Canada’s economic immigration strategy needs to shift away from plugging holes in lower-skilled labour markets to prioritize high-skilled newcomers based on their expected earnings, according to a report conducted by the CD Howe Institute. Study authors Matthew Doyle, Mikal Skuterud and Christopher Worswick argued the goal of Canada’s economic immigration should be to leverage it to boost GDP per capita in the entire population, including newcomers. Doyle, Skuterud, and Worswick said admitting immigrants to work in low-wage jobs pulls down average earnings and GDP per capita, but improving the system’s selection criteria can boost them. “A key insight of an economic immigration program that is designed to simply expand the labour force without raising the average human capital level of the population is unlikely to increase GDP per capita in the long run,” said Doyle in a Thursday press release. The authors said capital investment and productivity growth data does not suggest Canada is well-positioned to leverage heightened immigration to raise the level or growth rate of its GDP per capita. Instead, the data cautions against large scale increases in economic immigration rates in the near term due to absorptive capacity issues.“Given the current high immigration levels, exceptionally high temporary migration levels, and strains on the housing and healthcare sectors, the federal government should apply the insights from our analysis and reassess immigration and temporary migration targets,” said Skuterud.However, the authors said the approach moving forward should be to gradually increase immigration rates. This should start from a high minimum level of expected immigrant earnings and lower the threshold each year towards the average of the Canadian population.“This strategy would initially prioritize the applicants with the highest human capital levels and expected earnings whose contributions to the Canadian economy are likely to be the largest and allow the immigration target to converge, over perhaps several years, to the optimal level for economic immigration,” said Worswick.Unless major steps are taken to improve the economic immigration system, the authors said cuts to it will eventually be needed. In a country such as Canada, they said economic immigration should aim to maximize GDP per capita in the entire population. Furthermore, they pointed out the gains from improved earnings could allow the Canadian government to expand immigration under programs intended to achieve other non-economic objectives such as humanitarian goals.The Canadian government said in 2022 it will increase the number of immigrants entering Canada, with a goal of bringing in 500,000 people in 2025.READ MORE: Ottawa to welcome 500,000 immigrants per year by 2030That was up from the 405,000 immigrants who came to Canada in 2021 and the 465,000 expected to arrive in 2023. The plan — revealed by former immigration minister Sean Fraser — emphasized bringing in immigrants based on their work skills and experience.
Canada’s economic immigration strategy needs to shift away from plugging holes in lower-skilled labour markets to prioritize high-skilled newcomers based on their expected earnings, according to a report conducted by the CD Howe Institute. Study authors Matthew Doyle, Mikal Skuterud and Christopher Worswick argued the goal of Canada’s economic immigration should be to leverage it to boost GDP per capita in the entire population, including newcomers. Doyle, Skuterud, and Worswick said admitting immigrants to work in low-wage jobs pulls down average earnings and GDP per capita, but improving the system’s selection criteria can boost them. “A key insight of an economic immigration program that is designed to simply expand the labour force without raising the average human capital level of the population is unlikely to increase GDP per capita in the long run,” said Doyle in a Thursday press release. The authors said capital investment and productivity growth data does not suggest Canada is well-positioned to leverage heightened immigration to raise the level or growth rate of its GDP per capita. Instead, the data cautions against large scale increases in economic immigration rates in the near term due to absorptive capacity issues.“Given the current high immigration levels, exceptionally high temporary migration levels, and strains on the housing and healthcare sectors, the federal government should apply the insights from our analysis and reassess immigration and temporary migration targets,” said Skuterud.However, the authors said the approach moving forward should be to gradually increase immigration rates. This should start from a high minimum level of expected immigrant earnings and lower the threshold each year towards the average of the Canadian population.“This strategy would initially prioritize the applicants with the highest human capital levels and expected earnings whose contributions to the Canadian economy are likely to be the largest and allow the immigration target to converge, over perhaps several years, to the optimal level for economic immigration,” said Worswick.Unless major steps are taken to improve the economic immigration system, the authors said cuts to it will eventually be needed. In a country such as Canada, they said economic immigration should aim to maximize GDP per capita in the entire population. Furthermore, they pointed out the gains from improved earnings could allow the Canadian government to expand immigration under programs intended to achieve other non-economic objectives such as humanitarian goals.The Canadian government said in 2022 it will increase the number of immigrants entering Canada, with a goal of bringing in 500,000 people in 2025.READ MORE: Ottawa to welcome 500,000 immigrants per year by 2030That was up from the 405,000 immigrants who came to Canada in 2021 and the 465,000 expected to arrive in 2023. The plan — revealed by former immigration minister Sean Fraser — emphasized bringing in immigrants based on their work skills and experience.
