Canada in ‘population trap’: report
Immigration continues to be top of mind for economists and business media.
In a Jan. 15 report, which got plenty of media attention, economists at National Bank of Canada declared the country has entered into a “population trap” in which we are somehow stuck with perpetually falling living standards because our stock of capital just can’t keep up.
The logic is hard to follow since it’s not really a self-perpetuating trap — the federal government can impose limits on population growth should it wish.
But the National Bank report concludes that population growth should be capped at half a million, which seems reasonable.
Erik Hertzberg at Bloomberg also produced a nice piece this week on how the population numbers are muddying the ability of economists and policy makers to understand what is going on in the Canadian economy.
For example, economists are projecting Canada will see the sharpest increase in the unemployment rate among G7 countries this year. This may or may not reflect a relatively worse performance. It’s tough to tell given the surge in the labour force, which makes it tough for policy makers to figure out how to do policy.
