Immigration and the Growing Canada-U.S. Productivity Gap

This paper examines the impact of immigration on labour productivity in Canada. Immigration is a factor that has been largely ignored in the literature on Canadian productivity growth. A simplified growth accounting approach is utilized to estimate the reduction in labour productivity in Canada (as measured by GDP per worker) that can be attributed to the poor performance of post-1990 cohorts of immigrants in the labour market (as measured by average earnings as reported in the 2006 census). It is estimated that immigration accounts for 2.23 percentage points, or about a fifth, of the 10.96 percentage point post-1990 increase in the Canada-US labour productivity gap.