Individual Achievement or Market Constraint: Effects of Human Capital on the Income of Aboriginal People In Canada

Abstract

Human capital investment postulates that education is a form of investment individuals make in the early part of their career which yields an economic return in the form of labour market outcome later in their career. Thus, proportionately, the higher the human capital investment, the larger is the return of earnings. This thesis is concerned with the question: do different segments of the Aboriginal population with similar levels of education have similar economic returns? In other words, does the labour market in Canada reward income mainly on the basis of educational attainment, or are there other factors which influence economic returns besides schooling? The major findings of this study show that there are considerable differences in the returns which education provides to various segments of the Aboriginal population. First, the findings indicate that there are two basic segments in the Aboriginal population. One segment, which includes Aboriginal females, Aboriginal people living outside of large urban areas and individuals with registered Indian status, has low economic returns from education. The other segment receives larger economic returns from education, and includes Aboriginal males, individuals living in large urban centres and Aboriginal people without registered Indian status. Second, these differences within the Aboriginal population suggest that the assumption implied in the human capital theory of a competitive labour market based on educational attainment is questionable. This indicates that the Canadian labour market rewards individuals in different ways. The result of this study shows that income is not entirely based on educational attainment, and that self-effort and individual willingness to invest in human capital do not yield proportionate returns that are commensurate with different levels of human capital in the market for different segments of the Aboriginal population.