Tax Revenue and Human Capital Development in Canada: A Complex Relationship
Keywords:
Tax Revenue, Human Capital, Canada, EconomicsAbstract
This study investigates the correlation between tax income and the growth of human capital in Canada. It utilizes data on educational achievement and health spending from 2000 to 2020 obtained from the World Bank. VAR/VECM analysis was employed to examine the relationship between tax revenue and two human capital development metrics. Granger Causality tests indicated that there were no immediate causal effects between tax revenue and the two human capital development metrics. Nevertheless, a cointegrating relationship indicates a stable and balanced long-term connection. Curiously, it was discovered that previous educational achievements have a negative effect on tax revenue, indicating the need for additional research into the underlying causes. The study emphasizes the intricate nature of tax policy and human capital development, suggesting future research to integrate supplementary aspects and employ more advanced models to achieve a more full comprehension.