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Open Doors

A new RBC report suggests that per-capita incomes will decline if Canada closes its borders

Immigration a boon for Canadian economy

There are many problematic assumptions out there about immigrants — one of the most popular is the notion that most of them are low-skilled workers who have difficulty integrating into Canadian society, and end up in poorer neighbourhoods with a high concentration of other immigrants.

That’s not particularly true. Fifty percent of Canadian immigrants have a tertiary education — the highest proportion amongst OECD countries. A huge chunk of the 100,000 foreign students who come to Canada for university end up staying back, successfully integrating into the labour workforce.

There are numerous other statistics that could debunk the myth of the “poor immigrant”, but the fact of the matter is, Western nations with aging populations, like Canada, are hugely dependent on immigration for economic growth. Besides the fact that it is downright racist, the anti-immigration platform does not actually make any economic sense for developed countries.

A recent report by the Royal Bank of Canada echoes that sentiment, suggesting that if Canada were to close its borders right now, per-capita incomes (the average income earned by an individual Canadian) would fall by $3,500 in three decades.

That might not sound very significant in terms of how much your income will decline on an annual basis, but remember that wages should only be going up, not down, in line with inflation. Wage growth has pretty much slowed to a halt in the last five years — and that’s WITH the healthy level of immigration Canada has.

“The potential loss, attributed to fewer workers contributing to economic activity, is equivalent in size to the Canadian mining, oil and gas industry in 2015,” the RBC report says.

In 2016, the Canadian population expanded at its fastest rate since 1991. In fact, growth among the number of working-age persons (15-64) accelerated in 2016 for the first time in more than a decade, a pattern that can be attributed largely to what the report calls the “immigration bump”.

This is even more significant because without this influx of immigrants, Canada’s population aged 20-44 (the most important age group when it comes to boosting productivity), would actually be on the decline.

Also worth noting is the extent to which immigrants have contributed to Canada’s small business sector. A disproportionately high share (32.9 percent) of immigrant businesses were start-ups in 2014, and have since grown into full-fledged small or medium sized businesses. Second, firms owned by foreign-born residents accounted for nearly 40 percent of overall businesses in Canada’s Information, Communication and Technology sector in 2014.

Indeed, in a world increasingly paranoid about immigration, it’s more important than ever to point out that most Western economies will not be able to economically sustain themselves sheerly on natural population growth.

“By setting a target for 300K newcomers in 2017, the government hopes to address the “demographic squeeze” facing Canada — namely, there will be fewer working-age Canadians to support a rising number of retirees.”


On a complete side note, a good example of a country that has suffered economically because of its continued reluctance to encourage immigration, is Japan. The Japanese government forecasts that its population will fall from 128 million to a mere 86 million by 2060 if nothing is done to change the present immigration policy. All this is a strain on their economy — higher medical costs for an aging population, a shrinking labour force, and weak GDP due to less overall consumption.

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