The economic impact of immigration to Canada is dominated by two conflicting narratives: higher immigration levels increase GDP but decrease GDP per capita or living standards for the resident population and lead to diseconomies of scale in terms of overcrowding of hospitals, schools and recreational facilities, deteriorating environment, increase in cost of services, and an increase in cost of housing. A commonly supported argument is that impact of immigration on GDP is not an effective metric for immigration. Another narrative regarding immigration is the replacement of the aging workforce. However, some economists note that increasing immigration rates is not an entirely effective strategy to counter it. Increased immigration numbers and the resulting surge in housing prices significantly contributed to the rise of inflation in 2021 to an 18-year high, while the immigration caps introduced in 2025 have been linked to increasing housing affordability through a positive drop in average asking monthly rents, ranging from 2 to 8 percent in several major cities.
Canada is one of the top Western countries in terms of per capita immigrant acceptance. The per capita immigration rate to Canada has been relatively constant since the 1950s. However, in the first and second decades of the 21st century, there was a steady increase in the education and skill level of immigrants to Canada. This was due to the focus on higher average productivity-based applicants, resulting in immigrants to Canada being, on average, better educated than Canadians. This trend was enhanced for income redistribution in the third decade of the 21st century by opening low-skilled immigrant pathways with minimal immigration score requirements to reach a target of 400,000 immigrants annually. This has cemented a new narrative on immigration: immigration is to fill low-skilled jobs and alleviate competitive labor market pressures faced by businesses that use cheap labor. Starting in 2022, the Trudeau government has set immigration targets influenced by the Century Initiative's lobbying. Over a million immigrants were targeted in 2022, followed by 465,000 immigrants in 2023, 485,000 immigrants in 2024, and a projection of 500,000 immigrants in 2025. Across Canada, people have been asking the government to match affordable housing to the set immigration levels, while the government annually welcomes 500,000 new permanent residents, and more than 800,000 foreign nationals into the country on study visas, as asylum seekers, and on temporary work visas. A Canadian journalist highlighted the poor preparedness for receiving immigrants in swathes, pointing to Canada's historic need for a "servant class" and "cheap labor" for the bourgeoisie and the owning class. Furthermore, the journalist observed that Canada's failure to address or neutralize the social and professional barriers for immigrants suggests it is not as welcoming as it purports to be. This policy of inaction silently perpetuates the creation of a servant class within the country's diverse mosaic. As a part of the process, by default, the government systematically forces a majority of immigrants into vulnerable positions and economic disenfranchisement.
An article by an ex-policy maker states that Canada is rooting for the low-wage-low-productivity model of competitiveness that it has been locked in since the mid-1980s with the immigration targets, a problematic approach according to Paul Krugman in the long term, and which the ex-policy maker also endorses by stating that throwing more cheap labor at problems without a significant increase in productivity will affect a country's ability to improve its standard of living over time. Some economists also warn that sustaining low productivity and the permanent integration of low-skilled temporary residents or foreign workers would lead to forced tax increases to manage associated government costs. The article further observes that it is imperative that Canada and the "government for the people" require a fundamental re-commitment to pre-1970s dominating national objective and efforts for a steady improvement in raising the living standard of Canadians by embracing the supply and demand concept of labor economics, and improving the economic efficiency of the system. A former director from Quebec's Ministry of Immigration observed that the government needs to treat people better, as their lives and families' futures are at stake.
Overview Immigration to Canada
According to the CIA's World Factbook (2017), Canada has one of the highest migration rates in the world.Country Comparison :: Net Migration (2017), The CIA World Factbook, URL accessed 12 October 2018 Canada is also unusual among western nations in the widespread popular support for high rates of immigration, and a 2007 study showed support for immigration has increased in Canada despite its impact on cultural erosion.Adams, Michael. 28 November 2007. The Windsor Star. p. A8. Canada's immigration policy, which focuses on selecting immigrants based on their skills and qualifications to meet labor market demands, as well as supporting irregular immigrants in need, reinforces the public perception that immigrants are making a positive contribution to the economy and that the system preserves human dignity as economic conditions permit. However, assessing the economic effectiveness of the immigration policy is challenging due to the complex interplay of capitalist dynamics, societal influences, and political factors on the lives of immigrants.
In 2023, a Statistics Canada report revealed that the notion of a widespread labor shortage in Canada is no longer substantial. The report found that jobs requiring higher education consistently had fewer available positions and highlighted that the hiring challenges for positions requiring post-secondary education are not due to a lack of qualified workers but because of a mismatch in skills that could be solved with ongoing training and deflated entry requirements, and inadequate wages that could be fortified with desirable benefits or competitive wages. The report also raised doubts about the hiring difficulties faced by firms trying to recruit workers with lower levels of education. It raised questions whether these job vacancies are solely a result of labor shortages in specific low-skilled occupations that might demand higher wages or if factors such as greater negotiating power and profit maximization that the low-skilled industries enjoy play a significant role. According to Jim Stanford, an economist and the director of the Centre for Future Work, the goal of immigration policy should not be solely focused on solving recruitment problems for low-wage employers or to bolster the mass immigration industrial complex, but rather on broader considerations that benefit the country and its people as a whole.
In 2024, despite years of per capita recession and housing affordability issues, the Liberal government has increased the intake of permanent residents, issuing around 35,000 invitations per month and boosting the population by over 410,000 within the first four months of the year, a 47% increase compared to the same period in 2023. Concurrently, Canada is rapidly transitioning temporary residents holding jobs that require basic college education. The immigration department also outlined its plans to offer permanent resident opportunities to individuals with educational backgrounds ranging from none to a maximum of high school education, aimed at meeting the demand for cheap, low-skilled labor through programs like the Canadian Experience Class, without considering the long-term negative impacts. A Fraser Institute study indicates that Canada's standard of living is on course for its sharpest decline since 1985, with a rapid deterioration starting in mid-2019. An Ipsos survey of 1,001 Canadians indicates that many feel their institutions are broken, suffer from personal underachievement due to a lack of rewarding opportunities, and have lost a sense of togetherness, with most concluding that the "country is broken." Additionally, a report from Food Banks Canada estimates that 1 in 4 Canadians are living in poverty. Meanwhile, Australian economists are using Canada as a cautionary example for Australia's economy if their government continues with extreme immigration policies.
Economic rationale for immigration
There is no agreed view on the net impact of immigration in current times. Historically, Canada's unusually high immigration rates can be traced to the nation's unique economy. Another factor is that Canada has one of the world's largest supplies of natural resources such as oil, metals, and lumber. It also has a sparse population spread over a vast landscape. Canada has thus faced acute labour shortages and has responded by actively searching for immigrants.Wallace, Iain, A Geography of the Canadian Economy. Don Mills: Oxford University Press, 2002. In the late 19th century this included bringing Chinese migrants to build the Canadian Pacific Railway and actively advertising in Europe to find farmers with the Last Best West campaign. Today similar recruitment efforts are needed to staff the oil sands projects in Alberta.Scotton, Geoffrey. 11 April 2006. "Alberta worker shortfall could hit 350,000 by 2025." Calgary Herald. p. D.3
Another factor that contributes to the immigration question is Canada's low birth rate (10.3 births per 1000 people).Field Listing :: Birth Rate (2017) The CIA World Factbook, URL accessed 12 October 2018 The theory is that new residents can assist in meeting future government obligations relating to pay-as-you-go liabilities.
The economic dangers of population decline are not universally accepted. Organizations like the Fraser Institute question whether a declining population would reduce or increase per capita income, noting that in the short term, with a stable economy, fewer people would increase the per capita income simply because you divide the income among fewer people. This would increase per-head consumption and create a climate of economic well-being that could nurture pro-family values and policies which can increase Canada's birth rate. A study by the C. D. Howe Institute suggests that immigration cannot keep Canada's population young and could possibly contribute to population ageing in the near term.No Elixir of Youth: Immigration Cannot Keep Canada Young , Backgrounder, C. D. Howe Institute, Number 96, September 2006, URL accessed 29 November 2006 Due to socioeconomic processes and increased levels of immigration, skilled worker immigrants are being converted into a precariat class, with a 34% unemployment rate in 2001, raising questions about whether they are successfully meeting existing labor market needs in Canada. This class conversion among landed immigrants in 2020 was shown to be 9.5%, according to the unemployment rate.Immigrants' labour force rates, by immigration category, 2001 , Statistics Canada, URL accessed 4 January 2011