What Would Canada Be Today If Immigration Was Not Increased?

Last Updated On 24 November 2025, 10:38 AM EST (Toronto Time)

Between 2015 and 2025, Canada underwent one of the most dramatic immigration expansions in its modern history.

Permanent resident admissions nearly doubled from approximately 271,000 in 2015 to 485,000 in 2024, while temporary residents (international students and temporary foreign workers) surged from roughly 500,000 to over 2.5 million by 2024.

In October 2024, facing mounting concerns about housing affordability and infrastructure strain, the government announced dramatic reductions: targets of 395,000 for 2025, declining to 365,000 by 2027.

This represented a fundamental shift in Canada’s demographic and economic trajectory, with immigration growing at an average annual rate of 15% from 2016-2024 compared to just 4% from 2000-2015.

Furthermore, the new immigration levels plan announced in November 2025 now stabilizes the annual targets at 380,000.

This article examines a critical counterfactual question: What would Canada’s economy look like today if immigration levels had remained constant at 2015 levels throughout the decade?

By analyzing major economic indicators, including GDP per capita, housing affordability, wage growth, labour market dynamics, and fiscal sustainability, we can better understand the costs and benefits of Canada’s aggressive immigration expansion.

The analysis reveals a complex picture where maintaining 2015 immigration levels would have produced significant trade-offs rather than uniformly better or worse outcomes.

Lower immigration would likely have meant reduced housing price inflation, higher wage growth in certain sectors, and less strain on infrastructure, but at the cost of slower overall economic growth, more severe labour shortages in critical industries, and accelerated demographic aging.

Understanding these trade-offs is essential for determining optimal immigration policy going forward.

Part I: The Immigration Surge (2015-2025)

The Scale of Change

To understand the counterfactual scenario, we must first comprehend the magnitude of change that actually occurred.

In 2015, Canada admitted approximately 271,000 permanent residents and hosted roughly 500,000 temporary residents.

By 2023-2024, these numbers had transformed dramatically:

Permanent Residents:

• 2015: ~271,000 admissions
• 2019: ~341,000 admissions
• 2022: ~437,000 admissions (actual)
• 2023: ~465,000 admissions (target)
• 2024: 485,000 admissions (target)
• 2025: Originally planned at 500,000, then reduced to 395,000 (October 2024 revision)
• 2026-2027: Further reductions to 380,000 annually

Temporary Residents:

• 2015: ~500,000 total
• 2023-2024: Over 2.5 million (approximately 6% of population)
• Study permit holders increased from ~352,000 in 2015 to over 800,000 by 2023, but capping was done in the 2024 and 2025 immigration levels plan.
• International Mobility Program (IMP) workers surged following 2014 reforms

Population Impact: From 2016 onwards, immigration accounted for 97.6% of Canada’s population growth in 2023, and over 90% since 2016.

Canada’s population grew by over 1 million people in 2022 alone, reaching 40 million in June 2023.

By early 2025, Canada’s population stood at approximately 41.5 million—representing growth of roughly 6 million people (17%) from 2015’s 35.7 million.

The immigration rate jumped from an average of 0.6% per year (2000-2015) to nearly 1.2% per year by 2024.

To put this in perspective, Canada was effectively adding a city the size of Calgary every single year through immigration alone.

Policy Drivers

This expansion was not accidental but the result of deliberate policy choices beginning in 2015 when the Liberal government took office.

The Advisory Council on Economic Growth, appointed in early 2016, recommended substantial increases in permanent immigration to drive economic growth.

The narrative that emerged positioned immigration as a solution to Canada’s economic challenges: filling labour shortages, addressing an aging population, and boosting GDP growth.

The government steadily increased targets: 271,000 (2015) → 341,000 (2019) → 437,000 (2022 actual) → 465,000 (2023) → 485,000 (2024), with plans to plateau at 500,000 for 2025-2026.

However, by October 2024, facing mounting public pressure over housing affordability and infrastructure strain, the government announced dramatic cuts: 395,000 for 2025, 380,000 for 2026, 2027, and 2028.

The 2014 International Mobility Program reforms made it easier for employers to bring in temporary workers for lower-paying jobs.

This, combined with aggressive international student recruitment by educational institutions seeking revenue, created a perfect storm of population growth that outpaced infrastructure development.

Part II: Economic Indicators Under Current Reality (2015-2025)

GDP Growth: Strong Overall, Weak Per Capita

Total GDP Growth: Canada’s real GDP growth averaged close to 2% per year over the past decade, making it the second-fastest growing G7 economy behind only the United States.

This included recovery from a shallow recession in 2015 (oil price shock) and the COVID-19 downturn in 2020.

By late 2023, real output was 4.4% above pre-pandemic levels.

GDP Per Capita: A Different Story: Despite strong aggregate GDP growth, real GDP per capita has declined in five of the six quarters leading up to late 2023, falling 2.5% below pre-pandemic levels.

As of 2024-2025, per capita GDP has essentially stagnated, remaining near 2017 levels.

Canada’s GDP per capita in purchasing power parity is approximately 27.5% lower than the highest-ranking G7 country.

This divergence between total GDP and per capita GDP is the central economic puzzle of Canada’s immigration expansion.

Population grew 3.2% in 2023 alone, while economic output grew only 1.1%—the slowest pace since 2016 (excluding the pandemic year).

The mathematical reality: adding more people without proportional productivity growth dilutes prosperity per person.

Housing Affordability: A Crisis Emerges

The housing affordability crisis has become the most visible and politically consequential outcome of rapid population growth outpacing housing supply.

Housing Price Growth (2010-2022):

• Canadian housing prices increased 90% between 2010 and 2022
• By 2022, Canada had the most expensive housing market among G7 nations according to the OECD
• Toronto and Vancouver consistently ranked among the world’s least affordable housing markets

The Supply-Demand Mismatch: Between 2015 and 2023, housing stock growth fell short of new household formation by approximately 545,000 units.

Internal government documents from 2022 explicitly warned that “population growth has exceeded the growth in available housing units” and that housing construction had not kept pace.

Research suggests immigration contributed approximately 11% to the rise in housing prices, though factors like supply constraints, low interest rates, and speculative investments also played significant roles.

Rental Market Explosion:

• Average one-bedroom rental rates reached $2,530 in Vancouver and $2,360 in Toronto by January 2025
• Two-bedroom units cost $3,430 and $3,077 respectively
• These represented increases of over $300 from pre-pandemic 2019 levels nationally
• Even with immigration cuts announced in late 2024, rental rates declined only modestly (6-7% year-over-year in major markets)

Political Recognition: By late 2024, the government acknowledged the crisis, with the Parliamentary Budget Officer estimating that reduced immigration targets for 2025-2027 would shrink the projected housing shortfall by approximately 45%—effectively admitting the previous targets were unsustainable without a “construction miracle.”

Recent analysis from TD Economics confirms that immigration cuts are beginning to ease housing and labour market pressures, with rental growth moderating significantly.

Labour Markets: Persistent Shortages Despite Immigration

Paradoxically, despite massive immigration increases specifically designed to address labour shortages, significant gaps persisted across multiple sectors:

Healthcare:

• Job vacancies in health human resources quadrupled between 2015 and 2023
• Over 620 open positions for personal support workers (PABs) in Quebec alone by 2025
• Average offered wage growth in healthcare increased only 23% between Q4 2019 and Q3 2024, below the 27% national average, contributing to persistent shortages
• Healthcare remains among Canada’s top in-demand sectors facing critical shortages through 2033

Manufacturing:

• The percentage of manufacturers reporting understaffing increased from 39% in 2016 to over 80% in 2022
• Canadian manufacturers reported individual losses averaging $2.8 million in 2022 due to labour shortages
• The industry lost $7.2 billion from late delivery penalties and declined contracts in 2022 alone
• Small and medium enterprises continue to struggle with severe labour shortages that limit growth and productivity

Agriculture:

• Over 28,000 positions unfilled in 2022
• The gap between labour demand and supply expected to reach 15% by 2030

Transportation:

• Projected shortages by 2035: 70,000 to 130,000 workers, predominantly in aviation and trucking

Construction and Skilled Trades:

• Despite labour needs for housing construction, shortages persisted in construction trades
• Quebec, Ontario, and British Columbia faced the most urgent shortages

Wage Growth: Suppressed Then Accelerating

2015-2023: Wage Suppression: Real hourly wage growth averaged just 0.6% in 2018, suggesting little upward pressure despite reported shortages in some regions.

The influx of temporary foreign workers and international students, many willing to accept lower wages, appears to have dampened wage growth, particularly in sectors like retail trade, accommodation and food services, and agriculture.

Research from the Bank of Canada showed that non-permanent residents increasingly concentrated in low-wage industries, with their share of employment in accommodation and food services rising substantially.

Average wages in sectors with high temporary worker concentration grew more slowly than the national average.

2024-2025: Tightening and Acceleration: By 2025, wage growth indicators showed composition-adjusted growth at 3.6% year-over-year, above the benchmark range.

This occurred as immigration cuts began taking effect and the labour market started tightening.

The Conference Board of Canada projected wage growth would stabilize around 2.4-2.5% annually by 2027 as labour shortages from reduced immigration and baby boomer retirements created upward pressure.

Average Canadian earnings reached approximately $67,467 by 2025, reflecting both wage growth and changing labour market dynamics.

Productivity: The Missing Ingredient

Labour productivity improvements accounted for 93% of GDP per capita growth in the four decades preceding the pandemic.

However, productivity growth stalled during the 2015-2025 period, contributing significantly to per capita GDP stagnation.

Contributing Factors:

1. Reduced business investment in machinery and equipment (M&E): Real spending on M&E remained below 2008 levels as of 2024, following declines triggered by lower commodity prices in 2014-2015
2. Insufficient capital per worker: The amount of fixed capital invested per worker was identified as the most important source of labour productivity growth, yet this declined during the high-immigration period
3. Skill underutilization: Evidence of education-occupation mismatch among immigrants increased, with many university-educated immigrants working in positions below their skill level
4. Market concentration: Higher levels of market power in industries like telecommunications contributed significantly to Canada’s productivity gap with the United States

Part III: The Counterfactual—Canada at 2015 Immigration Levels

Now we construct the alternative scenario: What if Canada had maintained 2015 immigration levels (approximately 271,000 permanent residents and 500,000 temporary residents) throughout 2015-2025?

Population and Demographics

Actual Population Growth (2015-2025):

• Starting population (2015): ~35.7 million
• Ending population (early 2025): ~41.5 million
• Net increase: ~5.8 million (16.2% growth)

Counterfactual Population Growth: Maintaining 2015 immigration levels would have resulted in approximately 2.7-3 million fewer people by 2025:

• Estimated population: ~38.5-39 million
• Net increase: ~3-3.3 million (8.4-9.2% growth)

This is based on C.D. Howe Institute modelling showing that an immigration rate of 0.6% per year (the 2000-2015 average) would have produced substantially slower population growth.

The difference of 2.5-3 million people is equivalent to losing major cities like Montreal or the Greater Toronto Area’s entire net population growth.

Aging Demographics: With lower immigration, Canada’s median age would be approximately 1-2 years higher by 2025.

The working-age population (15-64) would have grown much more slowly, with a higher old-age dependency ratio.

Some regions, particularly Atlantic Canada outside of the largest cities, would have experienced population decline even under moderate immigration scenarios.

GDP Growth: Lower But Not Collapsed

Total GDP: With 3 million fewer people contributing to economic activity, Canada’s total GDP would be approximately 4-6% smaller in 2025 than it actually is.

Instead of averaging 2% real GDP growth annually, growth might have averaged 1.2-1.5%.

This calculation is based on several factors:

1. Immigrants contribute to GDP, but government documents acknowledged that “increasing the working-age population can have a positive impact on gross domestic product, but little effect on GDP per capita.”
2. New immigrants typically take 5-10 years to reach their full economic potential as they establish themselves
3. Many recent immigrants worked in lower-productivity sectors (retail, food service, agriculture)

GDP Per Capita: The Critical Difference: Here’s where the counterfactual becomes favourable:

With lower population growth but relatively similar total economic output, GDP per capita would likely be 3-5% higher than current levels.

Instead of declining 2.5% below pre-pandemic levels, per capita GDP might have grown modestly (1-2%) over the decade.

The mathematics are straightforward: Canada’s “numerator problem” (slow productivity growth) would remain, but the “denominator problem” (rapid population growth) would be significantly reduced.

Canadians’ economic output would be divided among fewer people, resulting in higher prosperity per capita.

Critical Caveat: This assumes that lower immigration would not have triggered its own economic problems through severe labour shortages. We’ll examine this crucial assumption below.

Housing Affordability: Dramatically Better

This is perhaps the clearest area where lower immigration would have produced superior outcomes.

Supply-Demand Balance: With 3 million fewer people, Canada would have needed approximately 1-1.2 million fewer housing units over the decade (assuming 2.5 people per household).

If housing construction had stayed at about the same level, Canada might have had a rough balance or even a small surplus in some markets instead of a 545,000-unit shortage between 2015 and 2023.

Price Impact: Economic modelling suggests that reducing immigration by 20-30% (as occurred with the 2024-2025 policy shift) could reduce the housing gap by 40-45%.

Maintaining 2015 levels represents a larger reduction (approximately 40-45% fewer immigrants than peak levels), suggesting even greater relief.

Conservative estimates:

• Toronto and Vancouver housing prices might be 20-35% lower than current levels
• Average Canadian home prices could be 15-25% lower
• Rental prices in major cities might be 15-30% below current levels

This would translate to:

• Toronto average home: $890,000 instead of $1.2-1.3 million
• Vancouver average home: $1.0-1.1 million instead of $1.5-1.6 million
• Toronto one-bedroom rent: $1,650-1,850 instead of $2,360

Quality of Life Impact: More affordable housing would have enabled:

• Higher homeownership rates among millennials and Gen Z
• Reduced household debt-to-income ratios
• Less crowding and precarious housing for newcomers and existing residents
• Reduced homelessness and housing insecurity
• Lower costs of living, increasing real disposable income

Labour Markets: More Severe Shortages, Higher Wages

This is where the counterfactual becomes more problematic for the “lower immigration” scenario.

Healthcare Crisis Intensified: With healthcare vacancies already quadrupling despite high immigration, lower immigration would have made an already critical situation catastrophic. Key impacts:

• Hospital wait times potentially 20-40% longer than current (already concerning) levels
• More severe nursing and physician shortages, potentially forcing service reductions
• Long-term care facilities facing critical understaffing
• Rural and remote areas might have lost healthcare services entirely

Construction Bottleneck: Lower immigration would create a paradox: less housing demand but also fewer construction workers to build needed housing for the existing population.

The construction labour shortage would be more acute, potentially:

• 15-25% fewer construction workers available
• Even slower housing construction than actual levels (which were already insufficient)
• Higher construction wages pushing up costs for all housing projects
• Severe shortages in skilled trades like electricians and welders, forcing wage increases above $40/hour to attract workers

Manufacturing and Agriculture: These sectors would face more severe crises:

• Manufacturing: Instead of 80% of firms reporting understaffing, potentially 90-95%
• Agriculture: The 28,000 unfilled positions might have grown to 35,000-40,000
• Individual manufacturer losses could have averaged $4-5 million instead of $2.8 million
• Food production capacity constraints, potentially affecting food security and prices

Service Sector Transformation: Sectors heavily reliant on temporary foreign workers and international students would face forced adaptation:

• Accommodation and food services: Widespread business closures or reduced hours
• Retail trade: Automation acceleration or reduced service levels
• Personal services: Higher costs, longer wait times

Wage Growth: The Silver Lining: Labour shortages would force wage increases, particularly in:

• Healthcare: Potentially 30-40% wage increases (vs. actual 23%) to attract and retain workers
• Construction and trades: 25-35% increases (vs. actual ~20-25%)
• Service sectors: 20-30% increases in accommodation, food service, retail
• Agriculture: Forced mechanization or wage increases of 30-40%

Average Canadian wage growth might have been 1-2% higher annually (3.5-4.5% instead of 2-2.5% in recent years), providing:

• Greater purchasing power for existing workers
• Stronger middle-class income growth
• Reduced inequality between workers and capital owners

Youth Employment: Canadian-born youth, particularly those without post-secondary education, would face a markedly different labour market:

• Youth unemployment potentially 2-3% lower
• More entry-level opportunities with competitive wages
• Greater incentive for employers to train and develop younger workers
• Stronger youth wage growth

Productivity and Investment: Mixed Outcomes

Potential Positive Pressures:

1. Forced automation and innovation: Severe labour shortages might have accelerated:
   • Robotics adoption in manufacturing
   • AI and automation in services
   • Process innovations to reduce labour requirements
   • Greater capital investment per worker
2. Higher-value focus: Businesses unable to expand through cheap labour might have:
   • Focused on higher-margin products and services
   • Invested more in worker training and development
   • Improved workplace efficiency and organization

Potential Negative Pressures:

1. Reduced business formation: Labour shortages might have:
   • Prevented new business launches
   • Forced business closures due to inability to staff operations
   • Reduced entrepreneurship and innovation
2. Lost output: Some economic activity simply wouldn’t have occurred:
   • Many restaurants and retail stores never opened
   • Some Construction projects never started
   • Comparatively reduced agricultural production

Net Productivity Impact: The evidence suggests productivity might have been marginally higher under lower immigration, perhaps by 0.5-1% annually, driven by:

• Greater capital investment per worker (higher capital-labour ratio)
• Forced efficiency improvements
• Less skill underutilization (fewer overqualified workers in low-productivity jobs)

However, this assumes businesses would respond by investing in productivity rather than simply reducing output, which is uncertain.

Fiscal Impact: Complex Trade-offs

Government Revenues:

• Lower income tax revenue: Fewer workers means less income tax collected, potentially $10-15 billion annually less in federal and provincial income taxes
• Lower sales tax revenue: Reduced consumption from smaller population, perhaps $5-8 billion less annually
• Lower payroll taxes: Reduced CPP/EI contributions

Government Expenditures:

• Reduced infrastructure strain: Less pressure on schools, hospitals, transit, roads—savings of $8-12 billion annually
• Lower settlement costs: Reduced spending on immigrant settlement services, language training, credential recognition
• Lower social assistance: Potentially lower social assistance costs as immigrants (especially refugees) are more likely to require support initially
• Healthcare and education: Reduced demand pressure, but also fewer healthcare and education workers available to provide services

Net Fiscal Balance: The net fiscal impact is likely slightly negative in the short term (lower immigration means less revenue) but potentially positive in the medium term (reduced infrastructure and service costs).

Canadian immigrants generally become net fiscal contributors after 10-15 years, so lower immigration means fewer near-term fiscal benefits but also lower near-term costs.

One critical consideration: With an aging population, lower immigration means a worse old-age dependency ratio, potentially requiring:

• Higher taxes on working-age population
• Reduced social benefits
• Higher immigration in the future to address fiscal sustainability

Social and Cultural Dimensions

Community Cohesion: Lower immigration might have resulted in:

• Reduced social tension over rapid demographic change
• Fewer complaints about “too much, too fast” immigration
• Potentially less political polarization on immigration policy
• Better integration outcomes for immigrants who did arrive (more services per immigrant)

Labour Relations:

• Stronger bargaining power for workers relative to employers
• Potential union membership growth as labour scarcity increases worker leverage
• More employer investment in worker retention and satisfaction

Regional Disparities:

• Atlantic Canada might face even more severe population decline and economic stagnation
• Rural areas throughout Canada would experience greater decline
• Major cities (Toronto, Vancouver, Montreal) would still grow but more slowly
• Greater concentration of economic activity in fewer urban centers

Cultural Diversity:

• Slower pace of increasing diversity
• Different mix of source countries for immigrants (potentially more emphasis on skills, less on family reunification and students)
• Reduced international student presence on university campuses

Part IV: Sector-by-Sector Analysis

Healthcare: Crisis Either Way

Actual Scenario (High Immigration):

• Severe shortages despite immigration
• Wages suppressed below market-clearing levels due to government control
• Many immigrant healthcare workers facing credential recognition barriers
• International students filling some healthcare aide positions
• System strained by 3 million additional people needing services

Counterfactual Scenario (2015 Immigration Levels):

• Even more severe shortages without immigrant healthcare workers
• Forced wage increases of 30-40% to attract workers
• Potential system breakdowns in rural/remote areas
• Greater automation and telemedicine adoption
• Crisis forcing policy reforms (credential recognition, scope of practice, private options)

Verdict: High immigration is marginally better for healthcare, but neither scenario solves the fundamental problem of inadequate healthcare worker supply and compensation.

Construction: The Paradox

Actual Scenario:

• Labour shortages despite high immigration
• Insufficient housing construction relative to population growth
• 545,000-unit shortfall between 2015-2023
• Wages grew but not enough to fully address shortages

Counterfactual Scenario:

• Even more severe labour shortages
• Potentially slower construction overall
• BUT: 1-1.2 million fewer housing units needed
• Net result: Better balance between supply and demand despite slower construction
• Higher construction wages (25-35% increases) attracting more Canadian workers to trades

Verdict: Lower immigration is likely better overall—reduced demand more than compensates for reduced construction labour supply.

Technology and Innovation: Competing Factors

Actual Scenario:

• Large pool of tech talent from international students and skilled immigrants
• Tech hubs in Toronto, Vancouver, Montreal thriving with global talent
• Some concerns about wage suppression in entry- and mid-level tech positions
• Brain gain from attracting global talent

Counterfactual Scenario:

• Smaller tech talent pool, potentially constraining sector growth
• Higher wages for tech workers (potentially 15-25% higher)
• Greater emphasis on training Canadian tech workers
• Forced automation and AI adoption to compensate for labour scarcity
• Potential loss of some tech companies to US or other countries with easier talent access

Verdict: High immigration is likely better for tech sector growth and innovation, though with trade-offs in wage levels.

Agriculture and Food Production: Automation Forced

Actual Scenario:

• Heavy reliance on Temporary Foreign Workers Program
• 28,000+ positions still unfilled despite immigration
• Low wage growth in sector
• Continued labour-intensive production methods
• Some worker exploitation and poor conditions

Counterfactual Scenario:

• Severe labour crisis forcing rapid adaptation
• Accelerated mechanization and automation
• Wage increases of 30-40% for remaining workers
• Some production reduction or shift to less labour-intensive crops
• Potential food price increases of 5-10%
• Forced modernization of sector

Verdict: Mixed—high immigration maintained production levels, but lower immigration might have driven necessary modernization and better working conditions.

Service Industries (Retail, Food Service, Hospitality): Transformation Required

Actual Scenario:

• International students and temporary workers filled large gaps
• Low wage growth in these sectors
• Business models reliant on low-wage labour maintained
• Continued employment for many but with stagnant wages

Counterfactual Scenario:

• Severe labour shortages forcing:
  • Business closures (perhaps 15-20% of restaurants and retail locations)
  • Automation (self-checkout, ordering kiosks, reduced service models)
  • Wage increases of 25-40%
  • Reduced hours of operation
  • Higher consumer prices (potentially 10-15% higher)
• Transformation to higher-productivity, better-paying service sector

Verdict: High immigration preserved more businesses and consumer convenience; lower immigration would have forced beneficial restructuring toward higher wages and productivity but with adjustment pain.

Part V: What’s The Right Immigration Level?

After examining the counterfactual, we can now address the fundamental question: What is the optimal immigration level for Canada?

The Core Trade-offs

The analysis reveals five fundamental trade-offs:

1. Total GDP vs. GDP Per Capita

• Higher immigration increases total economic size but dilutes per capita prosperity
• Lower immigration reduces total output but may increase individual prosperity
• Optimal balance: Moderate immigration that grows GDP while maintaining or slowly improving per capita GDP

2. Housing Affordability vs. Labour Supply

• Higher immigration exacerbates housing crises but fills labour gaps
• Lower immigration eases housing pressure but creates severe labour shortages
• Optimal balance: Immigration levels matched to housing construction capacity plus 2-3 years lag time for integration

3. Wage Growth vs. Business Costs

• Lower immigration drives wages up, benefiting workers but increasing business costs
• Higher immigration moderates wages, helping business margins but potentially suppressing living standards
• Optimal balance: Immigration levels that allow steady 3-4% nominal wage growth (1-2% real wage growth)

4. Short-term Economic Growth vs. Long-term Productivity

• High immigration provides immediate GDP boost but may reduce pressure for productivity improvements
• Lower immigration creates short-term adjustment pain but forces automation and efficiency gains
• Optimal balance: Moderate immigration with strong emphasis on high-skilled economic class and capital investment incentives

5. Fiscal Sustainability vs. Current Strain

• Higher immigration helps long-term fiscal outlook (more workers supporting aging population)
• Lower immigration reduces current infrastructure strain but worsens demographic trends
• Optimal balance: Sustainable immigration matched to infrastructure investment and long-term demographic needs

Evidence-Based Recommendations

Based on the counterfactual analysis, optimal immigration policy should incorporate:

1. Sustainable Levels Based on Absorptive Capacity

Target annual immigration should be determined by:

• Housing construction capacity (400,000-450,000 units built annually)
• Infrastructure investment levels (transit, schools, hospitals)
• Settlement service capacity
• Labour market absorption capacity

Recommended Range: 300,000-350,000 permanent residents annually (roughly 0.75-0.85% of the population), representing a middle ground between 2015 levels and recent peaks. This is close to what Canada actually adopted in its revised 2025-2027 plan.

2. Composition Matters More Than Total Numbers

The evidence strongly suggests the composition of immigration matters as much as the total:

• Increase economic class to 70-75% (from the current 60-64%): Prioritize skills that directly address labour shortages and retain talent on temporary status.
• Reduce temporary residents to 3-4% of the population (from 6%+): Better balance and integration by reducing new temporary residents entering Canada.
• Reform international student program: Limit to institutions with housing guarantees and employment pathways
• Target skilled trades and healthcare workers: Active recruitment for shortage occupations
• Improve credential recognition: Ensure immigrant skills are fully utilized

3. Regional Distribution Strategies

Current immigration heavily concentrates in Toronto, Vancouver, and Montreal, exacerbating local housing crises while leaving other regions labour-starved.

Strategies:

• Enhanced Provincial Nominee Programs with teeth: Increased allocations to provinces outside Ontario/BC, with targets rebounding significantly for 2026-2028
• Economic incentives for settling in smaller cities and regions (tax credits, housing assistance)
• Infrastructure investment in secondary cities to make them more attractive
• Rural immigration pilots expanded significantly
• Mobility restrictions with consequences for first 3-5 years in exchange for guaranteed pathways

4. Housing-First Policy Integration

Immigration policy cannot be set in isolation from housing policy. Required reforms:

• Mandatory housing impact assessments based on the latest data before setting immigration targets, rather than old data or outdated numbers such as 2021 census.
• Federal-provincial-municipal coordination: Immigration levels tied to housing starts and infrastructure investment
• Builder incentives: Tax breaks and streamlined approvals for housing construction
• Zoning reform: Requiring provinces/municipalities to allow density as condition of federal infrastructure funding
• Real estate speculation controls: Cooling investor demand to prioritize housing as shelter vs. asset

5. Labour Market Responsiveness

Immigration levels should respond dynamically to labour market conditions:

• Automatic adjustments based on job vacancy rates, unemployment levels, and wage growth
• Sectoral targeting: Higher immigration when specific sectors show sustained shortages with wage growth
• Economic downturn flexibility: Reduced targets during recessions to protect employment
• Skills forecasting: 5-year forward planning for needed skills and training Canadian workers
• Transparent processing: Regular updates on processing times to manage expectations and system capacity

6. Productivity and Investment Imperative

Regardless of immigration levels, Canada must address productivity challenges:

• Business investment incentives: Tax credits for machinery, equipment, and automation
• R&D support: Increased funding for research and innovation
• Competition policy: Reduce market concentration in telecom, banking, retail
• Skills training: Massive investment in Canadian worker training and upskilling
• Capital investment per worker: Target 10% increase over five years

Political and Social Dimensions

Public Support: Polling shows Canadian support for immigration has declined as housing and economic concerns have grown.

Three-quarters of Canadians in surveys said higher immigration was making the housing crisis worse.

Sustainable immigration policy requires maintaining public support through:

• Transparency: Honest acknowledgment of costs and benefits
• Local voice: Municipal input on immigration levels they can absorb
• Success measurement: Regular reporting on integration outcomes, housing supply, wage impacts
• Fairness perception: Ensuring newcomers and existing residents both benefit

Avoiding Scapegoating: As the analysis shows, immigrants are not to blame for Canada’s challenges—policy mismatches are.

The government increased immigration without corresponding increases in housing, infrastructure, or service capacity. Any optimal policy must:

• Clearly communicate that immigrants are not the problem
• Emphasize shared benefits from well-managed immigration
• Combat xenophobia and racism that scapegoats newcomers
• Acknowledge legitimate concerns about rapid change without enabling prejudice

Long-term Vision: Canada’s aging demographics mean that immigration will remain crucial for decades.

The question is not whether to have immigration, but how much and what kind. A sustainable approach:

• Maintains Canada’s identity as welcoming and multicultural
• Ensures economic and fiscal sustainability
• Preserves social cohesion and quality of life
• Prepares Canada for global competition for talent

Comparison Models: International Context

Australia: Comparable country with an immigration rate of 0.9-1.2%, similar to Canada’s recent peak.

Also experiencing housing affordability crisis and some backlash, suggesting Canada’s experience is not unique.

New Zealand: Reduced immigration targets in 2024-2025 similar to Canada, citing housing and infrastructure concerns. Immigration rate historically is around 0.8-1.0%.

United States: Lower immigration rate (~0.3-0.4% even with undocumented immigration), but much larger absolute numbers. Different challenges with irregular migration.

Nordic countries: Lower immigration rates (0.3-0.6%) with stronger social services and integration support. More selective, smaller scale.

Singapore: Very high temporary worker immigration (over 30% of the population are non-citizens) but strictly controlled and tied to economic needs. Different model, less focused on permanent settlement.

Lesson: Most comparable countries converge on permanent immigration rates of 0.75-1.0% as sustainable long-term levels, with temporary workers as a smaller supplementary component.

The Verdict on the Counterfactual

If Canada had maintained 2015 immigration levels throughout 2015-2025:

Clear Benefits:

1. Housing affordability: 20-30% lower home prices and rents, dramatically improving quality of life
2. GDP per capita: 3-5% higher, meaning better prosperity per person
3. Wage growth: 1-2% higher annually, strengthening middle class
4. Infrastructure strain: Reduced pressure on schools, hospitals, transit, roads
5. Integration quality: Better services per immigrant, improved outcomes
6. Youth opportunity: Better employment prospects for Canadian-born young people

Clear Costs:

1. Healthcare crisis: Even more severe shortages, potential system breakdown
2. Construction bottleneck: Fewer workers to build needed housing and infrastructure
3. Labour shortages: Manufacturing, agriculture, and service sectors severely constrained
4. Total GDP: 4-6% smaller economy, reduced international influence
5. Demographic aging: Worse old-age dependency ratio, fiscal sustainability concerns
6. Regional decline: Atlantic Canada and rural areas facing population collapse
7. Innovation drag: Smaller tech talent pool, less entrepreneurship

The Nuanced Reality

The counterfactual analysis reveals that there is no universally “better” outcome—only trade-offs based on priorities.

The optimal path depends on what Canadians value most:

• If prioritizing individual prosperity and affordability: Lower immigration (2015 levels or modestly above) is clearly superior
• If prioritizing total economic size and global influence: Higher immigration (2023-2024 levels) achieves this
• If prioritizing balanced growth and sustainability: Moderate levels (300,000-350,000 permanent residents, the 2025-2027 revised plan) represents optimal balance

The Actual Mistake: Canada’s error was not necessarily the total number of immigrants, but rather

1. Increasing immigration without proportional housing and infrastructure investment
2. Over-reliance on new temporary residents (students and temporary workers)
3. Insufficient economic class emphasis and too much family/student composition
4. Lack of regional distribution strategy
5. Inadequate productivity growth and capital investment
6. Poor policy coordination between immigration, housing, and economic development

Final Assessment

The counterfactual Canada of 2015 immigration levels would have been:

• More affordable for housing (major benefit)
• More prosperous per capita (major benefit)
• Less dynamic and smaller economically (moderate cost)
• More strained in healthcare and construction (major cost)
• Forced toward productivity improvements (moderate benefit)
• Better for existing workers’ wages (major benefit)
• Worse for business labour availability (major cost)

On balance, for the median Canadian (not the economy in aggregate), maintaining 2015 immigration levels likely would have produced a better outcome, particularly in housing affordability and wage growth.

However, this would have come with significant adjustment challenges and sector-specific crises.

Going forward, the optimal policy is neither the 2015 baseline nor the 2023-2024 peak, but rather a carefully calibrated middle path of approximately 325,000-350,000 permanent residents annually (about 0.8% of the population), heavily weighted toward economic class, with stronger housing supply coordination, regional distribution strategies, and productivity investments.

This “Goldilocks” approach—not too high, not too low—acknowledges that Canada needs immigration for demographic and economic vitality but that recent levels overwhelmed absorptive capacity.

The revised 2026-2028 plan targeting 350,000-400,000 represents a step in the right direction, though even slightly lower levels (325,000-350,000) might be optimal until housing construction catches up.

The key insight: Immigration is neither inherently good nor bad—its benefits or costs depend entirely on whether it is matched to infrastructure capacity, labour market needs, and public acceptance.

Canada’s 2015-2025 experience demonstrates that even a generally positive policy can produce negative outcomes when pursued without adequate preparation and coordination.

The path forward requires honest acknowledgment of these trade-offs, evidence-based policy-making, and integrated planning across immigration, housing, infrastructure, and economic policy.

Only then can Canada achieve the full benefits of immigration while minimizing the costs—creating a society that is both prosperous and welcoming, growing sustainably while maintaining quality of life for all residents, new and old alike.

Works Cited

Government & Official Sources

1. Statistics Canada. (2024). “Canada’s gross domestic product per capita: Perspectives on the return to trend.” Statistics Canada Catalogue, April 24, 2024.
2. Statistics Canada. (2025). “Canada’s population estimates, first quarter 2025.” The Daily, June 18, 2025.
3. Immigration, Refugees and Citizenship Canada. (2024). “2025-2027 Immigration Levels Plan.” October 2024.
4. Immigration, Refugees and Citizenship Canada. (2023). “Supplementary Information for the 2024-2026 Immigration Levels Plan.” November 1, 2023.
5. Immigration, Refugees and Citizenship Canada. (2024). “2024 Annual Report to Parliament on Immigration.” 2024.
6. Parliamentary Budget Officer. (2025). “Impact Assessment of 2025-2027 Immigration Level Plan.” January 23, 2025.

Research Institutions & Think Tanks

7. Fraser Institute. (2025). “Canada’s Changing Immigration Patterns, 2000–2024.” Finlayson, J., and Globerman, S. July 2025.
8. C.D. Howe Institute. (2025). “Fast vs. Slow: How Different Immigration Rates Can Impact Canada’s Economic Challenges and Regional Disparities.” June 3, 2025.
9. C.D. Howe Institute. (2025). “2024 Labour Market Review: Challenges, Trends, and Policy Solutions for Canada.” March 11, 2025.
10. Centre for Future Work. (2025). “Per Capita GDP is a Deeply Flawed Measure of Economic Performance and Living Standards.” Stanford, J. May 6, 2025.

Bank of Canada Publications

11. Bank of Canada. (2025). “The Shift in Canadian Immigration Composition and its Economic Impact.” Staff Discussion Paper 2025-8, May 2025.
12. Bank of Canada. (2025). “Benchmarks for assessing labour market health: 2025 update.” Staff Analytical Note 2025-17, June 18, 2025.

Financial Institutions & Economic Analysis

13. RBC Economics. (2024). “Immigration cuts will help narrow Canada’s housing gap but won’t solve crisis.” November 4, 2024.
14. TD Economics. “Canadian Labour Market Outlook: Denting the Armour.” Economic Report.

News & Media Sources

15. CBC News. (2024). “Immigration is making Canada’s housing more expensive. The government was warned 2 years ago.” Al Mallees, N. January 11, 2024 (Updated October 23, 2024).
16. CBC News. (2025). “Draw it! Compare immigration numbers under the Liberals and Conservatives.” CBC Interactive, 2025.
17. Global News. (2024). “Immigration cuts could impact housing market ‘soon,’ experts say.” October 25, 2024.

Academic & Policy Analysis

18. Policy Options (IRPP). (2025). “The misleading use of per capita GDP: Numerators, denominators and living standards.” Stanford, J. April 21, 2025.
19. Policy Options (IRPP). (2025). “The housing crisis is made worse by a policy mismatch.” Isumonah, K. April 24, 2025.
20. Aristotle Foundation. (2025). “Too much of a good thing? Immigration trends and Canada’s housing shortage.” August 10, 2025.

Economic Data Sources

21. World Bank Data. “GDP per capita growth (annual %) – Canada.” World Bank Open Data.
22. Macrotrends. “Canada GDP Per Capita 1960-2025.” Historical Economic Data.

Additional Government Resources

23. Employment and Social Development Canada. “Addressing labour shortages.” Briefing Binder 2019.
24. Statistics Canada. “Labour shortage trends in Canada.” Labour Market Statistics.
25. Statistics Canada. “Immigration and ethnocultural diversity statistics.” Population and Demography Statistics.

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