Assessing the effects of higher immigration on the Canadian economy and inflation (2024)

FAQs

Does immigration affect inflation in Canada? ›

And when newcomers first move to Canada, there is an initial burst of demand for goods and services as they set up home, which can put pressure on inflation.

Immigration in Canada has accounted for all the growth in the labour force for well over a decade, but it's still not enough to significantly offset the impact of an aging demographic or substantially reduce the structural shortages in the jobs market.

International migration is the main source of Canada's population growth. In the third quarter of 2023, the vast majority (96%) of the population growth was due to international migration. The rest of the growth (4%) was the result of natural increase, or the difference between the number of births and deaths.

Article content. Canada is facing a “population trap” as high international migration helps fuel inflation, including housing costs, potentially resulting in less robust economic growth in the future, a new report suggests.

What is the inflation rate in Canada now? Canada's inflation slowed to 2.7 per cent in April, slightly down from 2.9 per cent in March. It had reached 8.1 per cent in June, 2022, which was the highest in nearly four decades.

Cost of Living: Canada has a high cost of living, particularly in major cities like Toronto and Vancouver. Housing, transportation, and food costs can be expensive. Weather: Canada has long and harsh winters, with snow and ice covering much of the country for several months each year.

The available evidence suggests that immigration leads to more innovation, a better educated workforce, greater occupational specialization, better matching of skills with jobs, and higher overall economic productivity. Immigration also has a net positive effect on combined federal, state, and local budgets.

In the third quarter of 2023, the vast majority (96.0%) of the population growth was due to international migration.

Why immigrants are moving out of Canada? ›

Economic challenges, including difficulties in integrating into the labor market, often drive emigration. Personal factors such as the death of a loved one in the home country, harsh climate adjustment, and challenges in adapting to Canada's language and culture also contribute.

Things like competition, regulation and taxes all influence how much Canadians pay for common goods and services. Here's why our cost of living is so high. The cost of living in Canada is high and getting more expensive by the day.

Immigrants help reduce inflation pressures.

The National Foundation for American Policy reported that between January 2021 and May 2023, new international migrants have helped meet some of the surging demand for workers, enabling employment and output to grow faster and reducing inflation pressures.

Cost of Living: Canada has a high cost of living, particularly in major cities like Toronto and Vancouver. Housing, transportation, and food costs can be expensive. Weather: Canada has long and harsh winters, with snow and ice covering much of the country for several months each year.

Research on immigration and house prices has found that immigrants raise metropoli- tan area house price levels, but lower them in immigrant destination neighbour- hoods.

The evidence suggests that when immigration increases the supply of labor, firms increase investment to offset any reduction in capital per worker, thereby keeping average wages from falling over the long term. Moreover, immigrants are often imperfect substitutes for native-born workers in U.S. labor markets.