HRSDC-IC-SSHRC Skills Research Initiative

Working Paper Series

Population Ageing, High-skilled Immigrants and Productivity
by Maxime Fougère, Simon Harvey, Jean Mercenier and Marcel Mérette.

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Abstract

This paper evaluates the potential economic and labour market effects of attracting more highskilled immigrant workers in Canada in the context of an ageing workforce. The analysis is done using a computable overlapping generations model, which accounts for differences in the skill composition of immigrant and non-immigrant workers. The analysis first indicates that selecting the same proportion of high-skilled immigrants as in the second half of the 1990s would raise labour productivity and living standards in the long run. It could also reduce the expected negative impact of population ageing on growth in real GDP per-capita by about one-quarter. In addition, raising the proportion of high-skilled immigrants by 0.25% of the population each year could reduce by another 50% the anticipated decline in real GDP growth. However, these gains are conditional upon the recognition of permanent residents’ credentials. Finally, attracting more highskilled immigrants may significantly reduce the skill premium, which on one hand lowers earnings inequality between high and low skilled workers, but on the other hand may reduce incentives for young adults to invest in human capital.