an educational category as a proportion of the share of nonIndigenous Canadians in that category217.2%

150%

95.8%

100%

100.3%

87.7%

78.3%

50.0%
0%

34.2%
No education
credential

High school
diploma or
equivalent

Apprenticeship ortrade certificate/
diplomaNon-university
certificate/
diploma

University below
bachelor’s

Bachelor’s
degree23.9%
University above
bachelor’s

Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178.

Chart 2 expresses the share of the First Nations population in a category as a proportion of the share of
non-Indigenous Canadians in that same category. A value of 100% signifies that the share of the two
populations occupying a category is identical; in other words, there is no gap. A value exceeding 100%
meanwhile indicates that the share of First Nations people in a category is greater than the share of nonIndigenous people, while a value below 100% indicates that the share of First Nations people is less thanthat of non-Indigenous people. As the chart shows, First Nations are greatly overrepresented in the “nocertificate” category but are underrepresented to varying degrees in virtually every other educational
category. Moreover, as the level of educational attainment rises, the likelihood of First Nations individuals
occupying a bin falls steadily in comparison to their non-Indigenous counterparts.

19

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

The Education Gap: Average Years Approach
Another way of quantifying the education gap involves measuring the average number of years of education
in a given population; Box 2 provides a detailed description of the advantages and limitations of thisapproach This method confirms the existence of a significant gap between the educational attainment levelsof First Nations and non-Indigenous Canadians. The advantage of this approach is that it allows us to distill
the distribution of educational attainment levels into a single figure that is much easier to track over timeand compare between periods. Table 2 presents the average years of education for both groups for both2011 and 2016, with additional measures to quantify the gap and how it has changed between the 2011
National Household Survey and the 2016 Census.

Box 2: Measuring the Education Gap — The Average Years Approach
We call this the average years approach to measuring the education gap. Each educational category is
assigned a single value representing the expected number of years of schooling required to obtain that
credential. The average years of education of a population is derived simply by taking the arithmetic
mean of each individual’s assigned years of education value. This allows us to describe the gap as thesimple difference in the average years figure between the two populations. The coding scheme of theaverage years variable is described below:
Educational Attainment Category

AssignedValue

No certificate, diploma or degree

10 years

Secondary (high) school diploma or equivalency certificate

12 years

Apprenticeship or trades certificate or diploma

13 years

College, CEGEP or other non-university certificate or diploma 14 years
University certificate or diploma below bachelor level

15 years

Bachelor's degree

16 years

University certificate, diploma or degree above bachelor level

18 years

The advantage of this approach is that, unlike the distributional approach, it produces a single numericalmeasurement of the education gap that is simple to transform or compare over time. This usability
comes at the price of precision, however. As the mean is a very narrow representation of its underlying
distribution, the measure produced by this approach tells us little about the shape of the education gap.
Indeed, it is conceivable that two very distinct distributions of educational attainment might produce thesame average years of education value, indicating no education gap at all, even when the distributional
approach suggests significant category-specific gaps. Knowing that the average years of education in a
population is 14, for example, does not tell us anything about the spread of individuals across categories.
The distribution could be polar, with individuals either occupying the very low or the very high categories
but largely avoiding the middle categories. Alternatively, the distribution could be tightly clusteredaround the middle categories, with very few individuals inhabiting either end of the range. Fundamentally,
the mean does not provide us with enough information to distinguish between these two distributions.

20

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

In 2016, the average number of years of education for First Nations people was 12.1, corresponding to a high schoollevel of education. Non-Indigenous individuals meanwhile had an average of 13.3 years of education, or over a fullyear more than Canada’s First Nations population.8 The gap, which is derived by subtracting the average yearsof education for First Nations individuals from the same for non-Indigenous individuals, was about 1.26 years in2016 compared to 1.30 years in 2011: a miniscule 3% reduction in the size of the gap over the 5-year interval
Table 2: Years of education for working-age (15+) First Nations vs. non-Indigenous, 2011 vs. 2016
Avg Years of EducationGap(absolute)(3)

FN as a proportionof non-Indigenous(4)

Gap(relative)(5) = 1.00 –(4)First Nations(1)

Non-Indigenous
(2)

2011

11.93

13.23

1.30

90.15%

9.85pp

2016

12.07

13.34

1.26

90.53%

9.47ppAbsolute change

0.15

0.11

-0.04

0.38pp-0.38pp

Compound Annual
Percentage Change

0.25%

0.16%

-0.63%

0.08%-0.79%

Note: *pp = percentage points			
Sources: Statistics Canada, 2011 National Household Survey, Statistics Canada Catalogue no. 99-011-X2011037;
Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178.

between the censuses. The bottom row of the table quantifies the change in terms of an annual percentagechange, however, these estimates of the yearly change in the size of the gap are quite small. Still, it is worth
noting that the rate of change in the average years of education is higher for the First Nations population
than for the non-Indigenous population (0.25% per year vs. 0.16% per year). In other words, although bothgroups are becoming more educated over time, educational attainment is rising at a faster rate for First
Nations people than for non-Indigenous people.

8T he coding strategy employed to produce the average years of education variable does not make allowances for differences that may exist
between First Nations people and non-Indigenous Canadians in the time required to achieve a given level of educational attainment.
We suspect that this is particularly problematic for the “no certificate, diploma or degree,” given that, on average, First Nations individuals
are more likely than non-Indigenous individuals to have not completed primary or middle school (Statistics Canada, 2009). In this category,a more accurate representation of the ‘expected’ years of education for First Nations people might be 8 years. In this way, our coding
strategy likely underestimates the true gap in years of education between the two populations. It is also suspected that First Nationsindividuals may take longer than non-Indigenous individuals to attain certain educational credentials. However, we believe this differenceis less problematic. Ultimately, the years of education measure is only a proxy for an individual or population’s ‘educatedness’. An individual
taking longer than expected to complete a given credential likely does not represent any meaningful difference in one’s level of education,
and as such, we are less concerned about these manners of deviation from our coding strategy.

21

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

As a result, the education gap is, in fact, decreasing over time. Still, at the rates described in Table 2, weestimate it would take about 117 years for the gap to disappear completely.9 Overall, the years of education
measure paints a picture of a significant education gap that is shrinking, albeit quite slowly.
It is important to note that both approaches to measuring educational attainment (the distributional
approach and the average years approach) fail to incorporate the quality of education which individuals arereceiving. Instead, they assume that a single year of education or a given credential are equally valuable forall people in all regions at all institutions. This is a troublesome assumption given that instructional quality
and standards of achievement vary widely across the country and between institutions, with the quality ofon-reserve education for First Nations people often being particularly poor (Dart, n.d.). For this reason, theeffective gap in educational attainment between the First Nations and non-Indigenous populations is likely
larger than either of these approaches would suggest.

The Income Gap Conditional on Education
In addition to having a lower average level of educational attainment, First Nations individuals earn lower
incomes on average than non-Indigenous individuals. In 2015, for example, the mean employment
income10 for First Nations people was $33,079 compared to $46,449 for the non-Indigenous population—
an absolute gap of $13,370, with First Nations people earning only about 71% of what non-Indigenous
people earn on average.119W e calculate the time it would take for the education gap to disappear using three different methods. The first method entails calculating
the compound annual growth rate of average years of education for both the First Nations and non-Indigenous populations and evaluating
the number of years it would take for these figures to converge. The second method entails calculating the compound annual growth rate
for the average First Nations years of education as a proportion of the non-Indigenous figure and evaluating the number of years it would
take for the ratio to equal one. The third method entails calculating the compound annual growth rate for the non-Indigenous years ofeducation as a proportion of the First Nations figure and evaluating the number of years it would take for the ratio to equal one. These
three methods all yield the same estimate of about 117 years. It is worth noting that all three of these methods assume a constant rate ofchange for the education gap and the average years of education of both populations. This assumption is not particularly realistic, giventhat our measure of educational attainment has a ceiling. Furthermore, institutions of higher education, like universities, tend to be lessaccessible (less widespread, more exclusive, more expensive) than lower-level educational institutions like high schools. Consequently,
population-level gains in educational attainment are relatively easier to realize at lower average levels of education than at higher averagelevels of education. Thus, as levels of educational attainment reach higher levels in a population, the growth in the average years ofeducation is likely to slow down. An additional, fourth method approximates this dynamic by envisioning the average years of education for
non-Indigenous people as constant at 2016 levels. This yields a much smaller estimate of about 40 years for the average years of education
for the two populations to converge.

10T he primary measure of income we use in this report is employment income. For the sake of brevity, we will sometimes use the words“income”; unless stated otherwise, we are referring to employment income. Mean employment income in particular is calculated using
all working-age individuals (15 years of age or older) who reported a non-zero sum for employment income in the 2016 Census. However,given that the Census asks respondents to report earnings for the previous year, these income figures actually represent incomes earnedin 2015.

11I t’s crucial to note though that this full gap certainly does not represent pure wage discrimination against First Nations people. Rather,much of the gap is produced by differences in key variables between the two groups. For example, the First Nations population is, on
average, significantly younger than the non-Indigenous population; younger individuals generally lack the same kind of work experienceand skills as older individuals, and as such they are likely to earn lower wages. For this reason, if we do not control for age (i.e. comparing
only people who are the same age to eliminate differences in age as a possible explanation for differences in income), the average
earnings of the First Nations population will be lower than those of non-Indigenous population, even if there is no direct wage discrimination
occurring. This is only a demonstrative example however, as the differences driving this gap in earnings extend far beyond age, likely
including location (particularly urban vs. rural), labour force status (part-time vs. full-time vs. seasonal), and a number of other variables.
Moreover, there may be some degree of direct wage discrimination that we would observe should we control for all of these other
differences.

22

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

The core variable which we are most interested in as we grapple with this gap in earnings is the level of
educational attainment. As seen in the previous subsection, the distribution of educational attainment
differs between First Nations people and non-Indigenous Canadians, and it is likely, given the positive
relationship between education and earnings, that differing levels of education between the two groups isthe primary driver of the income gap we observe. For this reason, we are not particularly interested in theaggregate income gap as we estimate the potential economic benefits of boosting the labour market
performance of First Nations people. Rather, we are interested in the income gap conditional on, or
controlling for, one’s level of education. Put simply, we are asking: what is the difference between theearnings of First Nations individuals and non-Indigenous individuals when we only compare individuals withthe same level of educational attainment? Table 3 shows the results of this approach.
Clearly, even when we compare within educational categories, the income gap persists, although admittedly
no individual gap quite matches the $13,370 figure that we find when we do not control for educational
attainment. This suggests that distributional differences in educational attainment between the two
populations were indeed driving much of the overall disparity in earnings, although, as evidenced by theresidual gaps presented in Table 3, these differences do not explain the entire discrepancy. Still, when we
control for educational attainment, about half of the aggregate income gap disappears, with the averageFirst Nations employment income constituting between 83% and 88% of the non-Indigenous figure,compared to 71% when we do not control for education.
Table 1: Educational attainment for working-age (15+) First Nations vs. non-Indigenous, 2016
Nocertificate,
diploma or
degreeSecondary(high)
schooldiploma or
equivalency
certificate

Apprenticeship ortradescertificate
or diploma

College,
CEGEP orother
non-university
certificate
or diploma

University
certificate
or diploma
below
bachelor
level

Bachelor's
degreeUniversity
certificate,
diploma or
degreeabove bachelor level$33,079$21,260$28,170$39,549$38,570$41,509$52,997$68,480$46,449$25,526$33,960$45,072$45,805$47,710$62,485$79,110$13,370$4,266$5,790$5,523$7,235$6,201$9,488$10,630

71.2%

83.32%

83.0%

87.7%

84.2%

87.0%

84.8%

86.6%

28.8pp16.7pp17.1pp12.3pp15.8pp13.0pp15.2pp13.4pp

Total

First Nations
NonIndigenous
identity
Absolute GAP(nonIndigenous lessFirst Nations)First Nations
as a proportionof nonIndigenous
Relative GAP(100% - First
Nations as
Proportion of
nonIndigenous)*pp = percentage point, average employment income figures are calculated only for those individuals who reported
non-zero sums for employment income in the 2016 Census.
Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268.

23

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update$16,000$14,000

Chart 3: Gap in Average Employment Income for Working-Age First Nations vs. non-Indigenous by
Educational Attainment Category, 2015
$13,337$12,000$9,488$10,000$7,235$8,000$6,000$4,226$5,790No education
credential

High school
diploma or
equivalent$10,630$6,201$5,523$4,000$2,000$0,000OverallApprenticeship ortrade certificate/
diplomaNon-university
certificate/
diploma

University below
bachelor’s

Bachelor’s
degreeUniversity above
bachelor’s

Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268.

As Chart 3 show, the dollar value of the gap rises in absolute terms as the level of educational attainment
rises, with the largest gap of $10,630 occurring at the highest level of educational attainment (“above
bachelor level”). However, as the table shows, average employment income rises for both groups alongside
this gap—for this reason, we might be more interested in relative measures which take changes in income
into account. One such measure, which expresses the average employment income of First Nations people asa proportion of non-Indigenous average employment income, finds that the relative size of the income gap
falls slightly as educational attainment rises. Chart 4 shows this pattern. At the lowest educational
categories, First Nations earnings hover around 83% of non-Indigenous earnings, but this number converges
towards around 86% at the highest educational categories: a finding which reinforces the importance of
higher educational attainment for First Nations people as a means of closing the income gap.

24

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Chart 4: : First Nations Average Employment Income as a Proportion of non-Indigenous Average
Employment Income by Educational Attainment, 2015

100.0%
95.0%
90.0%

87.7%

85.0%

83.3%

83.0%

No education
credential

High school
diploma or
equivalent

84.2%

87%

84.8%

86.6%

71.2%

80.0%
75.0%
70.0%
65.0%
60.0%

OverallApprenticeship ortrade certificate/
diplomaNon-university
certificate/
diploma

University below
bachelor’s

Bachelor’s
degreeUniversity above
bachelor’s

Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268.

Interestingly though, the smallest relative gaps do not occur at the highest levels of educational attainment.
Rather, the relative income gap is at its smallest in the “apprenticeship or trades” category, where First
Nations people earn about 88% of the non-Indigenous figure, followed closely by the “university below
bachelor level”, where that figure drops slightly to 87%. The most significant income gaps, meanwhile,occur in the “high school diploma or equivalency certificate” and “no educational credentials” category,where First Nations people earn about 83% of the average non-Indigenous employment income.

The Employment Rate Gap Conditional on Education
Finally, First Nations people also tend to experience lower rates of employment than their non-Indigenous
counterparts. The employment rate of a given population can be expressed as E/WA, where E represents thenumber of employed persons within the population and WA represents the number of working-age individuals
within the population. It expresses the population that is presently employed as a proportion of the broader
population that could be employed. As such, it is sometimes interpreted as a sort of composite measure,
capturing both the rate of unemployment and the rate of labour force participation within a given population.12
Both factors are expressed through E, the numerator of the equation. Holding the size of the population
constant, as unemployment rises, logically, the number of employed persons should fall, and the employment

12T he employment rate of a population can be decomposed as follows:e= E/WA=(L-U)/WA=(P*WA-U)/WA=((E+U)-U)/WA

where e is the employment rate, E is the number of employed persons in the population, WA is the working age population (the number ofindividuals above 15 years old in this context), L is the labour force or the number of people who are either working or actively looking forwork, U is the number of unemployed persons in the population, and P is the labour force participation rate of the population or the
proportion of the working age population that is in the labour force. Alternatively, the employment rate of a population can be expressed as:
e=E/WA=(1-u)P
where u is the unemployment rate and e, E, WA, and P represent the concepts described above.

25

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

rate therein. Similarly, as the proportion of the population who are working or looking for work (i.e. the ‘labour
force’) rises, the number of employed persons is also likely to rise, with the employment rate to follow. To theextent that the employment rate captures these two dimensions, it can be a useful tool for measuring thelabour market performance of a population in broad terms. Table 4 and Chart 5 present the employment rate
for First Nations people and non-Indigenous Canadians both generally and by education level.

100%

Chart 5: Employment Rate Gap Between First Nations people and non-Indigenous Canadians by
Educational Attainment, 2016
Non-IndigenousFirst Nations

90.0%
80.0%
70.0%

65%

61%

58%

60.0%
50.0%

52%

47%

40.0%

26%

30.0%

66%

76%

70%

77%
74%

73%

65% 64%

57%

33%

20.0%
10.0%
0.0%

Overall

16.0 pp14.0 pp

No education
credential

High school
diploma or
equivalent

Apprenticeship ortrade certificate/
diplomaNon-university
certificate/
diploma

University below
bachelor’s

Bachelor’s
degreeUniversity above
bachelor’s

Panel B: Employment Rate Gap for First Nations Compared to non-Indigenous by Educational
Attainment, 2016, percentage points
13.7 pp12.0 pp10.0 pp

7.9 pp

8.0 pp

7.7 pp
4.2 pp

5.6 pp

6.0 pp
4.0 pp
2.0 pp-1.2 pp-1.9 pp-3.9 pp

University below
bachelor’s

Bachelor’s
degreeUniversity above
bachelor’s

0.0 pp-2.0 pp-4.0 pp-6.0 pp

Overall

No education
credential

High school
diploma or
equivalent

Apprenticeship ortrade certificate/
diplomaNon-university
certificate/
diploma

Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016267.
Note: pp - percentage points, negative numbers indicate that the employment rate for First Nations people is higher than theemployment rate for non-Indigenous Canadians26

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 4: Employment rate for working-age (15+) First Nations vs. non-Indigenous, 2016
Nocertificate,
diploma or
degreeSecondary(high)
schooldiploma or
equivalency
certificate

Apprenticeship ortradescertificate
or diploma

College,
CEGEP orother
non-university
certificate
or diploma

University
certificate
or diploma
below
bachelor
level

Bachelor's
degreeUniversity
certificate,
diploma or
degreeabove bachelor level

323,685

67,635

91,11538,71577,34010,07028,645

10,160691,405

264,425

175,315

67,480117,785

15,52037,67013,210

46.8%

25.6%

52.00%

57.4%

65.7%

64.9%

76.0%

76.9%

16,592,130

1,617,050

4,178,585

1,736,750

3,722,625

500,535

3,238,840

1,597,750

27,418,100

4,827,400

7,253,640

2,669,080

5,327,705

786,105

4,365,815

2,188,355

60.5%

33.5%

57.6%

65.1%

69.9%

63.7%

74.2%

73.0%

13.7pp

7.9pp

5.6pp

7.7pp

4.2pp

-1.2pp-1.9pp-3.9pp

77.4%

76.4%

90.2%

88.2%

94.0%

101.9%

102.5%

105.3%

22.6pp23.6pp

9.8pp

11.8pp

6.0pp-1.9pp-2.5pp-5.3pp

Total

First Nations
# of employedindividuals
working age
population
employment
rate

Non-Indigenous
# of employedindividuals
working age
population
employment
rate
Absolute Gap(nonIndigenous lessFirst Nations)FN
employment
rate as aproportion of
non-Indigenous
Relative Gap (1- First Nations
as Proportionof nonIndigenous)

Note: *pp = percentage points, employment numbers and rates are calculated using all individuals who reported
working during the census week (May 1 to May 7, 2016 for most households)
Source: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016267.

The overall employment rate13 for non-Indigenous Canadians is 60.5% in 2016 compared to 46.8% for First
Nations people: an absolute gap of 13.7 percentage points, with the First Nations rate making up just 77% of
the non-Indigenous rate. Again, this is reflective of relatively high rates of unemployment and relatively low

27Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updaterates of labour force participation in the First Nations population. Per the Labour Force Survey, theunemployment rate for the First Nations population in 2016 is 15.2% for the First Nations population,compared to 6.9% for the non-Indigenous population (Statistics Canada, 2022). Similarly, the labour force
participation rate is 61.3% for the First Nations population in 2016, compared to 65.6% for the nonIndigenous population (Statistics Canada, 2022).
As outlined in the previous section, at least some of this discrepancy is likely attributable to distributional
differences in variables which are related to employability and labour market participation like age,
province, gender, and education. Once again however, we can control for education by comparing within
educational categories, as Table 4 does. Although gaps in employment rate persist once we control for
education, none of the gaps within categories carry the same magnitude as the overall gap, with the size ofthe gap dropping from about 14 percentage points to about 6 to 7 percentage points on average. This again
suggests that distributional differences in educational attainment between First Nations people and nonIndigenous Canadians are responsible for about half of the gap in employment rates that we observe. The
largest employment rate gap within educational categories, in both absolute and relative terms, occurs in
the “no certificate category”. Here, the employment rate for First Nations people is exceedingly low at
25.6%, while the rate for non-Indigenous Canadians is significantly higher at 33.5%: a gap of about 8
percentage points. A similarly sized gap is also observed in the “apprenticeship or trades” category.
Interestingly, at the highest levels of educational attainment (specifically those involving a university
certification of some kind), the direction of the gap becomes reversed; that is to say, within these categories,
First Nations individuals actually enjoy a higher employment rate than non-Indigenous people. Thisphenomenon is most pronounced at the highest level of educational attainment, “above bachelor level”,
where the employment rate is nearly 4% higher for First Nations people than for non-Indigenous people.
It is likely that this is purely the result of distributional differences between the groups which we have notcontrolled for, with differences in age being the most likely candidate. The First Nations population is
younger on average than the non-Indigenous population, and this is especially true in the highest
categories of educational attainment. On average, highly educated non-Indigenous Canadians tend to besignificantly older than highly educated First Nations individuals (Statistics Canada, 2019a). Moreover,older individuals tend to be less interested in working compared to younger individuals. Thus, when we do
not control for differences in age between the two populations, the comparatively young First Nations
population in these educational categories appears to enjoy higher rates of employment than their older
non-Indigenous counterparts.

13

There are two primary ways of measuring employment using the data provided by the 2016 Census. Most obviously, we can use thenumber of employed people. This number is based on a Census question which asks respondents if they worked during the week that
the Census was conducted (May 1st to May 7th for most households in 2016). This approach may thus exclude seasonal workers or
people who, for whatever reason, did not work during the reference week, but were working at other points in the year. This method
yields an employment rate of 60.2% for Canadians generally. The other, broader approach classifies any person who reports a non-zerosum for their employment income as employed. This method yields an employment rate of 71.3% for Canadians. While the first
approach may suffer from being too limited, this approach risks being overly inclusive. Individuals who worked even a single hour within
a year will be classified as employed, occupying the same category as individuals who work 40 hours a week year-round. For this report,
we have chosen to use the first approach, referring to the employment rates and numbers provided by Statistics Canada. This approachis certainly not without its flaws, however we feel it is a better approximation of long-term employment, which is the form of
employment we are most interested in.

28

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Methodology
A core objective of this report is to estimate the economic benefits that would accrue a) to First Nations
people and b) to Canadians generally if these three gaps – the educational attainment gap, the conditional
income gap, and the conditional employment gap -- were to be closed. As part of this estimation process,we will assess the impact of closing each of the three gaps individually, as well as the cumulative impact ofclosing all three gaps simultaneously. The primary metric which we use to estimate these benefits is thetotal employment income generated by the closure of a gap. Total employment income is simply the sum of
the earnings from employment of all individuals in a population, usually a national economy; it has a close
relationship with output, with the growth rates of the two measures being inextricably linked. Moreover,total employment income comprises about half of GDP. Our methodology for these estimates is fairly
simple, and this section will now move to outline the specific procedure we perform to simulate the closingof each gap as well as for all three gaps simultaneously. We then conclude the section with a brief
discussion of the limitations of this methodology, and a sketching of the methodology we employ in Part II ofthis report.

Closing the Education Gap
Our definition of closing the education gap entails adjusting the share of the First Nations population in any
given educational attainment category such that it exactly matches the share of the non-Indigenous
population in that category. This thus results in the average years of education becoming identical acrossboth populations. To simulate the closure of the education gap, we simply replace the proportion of First
Nations people in any given educational attainment category with the proportion of non-Indigenous people
in that category. To produce an estimate of the economic benefits of that change, we compare the total
employment income of a) First Nations people and b) Canadians before and after the closure of the gap.
Total employment income can be calculated by summing up the employment income of every individual in
the relevant population. Unfortunately, we lack information on the precise employment incomes of eachindividual in the First Nations population, let alone the entire Canadian population. We do however have theaverage employment income for each group (and even each educational attainment category): figures which
we can multiply by the number of employed individuals in each category to produce an estimate of the total
employment income.
We first estimate the total employment income of First Nations individuals before the closure of the gap bymultiplying the number of employed First Nations individuals in each educational category by the average
employment income in that category.14 This is somewhat more difficult to do for the post-closure total
employment income however, given that we do not have the number of employed persons in each14This process of calculating this pre-closure total employment income figure is the same for all four scenarios. For this reason, its
calculation is omitted from our description of the procedures used to close the other gaps.

29

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updateeducational category under this hypothetical scenario. We can estimate these employment numbers
however.15 First, we multiply the total First Nations working-age population by the proportion of theworking-age non-Indigenous population in each educational category; this provides us an estimate of how
many working-age First Nations people would occupy each category after the closing of the gap.16 We thenmultiply the number of working-age First Nations people in each educational category by the employment
rate in that category (see Table 4) to produce an estimate of the number of employed First Nations people ineach category. Finally, to produce an estimate of the post-closure total employment income for the First
Nations population, we multiply the number of employed First Nations in each category by the average
employment income for First Nations people in that category (see Table 3) and add up all of these figures.
By subtracting the post-closure total employment income from the pre-closure figure, we can quantify the
economic benefit of closing the gap. We can also add the change in total employment income for First
Nations people to the pre-closure total employment income for Canadians17 generally to find the new total
employment income for the country post-closure.
Another way of estimating the economic benefits of closing the gap is quantifying the number of jobs
created by the movement of First Nations individuals into higher categories of educational attainment.
Employment rates tend to be higher in these categories compared to lower categories. As such, when weclose the education gap—an adjustment which moves many First Nations people to higher educational
categories—many First Nations individuals begin to enjoy higher rates of employment. In aggregate, thischange in the effective employment rate means a greater number of employed First Nations people.18

15

This estimation process involves the use of both the employment rate in a given educational attainment category and the mean
employment income in a given educational attainment category. It should be noted that these two metrics are not directly comparable;
the employment rate is calculated by including only those individuals who reported working during the Census week, while the mean
employment income is calculated for all individuals who reported a non-zero sum of employment income. In other words, they arecalculated using different definitions of employment (see Footnote 14 for more details on the distinction). The mean employment
income for the group counted as employed by the 2016 Census (and therein represented in the employment rate) is likely higher thanthe mean employment income used in our estimation. Indeed, the 2016 Census Public Use Microdata File (PUMF) confirms that themean employment income for those counted as employed in the 2016 Census week was about $7,000 higher than the mean
employment income for those who reported a non-zero sum for their employment income that same year (Statistics Canada, 2017). As aresult, our estimates of total employment income produced using this framework are likely underestimates.

16

Here we assume that the total First Nations population remains the same before and after the closure: an assumption that we willrevisit at the end of this section.

17

The calculation of pre-closure total employment income for all Canadians follows a very similar procedure to the calculation ofpre-closure total employment income for the First Nations population. The number of employed individuals in each educational
category is multiplied by the average employment income in that category.

18

Both of these approaches of quantifying the benefits of closing the education gap assume that the movement of First Nations individuals
between educational categories does not affect the labour market conditions in those categories. Namely, we assume that the average
employment income and the employment rate remain constant at pre-closure levels. While this is not an entirely reasonableassumption, we posit that the real effects on these parameters would be insignificant given the small size of these movements relative
to the size of the Canadian population in any given category..

30

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateClosing the Income Gap Conditional on Education
The closure of the income gap conditional on education entails a similar albeit much simpler process.
To produce an estimate of the total employment income19 for the First Nations population post-closure,
we simply multiply the pre-closure number of employed First Nations people in each educational
attainment category by the average employment income for non-Indigenous individuals in thatcategory. Finally, as in the previous section, we can subtract the pre-closure total employment income
from the post-closure figure to produce an estimate of the change in total employment income
resulting from the income gap closure.
It is important to note that the closure of the income gap within educational categories does not constitute a
closing of the aggregate income gap; that is to say, even after closing the income gap conditional on
education, First Nations people will still earn less on average than non-Indigenous people. This is aconsequence of differences in the distribution of educational attainment levels between the First Nations
and non-Indigenous populations. The aggregate average employment income figure can be thought of as aweighted average of the individual average employment income figures for each educational category. Thisfunction can be expressed in the following form:

whereis the aggregate average employment income of a population,is the average employment
income of educational attainment category c, ac is a weight representing the proportion of the population
which occupies category c, and n is the number of educational attainment categories. When we close theincome gap conditional on education, we are replacing the average employment income of First Nations
people in a given category with the same figure for non-Indigenous people; essentially, we are equalizing
i across the two populations. This is not sufficient to eliminate the aggregate income gap however, as
the distribution of individuals across educational categories will still vary between First Nations and nonIndigenous people. Thus, the values of ac will still vary between the populations and disparity will remain
between the aggregate average employment incomesof First Nations people and non-Indigenous
Canadians. In order for the aggregate income gap to fully close, both the income gap conditional on
education and the education gap would need to close.20 Under these circumstances, both ac andwould
be equalized across the two populations, leading to a convergence offor First Nations and nonIndigenous people, and a full closure of the aggregate income gap.

19

20

It should also be noted that the jobs approach to quantifying economic benefits is not applicable to the closure of the income gap. First
Nations individuals are not moving between categories nor is the employment rate gap being closed, and as such, the First Nations
population does not enjoy a higher effective employment rate (neither in the aggregate nor in specific categories). The only economic
benefits accruing as a result of closing the conditional income gap are the gains in income which all employed First Nations people
experience; there are no gains in employment.
We will perform this operation in our fourth and final scenario where all three gaps are closed simultaneously.

31

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateClosing the Employment Rate Gap Conditional on Education
The closure of the employment rate gap conditional on education also follows a fairly simple process. The
working-age population of First Nations people in each educational category is multiplied by the nonIndigenous employment rate in that category. This produces the number of employed First Nations people
in each educational category, which is then multiplied by the average employment income for First Nations
people in that category. Once again, this provides us an estimate of the total employment income postclosure for First Nations people, which can then be compared to the pre-closure figure to produce theestimated change in total employment income as a result of the gap closure.21 We can also estimate thenumber of jobs generated by the closure of the conditional employment rate gap as an additional way ofquantifying the economic benefits. To do so, we compare the pre- and post- closure number of employedFirst Nations people in each category and sum the differences.
As with the closure of the conditional income gap, the closure of the conditional employment rate gap is not
sufficient to eliminate the aggregate employment rate gap. The aggregate employment rate for a given
population can be expressed as:

where E is the aggregate employment rate for a population, Ec is the employment rate within a given
educational attainment category c, ac is a weight representing the proportion of the population which occupies
category c, and n is the number of educational attainment categories. Closing the employment rate gap
within educational categories equalizes Ec across the First Nations and non-Indigenous populations, however
the values of ac remain distinct for the two groups. In order for the aggregate employment rate gap to close
fully, both the conditional employment rate gap and the education gap need to close.22

Closing All Three Gaps Simultaneously
The procedure for estimating the benefits of closing all three gaps simultaneously is very similar to theprocess for estimating the benefits of closing the education gap. The distinction is that at every step we now
use the parameters of the non-Indigenous population rather than the First Nations population: an
adjustment that allows us to produce a portrait of the Canadian economy if First Nations people were to
enjoy the same level of educational attainment, the same income conditional on education, and the same
employment rate conditional on education as non-Indigenous Canadians.

2122

As described in the “Understanding the Gaps” section, there are several educational categories in which First Nations people actually
enjoy a higher employment rate than non-Indigenous individuals. In these categories, we will not close the disparity in employment rate
between the two groups, given that replacing the First Nations employment rate with the non-Indigenous rate would actually beeconomically harmful. Alternatively, we could replace the non-Indigenous employment rate with the higher Indigenous employment
rate, therein boosting the economic performance of non-Indigenous individuals, however we feel this is not germane to the goal of thisreport. We have instead chosen to leave the First Nations employment rate as is in these categories.
Again, we will perform this exercise in the final scenario as described in the following subsection.

32

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

We begin by closing the education gap. We do so by multiplying the total working age population of First
Nations people by the proportion of the non-Indigenous working age population in each educational
category. This yields the number of working-age First Nations people in each category if the distribution of
educational attainment for First Nations people was identical to the distribution for non-Indigenous
Canadians. We then close the conditional employment rate gap by multiplying the number of working-age
First Nations people in each category by the non-Indigenous employment rate in that category, yielding thenumber of employed First Nations people in each category. Finally, we close the conditional income gap. By
multiplying the number of employed First Nations people in each category by the average employment
income of non-Indigenous Canadians in that category and summing these figures, we produce the total
employment income for the First Nations population post-closure. Again, one way we can quantify the
economic benefits of closing all three gaps is by subtracting the pre-closure total employment income ofFirst Nations people from the post-closure figure.
Alternatively, we can calculate the number of new jobs produced by subtracting the pre-closure number of
employed First Nations people in each category from the post-closure number. The factors driving this job
creation process are a) the greater employment rate which many First Nations people now enjoy simply byvirtue of having a higher level of educational attainment and b) the greater employment rate which mostFirst Nations people enjoy now that employment rates in every category have converged to the rates enjoyedby non-Indigenous Canadians.

Assumptions & Limitations
All four of these scenarios follow what we call the overnight model of gap closure. That is, they envision thethree major gaps between First Nations people and non-Indigenous Canadians closing instantaneously or‘overnight’. This is obviously not a reasonable assumption; the closing of these gaps will take years, if not
decades, and will likely require substantial policy interventions. Moreover, this is hardly an innocuous
assumption given that the absolute and relative sizes of both populations, as well other key parameters likereal wage rates and employment rates, are expected to change significantly over this time period. As such,the findings of this model should not be regarded as an exact simulation of the economic outcomes that willarise should these gaps truly be closed. Rather, they should be viewed as initial estimations of themagnitude of benefits which might accrue to First Nations people and Canadians generally, should
policymakers pursue such goals.
Part II of this report sees us quantify the economic benefits of closing the three primary gaps using a moredetailed and more realistic model. We call this model the longitudinal model. Rather than disappearing
instantaneously, this model envisions the gaps closing slowly over the course of years. It also makes use of
economic projections developed by the Centre for the Study of Living Standards to incorporate changes overtime in the key population parameters that we have outlined above, namely real wages, employment rates,
and the size of the populations. Moreover, this model takes a slightly broader scope, assessing economic
benefits in terms of GDP, employment, employment income, and productivity gains. Finally, whereas the‘overnight’ model primarily mobilizes aggregate-level data for its estimations, this ‘longitudinal’ model
leverages 2016 Census individual-level microdata provided by Statistics Canada in order to control fordifferences in age, sex, and geography between the two populations.

33

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Results
Chart 6 and Table 5 collect our main results across the four scenarios we explore. Panel A of Chart 6 presents
the employment income effects of closing the education gap, while Panel B shows the employment effects.
Tables 6 to 9, meanwhile, present the results for each gap closure scenario. Our discussion of the results is
structured in the following manner: we begin with the closure of the education gap before moving to discuss
the closure of the conditional education gap, the closure of the conditional employment rate gap, andultimately the simultaneous closure of all three gaps.
These benefits should be interpreted as how measures of the Canadian economy in 2016 might change if key
labour market gaps between First Nations people and non-Indigenous Canadians were to close. Essentially,
we are developing hypothetical versions of the 2016 economy where these gaps have closed and calculating
the economic benefits for a given gap closure scenario as the difference in any given measure between that
hypothetical scenario and the real, observed 2016 economy.23 As such, the benefits expressed here are onetime benefits which would accrue if the aforementioned labour market gaps were to close instantaneously or“overnight”. Alternatively, these benefits may be conceptualized as the opportunity cost of allowing these gaps
to persist. For example, the gains in total employment income associated with the closure of the educational
attainment gap can be interpreted as the amount of total employment income which Canadians are ‘leaving on
the table’, so to speak, by not addressing this gap; in other words, we estimate that Canadian total
employment income in 2016 would have been that much larger if the educational attainment gap was closed.
In the longitudinal model offered in Part II of this report, we also offer time-series estimates of the yearly
benefits which would be accrued if these gaps were to close realistically over time.
Change in Total Employment Income (millions)Chart 6: Estimated Economic Benefits by Gap Closure Scenario$10,000

Panel A: Additional Total Employment Income Generated by Gap Closure Scenario, 2016, (millions)$8,638$9,000$8,000$7,000$6,000$5,000$4,998$4,000$3,000$2,032$2,000$1,117$1,000$0

Closing
Education Gap

23

Closing Income
Gap Conditionalon Education

Closing
Emplyment Gap
Conditional on
Education

Hence, all dollar estimates of benefits are expressed in 2015 Canadian dollars.

Closing All Three
Gaps
Simultaneously

34

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —Panel B: Additional Jobs Generated for First Nations by Gap Closure Scenario, 2016
$100,000$94,783$90,000$80,000$68,469$70,000$60,000$50,000$41,759$40,000$30,000$20,000$10,000$0

Closing
Education Gap

Closing Income
Gap Conditionalon Education

Closing
Emplyment Gap
Conditional on
Education

Closing All Three
Gaps
Simultaneously

Sources: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178. Statistics
Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268. Statistics Canada, 2016 Census
of Population, Statistics Canada Catalogue no. 98-400-X2016267.

Table 5: Estimated Economic Benefits of Gap Closures

Closing
Education
Gap

New
Employment (# ofjobs) fromgap
closureEmployment Sharebefore gap
closureEmployment shareafter gap
closureTotal
Canadian
Employment
Incomepre- gap
closure(millions)

Total
Canadian
Employment
Incomepost- gap
closure(millions)

Change in
Total
Employment
Income(absolute)(millions)

Change in
FN Total
Employment
Income(percentchange)Change in
Canadian
Total
Employment
Income(percentchange)68,469

1.88%

2.27%

$793,564$798,562$4,99844.82%

0.63%

1.88%

1.88%

$793,564$795,596$2,03218.22%

0.26%

Closing
Income Gap
Conditionalon Education

Gap Closure Scenario

Change in Total Number of Employed Persons (# of New Jobs)

An UpdateClosing
Employment
Gap
Conditionalon Education

40,851

1.88%

2.11%

$793,564$794,681$1,11710.02%

0.14%

Closing All
Three Gaps
Simultaneously

94,783

1.88%

2.42%

$793,564$802,202$8,63877.47%

1.09%

Sources: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178. Statistics
Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268. Statistics Canada, 2016 Census
of Population, Statistics Canada Catalogue no. 98-400-X2016267.

35

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateClosing the Education Gap
Table 6 presents our estimates for the economic benefits associated with closing the education gap under theovernight model outlined in the previous section. In total, we estimate that the closure of the gap would generatenearly $5 billion dollars in additional employment income for the Canadian economy, constituting a 0.63%
increase in total Canadian employment income. As a proportion of national earnings these gains may seemsmall, but this is simply a consequence of the small proportion of the Canadian population which First Nations
people comprise; in 2016, First Nations people accounted for only 2.1% of the Canadian working-age population.
As a proportion of First Nations total employment income, that $5 billion dollars in additional income represents
a nearly 45% increase from pre-closure income levels. Moreover, we estimate that the closure of the gap would
generate an additional 68,469 jobs for First Nations people as a result of the higher employment rates thathigher levels of educational attainment are associated with. Overall, this would boost the employment rate
for First Nations people from 46.8% to 56.7%: an increase of about 10 percentage points. Furthermore, it would
raise the proportion of total Canadian employment made up by First Nations–what we call the employment sharefor the First Nations population or the First Nations employment share–from 1.88% to 2.27%.

Table 6: Economic Benefits of Closing Education Gap

Total

No
certificate,
diploma or
degreeSecondary(high)
schooldiploma or
equivalency
certificate

Apprenticeship ortradescertificate or
diploma

College,
CEGEP orother
nonuniversity
certificate
or diploma

University
certificate
or diploma
below
bachelor
level

Bachelor's
degreeUniversity
certificate,
diploma or
degreeabove
bachelor
level

New
Employment (#of jobs) from gap
closure

68,469-36,471

4,001

-81

10,9272,795

55,02632,276

Total FN
Employment
Income pre- gap
closure(millions)$11,151$1,438$2,567$1,531$2,983$418$1,518$696

Total FN
Employment
Incomepost- gap
closure(millions)$16,149$663$2,679$1,528$3,404$534$4,434$2,906

Change in FN
Total
Employment
Income(absolute)(millions)$4,998

-$775

$113

-$3

$421

$116

$2,916$2,210Change in FN
Total
Employment
Income (percent
change)44.82%-53.92%4.39%-0.21%

14.13%

27.76%

192.10%317.68%Sources: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178. Statistics
Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268. Statistics Canada, 2016 Census
of Population, Statistics Canada Catalogue no. 98-400-X2016267.

36

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateAs shown in Table 6, the largest of the gains in income occur in the “bachelor’s degree” and “above bachelor
level” categories where the increases in employment income total to $2.9 billion and $2.2 billion
respectively; this tracks with our analysis of the gaps presented in Table 1 where we noted that these two
educational categories had the largest gaps in educational attainment between the two groups. Logically,closing these two widest gaps should produce the largest gains and that is exactly what we observe: aphenomenon which is bolstered by the fact that these two categories boast the highest average incomes of
the attainment categories by a large margin. The other major area of disparity between the two populations
is in the “no certificate” category, which First Nations people were twice as likely to occupy compared tonon-Indigenous Canadians. As shown in Table 6, the closure of the education gap is actually expected to
produce a negative change in the total employment income of First Nations people in this category. It is
critical to note that this negative figure is purely a function of First Nations people leaving the category as
they achieve higher levels of education. First Nations people
are not earning less; in fact, they are expected to earn significantly more in the higher educational
categories that they now inhabit. Rather, First Nations individuals are simply being redistributed into higheducational categories, leaving this category (as well as the “apprenticeship or trades” category) with asmaller population, and therein, a smaller total employment income. These small losses are greatly
overshadowed by the significant gains in other, higher educational categories however.
The employment figures in Table 6 tell a similar story. A fairly large number of jobs–about 36,000–are ‘lost’in the” no certificate” category, but once again, this only represents First Nations individuals moving intohigher educational categories and likely into higher paying jobs. It is important to note though, that thechanges in employment numbers within educational categories do not necessarily represent movement
between jobs. For example, a First Nations individual who has not graduated high school and is working inmanual labour would be counted as one job within the “no certificate” category. If that First Nationsindividual were to achieve a high school equivalency certificate as part of the closure of the education gap,
their job would no longer be counted in the “no certificate” category and would now be counted in the “highschool diploma or equivalent” category. This would happen regardless of if that individual stayed in theircurrent job or if they leveraged their newly acquired credentials to find a different job. With that said, giventhat greater economic opportunity and greater earning potential are some of the primary reasons why
individuals pursue higher levels of education, it seems likely that most individuals who reach a higher levelof educational attainment will see their new credentials reflected in their income. These gains in income
may arise from moving between jobs, but they can also arise from wage increases, or in the case of the selfemployed, increased self-employment income.

Closing the Income Gap Conditional on Education
Table 5 and 7 present our estimates for the economic benefits associated with closing the income gap
conditional on education under the overnight model. We estimate that the closure of the gap would generate
about $2 billion dollars in additional employment income: a 0.26% increase in total Canadian employment
income or about an 18% increase in the total employment income of the First Nations population. The
largest source of these gains is the “college or non-university certificate” category where the closure of the37

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updategap results in about $560 million in additional employment income, comprising over 25% of the aggregate
gains across all categories. This is followed closely by the “high school diploma or equivalent” category
where closure of the gap yields $528 million in additional employment income.
Interestingly, unlike the closure of the education gap, the greatest source of gains here does not stem fromthe educational categories with the largest income gaps. As shown previously in Chart 3, the two categories
with the largest gaps in average employment income between the two populations are the “bachelor’s
degree” category and the “above bachelor level” category, or the two highest levels of educational
attainment. Here however, the closure of the income gap in these two categories only yields $272 million
and $108 million respectively. These are still large gains to be sure, but perhaps not as large as we might
expect given the significant absolute gaps in the earnings of First Nations people compared to nonIndigenous Canadians in these categories. The reason for this is that the size of economic gains fromclosing the income gap in any given category is not solely a function of the size of the gap. Rather, the size of
economic gains is a product of both a) the size of the gap and b) the proportion of the population in that gap.
As Table 1 shows, the proportion of First Nations people in these top two categories only totals to 7.4% of
the population, compared to the 42.4% of the population occupying the “high school” and “college”
categories. This dynamic not only explains the distribution of economic gains across the educational
categories, it also illustrates why the gains from the closure of the conditional income gap do not quite rival
the gains from the closure of the education gap.

38

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 7: Economic Benefits of Closing Income Gap Conditional on Education

Total

No certificate,
diploma or
degreeSecondary(high)
schooldiploma or
equivalency
certificate

Apprenticeship ortradescertificate
or diploma

College,
CEGEP orother
non-university
certificate
or diploma

University
certificate
or diploma
below
bachelor
level

Bachelor's
degreeUniversity
certificate,
diploma or
degreeabove
bachelor
level

New
Employment(# of jobs)
from gap
closureTotal FN
Employment
Incomepre- gap
closure(millions)$11,151$1,438$2,567$1,531$2,983$418$1,518$696

Total FN
Employment
Incomepost- gap
closure(millions)$13,182$1,726$3,094$1,745$3,543$480$1,790$804

Change in FN
Total
Employment
Income(absolute)(millions)$2,032

$289

$528

$214

$560

$62

$272

$108

Change in FN
Total
Employment
Income(percentchange)18.22%

20.07%

20.55%

13.96%

18.76%

14.94%

17.90%

15.52%

Sources: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178. Statistics
Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268. Statistics Canada, 2016 Census
of Population, Statistics Canada Catalogue no. 98-400-X2016267.

Whereas the closure of the education gap yields about $5 billion in additional total employment income, theclosure of the income gap conditional on education yields approximately 40% of that -- about $2 billion.
Moreover, while the closure of the education gap generates 68,469 new jobs for First Nations people, theclosure of the income gap conditional on education, by definition, generates no additional employment
opportunities. Part of this disparity is explained by the analysis above; the closure of the income gap does

39

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

not redistribute First Nations people across educational categories like the closure of the education gap,
and as such, closing even seemingly enormous gaps like the income gap at the “above bachelor level” does
not generate enormous economic benefits given that very few First Nations people occupy this category.
Moreover, the potential income gains from moving individuals up the educational distribution are
significantly greater than the potential income gains from closing any of the within-category income gaps. In
other words, the gap in earnings between less educated and highly educated First Nations people is much
more substantial than the income gap between First Nations people and non-Indigenous Canadians within
any given educational category. For example, moving a First Nations individual from the “high school”
category to the “bachelor’s degree” category is associated, on average, with a nearly $25,000 increase inincome: a figure which dwarfs the largest within-category income gap at $10,630, and even the aggregate
income gap at $13,370. For these reasons, although the closure of the income gap conditional on education
is substantial and important, the economic importance of closing the education gap is significantly greater.

Closing the Employment Rate Gap Conditional on Education
Table 5 and 8 present our estimates for the economic benefits associated with the closure of theemployment rate gap between First Nations people and non-Indigenous Canadians within educational
categories. Overall, the closure of the employment rate gap under the ‘overnight model’ is projected togenerate about $1.1 billion in additional total employment income, representing a 0.14% increase in
Canadian total employment income and about a 10% increase in the total employment income of First
Nations people.24 Moreover, we estimate that the closure of the gap would generate 40,851 new jobs as aresult of the higher employment rates which most First Nations people would now enjoy. Consequently, theemployment share for the First Nations population–the proportion of total Canadian employment accounted
for by the employment of First Nations people–would rise from 1.88% to 2.11% (see Table 5). The mostsignificant source of these gains, by far, is the “no certificate” category, which would yield an estimated $444
million in additional employment income, should the employment rate gap be closed: a 31% increase fromthe pre-closure total employment income of First Nations people in this category. This is not particularly
surprising, given that, as shown in Table 1, the gap in employment rates in this category was the largest of
any educational category at about 8 percentage points.

24

As mentioned in Footnote 22, this model does not apply any adjustments to education categories where the employment rate is higher
for First Nations than for non-Indigenous Canadians. The figure provided in the “total” column of Table 8 is a sum of the economic
benefits of the closing the employment rate for the categories where we have made adjustments, and as such, this figure does notinclude any losses associated with closing the employment rate gap in the “below bachelor level”, “bachelor’s degree”, or “above
bachelor level” categories.

40

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 8: Economic Benefits of Closing Employment Rate Gap Conditional on Education

New
Employment(# of jobs)
from gap
closureTotal(1)

No certificate,
diploma or
degree(2)Secondary(high)
schooldiploma or
equivalency
certificate(3)Apprenticeship ortradescertificate
or diploma(4)

College,
CEGEP orother
non-university
certificate
or diploma(5)

University
certificate
or diploma
below
bachelor
level(6)

Bachelor's
degree(7)

University
certificate,
diploma or
degreeabove
bachelorlevel(8)40,851

20,890

9,818

5,196

4,947

-186

-678

-515

$11,151$1,438$2,567$1,531$2,983$418$1,518$696$12,268$1,882$2,843$1,737$3,174$410$1,482$660$1,117

$444

$277

$205

$191

-$8

-$36

-$35

10.02%

30.89%

10.77%

13.42%

6.40%-1.85%-2.37%-5.07%(A)
Total FN
Employment
Incomepre- gap
closure(millions)(B)
Total FN
Employment
Incomepost- gap
closure(millions)(C)
Change in FN
Total
Employment
Income(absolute)(millions)(D)
Change in FN
Total
Employment
Income(percentchange)(E)

Sources: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178. Statistics
Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268. Statistics Canada, 2016 Census
of Population, Statistics Canada Catalogue no. 98-400-X2016267.
Note: Column 1 is the sum of Columns 2, 3, 4, 5, 6, 7, 8 except in Rows A, D, and E where Columns 6, 7, 8 (the shadedboxes) are omitted from the calculation of the total.

The second most substantial source of gains is the “high school” category which is projected to experiencea $277 million increase in total employment income resulting from the closure of the gap. Interestingly, the“apprenticeship or trades” category, which experienced the second highest employment rate gap at 7.7%-- less than half a percentage point smaller than the gap in the “no certificate” category -- is projected to41

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updateyield only $205 million in additional total employment income from the closure. Again, this is by no means
an insignificant amount, but it is less than half of the gains projected for the “no certificate category”
despite experiencing an employment rate gap of comparable size. We posit that this is, again, aconsequence of the relatively small proportion of the population which inhabits this category; while the “nocertificate” category accounts for about 38% of the First Nations population, the “apprenticeship or trades”
category accounts for only about 10%.
Once again, the total gains from the closure of the employment rate gap conditional on education pale incomparison somewhat to the projected gains from the closure of the education gap, and to some extent,even the income gap. While all three do generate significant economic benefit, the projected gains fromclosing the employment rate gap are about 20% of the gains from closing the education gap, and about 55%of the gains from closing the income gap; the smallest of the three by a significant margin. One possible
explanation for this is that the bulk of the aggregate employment rate gap, both in absolute and relative
terms, is contributed by the lowest educational categories where individuals earn, on average, the lowest
incomes. As such, although the closure of the employment rate gap generates an additional 40,851 jobs,
and therein an additional 40,851 incomes, the majority of these incomes are relatively low. This isexacerbated by the fact that First Nations people in the highest educational categories--who enjoy thehighest average employment incomes-- already enjoy a higher employment rate than non-Indigenous
individuals. As such, no benefits from closing the employment rate gap accrue from these categories. Again,
while the employment rate gap is certainly significant, its economic importance does not match that of theeducation gap.

Closing All Three Gaps Simultaneously
Tables 5 and 9 present our estimates for the economic benefits associated with the simultaneous closure of
all three gaps--the education gap, the income gap conditional on education, and the employment rate gap
conditional on education--according to our overnight model. We project that the closure of the three gaps
simultaneously would generate an additional $8.6 billion in total employment income, representing a 1.09%
increase in Canada’s total employment income and about a 77% increase in the total employment income ofFirst Nations people. Moreover, we estimate that the closure of the three gaps would yield a total of 94,783
additional jobs. Consequently, the employment share for the First Nations population would rise from 1.88%
to 2.42%. The source of these gains is threefold. Firstly, many First Nations people would occupy higher
educational attainment categories as a result of the closing of the education gap. These individuals would
thus enjoy both higher employment rates and higher incomes by virtue of attaining higher levels of
education. Secondly, all First Nations people would enjoy higher incomes resulting from the closure of theincome gap conditional on education. Finally, First Nations people would enjoy higher employment rates
within most educational categories as a result of the closure of the employment rate gap. As one would
expect, these gains are by far the largest of any of the four scenarios, with the change in total employment
income being about 72% larger than the same figure in the “closing the education gap” scenario, and thenumber of jobs generated being about 38% larger.

42

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 9: Economic Benefits of Closing All Three Gaps At Once

Total

No certificate,
diploma or
degreeSecondary(high)
schooldiploma or
equivalency
certificate

Apprenticeship ortradescertificate
or diploma

College,
CEGEP orother
non-university
certificate
or diploma

University
certificate
or diploma
below
bachelor
level

Bachelor's
degreeUniversity
certificate,
diploma or
degreeabove
bachelor
level

New
Employment(# of jobs)
from gap
closure

94,783-26,854

14,244

5,102

16,5702,557

53,04430,124

Total FN
Employment
Incomepre- gap
closure(millions)$11,151$1,438$2,567$1,531$2,983$418$1,518$696

Total FN
Employment
Incomepost- gap
closure(millions)$19,789$1,041$3,578$1,975$4,302$602$5,104$3,187

Change in FN
Total
Employment
Income(absolute)(millions)$8,638-$397$1,011$444$1,319$184$3,586$2,491

Change in FN
Total
Employment
Income(percentchange)77.47%-27.61%39.40%

28.98%

44.20%

44.13%

236.23%358.05%

Sources: Statistics Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016178. Statistics
Canada, 2016 Census of Population, Statistics Canada Catalogue no. 98-400-X2016268. Statistics Canada, 2016 Census
of Population, Statistics Canada Catalogue no. 98-400-X2016267.

The distribution of gains across the educational categories very much resembles the distribution seen
under the “closing the education gap” scenario. The sources of the largest gains in both total employment
income and jobs are the “bachelor’s degree” category, which generates about $3.6 billion in additional
employment income and 53,044 jobs, followed by the “above bachelor level” category, which generates
about $2.5 billion in additional employment income and 30,124 jobs. This again tracks with what we would
expect based on our findings in Tables 1, 3, and 4: these categories are not only the sources of the largest
gaps in educational attainment (as per the distributional approach), but they also boast the highest average
incomes and high rates of employment. As such, closing the education gap generates massive economic
benefits to the extent that it redistributes First Nations people individuals en masse into these categories.
This is of course encouraged by the closure of the income gap, which further increases the average incomes
associated with these two categories.25
25


The
closure of the employment rate gap has no effect here however because the employment rate of First Nations was already higher
than the employment rate of non-Indigenous Canadians pre-closure.

43

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateOnce again, as with the closure of the education gap, the closure of the three gaps simultaneously is
associated with losses in the income and number of jobs associated with the “no certificate category”.
Specifically, it leads to a fall in total employment income equal to about $397 million, and the ‘loss’ of 26,854
jobs. However, as discussed in “closing the education gap” scenario which opened this section, these figures
do not, in any way, represent negative economic outcomes accruing to First Nations people. Rather thesenumbers are simply a consequence of the migration of First Nations individuals to categories withsignificantly higher average earnings and rates of employment. Interestingly, the “apprenticeship or trades”
category, which was a minute loss of jobs and employment income in the “closing the education gap”
scenario, is now associated with positive contributions to total employment income and the number of jobs:
a development which is assumedly a consequence of closing the income and employment rate gaps.
It is worth noting that the gains in key metrics of economic benefit – namely in total employment income,number of jobs, and First Nations employment share – are not additive. That is to say, the sum of the gains
from the three prior scenarios does not equal the gains from this final scenario. The change in total
employment income from this final scenario, for example, is actually larger in absolute terms than the sumof the three prior scenarios – an estimated $8.6 billion compared to a sum of $8.1 billion. This is also true inrelative terms; this final scenario represents a 1.09% increase in Canadian total employment income and a
77.47% increase in First Nations total employment income compared to totals of 1.03% and 73.06%
respectively in the prior three scenarios. The opposite is true for new employment generated by the closureof the gaps. The projected number of jobs generated by the simultaneous closure of the three gaps isovershadowed by the sum of new jobs from the previous three scenarios at 94,783 and 110,228 respectively:
a difference of over 15,000 jobs. Similarly, the change in First Nations employment share is smaller in this
scenario than the sum of the employment share gains in the three prior scenarios. The simultaneous
closure of the three gaps yields a 0.54% increase in employment share compared to a total increase of
0.63%, summing together the impacts of the three individual gap closure scenarios.
We interpret this as a natural consequence of the way we model the simultaneous closing of the three gaps.
We choose to close the education gap first in our calculations, redistributing First Nations individuals acrosseducational attainment categories. Because the closure of the conditional employment and income gaps
occur after this redistribution process, the impacts of closing theses gaps vary from the impacts we observein the individual gap closure scenarios. Many First Nations people now occupy different educational
categories than they did before the closure of the education gap, and as such, the gains they reap from theclosure of these two gaps may be larger or smaller than the total gains they would reap from summing
together the impacts of the individual gap closure scenarios.

44
26

Here the term “otherwise” refers to the sum of the three individual gap closure scenarios wherein the gaps are closed separately.

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateGiven that the closure of the education gap moves First Nations individuals to higher categories of educational
attainment, and that the absolute size of the within-category income gap is larger for higher education categories
than for lower ones, the gains generated from the closure of the conditional income gap grow here compared to theindividual gap scenario. Put simply, the closure of the education gap moves First Nations people into categories
where they gain more from the closure of the conditional income gap than they would have otherwise.26 This isreflected in the change in total employment income, which is larger than the sum of the gains in income from thethree prior scenarios. Similarly, given that both the absolute and relative size of the within-category employment
rate gap tends to fall as the level of educational attainment increases, even reversing direction in the highest
educational categories, the gains generated from the closure of the conditional employment rate gap shrink here
compared to the individual gap scenario.27 The closure of the education gap, in this case, moves First Nations
people into categories where they gain less from the closure of the conditional employment rate gap than theywould have otherwise. This is reflected in the number of new jobs as well as the First Nations employment
share, both of which are smaller here than the sum of their equivalents in the individual gap closure scenarios.
We also would expect this to be reflected in the change in total employment income – fewer new jobs means
less additional income, after all. However, it seems that these relatively smaller gains (compared to the priorthree scenarios) are eclipsed by the relatively larger gains associated with closing the income gap in this final
simultaneous scenario (again, compared to the individual gap closure scenarios). This phenomenon tracks
with our previous observation that the economic benefits of closing the conditional income gap are
significantly larger than the economic benefits of closing the conditional employment gap. Ultimately, thisproduces a change in total employment income which is larger than in the previous three scenarios.

Conclusion
We posit that our analysis of the potential gains from closing the key labour market gaps facing First
Nations individuals in comparison to their non-Indigenous counterparts provide strong evidence in supportof policy measures to close such gaps. Under the overnight model, we estimate that the simultaneous
closure of the three key gaps—the education gap, the income gap conditional on education, and theemployment rate gap conditional on education—would generate an additional $8.63 billion in total
employment income: a 1.09% increase in Canada’s total employment income and a staggering 77.5%
increase in the total employment income of First Nations people. We also find that it would provide an
additional 94,783 new jobs to First Nations people. We specifically recognize the gap in educational
attainment between the two populations as the most economically significant of these gaps, with theclosure of the education gap alone contributing about $5 billion in additional total employment income andboosting the total employment income of First Nations people by 44.8%. The closure of the income andemployment rate gaps conditional on educational attainment, meanwhile, are associated with economic
benefits that are somewhat smaller in scale, albeit still substantial; the summed total employment income
generated from the individual closure of these two gaps makes up about 63% of the gains in total
employment income associated with the closure of the education gap.

27

This effect is especially pronounced given that the closure of the education gap moves many First Nations into categories where theFirst Nations employment rate is higher than the non-Indigenous employment rate. Many of these individuals are moved fromcategories where the First Nations employment rate is lower than the non-Indigenous rate, and as such, they go from reaping someamount of gains from the closure of the conditional employment rate gap to reaping no gains at all.

45

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

The model which we employ in this report—what we call the overnight model of gap closure—envisions
these gaps closing instantaneously: a simplifying assumption which has allowed us to produce the initial
estimates we have offered in this report. Part II of this report utilizes what we call the longitudinal model ofgap closure, envisioning the closure of the gaps as a gradual, decades-long process. This approach
mobilizes the 2016 Census Public Use Microdata File offered by Statistics Canada alongside economic
projections developed by the Centre for the Study of Livings Standards in order to control for demographic
differences between the populations. Specifically, we control for age, sex and province/territory of residencealongside educational attainment in order to produce a more causal understanding of the relationships
between First Nations identity, educational attainment, and key labour market outcomes. This method
offers a broader approach to estimating the economic benefits of gap closures, assessing the impacts on
not only employment income but GDP and labour productivity, among other metrics.
Still, even without the additional depth offered by the longitudinal approach, we are confident in asserting
the economic importance of closing the education gap as well as the associated income and employment
rate gaps within educational categories. Our results across all four scenarios are unequivocal in portraying
these gaps, and particularly the education gap, as tremendous constraints on the economic performance ofCanada’s First Nations population: constraints which impede the growth and flourishing of not only First
Nations communities but the Canadian economy writ large. Further to our previous reports regarding the
economic performance of Canada’s Indigenous peoples, including Canada’s First Nations people, we submit
this report as evidence of the need for concerted policy efforts to reduce and ultimately eliminate the labour
market disparities we have outlined here. There have long been potent humanitarian arguments foraddressing these gaps and we position this report as part of a growing body of literature recognizing theadditional economic salience of such efforts.

46

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePart II: Longitudinal Model
Closing the First Nations Education Gap in Canada: Assessing Progress and Estimating the Economic Benefits — An Update, Part II
Part II of this report focuses on the “longitudinal” method of estimating the economic benefits of closing thevarious labour market gaps experienced by First Nations people compared to non-Indigenous people.
Whereas the “overnight” model of gap closure presented in Part I of this report envisions these labour
market gaps closing instantaneously, the longitudinal approach imagines the gaps closing gradually overthe course of a 20-year period (2021 to 2041). In doing so, it leverages population projections produced by
Statistics Canada and economic projections produced by the CSLS to develop estimates of key economic
indicators for the First Nations population over this period (Statistics Canada, 2021; Arif, 2022). Moreover,through the use of individual-level Census microdata, we are able to control for the demographic
characteristics of individuals and project their future economic performance in terms of wages, output,
labour productivity, and employment.28 Compared to the overnight model, which uses aggregate level data,
this approach allows us to produce more accurate and more detailed estimations of the impacts of theselabour market gaps on the First Nations population and the Canadian economy.
Part II of this report is structured in the following manner. The first section provides a methodological overview ofthe longitudinal model and the different scenarios of gap closure that we explore. In the second section, we
present the results of the model, first at the aggregate-level for each scenario, and then disaggregated acrossthe four major variables we consider: province/territory, sex, age, and educational attainment.29 The third section
discusses these results in comparison to the results from Part I, outlining possible sources of divergence
between the findings of the overnight model and the longitudinal model. The fourth and final section concludes.

Methodological Overview
Within this model, we consider six different scenarios – one baseline scenario and five gap closure
scenarios (Scenario 1 to Scenario 5) – each with their own set of assumptions about how the labour market
gaps experienced by the First Nations population might change and develop by the year 2041. Table 1
presents a summary of how we define each of these scenarios. For each scenario, we produce estimates ofkey economic indicators, namely, employment, employment income, contribution to GDP, and labour
productivity.30 By comparing these estimates between scenarios, we are able to develop an understanding of
the gains which may accrue to First Nations people and Canadians generally if these disparities are partiallyor completely eliminated.

28

We tend to measure these four variables in dollars. Unless it is explicitly stated otherwise, these variables are expressed in 2015
Canadian dollars.

29

Our model includes Canada’s three territories as a single category (“territories”) alongside all ten provinces. When referring to these 11
categories in this report we try to use province/territory wherever it is possible and does not impair readability. However, there are someinstances, particularly as we describe and compare results between the provinces, where it is difficult to include this terminology
without undermining the clarity of our writing. It should thus be noted that any use of the word province in this paper includes theamalgamated “territories” category unless the context explicitly distinguishes between the two.

30

This report uses the “productivity” interchangeably with “labour productivity”, as this is the only form of productivity we discuss. We
calculate labour productivity as total output divided by total employment; as such, the concept is always expressed in 2015 Canadiandollars per employed person.

47

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 1: Scenario Definitions
Scenario

Description

AssumptionsFirst Nations Educational Attainment in 2041

First Nations
Employment Rates in
2041

First Nations Wages in 2041

Baseline

Projected based on
2006-2016 rates ofimprovement for First
Nations; "business as
usual"

Equal to First Nations
employment rates in2016

Equal to First Nations
employment incomes in
2016, assuming annual
growth of 1%

1

Full Closure of the
Education Gap

Same as projectededucational attainmentof non-Indigenous
population in 2041; noeducational attainment
gap in 2041

Equal to First Nations
employment rates in2016

Equal to First Nations
employment incomes in
2016, assuming annual
growth of 1%

Half Closure of the
Education Gap

Equal to the averageof the baseline
projections for First
Nations and nonIndigenous
populations; half of
gap in baseline iseliminatedEqual to First
Nations
employment rates
in 2016

Equal to First Nations
employment incomes in
2016, assuming annual
growth of 1%

Closure of the
Employment Rate Gap

Projected based on
2006-2016 rates ofimprovement for First
Nations; "business as
usual"

Equal to nonIndigenous
employment rates
in 2016; gap closed

Equal to First Nations
employment incomes in
2016, assuming annual
growth of 1%

Closure of the Income
Gap

Projected based on
2006-2016 rates ofimprovement for First
Nations; "business as
usual"

Equal to First
Nations
employment rates
in 2016

Equal to non-Indigenous
employment incomes in
2016, assuming annual
growth of 1%; gap closed

Closure of All Three
Gaps (Educational
Attainment,
Employment Rate,
Income)Same as projectededucational
attainment of
non-Indigenous
population in 2041; noeducational
attainment gap in
2041

Equal to nonIndigenous
employment rates
in 2016; gap closed

Equal to non-Indigenous
employment incomes in
2016, assuming annual
growth of 1%; gap closed

2

3

4

5

The baseline scenario, which we use as a benchmark when analyzing the other five scenarios, assumes that thelevel of educational attainment among First Nations will continue to change at the same rate as it did between the2006 and 2016 censuses.31 In most (but not all) educational categories, the disparity in attainment between the First
Nations population and the non-Indigenous population closes somewhat during this period. This baseline scenario
is produced by simply extrapolating the rate of change observed in each educational category between 2006 and31

Specifically, we calculate the compound annual growth rate required to achieve the change between 2006 and 2016 in the proportion of
the First Nations population which occupies any of the nine educational attainment categories. For example, if the proportion of First
Nations people with a bachelor’s degree as their highest certification was 10% in 2006 and 20% 2016, we would calculate that as a 200%change over the 2006-2016 period. The corresponding compound annual growth rate would then be about 7.17%. Given that the
proportion occupying some educational attainment categories falls over this period, these rates can be greater than or less than one.

48

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update2016 over the 2016-2041 period. The rate of change for each of these categories is presented in Table 2, alongsidehistorical and projected levels of educational attainment. Ultimately, this approach sees the education gap between
the population widen in some categories compared in 2016. Undoubtedly, both groups become more educated,
however, for the First Nations population, these gains mainly occur as individuals move out of the “no certificate”
category, and into the “high school”, and non-university post-secondary categories (college, CEGEP). There are alsosignificant gains in the “bachelor” and “university above bachelor” categories. However, in both absolute andrelative terms, the gains experienced in these categories are greater for the non-Indigenous population than for the
Indigenous population, and as such the gap in these categories actually grow under this baseline scenario.32
Table 2: Proportion of Working Age Population (15+) in Educational Attainment Categories by Year and Scenario33
First Nations
2006

2011

2016

CompoundAnnualGrowth Rate(2006-2016)

Projected
2041 atCurrent Rates(baseline)

Education
Gap Half
Closes by
2041

Education
Gap Closes
Fully by2041

No certificate

48.3%

43.9%

39.0%

-2.1%

17.1%

12.4%

7.8%

High School

19.6%

23.1%

26.6%

3.1%

42.6%

33.6%

24.7%

Other Trades Certificate

10.4%

10.5%

8.8%

-1.6%

4.4%

5.3%

6.1%

College, CEGEP (3 months
to 1 year)

2.5%

2.7%

4.2%

5.3%

11.3%

8.5%

5.6%

College, CEGEP (1 year to 2
years)

7.1%

7.1%

8.3%

1.5%

8.9%

9.3%

9.8%

College, CEGEP (2 years+)

3.9%

4.2%

4.1%

0.3%

3.3%

5.0%

6.8%

University below Bachelor

2.9%

2.3%

1.9%

-4.2%

0.5%

0.6%

0.7%

Bachelor

4.0%

4.6%

5.7%

3.6%

10.2%

19.5%

28.7%

University above Bachelor

1.3%

1.7%

1.5%

1.9%

1.8%

5.8%

9.8%

Total

100.0%

100.0%

100.0%-

100.0%

100.0%

100.0%

Average Years of Education

11.75

11.87

12.01

-

12.62

13.37

14.12

32

It should be noted that the methodology used for these projections involves a standardization process which affects the results inconsiderable ways. After applying the historical rates of growth to each educational attainment proportion to estimate the future
proportion of individuals in that category, these proportions no longer sum to 100%. As such, a normalization process must be applied toboth the non-Indigenous educational distribution as well as the First Nations educational distribution in order to return the sum of the
proportions back to 100%. Given that the unnormalized total differs between the two populations as a result of the different levels of
growth in educational attainment which each population experiences, the educational attainment distributions are scaled down by
distinct factors, with the factors representing the average level of growth across all the education categories. Consequently, any
individual proportion does not solely represent the level of growth projected for that category, but also the average level of growth
expected for each educational category in the population. This generates some unintuitive results in some cases; for example, the sizeof the relative gap between the proportion of First Nations in the “above bachelor” category and the same proportion in the nonIndigenous population actually grows in our projection, even though the First Nations proportion is projected to grow faster than the
non-Indigenous proportion. For these reasons, caution should be exercised in interpreting these projected proportions, especially whencomparing the proportions across the two populations. Still, they represent broad-level movements in educational attainment, and forthe purposes of estimating key economic indicators like employment incomes, contributions to GDP, and levels of employment, we holdthat these projections are meaningful.

49

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 2: Proportion of Working Age Population (15+) in Educational Attainment Categories by Year and Scenario33
Non-Indigenous
2006

2011

2016

CompoundAnnualGrowth Rate(2006-2016)

Projected
2041 atCurrent Rates(baseline)

Education
Gap Half
Closes by
2041

Education
Gap Closes
Fully by2041

No certificate

23.1%

18.8%

17.8%

-2.6%

7.8%

-

-

High School

25.8%

25.4%

26.7%

0.4%

24.7%

-

-

Other Trades Certificate

10.9%

10.6%

9.7%

-1.2%

6.1%

College, CEGEP (3 months
to 1 year)

2.3%

2.3%

3.1%

3.1%

5.6%

-

-

College, CEGEP (1 year to 2
years)

8.3%

8.7%

9.2%

1.0%

9.8%

-

-

College, CEGEP (2 years+)

6.9%

7.5%

7.2%

0.5%

6.8%

-

-

University below Bachelor

4.5%

4.6%

2.8%

-4.7%

0.7%

-

-

Bachelor

11.9%

14.2%

16.1%

3.0%

28.7%

-

-

University above Bachelor

6.5%

8.0%

7.6%

1.7%

9.8%

-

-

Total

100.0%

100.0%

100.0%-

100.0%--

Average Years of Education

13.04

13.34

13.36

-

14.12

-

-

-

-

Sources: Statistics Canada (2010) “2006 Census Public Use Microdata File (PUMF). Individuals File,”
Dataset, Abacus Data Network.; Statistics Canada (2014) “2011 National Household Survey Public Use Microdata File
(PUMF): Individuals File,” Dataset, Abacus Data Network.; Statistics Canada. (2019a). “2016 Census Public Use
Microdata File (PUMF). Individuals File,” Dataset, Abacus Data Network.

Scenario 1 sees the educational attainment gap between First Nations people and non-Indigenous people
close completely. Under this scenario, the First Nations population is assumed to have the sameeducational attainment distribution as the non-Indigenous population in 2041.34 For example, if 20% of the
non-Indigenous population in 2041 is projected to occupy the “bachelor’s degree” category, this scenario
assumes that the same proportion of the First Nation population will occupy the “bachelor’s degree”
category in 2041. This assumption is made for each of the nine educational categories which we investigate.
It is essential to note that the gap which is being closed is the gap between the projected 2041 First Nations
population and the projected 2041 non-Indigenous population, not the gap between the two populations in
the present day.
Scenario 2, meanwhile, envisions the educational attainment gap closing only “half-way”. Functionally, this33
34

This table, like the rest of this report, can be updated in early 2023 upon the full release of the relevant 2021 Census data.

 on-Indigenous levels of educational attainment in 2041 are projected using the same methodology described in the baseline scenarioNfor the First Nations population (see Table 2).

50

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updatemeans that, rather than assuming the educational attainment of First Nations people in 2041 will be equal35
to that of non-Indigenous people in 2041, we assume that the First Nations educational attainment
distribution will be the average of the projected 2041 distributions for First Nations people and nonIndigenous people. For each educational category (ex. “high school”), we estimate the proportion of the First
Nations population in that category by taking the arithmetic mean of a) the projected proportion of First
Nations in that category in 2041 in the baseline scenario, and b) the projected proportion of non-Indigenous
people in that category in 2041, given current trends. In other words, half of the gap in the baseline scenario
is eliminated under Scenario 2. In this way, this scenario represents a sort of middle-ground between
Scenario 1, where First Nations educational attainment in 2041 is made equal to non-Indigenous levels of
educational attainment, and the baseline scenario. Although smaller in scale and effect than Scenario 1,
this “half-way” scenario likely represents a more realistic, albeit still optimistic, assumption about the
progression of First Nations educational attainment vis-à-vis non-Indigenous educational attainment. In
2041, many individuals who have completed their education and are in the workforce today will still be in theworkforce. As such, the full closure of the educational attainment gap would require that today’s young First
Nations people attain extremely high levels of education in order to ‘balance out’ the presence of older First
Nations people who are, on average, less educated than non-Indigenous individuals of the same age. The
half-closed scenario, meanwhile, more or less represents a future in which today’s young First Nations
people attain the same levels of education as today’s young non-Indigenous people: a proposition which,though a lofty goal in itself, is much more achievable.
For Scenario 3, we turn our attention to another labour market gap experienced by First Nations people incomparison to non-Indigenous people: the conditional employment rate gap. This is the observation that,even when matched up based on demographic and educational characteristics, First Nations people tend to
experience lower rates of employment than non-Indigenous people. In Part I of this report, we wereinterested in the employment rate gap conditional on educational attainment – that is, the disparity inemployment rates between First Nations people and Indigenous people of the same level of educational
attainment. However, with the use of individual-level Census microdata, we are now able to control fordifferences in sex, province/territory of residence, and age, in addition to educational attainment. For thesake of brevity, we will refer to this gap as simply the conditional employment rate gap. We describe eachcombination of these four variables as a “bin” containing the number of First Nations individuals thatmatches that combination of characteristics. For example, one bin, which might be called “Quebec females
35-44 years old with a high school education”, contains all female First Nations in Quebec between the agesof 35 and 44 who have a high school diploma or an equivalent as their highest educational certification.
Given that economic indicators like rates of employment and average incomes vary greatly across these four
variables, and we are primarily interested in labour market disparities which occur solely because of one’s
status as a First Nations person or a non-Indigenous person, we feel it is best to observe the gaps withinbins, rather than across whole populations. Under this scenario, we assume that the educational attainmentof the First Nations population is the same as in the baseline scenario, however in calculating levels of
employment, income, and output, we utilize the non-Indigenous employment rate for each bin (each agesex-province-educational attainment combination). In this way, we envision the employment rate gap
between the First Nations and non-Indigenous populations fully closing.
35

We define equality in educational attainment as the two populations occupying each educational attainment category in identical
proportions. For example, if 25% of the non-Indigenous population has a bachelor’s degree as their highest certification, equality in
educational attainment would mean that 25% of the First Nations population also has a bachelor’s degree as their highest certification.
This is only an example of one category though; for the educational attainments of the two populations to be equal, this would need to
be true for all nine educational categories. We base this definition on what we defined as the “distributional approach” to measuring
educational attainment in Part I of this report.

51

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Scenario 4 envisions the conditional income gap closing by 2041. Like the conditional employment rate gap,
the conditional income gap refers to the observation that, even for individuals of the same sex, province/
territory of residence, age group, and educational attainment level, First Nations individuals tend to earn
less on average in employment income than non-Indigenous individuals. To simulate the closing of this gap,
we follow a similar procedure to the previous scenario. We assume that the First Nations population in 2041
has “baseline” levels of educational attainment, however, when we calculate employment, income, andoutput, we utilize the non-Indigenous average employment income for each bin (each age-sex-provinceeducational attainment combination). By doing so, we are able to produce estimates of key economic
indicators under the assumption that the conditional income gap has closed fully.
Finally, for Scenario 5, we essentially combine Scenarios 1, 3, and 4 in order to simulate the closure of all
three major labour market gaps simultaneously. We assume that First Nations people in 2041 have thesame level of educational attainment as non-Indigenous people are projected to have, and furthermore,when calculating, employment, income, and output, we use the non-Indigenous employment rate andaverage employment income for each bin (each age-sex-province-educational attainment combination). In
doing so, we simulate a future in which all three gaps have been fully closed; one in which First Nationsindividuals experience largely the same labour market outcomes as non-Indigenous Canadians.

Results
In our model, we are primarily interested in four sources of economic benefit associated with the closure oflabour market gaps: gains in employment, gains in output or contribution to GDP, gains in income(specifically employment income), and gains in productivity, which is calculated as output per employedperson. This section will now proceed to present how each of these economic indicators vary between the
scenarios outlined previously. The gains for each scenario will be assessed by comparing the employment,
output, employment income, and productivity of a given scenario to the same measures in the baseline
scenario. Given that the baseline scenario reflects a “business-as-usual” assumption, wherein labour
market disparities experienced by First Nations people continue to evolve as they have for the past decadeor so, gains over the baseline scenario might be interpreted as the economic benefits of taking greateraction to eliminate these gaps.
Results are organized in the following manner: Tables 3 to 5 collect our main results, presenting ourestimates for the key economic benefits associated with each gap closure scenario, first for 2041 and thencumulatively for the period 2021-2041. Tables 4 – 16 present these results at the national level for eachscenario, again focusing first on the results for 2041 and then on the cumulative results for 2021-2041.
Finally, Tables 16 – 19 break down the main results by each of the key variables used to define the bins36:
that is, by province/territory, age group, sex, and educational attainment. Our analysis begins by reporting
the aggregate results associated with each gap closure scenario, before launching into a more detailed
discussion of results for each of the four major variables included in the longitudinal model.

36

There are a total of 1188 bins (11 province/territories x 6 age groups x 2 sexes x 9 educational attainment categories). The contributionof each of these bins to employment, total employment income, and total GDP can be provided upon request.

52

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 3: Main Results, Projections for First Nations in 2041 by Scenario
Scenario

1

2

3

4

5

68.35

98.57

83.46

79.49

77.02

116.79

-

44.2%

22.1%

16.3%

12.7%

70.9%

3,081.35

3,111.57

3,096.46

3,092.50

3,090.02

3,129.79

-

1.0%

0.5%

0.4%

0.3%

1.6%

34.17

49.28

41.73

39.75

38.51

58.39

-

44.2%

22.1%

16.3%

12.7%

70.9%

1,540.67

1,555.79

1,548.23

1,546.25

1,545.01

1,564.90

-

1.0%

0.5%

0.4%

0.3%

1.6%

674.82779.43727.13814.27674.82862.59

-

15.5%

7.8%

20.7%

0.0%

27.8%

23,284

23,38823,33623,42323,284

23,471

-

0.4%

0.2%

0.6%

0.0%

0.8%

FN Labour Productivity

101,280

126,463

114,777

97,626

114,127

135,393% change over baseline

-

24.9%

13.3%

-3.6%

12.7%

33.7%

132,340

133,040

132,691

132,028

132,712133,345

-

0.5%

0.3%

-0.2%

0.3%

0.8%

GDP Gains
Total FN Contribution to GDP(billions)% change over baseline
Total Canadian Contribution to
GDP (billions)% change over baseline
Employment Income Gains
Total FN Employment Income(billions)% change over baseline
Total Canadian Employment
Income (billions)% change over baseline
Employment Gains (thousands)
Total FN Employment% change over baseline
Total Canadian Employment% change over baseline
Labour Productivity Gains

Aggregate Canadian Labour
Productivity% change over baseline

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

53

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 4: Main Results, Projected Change in GDP Over Baseline Scenario (billions), 2021-2041
Baseline(total level)

Education Gap
Closes

Education Gap

Employment

Income Gap

All Three Gaps

Half Closes

Rate Gap

Closes

Close

ClosesScenario

1

2

3

4

5

2021

2,195.17

0.00

0.00

0.00

0.00

0.00

2022

2,232.71

1.09

0.55

0.40

0.31

1.74

2023

2,270.88

2.22

1.11

0.82

0.64

3.55

2024

2,309.72

3.38

1.70

1.25

0.97

5.41

2025

2,349.21

4.59

2.30

1.70

1.32

7.34

2026

2,389.38

5.84

2.92

2.16

1.68

9.34

2027

2,430.24

7.13

3.57

2.63

2.05

11.40

2028

2,471.80

8.46

4.24

3.13

2.43

13.53

2029

2,514.07

9.83

4.92

3.63

2.83

15.74

2030

2,557.06

11.26

5.64

4.16

3.23

18.01

2031

2,600.78

12.72

6.37

4.70

3.66

20.36

2032

2,645.26

14.24

7.13

5.26

4.09

22.79

2033

2,690.49

15.80

7.91

5.84

4.54

25.30

2034

2,736.50

17.42

8.72

6.43

5.00

27.89

2035

2,783.29

19.08

9.55

7.04

5.48

30.56

2036

2,830.89

20.80

10.41

7.68

5.97

33.31

2037

2,879.30

22.57

11.29

8.33

6.48

36.16

2038

2,928.53

24.40

12.20

9.00

7.00

39.09

2039

2,978.61

26.28

13.14

9.70

7.54

42.11

2040

3,029.54

28.22

14.11

10.41

8.10

45.23

2041

3,081.35

30.22

15.11

11.15

8.67

48.44

Total

52,709.61

285.55142.88105.42

82.00

457.30

1.76%

1.73%

1.73%

1.72%

1.79%

GDP Annual 1.71%
GrowthRate

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

54

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 5: Main Results, Projected Change in Employment Over Baseline Scenario (job-years), 2021-2041
Baseline(total level)

Education Gap
Closes

Education Gap

Employment

Income Gap

All Three Gaps

Half Closes

Rate Gap

Closes

Close

4

5

ClosesScenario

1

2

3

2021

19,271,900

-

-

-

-

-

2022

19,454,983

4,361

2,183

5,809

-

7,815

2023

19,639,805

8,806

4,407

11,731-

15,7812024

19,826,384

13,336

6,674

17,766-23,9012025

20,014,734

17,952

8,984

23,916-32,1772026

20,204,874

22,655

11,33730,184-

40,6122027

20,396,820

27,44813,73536,570-49,2072028

20,590,590

32,33016,17743,077-57,9652029

20,786,201

37,304

18,66549,705-66,8892030

20,983,670

42,37021,19856,458-75,9802031

21,183,015

47,531

23,77963,337-

85,2422032

21,384,253

52,786

26,40770,343-

94,6762033

21,587,404

58,13929,08277,478-104,2852034

21,792,484

63,58931,80784,745-

114,0712035

21,999,513

69,13934,581

92,144-

124,0382036

22,208,508

74,79074,79099,679-134,1872037

22,419,489

80,54240,280107,350-

144,5222038

22,632,474

86,39943,207

115,160-

155,0452039

22,847,482

92,361

46,186

123,111-

165,7582040

23,064,534

98,42949,217

131,205-

176,6642041

23,283,647

104,606

52,303

139,443-

187,767

Total

426,300,863

1,034,872

554,998

1,379,212-

1,856,582

0.97%

0.96%

0.98%

0.95%

0.99%

GDP Annual 0.95%
GrowthRate

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

55

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateAggregate Results
The Full Closure of the Education Gap
As Table 3 illustrates, the full closure of the education gap by 2041 is associated with substantial economic
benefits. Under the baseline scenario, we estimate the First Nations contribution to GDP and employment
at $68.3 billion and about 674,000 jobs respectively. When the education gap is eliminated, First Nations
GDP rises by about $30 billion, and First Nations employment is boosted by over 100,000 additional jobs: a
44.2% increase in total First Nations output and a 15.5% increase in total First Nations employment. In thecontext of the Canadian economy, these gains represent a 1% increase in GDP and a 0.4% increase inemployment. Moreover, they constitute substantial improvements in the share of total output andemployment contributed by the First Nations population, with the First Nations share of GDP rising about
43% and the First Nations share of employment rising 15%.37 As we discussed in Part 1 of this report, thebenefits of closing the labour market gaps experienced by First Nations can seem small when comparedagainst the Canadian economy as whole, but it is crucial to recognize that this is simply a consequence of
the First Nations population comprising a relatively small proportion of the Canadian population. With thiscontext in mind, these gains are far from insignificant, especially at a time when concerns abound that the
Canadian economy is stagnating and that the Canadian labour supply is “tapped out”.

Table 6: Economic Benefits of the Full Closure of the Education Gap (Scenario 1), Estimates for 2041
Panel A: Employment Income Effects

37

FN Total Employment
Income (billions)

FN Employment
Income per Employed
PersonTotal Canadian Employment
Income ( billions)

(1)

(2)

(3)

Baseline

34.2

50,6401,540.7

Scenario 1

49.3

63,231

1,555.8

absolute change

15.1

12,591

15.1

percentage change over baseline

44.2%

24.9%

1.0%

We define the employment share of the First Nations population as the share of Canadian employment which is made up of employedFirst Nations people. Similarly, we define the GDP share of the First Nations population as the share of Canadian output which is
attributable to the contributions of First Nations people.

56

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePanel B: GDP Effects
FN Contribution to GDP(billions)

FN Contribution to GDP
as Share of Total GDP

Total Canadian GDP(billions)(4) = (1) x 2(5)(6) = (3) x 2

Baseline

68.3

2.22%

3,081.3

Scenario 1

98.6

3.17%

3,111.6

absolute change

30.2

0.95pp30.2

percentage change over baseline

44.2%

42.8%

1.0%

FN Employment ShareTotal Canadian Employment(# of jobs)

(7)

(8)

(9)

674,824

2.90%

23,283,647

Panel C: Employment Effects
FN Employment(# of jobs)

Baseline
Scenario 1

779,430

3.33%

23,388,252

absolute change

104,606

0.43pp104,606

percentage change over baseline

15.5%

15.0%

0.4%

FN Productivity (output
per person employed)

FN Productivity Share(FN productivity as
proportion of
Canadian productivity)

Aggregate Canadian
Productivity (output perperson employed)(10) = (2) x 2

(11)

(12)

Baseline

101,28076.5%

132,340

Scenario 1

126,46395.1%

133,040

absolute change

25,182

18.5pp700

percentage change over baseline

24.9%

24.2%

0.5%

Panel D: Productivity Effects

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Average employment income and productivity for the First Nations population, meanwhile, increase by
24.9%; that’s about a $25,000 increase in First Nations productivity and about a $12,000 increase in First
Nations average employment income. Both of these measures essentially represent the ratio of gains toincome or output to gains in employment.38 If employment rose commensurately to output in this scenario,
we would expect to see no change in productivity and average employment income. Thus, the fact that bothproductivity and average employment income rise substantially compared to the baseline under this38

Employment income and output are closely linked concepts. Historically, the labour share of income (that is the proportion of output
which accrues to labour in the form of employment income) has been about 0.5 in Canada. As such, in our analysis we estimate output(GDP) as two times employment income. Because of this assumed linear relationship between the two concepts, labour productivity,
which is calculated as total output over total employment, and average employment income, which is calculated as total employment
income over total employment, have a similar interpretation.

57

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updatescenario indicates that gains in income and output are relatively greater than gains in employment. In fact,
these productivity gains are so large that First Nations productivity, which under the baseline scenario was
only about 76.5% of total Canadian productivity, soars to nearly 95% of the Canadian figure when the
education gap closes. Although we lack the data to estimate non-Indigenous productivity in the two
scenarios, we assume that total Canadian productivity is a close approximation, given the relatively small
proportion of the Canadian population which the Indigenous population represents. We highlight this result
as hugely significant; it signifies that differences in educational attainment between the First Nations andnon-Indigenous populations account for almost 80% of the productivity gap between the two populations, andhence, that the elimination of the educational attainment gap would also significantly reduce theproductivity gap.
Table 7: Cumulative Economic Benefits of the Full Closure of the Education Gap (Scenario 1), Estimates for2021-2041
Total GDP(billions)

Total Employment (JobYears)

Annual GDP
Growth Rate

AnnualEmployment
Growth Rate

Annual
Productivity
Growth Rate

(1)

(2)

(3)

(4)

(5)

Baseline

54,904.8

445,572,763

1.71%

0.95%

0.75%

Scenario 1

55,190.3

446,607,635

1.76%

0.97%

0.78%

absolute change

285.5

1,034,872

0.05pp0.02pp0.03pppercentage change overbaseline

0.5%

0.2%

2.9%

2.4%

3.53%

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Unlike the overnight model we presented in Part I of this report, the longitudinal model imagines the labour
market gaps experienced by First Nations closing gradually over 20 years. As such, economic gains are
accrued not only in 2041 upon the full closing of the gap, but also throughout the 2021-2041 period as thegap begins to close and Scenario 1 begins to diverge from the baseline scenario. Table 7 presents the
cumulative results for the 2021-2041 period under Scenario 1, estimating benefits accrued throughout theentire gap closure process.
We estimate that over the 2021-2041 period, the full closure of the education gap is associated with about$286 billion in increased output. The gap closure process also produces an additional 1.03 million “job-years”
throughout the period. A job-year represents exactly what the name suggests: a job in a single year. A job thatis created in 2037 and continues to exist through to the end of 2041, for example, would constitute five jobyears in our analysis. While this measure may be unconventional, it has a meaningful economic interpretation:
each job-year represents an additional yearly income accruing to the First Nations population.
We also estimate how annual rates of real GDP, employment, and productivity growth would be affected by
the additional output and employment generated by the closure of the full education gap. The CSLS
economic projections, which we use as a basis for the projections presented in this report, estimate anannual real GDP growth rate of 1.71% for the 2019-2038 period. Factoring in the economic benefits
generated through the closure of the education gap, we estimate that the real GDP growth rate for the2021-2041 period would rise to 1.76% under Scenario 1: an increase of 0.05 percentage points. Similarly, we
estimate that the annual growth rate of Canadian employment, which we project to be 0.95% for the 2021-

58

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

2041 period under the baseline scenario, would rise to 0.97% if the education gap were to close completely.
Finally, we estimate that annual labour productivity growth would rise from 0.75% in the baseline scenario
to 0.78% if the education gap were to close by 2041. Again, these numbers may appear small, but the effects
they represent are far from it. These rates measure the growth of the entire Canadian economy per year,
and as evidenced by the cumulative gains to GDP and employment presented in Table 7, even small
improvements in these rates quickly compound into massive economic gains. Moreover, given contemporary
concerns about Canada’s economic stagnation, we highlight these gains and the potential augmentations
they represent for Canada’s economic growth trajectory as more salient than ever.

The Half Closure of the Education Gap
Table 8 presents the economic benefits associated with closing the educational attainment gap halfway. As
one would expect, the economic benefits associated with this gap closure scenario are similar to thebenefits found in Scenario 1, albeit much attenuated. Half-closing the education gap is associated withincreases in output and income of $15.1 billion and $7.6 billion respectively. In relative terms, those gains
represent an improvement in First Nations contribution to GDP and employment income of about 22%. The
half-closing of the gap is also associated with an increase in First Nations employment of about 8%, or
52,000 jobs. Together, these gains represent an 0.5% increase in Canadian GDP in 2041 and a 0.2% increasein Canadian employment in 2041. Again, the economic gains in this scenario are, logically, about half of theeconomic gains associated with the full closure of the educational attainment gap in Scenario 1.
In terms of productivity, we estimate about a $13,500, or a 13.3%, increase in First Nations output per
employed person over the baseline when the education gap is half-closed; given our assumption that about
half of the value of output accrues to labour in the form of employment income, that also represents anincrease in the average annual employment income of First Nations of nearly $7,000. This boost raises First
Nations productivity from 76.5% of Canadian productivity to 86.5%: a 10-percentage point increase,eliminating about 42% of the baseline productivity gap. It also represents a 0.3% increase in aggregate
Canadian productivity.
Table 8: Economic Benefits of the Half Closure of the Education Gap (Scenario 2), Estimates for 2041
Panel A: Employment Income Effects
FN Total Employment
Income (billions)

FN Employment
Income per Employed
PersonTotal Canadian Employment
Income (billions)

(1)

(2)

(3)

Baseline

34.2

50,6401,540.7

Scenario 2

41.7

57,388

1,548.2

absolute change

7.6

6,748

7.6

percentage change over baseline

22.1%

13.3%

0.5%

59

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePanel B: GDP Effects
FN Contribution to GDP(billions)

FN Contribution to GDP
as Share of Total GDP

Total Canadian GDP(billions)(4) = (1) x 2(5)(6) = (3) x 2

Baseline

68.3

2.22%

3,081.3

Scenario 1

98.6

3.17%

3,111.6

absolute change

30.2

0.95pp30.2

percentage change over baseline

44.2%

42.8%

1.0%

FN Employment ShareTotal Canadian Employment(# of jobs)

(7)

(8)

(9)

Baseline

674,824

2.90%

23,283,647

Scenario 2

727,127

3.12%

23,335,949

absolute change

52,3030.22pp52,303

percentage change over baseline

7.8%

7.5%

0.2%

FN Productivity (output
per person employed)

FN Productivity Share(FN productivity as
proportion of
Canadian productivity)

Aggregate Canadian
Productivity (output perperson employed)(10) = (2) x 2

(11)

(12)

Baseline

101,28076.5%

132,340

Scenario 1

114,777

86.5%

132,691absolute change

13,49710.0pp351

percentage change over baseline

13.3%

13.0%

0.3%

Panel C: Employment Effects
FN Employment (# ofjobs)

Panel D: Productivity Effects

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

60

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 9: Cumulative Economic Benefits of the Half Closure of the Education Gap (Scenario 2), Estimates for2021-2041
Total GDP(billions)

Total Employment (JobYears)

Annual GDP
Growth Rate

AnnualEmployment
Growth Rate

Annual
Productivity
Growth Rate

(1)

(2)

(3)

(4)

(5)

Baseline

54,904.8

445,572,763

1.71%

0.95%

0.75%

Scenario 2

55,047.7

446,090,376

1.73%

0.96%

0.77%

absolute change

142.9

517,6130.02pp0.01pp0.01pppercentage change overbaseline

0.3%

0.1%

1.5%

1.2%

1.8%

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.
Table 9 presents the cumulative economic benefits of half-closing the education gap. Over the 2021-2041
period, the half closure of the education gap is associated with about an additional $143 billion in output
compared to the baseline scenario and an additional 517,000 job-years accruing to the First Nations
community. These gains manifest as a 0.02 percentage point increase in GDP, bringing Canada’s annual
GDP growth rate from 1.71% in the baseline scenario per year to 1.73% in Scenario 2. Similarly, the halfclosure of the education gap causes the annual growth rate of employment to rise to 0.96% per year and theannual growth rate of productivity to rise to 0.77% per year; improvements of about 0.01 percentage pointcompared to the baseline.

The Closure of the Conditional Employment Rate Gap
Table 10 presents the estimated economic benefits associated with the closure of the conditional
employment rate gap: that is, the employment rate disparity between First Nations and non-Indigenous
people of the same sex, province/territory of residence, age group, and level of educational attainment. In
2041, when we assume the gap fully closes under Scenario 3, we estimate an additional $11.1 billion in First
Nations contribution to GDP, and an additional $5.6 billion in First Nations employment income: a relative
increase in both measures of 16.3%. Compared to the income and output gains associated with the closureof the education gap, these gains are more modest, albeit still significant. However, as one would expect
given the focus of this scenario, the gains to employment are more substantial. The closure of theemployment rate gap is associated with nearly 140,000 additional jobs for First Nations people; about a 21%
increase in total First Nations employment. The First Nations employment share, which is projected to be
2.9% in the baseline scenario, rises to 3.48% as a result. These gains in employment exceed those seen in
Scenarios 1 and 2 by a significant margin: a testament to the economic costs of the disparity in theemployment rates enjoyed by First Nations people compared to non-Indigenous Canadians.

61

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 10: Economic Benefits of the Closure of the Employment Rate Gap (Scenario 3), Estimates for 2041
Panel A: Employment Income Effects
FN Total Employment
Income (billions)

FN Employment
Income per Employed
PersonTotal Canadian Employment
Income (billions)

(1)

(2)

(3)

Baseline

34.2

50,6401,540.7

Scenario 3

39.7

48,813

1,546.2

absolute change

5.6-1,827

5.6

percentage change over baseline

16.3%

-3.6%

0.4%

Panel B: GDP Effects
FN Contribution to GDP(billions)

FN Contribution to GDP
as Share of Total GDP

Total Canadian GDP(billions)(4) = (1) x 2(5)(6) = (3) x 2

Baseline

68.3

2.22%

3,081.3

Scenario 3

79.5

2.57%

3,092.5

absolute change

11.1

0.35pp11.1

percentage change over baseline

16.3%

15.9%

0.4%

FN Employment ShareTotal Canadian Employment(# of jobs)

674,824

2.90%

23,283,647

Baseline

814,268

3.48%

23,423,090

Scenario 3

139,443

0.58pp139,443

absolute change

20.7%

19.9%

0.6%

percentage change over baseline

7.8%

7.5%

0.2%

FN Productivity (output
per person employed)

FN Productivity Share(FN productivity as
proportion of
Canadian productivity)

Aggregate Canadian
Productivity (output perperson employed)(10) = (2) x 2

(11)

(12)

101,28076.5%

132,340

Panel C: Employment Effects
FN Employment (# ofjobs)

Panel D: Productivity Effects

Baseline62

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePanel D: Productivity Effects
Scenario 3

97,62673.9%

132,028

absolute change(3,654)-2.6pp(312)

percentage change over baseline

-3.6%

-3.4%

-0.2%

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.
The natural consequence of this imbalance in output gains compared to employment gains is seen in thechange in productivity and average employment income compared to the baseline scenario. As theemployment rate gap closes, employment rises rather massively while output struggles to keep pace. As aresult, the income which accrues to each employed person and the quantity of output attributed to eachworker falls. This dynamic can be observed plainly in our results; when the employment rate gap is closed,
we estimate that First Nations productivity and average employment income fall by 3.6%, reducing First
Nations productivity from 76.5% of the Canadian average to 73.9%. Similarly, average employment income
falls by just under $2,000.
Table 11: Cumulative Economic Benefits of the Closure of the Employment Rate Gap (Scenario 3), Estimatesfor 2021-2041
Total GDP(billions)

Total Employment (JobYears)

Annual GDP
Growth Rate

AnnualEmployment
Growth Rate

Annual
Productivity
Growth Rate

(1)

(2)

(3)

(4)

(5)

Baseline

54,904.8

445,572,763

1.71%

0.95%

0.75%

Scenario 3

55,010.2

446,951,975

1.73%

0.98%

0.74%

absolute change

105.4

1,379,212

0.02pp0.03pp-0.01pp

percentage change overbaseline

0.2%

0.3%

1.1%

3.2%

-1.6%

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Table 11 presents the cumulative economic gains associated with the closing of the employment rate gap.
Over the period 2021-2041, we estimate an additional $105.4 billion in output as a result of the gap closure:a 0.2% increase over the cumulative GDP for the period in the baseline scenario. We also project about 1.4
million additional job-years compared to the baseline scenario. Once again, though the income gains arenotably smaller than in Scenarios 1 and 2, the gains in terms of employment are much larger. The impact of
the closure of the employment rate gap on the annual growth rates of GDP and employment follow a similar
pattern. Under Scenario 3, Canada’s annual GDP growth rate rises 0.02 percentage points, or about 1.1%
compared to the baseline scenario. The annual growth rate of employment, meanwhile, rises 0.03

63

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

percentage points to 0.98% per year: an improvement over the baseline of about 3.2%. Finally, reflecting theratio of output gains to employment gains, the closure of the employment rate gap is actually associatedwith a deterioration in the annual rate of productivity growth. The productivity growth rate falls 0.1
percentage point, representing a decrease of 1.6% compared to the baseline scenario.

The Closure of the Conditional Income Gap
Table 12 presents the economic benefits associated with the closure of the conditional income gap for2041. We estimate that this scenario is associated with an $8.7 billion increase in GDP, representing a
12.7% increase over First Nations contribution to GDP in the baseline, and a 0.3% increase in total
Canadian GDP. This also manifests as a $4.3 billion increase in total First Nations employment income.
These gains in output and income are certainly significant, however they are the smallest of all five
scenarios which we explore.
Notably, unlike the previous scenarios, there are no employment gains associated with the closure of theconditional income gap. With the closure of the education gap, many First Nations people move to higher
educational attainment categories, which on average, experience higher rates of employment than lower
educational attainment categories. As such, many First Nations people who are unemployed in the baseline
scenario become employed when the education gap closes, boosting total employment within the First
Nations population and the Canadian economy. Similarly, when the conditional employment rate gap isclosed, First Nations come to experience non-Indigenous employment rates, which are higher on averagethan First Nations employment rates. Hence, like Scenario 1 and 2, there are significant employment gains.
Table 12: Economic Benefits of the Closure of the Income Gap (Scenario 4), Estimates for 2041
Panel A: Employment Income Effects
FN Total Employment
Income (billions)

FN Employment
Income per Employed
PersonTotal Canadian Employment
Income (billions)

(1)

(2)

(3)

Baseline

34.2

50,6401,540.7

Scenario 4

39.7

48,813

1,546.2

absolute change

5.6-1,827

5.6

percentage change over baseline

16.3%

-3.6%

0.4%

64

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePanel B: GDP Effects
FN Contribution to GDP(billions)

FN Contribution to GDP
as Share of Total GDP

Total Canadian GDP(billions)(4) = (1) x 2(5)(6) = (3) x 2

Baseline

68.3

2.22%

3,081.3

Scenario 4

77.0

2.49%

3,090.0

absolute change

8.7

0.27pp8.7

percentage change over baseline

12.7%

12.4%

0.3%

FN Employment ShareTotal Canadian Employment(# of jobs)

(7)

(8)

(9)

Baseline

674,824

2.90%

23,283,647

Scenario 4674,824

2.90%

23,283,647

00.00pp

0

0.0%

0.0%

0.0%

FN Productivity (output
per person employed)

FN Productivity Share(FN productivity as
proportion of
Canadian productivity)

Aggregate Canadian
Productivity (output perperson employed)(10) = (2) x 2

(11)

(12)

Baseline

101,28076.5%

132,340

Scenario 3

114,12786.0%

132,712absolute change

12,8479.5pp

372

percentage change over baseline

12.7%

12.4%

0.3%

Panel C: Employment Effects
FN Employment (# ofjobs)

absolute change
percentage change over baseline

Panel D: Productivity Effects

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.
With the closure of the conditional income gap however, there is no change in the employment rates
experienced by the First Nations population. The only adjustment made compared to the baseline
scenario is that First Nations within each age-sex-province-educational attainment category now earn
the average wage of non-Indigenous people with the same characteristics. As such, there is no change in
the number of people employed in this scenario compared to the baseline – only changes in what thealready-employed earn.
Like Scenario 3, the disparity in income and employment gains here has a significant impact on productivity.

65

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

However, unlike Scenario 3, where the gains in employment overshadow the gains in income, resulting inless output per employed person, the effect runs in the opposite direction here; the moderate income gains
eclipse the non-existent gains in employment. The result of this is that output and income per employedperson rises considerably. Productivity and average employment income both rise by 12.7%, withproductivity increasing by about $13,000 and average employment income jumping by over $6,000.
Altogether, the gains bring First Nations productivity from 76.5% of the Canadian average to 86%,
eliminating about 40% of the productivity gap.
Table 13: Cumulative Economic Benefits of the Closure of the Income Gap (Scenario 4), Estimates for 20212041
Total GDP(billions)

Total Employment (JobYears)

Annual GDP
Growth Rate

AnnualEmployment
Growth Rate

Annual
Productivity
Growth Rate

(1)

(2)

(3)

(4)

(5)

Baseline

54,904.8

445,572,763

1.71%

0.95%

0.75%

Scenario 4

54,986.8

445,572,763

1.72%

0.95%

0.77%

absolute change

82.0

0

0.01pp0.00pp0.01pppercentage change overbaseline

0.1%

0.0%

0.8%

0.0%

1.9%

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.
Table 13 presents our cumulative estimates of economic benefit for Scenario 4. In line with our point
estimates for 2041, the cumulative gains associated with the closing of the income gap over the 2021-2041
period are the smallest of all five scenarios that we explore. In total, we estimate a cumulative $82 billion in
additional output compared to the baseline scenario, and once again, no gains in employment. This
represents a 0.01 percentage point increase in the annual growth rate of Canadian GDP, bringing the figure
from 1.71% to 1.72%. We also estimate a 0.01 percentage point increase in the annual growth rate ofproductivity: about a 1.9% increase over the baseline scenario. The size of these productivity gains is abouton par with those seen in Scenario 2 when we simulate the half-closing of the education gap.

The Closure of All Three Gaps
Table 14 presents the economic benefits in 2041 for Scenario 5, the final scenario which we explore. Under
this scenario, all three gaps of interest – the education gap, the conditional employment rate gap, and theconditional income gap – close gradually over the 2021-2041 period. As one might expect, our estimatesplace this scenario as the most economically impactful of all the scenarios discussed. We estimate that thefull closing of all three gaps is associated with a massive 70.9% increase in First Nations output over thebaseline scenario; First Nations contribution to GDP rises by about $48 billion compared to the baseline
scenario while total First Nations employment income grows by about $24 billion. The share of Canadian
GDP accounted for by First Nations output grows by about 68% compared to the baseline scenario, jumping
from 2.22% of Canadian GDP to 3.73%. As a result of these gains, our estimate of Canadian GDP in this66

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updatescenario is 1.6% larger than in the baseline scenario.
The scenario is also associated with great gains in employment. In 2041, the closure of the three gaps is
associated with about an additional 188,000 jobs for First Nations. Total First Nations employment in this
scenario is about 28% larger than the same figure in the baseline scenario, and total Canadian employment
about 0.8% higher. The share of Canadian employment which is held by First Nations people is substantiallyhigher here than in the baseline as a result – 3.68% as opposed to 2.90% in the baseline.
Table 14: Economic Benefits of the Closure of All Three Gaps (Scenario 5), Estimates for 2041
Panel A: Employment Income Effects
FN Total Employment
Income (billions)

FN Employment
Income per Employed
PersonTotal Canadian Employment
Income (billions)

(1)

(2)

(3)

Baseline

34.2

50,6401,540.7

Scenario 5

58.4

67,6971,564.9

absolute change

24.2

17,05724.2

percentage change over baseline

70.9%

33.7%

1.6%

Panel B: GDP Effects

Baseline

FN Contribution to GDP(billions)

FN Contribution to GDP
as Share of Total GDP

Total Canadian GDP(billions)(4) = (1) x 2(5)(6) = (3) x 2

68.3

2.22%

3,081.3

Scenario 5

116.8

3.73%

3,129.8

absolute change

48.4

1.51pp48.4

percentage change over baseline

70.9%

68.2%

1.6%

FN Employment ShareTotal Canadian Employment(# of jobs)

(7)

(8)

(9)

Baseline

674,824

2.90%

23,283,647

Scenario 5

862,591

3.68%

23,471,413

absolute change

187,767

0.78pp187,767

percentage change over baseline

27.8%

26.8%

0.8%

Panel C: Employment Effects
FN Employment (# of
jobs)

67

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePanel D: Productivity Effects
FN Productivity (output
per person employed)

FN Productivity Share(FN productivity as
proportion of
Canadian productivity)(10) = (2) x 2

(11)

(12)

Baseline

101,28076.5%

132,340

Scenario 5

135,393101.5%

133,345

absolute change

34,11325.0pp1,005

percentage change over baseline

33.7%

32.7%

0.8%

Aggregate Canadian
Productivity (output perperson employed)

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

The closure of the three gaps is also associated with incredible gains in productivity and average
employment income: an indication that gains in output are large relative to gains in employment (though it
should be emphasized that both measures of economic benefit are very substantial under this scenario).
Productivity and average employment income are about 33% higher under this scenario compared to thebaseline: a level of benefit, which again, exceeds all four other scenarios. In fact, the gains in productivity
are so significant that, under this scenario, First Nations productivity comes to exceed the Canadian
average, rising from 76.5 percent of Canadian productivity in the baseline to a whopping 101.5% of theCanadian figure. Given that this scenario equalizes educational attainment, average employment incomes,
and employment rates for similar First Nations and non-Indigenous people, this finding seems to suggestthat First Nations people are distributed across age, sex, and provincial categories in a manner which ismore productive than the non-Indigenous population. Although our methodology matches the distribution ofFirst Nations individuals across educational attainment categories to the distribution of non-Indigenous
individuals across the same categories – what we define as the closing of the education gap – it does notmatch the two populations on demographic characteristics like age, sex, and province/territory of residence.
As such, when we close all three labour market gaps in this scenario, these demographic disparities remain
as the sole source of variation between the two populations, economically speaking. Thus, the fact thatmeasures of productivity are not equal for the two populations even after closing the three gaps – and thatFirst Nations productivity actually comes to exceed non-Indigenous productivity, no less – would suggestthat these demographic differences are driving the residual differences in productivity.

68

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 15: Cumulative Economic Benefits of the Closure of All Three Gaps (Scenario 5), Estimates for 20212041
Total GDP(billions)

Total Employment (JobYears)

Annual GDP
Growth Rate

AnnualEmployment
Growth Rate

Annual
Productivity
Growth Rate

(1)

(2)

(3)

(4)

(5)

Baseline

54,904.8

445,572,763

1.71%

0.95%

0.75%

Scenario 5

55,362.1

447,429,345

1.79%

0.99%

0.79%

absolute change

457.3

1,856,582

0.08pp0.04pp0.04pppercentage change overbaseline

0.8%

0.4%

4.6%

4.3%

5.06%

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.
Table 15 presents the cumulative economic benefits associated with the closure of all three gaps over thecourse of the 2021-2041 period. We estimate that cumulative GDP for the period is $457.3 billion, or 0.8%,
larger for this scenario compared to the baseline scenario. In terms of employment gains, we estimate thatthe closure of all three gaps is associated with nearly 1.9 million additional job-years for First Nations: a
0.4% increase compared to the baseline scenario. These immense gains are also evident in the annual
growth rates of GDP, employment, and productivity, which are significant larger here compared to thebaseline scenario. All three measures grow about 4-5% over the baseline, with Canada’s annual GDP
growth rate rising 0.08 percentage points, from 1.71% per year to 1.79%. Both the annual growth rate ofCanadian employment and the annual growth rate of Canadian productivity rise 0.04 percentage points,
going from 0.95% per year to 0.99% and from 0.75% to 0.79%, respectively. Again, the cumulative economic
impacts for this gap closure scenario are substantially larger than the impacts estimated for any of theother scenarios.

Discussion & Variable Breakdown
In this section, we supplement the scenario-specific analysis provided in the previous section with abreakdown of our results across the four major variables considered in our model. We begin with a brief
discussion of the aggregate-level results, comparing gains across the five gap closure scenarios. We thendisaggregate our results along lines of province/territory, age group, sex, and educational attainment,
discussing each variable in turn.
Tables 16 and 17 collect the GDP effects of each gap closure scenario in 2041, broken down across the four
variable we use to define our bins: province, age, sex, and educational attainment. Table 16 presents theabsolute change in GDP over the baseline scenario while Table 17 presents these changes in percentage
form. Table 17 also presents the working age population of First Nations of each subgroup for ease ofreference. Tables 18 and 19 present the same measures but for the employment effects of each gap closure
scenario. Appendix Tables 1-3 provide similar breakdowns for productivity and income effects. Our
discussion here will focus primarily on GDP and employment gains, however.

69

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateComparing the results of each gap closure scenario at the aggregate level (i.e., without disaggregating into
any of the subcategories presented), some patterns emerge. Scenario 5 exhibits the largest gains by quite alarge margin, followed by Scenario 1, Scenario 2, Scenario 3, and ultimately Scenario 4. Of the three
individual gaps, the education gap is the most consequential from an output perspective, with theassociated gains being significantly larger than the gains from closing the income and employment rate
gaps combined. From an employment perspective however, the employment rate gap produces the mostsignificant gains. Interestingly, Scenario 5, which sees all three gaps close simultaneously, is associatedwith gains that are slightly smaller than the sum of the gains from Scenarios 1, 2, and 3. This mirrors our
findings from the overnight model, and we believe the same intuition holds true here. The closing of theeducation gap moves individuals into higher educational attainment categories than they would haveoccupied otherwise, and on average, gaps in employment rates and employment incomes tend to be smaller(in relative terms at least, if not in absolute terms as well) in these higher education categories. As such,the closing of the education gap actually tends to eliminate some of the income and employment rate gaps.
The gains from closing these residual gaps are thus smaller than when these gaps are eliminatedindividually (as in Scenarios 3 and 4), making Scenario 5 slightly less than the sum of its parts in terms ofboth employment and GDP gains.
Table 16: Projected Absolute Change in First Nations Contribution to GDP over Baseline Scenario (millions),
2041
Baseline(total level)

Employment
Rate Gap
Closes

Education Gap
Closes

Education Gap
Half Closes

Total

(1)

(2)

(3)

(4)

(5)

Newfoundlandand Labrador

2,119

1,366

683

-198

-204

689

Prince Edward
Island

92

69

34

37

25

124

Nova Scotia

1,813

648

324

53

43

805

New Brunswick

712

167

83

234

127

916

Quebec

6,617

2,067

1,033

347

-361

2,305

Ontario

16,488

7,015

3,507

2,059

2,096

11,249Manitoba

7,611

5,775

2,888

1,805

1,333

6,866

Saskatchewan

6,061

3,509

1,754

3,136

1,378

8,193

Alberta

14,054

5,498

2,749

2,150

1,977

9,240

BritishColumbia

10,966

3,416

1,708

1,184

2,199

7,010

Territories

1,813

693

346

341

58

1,044

Total

68,34630,222

15,111

11,1488,670

48,443

Scenario

Income Gap
ClosesAll Three Gaps
Close

Province/Territory70

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 16: Projected Absolute Change in First Nations Contribution to GDP over Baseline Scenario (millions),
2041
Age Group

15 to 24 years

5,219

3,826

1,913

1,117

-400

2,510

25 to 34 years

12,685

5,911

2,955

3,218

2,647

10,94635 to 44 years

18,127

7,664

3,832

3,902

1,718

12,49845 to 54 years

18,131

6,548

3,274

3,289

3,268

14,87855 to 64 years

8,610

2,649

1,325

1,758

2,152

8,648

65 years and
over

5,573

3,624

1,812

-2,136-717-1,036

Total

68,34630,222

15,111

11,1488,670

48,443Male

41,39014,989

7,495

8,012

7,700

32,599Female26,956

15,233

7,617

3,136

969

15,844

Total

68,34630,222

15,111

11,1488,670

48,443

No certificate

4,378-2,380-1,190

2,645

983

-326

High School

24,412-10,243-5,122

5,587

3,568

-3,944

Other Trades
Certificate

2,967

1,085

542

714

611

3,311

College, CEGEP(3 months to 1
year)

7,812

-3,908-1,954

1,453

1,167

-2,140

College, CEGEP(1 year to 2
years)

7,682

800

400

1,026

947

3,430

College, CEGEP(2 years+)

2,977

3,217

1,609

516

506

5,604

University
below Bachelor

456

229

115

45

12

348

Bachelor

13,96825,344

12,672

-747

1,416

28,408

University
above Bachelor

3,694

16,078

8,039

-92

-540

13,753

Total

68,34630,222

15,111

11,1488,670

48,443

TOTAL

68,34630,222

15,111

11,1488,670

48,443Sex

Educational Attainment

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

71

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 17: Projected Percent Change in First Nations Contribution to GDP over Baseline Scenario, 2041
FN Working
Age Population

Employment
Rate Gap
Closes

Education Gap
Closes

Education Gap
Half Closes

Total

(1)

(2)

(3)

(4)

(5)

Newfoundlandand Labrador

37,000

64.48

32.24

-9.34

-9.63

32.52

Prince Edward
Island

3,000

74.25

37.12

40.33

26.68

134.47

Nova Scotia

35,000

35.71

17.86

2.92

2.37

44.39

New Brunswick

23,000

23.46

11.73

32.85

17.82

128.71

Quebec

126,000

31.24

15.62

5.24

-5.46

34.84

Ontario328,000

42.55

21.27

12.49

12.71

68.23

Manitoba

168,000

75.88

37.94

23.72

17.52

90.21

Saskatchewan

142,000

57.89

28.94

51.73

22.73

135.17

Alberta

204,000

39.12

19.56

15.30

14.07

65.75

BritishColumbia

228,000

31.15

15.58

10.80

20.05

63.92

Territories

19,000

38.21

19.10

18.83

3.17

57.59

Total

1,313,000

44.22

22.11

16.31

12.68

70.88

15 to 24 years

249,613

46.59

23.30

25.37

20.87

86.29

25 to 34 years

228,457

42.28

21.14

21.53

9.48

68.95

35 to 44 years

214,558

36.11

18.06

18.14

18.03

82.06

Scenario

Income Gap
ClosesAll Three Gaps
Close

Province/Territory

Age Group

45 to 54 years

158,279

30.77

15.39

20.42

25.00

100.4455 to 64 years

246,212

65.03

32.52

-38.33-12.86-18.5965 years andover

1,313,000

44.22

22.11

16.31

12.68

70.88

Total

68,34630,222

15,111

11,1488,670

48,443Male

645,416

36.21

18.11

19.36

18.60

78.76

Female667,584

56.51

28.26

11.63

3.60

58.78

Total

1,313,000

44.22

22.11

16.31

12.68

70.88

Sex

Educational Attainment

72

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 17: Projected Percent Change in First Nations Contribution to GDP over Baseline Scenario, 2041
No certificate

102,235-54.35-27.18

60.41

22.46

-7.44

High School

324,323-41.96-20.98

22.89

14.62

-16.16

Other Trades
Certificate

79,686

36.56

18.28

24.08

20.58

111.59College, CEGEP(3 months to 1
year)

74,114-50.02-25.01

18.60

14.93

-27.39College, CEGEP(1 year to 2
years)

128,758

10.42

5.21

13.36

12.32

44.65

College, CEGEP(2 years+)

89,166108.07

54.04

17.34

16.99

188.22

University
below Bachelor

9,277

50.29

25.14

9.84

2.64

76.34

Bachelor

377,009

181.45

90.73

-5.34

10.14

203.38

University
above Bachelor

128,433435.18217.59-2.50-14.61372.25

Total

1,313,000

44.22

22.11

16.31

12.68

70.88

TOTAL

1,313,000

44.22

22.11

16.31

12.68

70.88

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Table 18: Projected Absolute Change in First Nations Employment over Baseline Scenario (# of jobs), 2041
FN Working
Age Population

Employment
Rate Gap
Closes

Education Gap
Closes

Education Gap
Half Closes

Total

(1)

(2)

(3)

(4)

(5)

Newfoundlandand Labrador

16,566

4,247

2,124

435

-

2,767

Prince Edward
Island

1,271

538

269

718

-

869

Nova Scotia

19,601

1,936

968

523

-

2,280

New Brunswick

10,148

1,089

544

2,787

-

4,077

Quebec

66,063

6,176

3,088

6,339

-

11,440Ontario

172,399

22,566

11,283

20,170-34,412

Manitoba

84,096

20,11810,05928,503-33,763

Scenario

Income Gap
ClosesAll Three Gaps
Close

Province/Territory73

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 18: Projected Absolute Change in First Nations Employment over Baseline Scenario (# of jobs), 2041
Saskatchewan

58,227

12,345

6,172

39,913-44,088

Alberta

110,365

17,298

8,649

22,627-29,062

BritishColumbia

125,083

16,464

8,232

13,782-

20,962Territories

11,005

1,829

915

3,647

-

4,047

Total

674,824

104,606

52,303

139,443-

187,767

15 to 24 years

102,856

17,2008,600

30,774-40,74825 to 34 years

143,345

27,014

13,50744,645-55,72035 to 44 years

143,698

19,2309,615

37,356-

46,06445 to 54 years

137,692

18,7809,390

32,243-40,32755 to 64 years

77,894

8,289

4,144

19,370-23,93265 years andover

69,33914,093

7,046-24,945--19,025

Total

674,824

104,606

52,303

139,443-

187,767

Male

353,11247,224

23,61281,607-

100,849

Female321,71257,382

28,691

57,836-

86,918

Total

674,824

104,606

52,303

139,443-

187,767

No certificate

64,479-35,046-17,523

38,615--17,419High School

281,210-117,996-58,998

64,199--80,735

Other Trades
Certificate

29,524

10,794

5,397

9,302

-

23,496

College, CEGEP(3 months to 1
year)

83,248-41,644-20,822

17,711--32,793

College, CEGEP(1 year to 2
years)

72,242

7,525

3,762

9,339

-

17,837

College, CEGEP(2 years+)

25,715

27,791

13,895

4,115-

36,352

University
below Bachelor

3,614

1,817

909

564

-

2,664

Bachelor

97,818

177,493

88,747-4,160-165,785

Age Group

Sex

Educational Attainment74

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 18: Projected Absolute Change in First Nations Employment over Baseline Scenario (# of jobs), 2041
University
above Bachelor

16,97573,87236,936-242-

72,579

Total

674,824

104,606

52,303

139,443-

187,767

TOTAL

674,824

104,606

52,303

139,443-

187,767

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.
Table 19: Projected Percent Change in First Nations Employment over Baseline Scenario, 2041
FN Working
Age Population

Employment
Rate Gap
Closes

Education Gap
Closes

Education Gap
Half Closes

Total

(1)

(2)

(3)

(4)

(5)

Newfoundlandand Labrador

37,000

25.64

12.82

2.63

-

16.70

Prince Edward
Island

3,000

42.33

21.16

56.49

-

68.34

Nova Scotia

35,000

9.88

4.94

2.67

-

11.63

New Brunswick

23,000

10.73

5.36

27.46

-

40.18

Quebec

126,000

9.35

4.67

9.59

-

17.32

Ontario328,000

13.09

6.54

11.70

-

19.96

Manitoba

168,000

23.92

11.96

33.89

-

40.15

Saskatchewan

142,000

21.20

10.60

68.55

-

75.72

Alberta

204,000

15.67

7.84

20.50

-

26.33

BritishColumbia

228,000

13.16

6.58

11.02

-

16.76

Territories

19,000

16.62

8.31

33.14

-

36.77

Total

1,313,000

15.50

7.75

20.66

-

27.82

15 to 24 years

215,881

16.72

8.36

29.92

-

39.62

25 to 34 years

249,613

18.85

9.42

31.14

-

38.87

35 to 44 years

228,457

13.38

6.69

26.00

-

32.06

45 to 54 years

214,558

13.64

6.82

23.42

-

29.29

55 to 64 years

158,279

10.64

5.32

24.87

-

30.72

65 years andover

246,212

20.32

10.16

-35.97--27.44

Scenario

Income Gap
ClosesAll Three Gaps
Close

Province/Territory

Age Group75

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 19: Projected Percent Change in First Nations Employment over Baseline Scenario, 2041
Total

1,313,000

15.50

7.75

20.66

-

27.82

Male

645,416

13.37

6.69

23.11

-

28.56

Female667,584

17.84

8.92

17.98

-

27.02

Total

1,313,000

15.50

7.75

20.66

-

27.82

No certificate

102,235-54.35-27.1859.89--27.02High School

324,323-41.96-20.9822.83--28.71Other Trades
Certificate

79,686

36.56

18.28

31.51

-

79.58

College, CEGEP(3 months to 1
year)

74,114-50.02-25.01

21.28--39.39College, CEGEP(1 year to 2
years)

128,758

10.42

5.21

12.93

-

24.69

College, CEGEP(2 years+)

89,166108.07

54.04

16.00

-

141.36

University
below Bachelor

9,277

50.29

25.14

15.59

-

73.72

Bachelor

377,009

181.45

90.73

-4.25

-

169.48

University
above Bachelor

128,433435.18217.59-1.42-427.56

Total

1,313,000

15.50

7.75

20.66

-

27.82

TOTAL

1,313,000

15.50

7.75

20.66

-

27.82

Sex

Educational Attainment

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Province/Territory
Breaking down gains by province/territory reveals several relationships of interest. Overall, the absolute
size of gains tends to follow the working age population of First Nations in each province fairly closely. That
is to say, provinces with larger working age populations of First Nations tend to exhibit higher gains acrossall scenarios. Ontario, Manitoba, and Alberta are the three provinces estimated to experience the largest
gains across most of the five scenarios, with two key exceptions: British Columbia exhibits the largest GDP
gains of all provinces when the income gap closes and Saskatchewan benefits the most, in both GDP and
employment, when the employment rate gap closes and when all gaps close simultaneously.

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Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

When viewed in relative terms, these relationships shift significantly however. Across all gaps, Prince
Edward Island consistently exhibits some of the largest percentage increases over the baseline scenario;
the closure of the education gap, for example, is associated with an increase in First Nations GDP of about
74% and the closure of all three gaps is associated with a massive 134% increase in First Nations GDP.
Employment in these scenarios also rises 42% and 68% respectively. To an extent, this seems intuitive given
P.E.I’s exceedingly small population of working-age First Nations. Still, the massive relative gains that P.E.I
experiences from gap closure seems to indicate that gains from gap closure do not scale perfectly withworking-age population (otherwise we would see absolute gains in proportion to the very small population).
New Brunswick and Saskatchewan are also estimated to benefit from enormous gains in output in Scenario
5, with relative increases in First Nations GDP of well over 100%. Small working-age population might also
be an explanation for New Brunswick’s gains, but this is somewhat discredited by the comparatively small
gains the province experiences in other scenarios. This discrepancy between Scenario 5’s gains and gains
from the other scenarios suggests that there is a sort of interaction effect at play, where the gains fromclosing the three gaps simultaneously are much larger than the sum of the gains from closing the gaps
individually. It is possible that the gap in employment rates and average employment incomes are actuallylarger in higher educational attainment categories in New Brunswick, and that the movement of First
Nations people up the educational attainment distribution actually produces larger income and employment
rate gaps, hence the larger gains in Scenario 5. Saskatchewan’s output gains, meanwhile, seem to be
derived primarily from the closure of the employment rate gap, which itself is associated with an additional$3 billion in First Nations GDP contribution (a 51% increase over baseline) and a massive 40,000 additionaljobs for First Nations (a 69% increase). Interestingly, although it enjoys significant gains in GDP and
employment in Scenario 5, these gains are markedly smaller than the sum of its gains in individual gap
closure scenarios: a finding which suggests that Saskatchewan’s employment rate gap and income gap
become meaningfully attenuated by the closure of the education gap.
The size of GDP gains for each province/territory in each scenario tends to follow the same pattern as isobserved at the national level; Scenario 5 tends to be associated with the largest gains, followed by
Scenarios 1, 2, 3, and 4. There are some exceptions to this trend, however. In British Columbia andOntario, for example, the closure of the income gap (Scenario 4) is associated with greater GDP gains
than the closure of employment rate gap. For British Columbia, where the output gains from closing theincome gap exceed the gains from half closing the education gap, this seems to be indicative of an income
gap which is larger than the Canadian average, hence the larger gains. Comparing Ontario’s gains by
scenario to the national-level gains, however, suggests that the gains from closing the employment rategap (Scenario 3) are less significant than average, likely indicating an employment rate gap which issmaller than in other provinces. Saskatchewan, as mentioned previously, is another example; the GDP
gains from the closure of the employment rate gap are nearly equal to the gains from closing the
education gap and are much larger than the gains from Scenarios 2 and 4. This too suggests anemployment rate gap which is larger than other provinces.
In terms of employment, this pattern in the size of gains across scenarios is much less consistent though. In
Newfoundland and Labrador, Nova Scotia, Ontario, and British Columbia, the closure of the education gap is
associated with greater gains than the closure of the employment rate gap. These provinces are very much

77

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updatethe exception though, and even some of these provinces benefit more from Scenario 3, the closure of theemployment rate gap, than from Scenario 2: a departure from what we observed when breaking results
down by GDP gains. Most of the provinces – namely P.E.I, New Brunswick, Quebec, Manitoba,
Saskatchewan, Alberta – as well as the territories experience employment gains from the employment rate
gap which exceed the gains associated with the closure of the education gap, often by a significant margin.
Manitoba, for example, sees close to 29,000 additional jobs over the baseline scenario when theemployment rate gap is closed, compared to a reduced 20,000 additional jobs when the education gap
closes. This result is fairly intuitive. Whereas the closure of the education gap generates increased
employment via a decidedly indirect mechanism – moving First Nations into higher education categories
where they tend to experience greater rates of employment – the closure of the employment rate gap boosts
employment directly by matching First Nations employment rates with non-Indigenous employment rates.
This is unlike the dynamic observed with respect to GDP gains. There, the closure of the education gap
tends to produce greater income and output gains than the closure of the employment rate gap because theformer works through two mechanisms – raising incomes directly and creating additional incomes throughadditional employment – whereas the latter only affects output by creating additional employment.
Although all gap closure scenarios have a positive effect on employment, some provinces experience
negative GDP gains in some gap closure scenarios. Quebec, for example, is estimated to experience a
reduction in First Nations GDP of about 5% relative to baseline when the income gap closes. We interpret
this result as indicating that First Nations people enjoy a higher average employment income than nonIndigenous people with the same age-sex-province-educational attainment characteristics. Notably,
Newfoundland and Labrador is estimated to experience reductions in First Nations GDP of about 9-10% withthe closure of either the income gap or the employment rate gap. These results would suggest that First
Nations in Newfoundland and Labrador enjoy an employment rate and average employment income that are
higher than those of non-Indigenous people with similar characteristics. Because of these dynamics,
Newfoundland and Labrador is unique in being the only province for which the gains from closing all threegaps are actually smaller than the gains from simply closing the education gap.

Age Group
Breaking gains down by age group too yields some interesting insights. In absolute terms, the 45-54, 35-44,
and 25-34 cohorts tend to experience the greatest GDP gains across all scenarios. This makes sense givena) that these groups represent individuals in their prime (when they’re most likely to be working) and at thepeak of their earning potential, and b) that higher levels of employment and income are associated withgreater absolute GDP gains. These same groups also tend to benefit from the greatest absolute gains in
employment across scenarios. The 25-34 cohort, specifically, is associated with absolute employment gains
that are substantially larger than other age groups. For example, when the education gap closes, anadditional 27,000 jobs are generated for First Nations in the 25-34 group: 7,000 more than is estimated forthe next largest group, the 35-44 cohort. In relative terms though, the groups that benefit the most varydepending on the scenario.
For Scenarios 1 and 2, where the education gap closes fully or partially, the 15-24 and 65+ cohorts

78Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updateexperience the greatest gains in First Nations contribution to GDP by quite a decent margin, with increasesof 73% and 65% respectively. In each scenario, we assume that all age-province-sex bins possess anidentical educational attainment distribution: due to this simplifying assumption, it is not possible fordifferent age groups to experience smaller or larger education gaps than one another. As such, variations
between cohorts in the estimated gains they experience from the closure of the education gap are only due
to differing relationships between educational attainment and employment rates or wages. If an age groupexperiences an above-average level of benefit from the closure of the educational attainment, this should beinterpreted as a product of the greater returns to education in that group, not as a product of a larger
education gap. Such is the case for the 15-24 and 65+ age groups. This makes some intuitive sense.
15–24-year-olds are likely to lack significant work experience compared to other groups, and as such, thekind of opportunities and labour market outcomes they can attain is likely to be more heavily influenced bytheir educational qualification than other, older groups. Seniors, meanwhile, are expected to face reduced
employability in positions involving manual labour: the kind of positions which are most common for low
levels of education. As such, both groups benefit an extraordinary amount from additional levels of
educational attainment. Furthermore, both groups face below-average levels of employment and income
and have relatively small contributions to GDP. As such, absolute gains need not be particularly large for the
relative, percentage gains over baseline to be substantial.
In terms of employment gains, it is the 65+ and 25-34 cohorts which experience the greatest relative gains.
Broadly, we believe a similar interpretation applies here: these age ranges, more so than other ranges, face
great returns to additional education. Still, we posit that the lower relative gains associated with the 15-24
cohort here compared to the GDP perspective reflect the different mechanisms at play for the production of
GDP and employment gains. GDP gains come from gains in income and gains in employment rates whereas
employment gains are derived solely from improvements in employment rates. As evidenced by thedisparities in relative GDP gains and relative employment gains, increased educational attainment has
greater implications for income than employment rates in the 15-24 age range.
Moving to Scenario 3, the closure of the employment rate gap, the 25-34, 35-44, and 15-24 cohorts exhibit
the largest relative gains here: an indication that the disparity in employment rates between First Nations
people and non-Indigenous people is likely larger in these categories compared to others. Interestingly
however, when the employment rate gap closes, the 65+ age group experiences a massive reduction in First
Nations employment and GDP contribution; with both measures falling 35-39% compared to the baseline
scenario. A similar occurrence is observed in Scenario 4, when the income gap closes, and Scenario 5, when
all three gaps close. We posit that these negative effects might reflect a fundamental difference in thelabour market activity of First Nations and non-Indigenous people: First Nations people may tend to retire
later than non-Indigenous people. Hence, replacing the employment rate for First Nations in each bin withthe employment rate for non-Indigenous people in the same bin results in a much lower level of
employment and income. The fall in GDP contribution that occurs in the 65+ cohort when the income gap
closes is not fully explained by this dynamic, however, as we only measure average employment income forindividuals who report a positive sum for employment income in the 2016 census (a measure which does notinclude pension earnings). Hence, retired individuals should not contribute to the income calculation. We
offer two possible explanations for this result. Perhaps a meaningful proportion of retired people continue
to report a small but non-zero sum for their employment income, causing the disparity in retirement age

79

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

between the two populations to manifest as an income disparity wherein First Nations people out-earn
non-Indigenous people. Or, alternatively, employed First Nations people in this age category simply do earnmore than similar non-Indigenous people, hence the negative GDP effect associated with the closure of theincome gap.
In Scenario 4, the 55-64 cohort experiences the greatest relative gains in GDP, which would seem to suggestthat the relative income gap between the First Nations population and the non-Indigenous population islarger here than in other categories. Scenario 5, from a GDP perspective, sees the 24-34, 55-64 and 45-54
cohorts gaining the most in relative terms, with gains of 100%, 86%, and 82% over baseline, respectively.
The 55-64 group is particularly interesting, given that the gains here are about 25 percentage points higher
than the sum of the gains from Scenarios 1, 3, and 4. This would suggest that, for 55 to 64-year-old
individuals, higher educational attainment categories are associated with income gaps of greater
magnitude. This group’s employment gains in Scenario 5 are less than the sum of the relevant individual
scenarios however, indicating that the employment rate gap actually decreases at higher educational
categories for 55 to 64-year-olds. This “less-than-the-sum-of-its-parts” observation holds true for every
age group in Scenario 5, including the 15-24 and 25-34 cohorts, who experience the highest relative
employment gains of all age groups.

Sex
GDP and employment gains differ considerably between males and females. In both absolute and relative
terms, we estimate that the closure of the education gap is associated with greater gains for women thanmen. In total, we estimate that the GDP contribution of both groups would rise by about $15 billion.
However, this represents a much larger increase over baseline for women (about 57%) than for men (about36%). With respect to employment however, gains for females eclipse gains for males in both absolute andrelative terms. Again, since we have assumed that educational attainment for both groups is equal to thenational average for First Nations, this disparity in gains is not indicative of education gaps of different
magnitudes; rather, it reflects the fact that women experience greater returns to education than men.
This dynamic reverses for Scenarios 3, 4, and 5 however. Males experience greater gains, in relative andabsolute terms and in both GDP and employment when the employment rate gap or income gap close. Thisis assumedly a result of another, intersecting labour market disparity wherein women tend to experiencemarkedly lower rates of employment and average incomes than men. This downward pressure on female
wages and employment seems to overshadow the gaps between First Nations people and non-Indigenous
people; even non-Indigenous females face significantly suppressed wages and rates of employment simply
by virtue of being a female, leading to relatively small gaps. As such, the gains from eliminating the
disparity in wages and employment rates between First Nations people and non-Indigenous people has amuch greater effect for men, who don’t face this some downward pressure. As a natural consequence of
this dynamic, men also experience much greater gains than women in Scenario 5. Of note is the fact that,while men enjoy GDP gains in Scenario 5 which are slightly larger than the sum of gains from Scenarios 1,
3, and 4, women enjoy GDP gains which are substantially less than the sum of gains from the otherscenarios. This tracks with our interpretation of the results from Scenario 1: women gain significant returns

80Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updatefrom education, in part because gaps in income between First Nations people and non-Indigenous people
are reduced at these higher levels of educational attainment. This also manifests in the gains for Scenario 5
because the closure of the education gap increases the educational attainment of First Nations women
above what it would have been in Scenarios 3 and 4. In terms of employment however, the results in
Scenario 5 are fairly similar between males and females, with the relative gains for males hovering justslightly above the relative gains for females. Both groups experience gains which are less than the sum of
the gains from Scenarios 1 and 3: a reflection of the fact that the employment rate gaps for both groups
tend to shrink at higher levels of educational attainment.

Educational Attainment
Given that we are directly adjusting peoples’ levels of educational attainment in Scenarios 1, 2, and 5, theresults by educational attainment take on a slightly different shape compared to our breakdowns by
variable. When the education gap is closed, partially or fully (Scenarios 1, 2, and 5), the greatest gains
accrue to the “University above Bachelor” category accrue to the “University above bachelor”, “Bachelor”,
and “College, CEGEP (2 years+)” categories. In fact, the GDP gains just in the top two educational categories
account for 137% of the total GDP gains across all categories and 127% of total employment gains across
categories.39 This makes sense, as these are the categories which non-Indigenous people tend to occupy inmuch greater proportion than non-Indigenous people. Hence, these are the categories that the First Nations
population is moving to as the education gap closes. Conversely, the “No certificate”, “High School” and“Other Trades Certificate” categories experience significant reductions in First Nations GDP contribution
simply because these are the categories which First Nations occupy in greater proportions than nonIndigenous people. The GDP contribution in these categories decreases not because First Nations in thesecategories are earning less after the closure of the education gap, but simply because there are fewer First
Nations occupying these categories.
Given that Scenarios 3 and 4 do not entail the closure of the education gap, gains are distributed differently
under these scenarios. When the employment rate gap closes, the greatest relative gains accrue to the four
lowest categories of educational attainment, with the “no certificate” category in particular experiencing avery substantial 60% increase in First Nations GDP contribution and employment compared to the baseline:
a figure which dwarfs the relative gains in other categories. This would suggest that the employment rate
gap is particularly large in these lowest educational attainment categories. Moreover, as we observed in theovernight model, the highest educational attainment categories experience negative GDP and employment
effects from the closure of the employment rate gap due to the fact that First Nations people in thesecategories actually enjoy higher rates of employment than similar non-Indigenous people. A similar
phenomenon is observed when the income gap closes. The “university above bachelor” category
experiences a $540 million or 14.61% decline in First Nations GDP contribution compared to baseline,
indicating that First Nations people in this category actually tend to earn more than similar non-Indigenous
people. The greatest relative gains in Scenario 4, meanwhile, accrue to the “no certificate”, “other trades
certificate” and “college, CEGEP (2 years+)” categories, where the gap in earnings between First Nations
and similar non-Indigenous people seems to be particularly large.

39This figure is over 100% because of the negative GDP effects experienced in other educational attainment categories. In other words,
the sum of the effects in all educational attainment categories is less than the sum of the effects in the top two categories (“Bachelor”
and “University above Bachelor”).

81Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateComparing The Models
This section begins by summarizing and comparing the results of the overnight and longitudinal models. We
identify what we see as the two key sources of deviation in the methodologies of the two models: differencesin the assumptions we make about First Nations population between models and differences in the control
variables which we include. We proceed to explore each of these concepts in turn.
Table 20 collects key results from the overnight and longitudinal models. Given that the two models
estimate economic gains at different points in time for populations of different sizes, we mainly compare
relative, rather than absolute, measures of gain. For the overnight model, the baseline for these relative
measures of gain is the 2016 Canadian economy as captured by the 2016 Census.40 The baseline for thelongitudinal model, meanwhile, is a projection for the 2041 Canadian economy under the assumption thatexisting labour market gaps between First Nations and non-Indigenous people continue to evolve as they
did between the 2006 and 2016 Censuses.
Panel A presents the relative gain in First Nations employment and employment income compared to therespective counterfactual or baseline scenario of each model, expressed as the percentage gain over thatbaseline scenario. Panel B presents these same measures at the national level, expressing the percentagechange in total Canadian employment income and employment compared to the baseline. Employment
income is the only measure of income or output that we present in these comparisons given that theovernight model only produces estimates of employment income and not GDP. Still, given our assumptionthat there is a linear relationship between the two concepts – specifically, that half the value of all output
accrues to labour in the form of employment income – these percentage gains in employment income also
represent percentage gains in GDP.
Table 20: Main Results by Model Used
Panel A: FN Employment Income and Employment Effects, Percentage Change over Baseline
Scenario 1 (Full
Education Gap
Closes)Scenario 2 (Half
Education Gap
Closes)Scenario 3(Employment
Rate Gap
Closes)Scenario 4(Income Gap
Closes)Overnight

44.82%-

10.02%

18.22%

77.47%

Longitudinal

44.22%

22.11%

16.31%

12.68%

70.88%

Overnight

21.15%-

12.90%-

29.28%

Longitudinal

15.50%

7.75%

20.66%-

27.82%

Scenario 5 (AllGaps Close)

FN Total Employment Income

FN Employment40

It should be noted however that employment incomes reported in the 2016 Census represent earnings for 2015.

82

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePanel A: National Employment Income and Employment Effects, Percentage Change over Baseline
Scenario 1 (Full
Education Gap
Closes)Scenario 2 (Half
Education Gap
Closes)Scenario 3(Employment
Rate Gap
Closes)Overnight

0.63%

-

0.14%

0.26%

1.09%

Longitudinal

0.98%

0.49%

0.36%

0.28%

1.57%

Overnight

0.40%

-

0.24%

-

0.55%

Longitudinal

0.45%

0.22%

0.60%

-

0.81%

Scenario 4(Income Gap
Closes)Scenario 5 (AllGaps Close)

Total Employment Income

Employment

Panel C: First Nations Employment Income and Employment Share, Absolute Levels
Baseline

Scenario 1 (Full
Education Gap
Closes)Scenario 2 (Half
Education Gap
Closes)Scenario 3(Employment
Rate Gap
Closes)Overnight

1.41%

2.02%

-

1.54%

1.66%

2.47%

Longitudinal

2.22%

3.17%

2.70%

2.57%

2.49%

3.73%

Overnight

1.88%

2.27%

-

2.12%

1.88%

2.42%

Longitudinal

2.90%

3.33%

3.12%

3.48%

2.90%

3.68%

Scenario 4(Income Gap
Closes)Scenario 5 (AllGaps Close)

FN Employment
Income ShareFN Employment
Share

Panel D: First Nations Employment Income and Employment Share, Percentage Change Over Baseline
Scenario 1 (Full
Education Gap
Closes)Scenario 2 (Half
Education Gap
Closes)Scenario 3(Employment
Rate Gap
Closes)Overnight

43.42%-

9.48%

17.51%

74.95%

Longitudinal

42.82%

21.51%

15.89%

12.37%

68.23%

Overnight

20.58%-

12.54%-

28.48%

Longitudinal

14.98%

7.51%

19.95%-

26.80%

Scenario 4(Income Gap
Closes)Scenario 5 (AllGaps Close)

FN Employment Income ShareFN Employment Share

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.
Note: All estimates presented for the longitudinal model are for the year 2041. Estimates for the overnight model are forthe year 2016.

83

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdatePanel C expresses the economic gains associated with each scenario in a different way, recording the
proportion of Canadian employment (employment share) and employment income (employment income
share) accounted for by First Nations people under each model and scenario. Given that the different
scenarios utilize a different baseline with different employment and income shares to start, the effect of gap
closure is more difficult to parse here. Still, the data in Panel C offers a useful snapshot of how the First
Nations population changes relative to the Canadian population across the two models and the individual
scenarios they explore. Panel D expresses the percentage change in these shares over baseline for eachscenario. In doing so, it provides a more tractable way of comparing changes in employment and income
shares across the two scenarios. Across all panels, Scenario 2 is left blank for the overnight model giventhat this scenario – the half closure of the education gap – is not explored under the overnight model.
Similarly, employment gains in Scenario 4 are left blank for both models given that the closure of theincome gap is not associated with any gains in employment.
The results in Panel A are broadly similar across the two models; there are minor discrepancies between
the estimates of the two models. However, the effect sizes of the gains from each scenario are quite
similar. Across the four scenarios for which we have results for both models, the results from thelongitudinal method tend to be slightly attenuated compared to the results from the overnight model. A
similar result is also observed in Panel D: each gap closure scenario is associated with gains of similar
size to Panel A, and once again, the results of the longitudinal model tend to be slightly reduced
compared to the overnight model.
Scenarios 3 and 4 represent somewhat of an exception to this trend. The gains from Scenario 3 are actuallyfound to be larger in the longitudinal model than the overnight model; the estimated employment income
gains, in particular, are about 63% larger in the longitudinal model than the overnight model. In fact, in thelongitudinal model, the income gains from Scenario 3 are found to be larger than Scenario 4, while theopposite is true in the overnight model. Scenario 4, meanwhile, has the longitudinal results as, again,slightly reduced compared to overnight results. Still, the Scenario is noteworthy given the significant
discrepancy between the results of the overnight model and the longitudinal model; the gains for thelongitudinal model are about 44% smaller than the gains for the overnight model.
In contrast to Panels A and D which provided fairly similar estimates of economic gain for each of themodels, Panel B on the effects for Canada offers results which differ significantly between the models.
Here, the estimated gains in Canadian income and employment are consistently found to be larger in thelongitudinal model than the overnight model. The full closure of the education gap is associated withincome gains that are estimated to be 55% higher in the longitudinal model than the overnight model.
Similarly, the closure of all three major gaps is associated with employment gains that are estimated to be
47% higher in the longitudinal model than the overnight model.
We believe that these differences across models in the estimated economic gains associated with each gap
closure scenario are mainly a product of two factors: differences in the assumptions we make about theFirst Nations population across the two methodologies used, and the use of additional control variables in
the longitudinal model. We now move to discuss each of these factors individually.

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Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Population Differences
The overnight model and the longitudinal model simulate gap closure using different versions of the First
Nations population. The overnight model, which envisions the labour market gaps experienced by First
Nations disappearing instantaneously, uses the First Nations population in 2016 as characterized by the 2016
Census. The longitudinal model meanwhile projects the future economic performance of First Nations for the2021-2041 period using projections produced by Statistics Canada. For the longitudinal model, the resultspresented in Table 21 reflect the economic gains from closing each of the relevant gaps in the year 2041. As
such, the First Nations population looks significantly different with respect to a) the size of the First Nations
population relative to the Canadian population, and b) the demographic groups that comprise the First Nations
population and proportion of the total First Nations population they represent.
As one of the fastest growing populations in Canada, First Nations come to occupy a greater and greater
proportion of the Canadian population over the course of the 2021-2041 period. In 2016, the First Nations
population represented 3.04% of the Canadian population and 2.78% of the Canadian working age population(Statistics Canada, 2017a, 2017b). By 2041, Statistics Canada estimates that the First Nations population will
represent 3.56% of the Canadian population and 3.37% of the Canadian working age population (Statistics
Canada, 2019, 2021). These differences in the First Nations population across the two methodologies help to
explain the significant difference in the employment and employment income shares of First Nations between
the models (see Panel C). A First Nations population which represents a larger share of Canada means that,
all else equal, the same percentage change in First Nations employment and income will represent a larger
increase in aggregate Canadian income and employment. We present this dynamic as a possible explanation
for the fairly substantial differences in the results of the two models as presented in Panel B.
This effect might be further bolstered by changes in the demographics of the First Nations. As we’ve noted priorin this report, variables like age, sex, and province/territory of residence are major determinants of the labour
market outcomes that individuals experience. The methodology we employ in the longitudinal method controls
for these variables, only comparing wages and employment rates among individuals who share the same agegroup, sex, and province/territory of residence. However, there are assuredly other variables that we have notcontrolled for and that are determinants of labour market outcomes. Living on reserve, for example, tends to be
associated with poorer labour market outcomes for First Nations. If the growth rate of First Nations people living
on-reserve over the 2021-2041 period was meaningfully higher than the growth rate of First Nations people living
off-reserve, the First Nations population in 2041 would be comprised of a greater proportion of on-reserve
individuals than the First Nations population in 2016. This, in turn, might lead to lower average wages and ratesof employment for the 2041 First Nations population compared to the 2016 population. The apparent wage gap
between First Nations and non-Indigenous people in 2041, not controlling for on-reserve status, might seemlarger in 2041 than 2016. The gains associated with closing that gap might then be estimated as larger in thelongitudinal method compared to the overnight method, where the proportion of the First Nations population
living on-reserve is lower. This is just one example of how differences in the growth rates of groups withunobserved characteristics can drive differences between the results of the two methods.41

41

It should be noted that we do not directly project non-Indigenous population growth to 2041. We measure wages and employment rates
in each of the 1188 age-sex-province-educational attainment bins for the 2016 non-Indigenous population and forecast these measures
to 2041. However, we only compare the First Nations and non-Indigenous populations within bins, for individuals with the same age,sex, and province characteristics. We do not directly produce estimates for the non-Indigenous population. As such, changes in the
demographic breakdown of the non-Indigenous population over the 2021-2041 period have no impact on our estimates of the economic
gains associated with gap closure.

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Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Another key difference between the two methodologies is the level of educational attainment assigned to
the First Nations and non-Indigenous populations. In the overnight model, we simply observe the share ofeach population in each educational attainment category in the 2016 Census. The longitudinal model,
however, requires us to project the future educational attainment of both populations in 2041. We do sousing historical trends, extrapolating to 2041 the growth in each educational attainment category observed
between the 2006 and 2016 Census. As shown in Table 2, this produces an education gap of a different size
than the one observed in 2016: a gap which is, on average, larger than the one observed in 2016. Given thatthe gains from closing the education gap directly depend on the size of said gap, this difference between the
educational attainment of the First Nations population and the non-Indigenous population in 2016 and 2041
is likely to produce deviations in the results of the two models.

Omitted Control Variables
The overnight model involved the comparison of First Nations and non-Indigenous people across different
age, sex, and provincial categories. We defined the closure of the income gap, for example, as First Nations
people earning the same average employment income as non-Indigenous people in the same educational
category. In this way, we were, at times, “comparing apples to oranges.” The disparity in earnings between a
19-year-old female First Nations person in the Northwest Territories and a 45-year-old male nonIndigenous person in Alberta is likely to be vast – and not entirely due to one’s identity as a First Nations
person or a non-Indigenous person. Differences in demographic characteristics, like one’s province/
territory of residence, age, or sex are also associated with different labour market outcomes. By only
comparing individuals with the same level of educational attainment, we controlled for perhaps the mostsignificant determinant of labour market performance. Still, the data we mobilized for the overnight model
limited us from controlling for other key determinants of labour market performance, and as such, there
was likely some level of bias to our measurement of the labour market gaps facing First Nations people andthe gains associated with closing those gaps. Bias is ever present in economic analysis as all models makesimplifications and data are rarely available on all relevant variables. Still, a more rigorous model is always
desirable.
The longitudinal model hence sought to reduce bias present in our estimations by leveraging detailed,individual-level microdata from the 2016 Census. With this microdata, we were able to control for not only
education, but also age, sex, and province/territory of residence. In this way, we were able to come muchcloser to the ideal of “comparing apples to apples”; that is, isolating the causal effect of First Nations
identity on labour market outcomes by comparing only the labour market outcomes of First Nations andnon-Indigenous people who are identical in all other relevant characteristics.
The fact that our estimates of economic gain are, on average, slightly smaller in the longitudinal method
compared to the overnight method might suggest that there is a degree of bias in our estimates from theovernight method, and that this bias is predominantly upward. In other words, the overnight model may
have produced slight overestimates of the size of the labour market disparities facing First Nations people.
Imagine the distribution of First Nations people across age, sex, and province/territory categories in 2016
was associated with poorer labour market outcomes compared to the non-Indigenous population. This86

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updatewould produce seemingly larger labour market gaps in the overnight model relative to the longitudinalmodel, since the overnight model does not control for these characteristics, whereas the longitudinal model
does. Given this seemingly larger gap, the overnight model would produce larger estimates of the economic
benefits associated with gap closure compared to the longitudinal model. This discrepancy in the results ofthe models would not be caused by any real difference in the labour market performance of the populations
across models. Rather, it would simply be a consequence of attributing existing differences in First Nations
and non-Indigenous labour market performance to different sources; in the overnight model, the gap in theperformance of the populations would be completely attributed to the effect of being First Nations or
non-Indigenous, whereas in the longitudinal model, some of the disparity would be attributed to differencesin the composition and characteristics of the First Nations population.
One potential source of such bias is differences in age between the populations, as the First Nations
population is, on average, younger than the non-Indigenous population. Younger individuals tend to earnlower wages than older individuals. By not controlling for age in the overnight model, we measured theeffect of this difference as part of the effect on wages of being First Nations. In the longitudinal method,
however, we controlled for these differences, only comparing First Nations and non-Indigenous people ofsimilar age. Therein, we measured a smaller gap in wages between the populations compared to theovernight model. This is one potential explanation for the smaller gains we associate with the closure of theincome gap in the longitudinal model compared to the overnight model (see Table 21). The relatively large
gains we associate with the closure of the employment rate gap in the longitudinal model compared to theovernight model may too be a result of controlling for these demographic differences; in this case though,the direction of the discrepancy suggests downward bias in the overnight model estimates.
It is crucial to note that even with the added controls in the longitudinal model, there are certainly additional
omitted variables which we have not included in either of our models. As mentioned in the prior section on
the consequences of population differences, on-reserve status -- which we might operationalize as
residence in urban versus rural areas given that very few non-Indigenous people live on-reserve -- isanother variable which future research might try to control for. Living rurally or on-reserve is generally
associated with fewer employment opportunities compared to living in more populated, less remote areas;in this way, this variable is likely to be a significant determinant of labour market outcomes. The fact that wehave not controlled for it, then, is likely to be a source of bias in both the overnight and longitudinal models.

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Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Conclusion
The findings of the longitudinal model of gap closure are broadly consistent with the findings from Part
I of this report: the closure of the various labour market disparities facing First Nations is associatedwith significant gains in employment, output, income, and productivity for not only First Nations but
Canadians broadly.
The educational attainment gap is particularly consequential in this regard; we estimate that its full closure
is associated with an additional $30 billion in output in 2041 compared to the baseline scenario, and acumulative $285 billion in additional output over the 2021-2041 period. Moreover, we estimate that the fullclosure of the gap would generate nearly 105,000 additional jobs for First Nations people in 2041, and 1.03
million additional job-years for the First Nations people compared to the baseline over the 2021-2041
period. Furthermore, we find that the average employment income of First Nations people in 2041 would
rise nearly $13,000 compared to the baseline scenario, increasing from about $50,600 to about $63,200.
These gains in employment and output manifest as a $25,000 increase over baseline in the productivity of
the First Nations population in 2041, measured as output per employed person. This productivity boost
would bring First Nations productivity from 76.5% of the Canadian average to 95.1%: a massive increasethat nearly eliminates the productivity gap between the First Nations population and Canadians at large. As
a result of these gains, the projected annual growth rate of Canadian GDP for the 2021-2041 period rises
about 0.05 percentage points over baseline, from 1.71% per year to 1.76%. The annual growth rate ofCanadian employment also rises about 0.02 percentage points, from 0.95% per year to 0.97%. The annual
growth rate of Canadian labour productivity for the period improves meaningfully as well, from 0.75% peryear to 0.78%: a change of about 0.03 percentage points.
Admittedly, fully closing the educational attainment gap between First Nations and non-Indigenous people
by 2041 is an unrealistic prospect given that many individuals in the labour force today will still be in thelabour force by 2041. Still, the gains from closing the educational attainment gap even halfway are
considerable. We estimate that the half closure of the educational attainment gap is associated with anadditional $15 billion in output in 2041: a 22% increase in First Nations output compared to the baseline
scenario. This manifests as a cumulative $143 billion in additional output over the 2021-2041 period. The
half closure of the educational attainment gap is also associated with an additional 52,000 jobs overbaseline for First Nations in 2041, and an additional 518,000 job-years for First Nations people over the2021-2041 period. Average annual First Nations employment income would also rise by nearly $7,000 under
this scenario, while labour productivity would increase by over $13,000. As a proportion of Canadian labour
productivity, First Nations labour productivity rises from 76.5% to about 86.5%: an increase of 10 percentage
points. In total, these gains result in a 0.02 percentage point increase in the annual growth rate of CanadianGDP, a 0.01 percentage point increase in the annual growth rate of Canadian employment, and a 0.01
percentage point increase in the annual growth rate of Canadian labour productivity.
As one might expect though, the most substantial gains are associated with the simultaneous closure of theeducational attainment gap, the conditional employment rate gap, and the conditional employment income
gap. Under this scenario, we estimate that total First Nations output in 2041 would increase by about $48
billion over the baseline scenario. Over the entire 2021-2041 period however, we estimate that the gradual88Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Updateclosure of the three gaps is associated with a cumulative $457 billion in additional output. First Nations
employment in 2041 is also projected to rise by nearly 188,000 jobs above baseline under this scenario, withcumulative gains of just under 1.9 million additional job-years accruing to First Nations over the 2021-2041
period. Average First Nations employment income, meanwhile, is projected to rise by $17,000 in 2041, upon
the full closure of the three gaps. We also estimate that First Nations labour productivity would rise by$34,000 under this scenario, from about $101,000 per employed person to over $135,000. This productivity
gain pushes First Nations productivity beyond the Canadian average, from 76.5% of Canadian labour
productivity to 101.5%. These gains represent a 0.08 percentage point improvement in the annual growthrate of Canadian GDP for the 2021-2041 period, bringing the figure to 1.79% per year. Moreover, the annual
growth rates of Canadian employment and labour productivity both rise 0.04 percentage points, to 0.99%
and 0.79% respectively.
We present these gains as evidence of the great economic benefits which would accrue both to First Nations
people and Canadians generally, should policymakers and community leaders pursue the elimination of thelabour market disparities facing First Nations people vis-à-vis non-Indigenous people. We hold that
economic benefits of this size are remarkable, no matter the context. Still, we posit that our findings
become even more salient when situated in the context of present-day concerns about economic stagnation
and Canada’s slow growth trajectory. At a time when economists and business leaders speculate that the
Canadian labour market is all “tapped out”, the First Nations population remains a chronically overlooked
and underinvested-in resource for the Canadian economy. Put simply, the economic costs of maintaining
these gaps – to say nothing of the humanitarian costs – are enormous and they have scarcely been as
relevant as they are today.

89

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

References
Arif, A. (2010). “Economic Projections for Canada and the Provinces, 2019-2038.” Centre for
the Study of Living Standards. CSLS Research Report 2022-01.
Belanger, Y.D., Awosoga, O., Weasel Head, G. (2013). “Homelessness, Urban Aboriginal
People, and the Need for a National Enumeration,” Aboriginal Policy Studies, 2(2), 4-33.
Calver, M. (2015) “Closing the Aboriginal Education Gap in Canada: Assessing Progress andEstimating the Economic Benefits,” Centre for the Study of Living Standards, CSLS Research Report 2015-03.
Dart, C. (n.d.) “First Nations Schools Are Chronically Underfunded,” CBC.
https://www.cbc.ca/cbcdocspov/features/first-nations-schools-are-chronically-underfunded.
Government of Canada (2020). “Overrepresentation of Indigenous People in the Canadian
Criminal Justice System: Causes and Responses,” Department of Justice. Last modified April 9, 2022.
https://www.justice.gc.ca/eng/rp-pr/jr/oip-cjs/p3.html.
Kim, P.J. (2019). “Social Determinants of Health Inequities in Indigenous Canadians Through aLife Course Approach to Colonialism and the Residential School System,” Health Equity, 3(1), 378-381.
Sharpe, A., Arsenault, J.-F., Lapointe, S. (2007). “The Potential Contribution of Aboriginal
Canadians to Labour Force, Employment, Productivity and Output Growth in Canada,
2001-2017,” Centre for the Study of Living Standards, CSLS Research Report 2007-04.
Sharpe, A., Arsenault, J.-F., Lapointe, S., Cowan, F. (2009). “The Effect of Increasing
Aboriginal Educational Attainment on the Labour Force, Output, and the Fiscal Balance,” Centre for the
Study of Living Standards, CSLS Research Report 2009-03.
Statistics Canada (2009). “Census of Canada. Public Use Microdata File on Individuals, 2001,”
Dataset. Abacus Data Network.
Statistics Canada (2010). “2006 Census Public Use Microdata File (PUMF). Individuals File.”

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Assessing Progress and Estimating the Economic Benefits —An Update

Dataset. Abacus Data Network.
Statistics Canada (2014). “2011 National Household Survey Public Use Microdata File
(PUMF): Individuals File.” Dataset. Abacus Data Network.
Statistics Canada (2017a). “Canada [Country] and Canada [Country] (table).” Census Profile,
2016 Census. Statistics Canada Catalogue no. 98-316-X2016001.
Statistics Canada (2017b). 2016 Census of Population Data Tables Catalogue no. 98-400X2016178, no. 98-400-X2016267, no. 98-400-X2016268.
Statistics Canada (2019a). “2016 Census Public Use Microdata File (PUMF). Individuals File.”
Dataset. Abacus Data Network.
Statistics Canada (2019b). Table 17-10-0057-01. Projected population, by projection scenario,
age and sex, as of July 1 (x 1,000).
Statistics Canada (2021). Table 17-10-0144-01. Projected population by Indigenous identity, agegroup, sex, area of residence, provinces and territories, and projection scenario, Canada (x 1,000).
Statistics Canada (2022). Table 14-10-0365-01. Labour force characteristics by region anddetailed Indigenous group.

91

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateAppendix Table 1: Projected Change in First Nations Average Employment Income over Baseline Scenario, 2041
Appendix Table 1: Projected Change in First Nations Average Employment Income over Baseline Scenario, 2041
Baseline (total
level)

Employment
Rate Gap
Closes

Education Gap
Closes

Education Gap
Half Closes

Total

(1)

(2)

(3)

(4)

(5)

Newfoundlandand Labrador

63,951

19,76911,008-7,456-6,155

8,670

Prince Edward
Island36,312

8,144

4,783

-3,751

9,690

14,265

Nova Scotia

46,254

10,876

5,694

111

1,094

13,573

New Brunswick

35,079

4,032

2,119

1,484

6,252

22,156

Quebec50,07910,025

5,236-1,990-2,733

7,481

Ontario

47,81912,455

6,610

337

6,078

19,240Manitoba

45,254

18,973

10,500-3,4397,927

16,165

Saskatchewan

52,05015,756

8,633-5,193

11,83017,611

Alberta

63,67012,907

6,923-2,7498,959

19,865BritishColumbia

43,833

6,969

3,699

-87

8,789

17,707

Territories

82,377

15,2468,208-8,856

2,614

12,540Total

50,64012,591

6,748-1,827

6,424

17,05715 to 24 years

25,372

12,2996,624-1,664-1,943

1,539

25 to 34 years

44,248

10,331

5,610-1,9489,235

15,10735 to 44 years

63,073

16,075

8,542-2,237

5,979

17,62145 to 54 years

65,84013,0226,926-2,816

11,86826,87255 to 64 years

55,267

10,056

5,282-1,96913,81429,47365 years andover

40,18814,933

8,155-1,480-5,170

4,897

Total

50,64012,591

6,748-1,827

6,424

17,05758,60811,807

6,274-1,787

10,90422,885

Scenario

Income Gap
ClosesAll Three Gaps
Close

Province/Territory

Age Group

Sex

Male

92

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateAppendix Table 1: Projected Change in First Nations Average Employment Income over Baseline Scenario, 2041
Female41,894

13,7507,438-2,253

1,506

10,475

Total

50,64012,591

6,748-1,827

6,424

17,057

No certificate

33,953

0

0

111

7,624

9,106

High School

43,405

0

0

21

6,344

7,642

Other Trades
Certificate

50,25200-2,84010,341

8,955

College, CEGEP(3 months to 1
year)

46,9230

0-1,037

7,007

9,295

College, CEGEP(1 year to 2
years)

53,167

0

0

202

6,552

8,511

College, CEGEP(2 years+)

57,887

0

0

666

9,833

11,237

University
below Bachelor

63,03900-3,136

1,665

948

Bachelor

71,395

0

0

-814

7,240

8,982

University
above Bachelor

108,82000-1,192-15,899-11,409

Total

50,64012,591

6,748-1,827

6,424

17,057

TOTAL

50,64012,591

6,748-1,827

6,424

17,057

Educational Attainment

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Appendix Table 2: Projected Change in First Nations Average Employment Income over Baseline Scenario(per cent), 2041
Education Gap
Closes

Education Gap Half
ClosesEmployment Rate
Gap Closes

Income Gap Closes

(1)

(2)

(3)

(4)

(5)

Newfoundlandand Labrador

30.91

17.21

-11.66

-9.63

13.56

Prince Edward
Island

22.43

13.17

-10.33

26.68

39.28

Nova Scotia

23.51

12.31

0.24

2.37

29.34

New Brunswick

11.49

6.04

4.23

17.82

63.16

Scenario

All Three Gaps
Close

Province/Territory93

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateAppendix Table 2: Projected Change in First Nations Average Employment Income over Baseline Scenario(per cent), 2041
Quebec

20.02

10.46

-3.97

-5.46

14.94

Ontario

26.05

13.82

0.70

12.71

40.24

Manitoba

41.93

23.20

-7.60

17.52

35.72

Saskatchewan

30.27

16.59

-9.98

22.73

33.83

Alberta

20.27

10.87

-4.32

14.07

31.20

BritishColumbia

15.90

8.44

-0.20

20.05

40.40

Territories

18.51

9.96

-10.75

3.17

15.22

Total

24.86

13.33

-3.61

12.68

33.68

15 to 24 years

48.47

26.11

-6.56

-7.66

6.07

25 to 34 years

23.35

12.68

-4.40

20.87

34.14

35 to 44 years

25.49

13.54

-3.55

9.48

27.94

45 to 54 years

19.78

10.52

-4.28

18.03

40.81

55 to 64 years

18.19

9.56

-3.56

25.00

53.33

65 years and
over

37.16

20.29

-3.68

-12.86

12.19

Total

24.86

13.33

-3.61

12.68

33.68

Male

20.15

10.70

-3.05

18.60

39.05

Female

32.82

17.75

-5.38

3.60

25.00

Total

24.86

13.33

-3.61

12.68

33.68

No certificate

0.00

0.00

0.33

22.46

26.82

High School

0.00

0.00

0.05

14.62

17.61

Other Trades
Certificate

0.00

0.00

-5.65

20.58

17.82

College, CEGEP(3 months to 1
year)

0.00

0.00

-2.21

14.93

19.81

College, CEGEP(1 year to 2
years)

0.00

0.00

0.38

12.32

16.01

College, CEGEP(2 years+)

0.00

0.00

1.15

16.99

19.41

Age Group

Sex

Educational Attainment

94

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateAppendix Table 2: Projected Change in First Nations Average Employment Income over Baseline Scenario(per cent), 2041
University
below Bachelor

0.00

0.00

-4.97

2.64

1.50

Bachelor

0.00

0.00

-1.14

10.14

12.58

University
above Bachelor

0.00

0.00

-1.10

-14.61-10.48

Total

24.86

13.33

-3.61

12.68

33.68

TOTAL

24.86

13.33

-3.61

12.68

33.68

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

Appendix Table 3: Projected Change in First Nations Productivity over Baseline Scenario, 2041
Baseline (total
level)
Scenario

Total

Employment
Rate Gap
Closes

Education Gap
Closes

Education Gap
Half Closes

Income Gap
ClosesAll Three Gaps
Close

(1)

(2)

(3)

(4)

(5)

Province/Territory

Newfoundlandand Labrador

127,901

39,53922,016-14,913-12,311

17,340Prince Edward
Island72,625

16,287

9,566-7,502

19,37928,530Nova Scotia

92,50721,752

11,388

222

2,188

27,146

New Brunswick

70,159

8,064

4,237

2,967

12,50344,312

Quebec100,157

20,04910,472-3,980-5,466

14,962

Ontario

95,637

24,911

13,220673

12,15638,480Manitoba

90,50837,94621,000-6,87815,85332,329

Saskatchewan

104,100

31,512

17,266-10,385

23,66135,222

Alberta

127,340

25,814

13,845-5,49817,91839,731

BritishColumbia

87,666

13,937

7,399

-174

17,57735,414Territories

164,754

30,491

16,416-17,712

5,228

25,080Total

101,280

25,182

13,497-3,654

12,847

34,11315 to 24 years

50,745

24,59813,248-3,329-3,886

3,078

25 to 34 years

88,495

20,662

11,221-3,896

18,46930,21435 to 44 years

126,146

32,15017,083-4,474

11,95835,24345 to 54 years

131,681

26,043

13,853-5,632

23,73753,74455 to 64 years

110,535

20,112

10,564-3,937

27,62858,947

Age Group95

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An UpdateAppendix Table 3: Projected Change in First Nations Productivity over Baseline Scenario, 2041
65 years andover

80,377

29,866

16,310-2,961-10,340

9,795

Total

101,280

25,182

13,497-3,654

12,847

34,113

Male

117,216

23,614

12,547-3,57521,80745,771

Female83,78927,501

14,876-4,505

3,012

20,951

Total

101,280

25,182

13,497-3,654

12,847

34,113

No certificate

67,9060

0

222

15,24818,213High School

86,80900

42

12,68815,284

Other Trades
Certificate

100,50400-5,68020,681

17,909College, CEGEP(3 months to 1
year)

93,84500-2,07314,014

18,590

College, CEGEP(1 year to 2
years)

106,33400405

13,10517,021

College, CEGEP(2 years+)

115,775

0

0

1,332

19,66522,473

University
below Bachelor

126,07800-6,272

3,329

1,896

Bachelor

142,79100-1,62814,481

17,963

University
above Bachelor

217,64100-2,383-31,798-22,818

Total

101,280

25,182

13,497-3,654

12,847

34,113

TOTAL

101,280

25,182

13,497-3,654

12,847

34,113Sex

Educational Attainment

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

96

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 23: Projected Change in First Nations Productivity over Baseline Scenario (per cent), 2041
Education Gap
Closes

Education Gap Half
ClosesEmployment Rate
Gap Closes

Income Gap Closes

(1)

(2)

(3)

(4)

(5)

Newfoundlandand Labrador

30.91

17.21

-11.66

-9.63

13.56

Prince Edward
Island

22.43

13.17

-10.33

26.68

39.28

Nova Scotia

23.51

12.31

0.24

2.37

29.34

New Brunswick

11.49

6.04

4.23

17.82

63.16

Quebec

20.02

10.46

-3.97

-5.46

14.94

Ontario

26.05

13.82

0.70

12.71

40.24

Manitoba

41.93

23.20

-7.60

17.52

35.72

Saskatchewan

30.27

16.59

-9.98

22.73

33.83

Alberta

20.27

10.87

-4.32

14.07

31.20

BritishColumbia

15.90

8.44

-0.20

20.05

40.40

Territories

18.51

9.96

-10.75

3.17

15.22

Total

24.86

13.33

-3.61

12.68

33.68

15 to 24 years

48.47

26.11

-6.56

-7.66

6.07

25 to 34 years

23.35

12.68

-4.40

20.87

34.14

35 to 44 years

25.49

13.54

-3.55

9.48

27.94

45 to 54 years

19.78

10.52

-4.28

18.03

40.81

55 to 64 years

18.19

9.56

-3.56

25.00

53.33

65 years and
over

37.16

20.29

-3.68

-12.86

12.19

Total

24.86

13.33

-3.61

12.68

33.68

Male

20.15

10.70

-3.05

18.60

39.05

Female

32.82

17.75

-5.38

3.60

25.00

Total

24.86

13.33

-3.61

12.68

33.68

No certificate

0.00

0.00

0.33

22.46

26.82

High School

0.00

0.00

0.05

14.62

17.61

Scenario

All Three Gaps
Close

Province/Territory

Age Group

Sex

Educational Attainment

97

Closing the First Nations Education Gap in Canada:
Assessing Progress and Estimating the Economic Benefits —An Update

Table 23: Projected Change in First Nations Productivity over Baseline Scenario (per cent), 2041
Other Trades
Certificate

0.00

0.00

-5.65

20.58

17.82

College, CEGEP(3 months to 1
year)

0.00

0.00

-2.21

14.93

19.81

College, CEGEP(1 year to 2
years)

0.00

0.00

0.38

12.32

16.01

College, CEGEP(2 years+)

0.00

0.00

1.15

16.99

19.41

University
below Bachelor

0.00

0.00

-4.97

2.64

1.50

Bachelor

0.00

0.00

-1.14

10.14

12.58

University
above Bachelor

0.00

0.00

-1.10

-14.61-10.48

Total

24.86

13.33

-3.61

12.68

33.68

TOTAL

24.86

13.33

-3.61

12.68

33.68

Source: Authors’ calculations based on 2016 Census data and CSLS economic projections.

		98

To learn more, please visit: www.afn.ca/policy-sectors/education

55 Metcalfe Street
Suite 1600, Ottawa
Ontario K1P 6L5
Tel: 613.241.6789
Fax: 613.241.5808
Education@afn.ca