WASHINGTON, DC — High-income countries globally face a stark demographic transition as their populations age and fertility rates decline, with key implications for productivity and the maintenance of retiree benefits if tax bases decline as workforces shrink. Questions remain about how and to what extent immigration can help slow this transition and soften the impact on labor markets. Canada offers a unique vantage point on the role that immigration can play in easing demographic decline—and the potential drawbacks. Over the past decade, rising permanent and temporary migration accounted for the entirety of Canada’s labor force growth. But the rapid pace of change has come with challenges. By 2024, Canada’s historic embrace of immigration had cooled amid public concerns about its impact on housing costs and public services. In a new report out today for the Migration Policy Institute’s Transatlantic Council on Migration, respected Canadian researcher Daniel Hiebert investigates the efficacy of immigration in addressing population change and the old-age dependency ratio. The report examines Canada’s demographic challenges (its total fertility rate of 1.26 children per woman is among the lowest rates globally) and recent changes in migration policymaking before exploring the consequences of setting immigration rates at different levels. The report uses six scenarios for admissions and population projections over the next half-century that were commissioned from Statistics Canada. The report finds that while the six scenarios, which range from high- to near net-zero immigration, would produce very different overall population sizes by 2046 and 2071, the old-age dependency ratio would rise even under the highest immigration rate. “These scenarios point to an important lesson: Immigration can grow the population and slow the effects of falling fertility, but it is less efficient at changing the age composition of the population,” writes Hiebert, emeritus professor of geography at the University of British Columbia. That is because immigrants themselves age and eventually retire alongside their native-born peers. To tackle the rising old-age dependency ratio and the prospect of shrinking workforces, policymakers would need to also consider other interventions, such as raising the retirement age, Hiebert writes. The report, Understanding the Impact of Immigration on Demography: A Canadian Case Study, argues that for immigration policy to effectively tackle Canada’s challenges, policymakers will need to frame a long-term strategy that considers a number of intertwining realities, including: - Calibrating immigrant admissions together with decisions about social spending and investment in housing stock and infrastructure.
- Taking a longer lens than the standard three-year population plan, given the consequences of changing immigration targets play out over decades. This also means recognizing the need for different policy interventions as “fast” regions such as large cities face pressures on housing and infrastructure from above-average population growth, while “slow” regions such as rural areas will need help navigating depopulation and rising old-age dependency ratios.
- Effectively communicating with the public to set appropriate expectations for immigration.
“Canada is frequently seen as an exceptional case, globally, with a population that has been willing—enthusiastic, even—to accommodate a relatively high rate of immigration. This consensus has become frail and the Canadian government (like others around the world) has changed its tone on immigration, acknowledging that there are costs to immigration-led population growth,” Hiebert writes. “Nevertheless, demographic challenges are resolute and ignoring them will, eventually, also carry economic and political consequences.” While few governments globally have clearly and forcefully articulated the unprecedented levels of old-age dependency that are looming, and the resulting painful economic adjustments ahead, embarking on a national conversation around demography, engaging with the tough policy trade-offs involved and building a population strategy could help raise Canadian public awareness, the author concludes.
Read the report here: www.migrationpolicy.org/research/immigration-demography-canada. For more on the Transatlantic Council on Migration, visit: www.migrationpolicy.org/transatlantic. | 
