New permanent residents’ income has ‘improved considerably,’ report

From 2014 to 2018, median total income of new permanent residents in Canada rose 23 percentage points

New permanent residents’ income has ‘improved considerably,’ report

New Canadian permanent residents’ income has improved in comparison to the general population, according to a report from The Office of the Parliamentary Budget Officer (PBO).

Income dynamics of new immigrants to Canada reveals that from 2014 to 2018, the median total income of new-immigrant tax-filers rose from 55 per cent of the median total income of all tax-filers, to 78 per cent.

Prior to this, median income rose from about 49 per cent of all residents in 2006 to about 89 per cent in 2013. Additionally, the increases were notable in 2015 and 2018 at 11 percentage points and nine percentage points, respectively. Moreover, temporary residents have seen rising wages since 2006.

The report uses income data on new immigrants a year after they acquired permanent resident status and highlights that the trends driving the income change include greater pre-landing Canadian work experience, a shift of source-countries to south Asia, and greater family connections of incoming migrants.

Professional groups dominate increases

The increase in relative income is dominated by professional groups such as engineers, applied scientists, etc., while immigrants from India made the largest contribution to that gain; these trends are discernible from the mid-2000s. Meanwhile, of the income gains between 2014 and 2018, about 85 per cent of them were attributed to prior work and study experience in Canada, according to the report.

"The closing of the income gap corresponds with an increase in the number of temporary residents and better Canadian experience … that these recent immigrants have gained, either in the workplace in the labour market or through studying in Canada, so there seems to be a strong correlation there," Parliamentary Budget Officer Yves Giroux told CTVNews.ca.

The report follows the November announcement in which Immigration, Refugees and Citizenship Canada revealed it aims to welcome 485,000 new permanent residents in 2024, 500,000 in 2025 and plateau at 500,000 in 2026. According to the press release, this plan prioritizes economic growth, and supports family reunification, while responding to humanitarian crises and recognizing the rapid growth in immigration in recent years.

Rising incomes may improve productivity

In addition to trends, the report also identified Express Entry as another possible source behind the increase in incomes. Canada introduced Express Entry on Jan. 1, 2015 – a process designed to help bring skilled workers into the country.

"Events like the establishment of Express Entry system was not a game-changer per se, instead it was part of an evolution that has facilitated the integration of immigrants into the workforce," according to the report.

The PBO also noted that immigration tends to hurt the measurement of economy-wide productivity over the short term. It estimated that immigration potentially contributed to lowering annual Canadian productivity growth by 0.21 percentage points between 1990 and 2014. However, the rising incomes of newcomers could improve productivity growth since there is a connection between income and the market value of work.

"When relative incomes of new immigrants are lower, their measured productivity is likely to be lower, especially in the initial years when they are not yet fully integrated into the Canadian workforce," the report said.

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