Wednesday, May 20, 2015

Braking into the Curve, 2: Immigration to Canada is Not a Solution

 In the year 2000, twenty percent of Canadians were under 14, 10% were over 65. In 2035, 20% of Canadians will be over 65, 15% will be under 14. That's not a formula for a robust economy, or much of anything else.(1)

ii) Last time, I showed you some projections for future Canadian population totals. I took the low estimate as most likely. Why? Because it is the most likely. For example, this projection, which was made in 2012, showed the Canadian population at 35,729,000 in 2015. The January 1 2015 total now out is 35,702,000.   This sort of thing happens often enough that, were I a cynical man, I would be tempted to suggest that fears of overpopulation are inflating the numbers. 

So let us take it that population growth will have virtually stalled out by this time at somewhere below 40 millions.(2) All of that growth will be coming from immigration.

So how many immigrants can we expect? On its face, this is a policy decision. We set the numbers, they come. Living in Canada is awesome. In reality, check out the sharp year-to-year fluctuations, which reflect recession years. Immigrants are rational.

As far as projections go, there seems to be a trend towards optimism, again. The 2014 immigration action plan for 2014 called for a low intake of 250,000, high intake of 265,000, with a target of 261,000. The actual total was 258,953

The federal government's immigration plan for 2015 is set at a low of 260,000, and a high of 285,000. Will we underperform again? Check back next year --but notice that I just moved the goal posts here, from the net immigration rate to the immigration rate. People leave Canada, too. Your buddy, Mike from Canada? He's in L.A. now. Statscan thinks that the net Canadian emigration rate in 2012 was 47,100. So knock the Canadian population growth curve negative --soon. Of course, now I'm being the pessimistic one, since if you cut that many people from "above the red line" up in graph ii), the Canadian population growth rate would already be negative. 

Why do we have to worry about the future of immigation?  Immigration to Canada is sensitive to economic opportunity. Note the dips in the chart below.  People are not going to come if there are no jobs. In fact, it is conceivable that they will start leaving. Note the way the chart flirts with the floor in the 1890s? People might have like Canada back in ragtime days

But they liked America better.

What happens if, in the future, the Canadian population growth rate goes negative harder and more quickly than we currently estimate? Well, it's not going to be good news for pensions and eldercare, especially given how much we depend on immigrants to look after our parents for us. (Guilty, and do I mean "guilty.") As I suggested last time, there's a chance that it'll cost you your job, too.

Does all of this sound pessimistic? It shouldn't, because we've been here before, and we've gotten out of this before.

 Somehow, we managed to shift our foot from the brake to the gas pedal between 1945 and 1961. And, no, it wasn't the war, at least, not directly. The birth rate continued to accelerate through the 1950s. Presumably, then, it was the indirect effects of the war. Which is great, because to avert either a long-drawn out, low-level, endemic fiscal and health crisis, or a short and sharp one, we need to find the gas pedal again, and it would be nice to do it without having to fight a world war. Wars are bad. 

1) Unfortunately, these numbers come to us from the  Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2006 Revision and World Urbanization Prospects: The 2005 Revision. and the Population Division tends to overestimate future population growth trends.

2) Per StatsCan: "the low-growth scenario is defined by the following assumptions: a Canadian total fertility rate that reaches 1.53 births per woman in 2021/2022 and remains constant thereafter; a Canadian life expectancy that reaches 85.9 years for males and 87.1 years for females in 2062/2063; interprovincial migration based on the trends observed between 1991/1992 and 2010/2011; a national immigration rate that reaches 0.5% in 2022/2023 and remains constant thereafter; an annual number of non-permanent residents (Canada) that reaches 733,600 in 2014 and remains constant thereafter; a national net emigration rate of 0.16%.

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