Economic contribution of new permanent residents is rising, according to bank report
A new economic analysis suggests Canada’s recent immigration cuts may not significantly slow potential GDP growth, as the changing profile of new permanent residents is creating greater economic value per person.
According to a new CIBC Capital Markets report, more than half of Canada’s permanent resident visas in 2024 went to people already living in the country. Of the 483,640 permanent resident visas approved last year, 252,478 recipients (50.7%) already resided in Canada. This represents a dramatic increase from 39% in 2019.
“The economic contribution of the 395,000 new permanent residents (the target for 2025), is notably higher than it was in the past,” wrote Benjamin Tal, the report’s author and deputy chief economist at CIBC Capital Markets.
Canadian experience counts for plenty when it comes to earnings
The largest share of permanent resident approvals, 57.1%, falls under the “economic class” category, which prioritizes skilled workers. Nearly two-thirds of these economic class approvals in 2024 went to people already living in Canada, compared to 42.5% in 2019.
This shift carries significant economic implications, according to the report. New permanent residents with Canadian experience demonstrate substantially higher earnings than those arriving from abroad. Those who obtained permanent residency in 2020 earned $45,200 in 2022, despite having less than two full years as permanent residents—higher than the $45,100 earned by 2012 arrivals who had been in the country for a decade.
Skills and education alignment
The changing immigration landscape has also improved skills alignment. Economic class applicants who received permanent residency in recent years showed higher representation in skill level A occupations compared to Canadian-born workers. Those accepted under the Canadian Experience Class were particularly likely to hold management positions or high-skilled roles.
Among former study permit holders who completed their education in Canada and gained permanent residency between 2016 and 2021, 39% studied STEM fields and 33% studied business and administration.
Economic impact
The report estimates that changes in the composition of permanent residents generated an additional $5 billion in earnings between 2018 and 2021. Canadian resident permanent resident approvals create less strain on housing, health, social services, and infrastructure compared to arrivals from elsewhere.
“The comparative positive economic contribution of within Canada arrivals along with the lower costs to accommodate them is a pathway for a more efficient and productive immigration system,” the report concluded.
The analysis suggests that while Canada has reduced immigration targets, the quality and economic contribution of new permanent residents has increased significantly, potentially offsetting concerns about slower population growth affecting economic expansion.
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