Senior Director of Canadian Economics
What’s the Right Number of Newcomers to Welcome to Canada?
What’s the right number of newcomers to welcome to Canada? Well, it depends. Immigration is imperative for Canada’s long‑term economic success but can lead to short‑term challenges. As such, there are several considerations policymakers should keep in mind.
One such consideration is near‑term economic and labour market conditions. Sustained labour demand suggests that the current pace of permanent and non‑permanent resident admissions may be warranted, at least for now.
We can also look at how quickly the working‑age population (those 15 to 64) would need to grow to stabilize the old‑age dependency ratio (OADR), thereby offsetting the impacts of aging. It would need to increase just over 2% annually, slightly faster than the 2022 pace and roughly triple the 5‑year pre‑pandemic average. To push the OADR lower would require even more immigration.
Economic immigrants also raise potential GDP growth by being highly productive and engaged in the labour force. Other newcomers have more mixed impacts on potential GDP. But in aggregate, our research shows that higher immigration will do more to raise real GDP per capita and, by extension, living standards and incomes in the long run.
However, as population growth continues to drive up home prices and erode affordability in the near term, the federal government must address this in its immigration policy, particularly regarding non‑permanent residents. It must marry immigration policy with immediate action to increase the housing supply.
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