One study says taking in an extra one million immigrants would increase GDP by 2.3%
migration has changed the face of communities across Canada, helping many to prosper and grow. They are the stories that prompt calls for the government to allow more newcomers in, to be vigilant about competing for highly skilled workers and to do more to help them to stay here and prosper. Of course, there are costs associated with processing and
supporting immigrants, and the net benefit for a country such as Canada is hard to quantify. But one forecasting model does indicate that an increase in immigration would benefit the country as a whole economically. The study, authored by three Canadian professors and published in 2013 in the British Journal of Industrial Relations, concluded that taking in an extra one million immigrants over a 10-year period would increase Canada’s real GDP by 2.3%. It would also result in a modest increase in GDP per capita
for people already living in the country, according to Peter Dungan, an economics professor at the University of Toronto and one of the authors of the study. “It’s not a huge increase, but it’s there,” he says. This is partly because new immigrants tend to be concen-
trated in the working-age group, which means that most end up working and paying taxes for a long time. Another thing is that there are economies of scale to providing government ser- vices. “For instance, if you bring in an extra 100,000 people, you don’t have to increase the military proportionately,” Dungan says. “This gives you some extra for all of us to enjoy.” One issue, though, is that immigrants are falling behind in
their ability to catch up to wages earned by Canadians. In the early 1970s, new immigrants earned 75¢ for every dollar earned by a native-born Canadian, controlling for education levels and skill sets. By the mid-2000s, that number had fallen to 62¢. And census numbers going back to the 1990s show that immigrants are earning less and less on average compared with Canadians, even aſter they have been here for a few years. “You still get positive economic effects even when immi-
grants have 70% to 75% of Canadian earnings,” Dungan says. But he points out that the benefit would be much greater if their earnings were more in line with what Canadians earn. “So a clear message is that Canada has to be better at integrating immigrants and making sure that they produce to their full potential.”
This is an oſten-expressed sentiment. According to Michael Bloom, vice-president of industry and
business strategy at The Conference Board of Canada, immi- grant earning levels have taken a significant negative shiſt from previous decades. “Our strategy has been to seek highly skilled people, more than many countries, and we have been more suc- cessful in doing that than most countries,” he says. “But we are not making the most of those people who were, until the 1990s, catching up on income.”
30 | CPA MAGAZINE | JUNE/JULY 2016
The problem, he says, is that we are not adjusting fast enough to the changing populations coming in. Rather, Canada’s immigration infrastructure still operates as if most newcomers speak English as a first language and come from places that Canada knows well, such as the US or the UK, which is no longer the case. Not only are lower wages and underemployment a waste of
talent, but these factors also hurt our competitive position when it comes to recruiting and retaining the skilled people we want to attract. “If people come to Canada and they can’t get the level of ser-
vices that allow them to fully integrate and connect to the labour force and find a place in communities, some of them will leave and word will get back to their home countries that things aren’t so good in Canada,” Bloom says. As competition for educated and skilled immigrants intensi-
fies around the globe, the experts say this is a reputation Canada cannot afford to have. Our competitive position is crucial in this regard because census figures show that by 2030 virtually all of Canada’s net growth in population will be coming from immigration. Another factor is Canada’s aging population, which means
that in years to come there will be a decreasing percentage of people available to provide social and economic support for seniors. According to Statistics Canada, in 2006 there were five working-age people (aged 20 to 64) for every senior, down from seven in 1971. By 2056, it is projected that there could be only two working-age people for every senior. “We have to recognize this inexorable demographic blow,”
Bloom says. “If we recognize it and say therefore that we are going to improve the way in which we add to the human wealth of the country, then we are going to be okay. If we fail to do that, we’re going to be in deep trouble.” Randall Hansen is director of the Centre for European,
Russian and Eurasian Studies at the Munk School of Global Affairs and a Canada Research Chair in Immigration and Governance in the political science department at U of T. He has studied global immigration patterns and says that the evi- dence is fairly clear. “Econometric research shows that skilled immigration pro-
duces a small net positive economic benefit, and in most cases low-skilled immigration produces a small economic cost for the host society,” he says. But he believes public discussion about the effects of immi-
gration is prone to exaggeration either way, because neither the benefits nor the costs are as great as they are sometimes made out to be. He applauds efforts to better match skilled immi- grants to jobs for which they are suited and to support im- migrant integration, but he’s not optimistic that an ultimate cure for the so-called “brain waste” can be found.
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