Op-Eds

Canada is becoming increasingly reliant on immigration for its labour-force growth, which in turn is a key component of economic prosperity. However, not all Canadians may be aware of this beneficial impact of immigration. Understanding it better may shed light on debates over the country’s immigration policy. Because of rapid population aging over the past decade, the labour force is shrinking as a percentage of the population, as the rate of participation of Canadians in the work force drops sharply past the age of 64. In order to mitigate the negative impacts of this demographic change on the economy and government finances, the federal government has been raising Canada’s annual immigration intake. While high immigration...
Immigration is not the panacea, as often advertised, to an aging population and low fertility rates. However, the right economic immigration inflow enhances employment outcomes and strengthens the overall economy. Principal applicants selected under the economic immigration program integrate well into the labour market. But their immediate families do not. Overall, this means that, across all categories, most new immigrants struggle in the labour market after their arrival. One way to encourage better outcomes is to substantially increase the target for economic immigration. Ottawa has increased annual immigration targets, gradually moving up from 280,000 in 2016 to 350,000 by 2021. Canada admits these immigrants...
We already know that Canada’s population aging will drag down government revenue and blow up social and health spending, but its long-term impact on fiscal sustainability and intergenerational fairness greatly depend on future government policies. While this demographic change substantially shifts the tax burden away from baby boomers and their children − the baby busters or Generation X – to the boomers’ grandchildren, achieving long-term fiscal sustainability can be possible. In my recent study for the C.D. Howe Institute, I estimate average lifetime tax burdens for the current generations by birth cohort, and for an unborn future generation. Lifetime tax burdens are simply the total amount of taxes minus cash benefits and...
Free licensed child care. It sounds like a parents’ dream. But look a little closer at the Government of Ontario’s recently announced plan to deliver free licensed child care for preschoolers, and flaws emerge. Beyond the arguably late starting age of 2½ years, this initiative could have unwelcome consequences due to its limited accessibility and its potential to create excess demand for licensed preschool care. Certainly the need for a solution is great. Gradual rises in dual-income-earner families and the employment rate of women in Ontario have led to higher needs for child care over the past few decades. But cost is probably the main barrier to access. According to the latest family survey by Statistics Canada, about 43 per...
For the first time in three years, headline inflation in Canada has moved above the Bank of Canada’s 2-per-cent target. Whether or not it will continue to increase, the fact that the bank’s three core measures of inflation averaged above 2 per cent for the first time in six years certainly suggests that it will. But the question remains, why has it been so hard to hit the 2-per-cent target? In a recent C.D. Howe Institute paper, we show that demographics – often thought of as an issue for health care or pension costs – has acted as a drag on monetary policy effectiveness and, in turn, has led to lower inflation. Much work has been done examining the issue of tepid inflation since the financial crisis. Canada has not been immune to this...