Canada’s breakneck population growth over the last several years could provide a significant economic advantage in the future, countering the present-day negative strain on infrastructure, services and housing, a CIBC economist says.

In a paper published Thursday, Benjamin Tal highlights the youthful skew of Canada’s immigration-fuelled population boom, with recent arrivals — many of them non-permanent residents (NPRs) — “much younger than the rest of the population.” Tal writes that this “youth dividend” could offer an eventual payoff in that, essentially, younger people work more and spend more.

“A larger and younger population should create new opportunities for employers and generate greater household demand,” Tal wrote.

“One should not underestimate the lasting impact that the recent trend in population growth will eventually have on labour supply, output, productivity, and the dependency ratio” — the latter being a measure of the number of people not in the labour force versus the number working.

The scale of Canada’s population growth in recent years has been well documented, with its political importance snowballing at a similar pace. Tal notes that “Canada’s population has grown by 3.2 million or 8.4 per cent since mid 2021, and by no less than 5.6 million or 15.7 per cent since late 2015.” The strain of that growth across various sectors, housing in particular, drove the federal government to sharply reduce immigration targets in the years ahead.

A larger and younger population should create new opportunities for employers and generate greater household demand.Benjamin Tal, CIBC economist

The annualized growth rate in January 2024 was 3.2 per cent, the highest since 1957, in the baby boom era. Much of the recent growth, Tal writes, “was not forecasted by Statistics Canada, and was not planned for.” As it was made up mostly of adults, who needed immediate services and housing — rather than children growing up in existing households — the recent population influx furthermore caused a jolt not seen with the baby boom.

“Unplanned population growth places enormous pressure on governments already struggling to provide public services for its existing population,” Tal wrote. “With the sheer scale of the population/capital mismatch in Canada, the public backlash was both predictable and inevitable.”

In terms of economic benchmarks, on average, NPRs work for less money and work fewer hours. Their sheer numbers (Tal notes that their population of around three million is larger than six of 10 Canadian provinces) helped boost real GDP growth. But at a per-capita level, their lower productivity acts as a drag on GDP.