The Economic Impact of Immigration on Canada

Pie Chart [Public Domain]

If you’ve been watching the news any time in the last decade, you’ll know that the question of immigration is one that is at the forefront of domestic and international politics the world over. In this article, we’ll take a look at a summary of immigration to Canada, and try to find out whether or not there exists a net profit to the Canadian economy which is facilitated by migrant labour and other such economic boons provided by this kind of influx.

A Brief Summary of Canadian Immigration

Canadian Immigration Officers [Public Domain]

It is important to consider that Canada has three main categories of immigrants.

• First we have Family Class, those closely-related to Canadian residents.
• Then Economic Immigrants who are the skilled workers and business people which help to bolster the Canadian economy by bringing their skill or trade which has been conceived abroad into the Canadian financial sphere.
• And, last of all, there is the refugees category, intended for people who are escaping from persecution, torture, or cruel and unusual punishment in their own countries or places of residence.

As you can see from the distinctions, Canada has put a lot of thought into streamlining its immigration process, with significant changes to existing legislation as well as new laws being introduced as recently as 2008 and beyond.

Since 2001, immigration figures have hovered at between 221,000 and 262,000 people per year, and Canada is known the world over for its broad, welcoming immigration policy which has encouraged the kind of ethnic diversity and multiculturalism for which the nation is famed. It is estimated that Canada has around 33 different ethnic groups with at least 100,000 members, and of these 33 at least 10 have a membership of more than 1 million people. Beyond this, some 16.2% of the population was found to belong to the category of ‘visible minorities’, of whom the most numerous are the South Asians at 4% of the population, the Chinese at 3.9%, those of ‘Black’ descent at 2.5%, with Filipinos at 1.3%. Of course, this figure of 16.2% only considers the visible minorities, and Canadians of European descent are not typically classed in this category with Germans making up around 10.18% of the entire population, Italians 4.63%, and Ukrainians at 3.87%, for example.

As you can see, Canada is a strong player in the immigration scene. In fact, according to Canada’s immigration program, Canada has (or had at one point) the highest per capita immigration rate in the entire world.

The Economic Impact of Immigration

On the whole, economists are yet to come to any distinct and final conclusion as to the net impact of immigration on a nation’s economies. There are an absolute plethora of factors involved and, given that the immigration policies which have shaped today’s society continue to evolve and shift subtly with every government who amends them, it is difficult to isolate any one policy in order to prove some form of correlation or causal link between a type of immigration and an economic outcome.

The rationale behind Canada’s high immigration rates could be set down to several different factors. Population density in Canada shows that it is a nation with a sparse population spread across an extremely large area, and this combined with the fact that Canada has one of the largest natural oil, lumber, and metal supplies in the entire world have created an extremely unique economic climate within that nation.

Estimates show that for every 10% increase in the overall population from immigrants entering the country, the average wage reduction is around 4% with a greater impact seen on skilled workers, such as those with post-graduate degrees. In some cases, they can take a wage cut of around 7% in these circumstances. In the last 25 years, the relative position of immigrants as compared with those native to the country has shown a steady decline. Whilst there exists a wide number of hypotheses to account for this fact, the jury is still out as to the actual cause of this problem.

A Final Word

As it stands, it is difficult to accurately assess the economic impact of immigration into the Canadian state. All that can be said on the matter with any degree of certainty is that Canada’s prosperity is largely correlated with its immigration rates; it could well be the case that Canada would not hold its current place in the world political and economic stage without the benefit which immigrant labour (both skilled and unskilled) has historically provided.

It’s important to keep in mind the multiplier effect, which is well worth researching in reference to this thorny and contentious issue. There is no doubt that the question of immigration’s value to the Canadian state is not one that will be answered easily, nor one that will be resolved soon.