Skuterud: The Growing Data Gap on Canada’s Temporary Resident Workforce

Useful recommendations:

Statistics Canada’s Labour Force Survey (LFS) underestimates the rapidly growing non-permanent resident (NPR) population. This undercount potentially distorts important economic indicators, such as nominal wage growth and unemployment rates, because NPRs disproportionately influence these measures as a growing share of new labour market entrants.

To address this data gap, this E-Brief recommends revising the LFS to better identify NPRs by including specific questions about study or work permits and exploring the possibility of linking survey data to immigration records for improved accuracy.

Introduction

Canada has experienced a dramatic increase in its non-permanent resident (NPR) population in recent years. Before 2020, NPRs never comprised more than 3 percent of Canada’s population. As of October 2024, they comprised 7.4 percent of the population. While initial concerns over runaway NPR population growth were focused on overheating housing markets, by mid-2024, worries turned to the contribution of NPRs – particularly international students – to rising youth unemployment rates.

Evaluating the labour market impacts of Canada’s growing NPR population requires timely, high-quality data on Canada’s labour force. It is well known that Statistics Canada struggles to sample NPRs, in part due to challenges related to how Statistics Canada’s Labour Force Survey (LFS) sampling frame is constructed. The LFS samples dwellings, not individuals, and gathers data on all persons usually living at the sampled address, including NPRs. There may be ambiguity about whether the address where NPRs are sampled is their usual residence, resulting in their exclusion from the survey.¹ Skuterud (2023) highlighted a significant and widening discrepancy between the share of NPRs in Canada’s labour force estimated using the LFS and administrative data from Immigration, Refugees and Citizenship Canada (IRCC).² With continued growth in the NPR population since 2023, there is reason to believe this discrepancy has grown.

Why does this matter? The accuracy of the LFS’s estimates of nominal wage growth and unemployment rates are critical in informing the Bank of Canada’s monetary policy decisions and collective bargaining negotiations across the country. As IRCC introduces policies to rein in NPR entries, understanding whether international students are, in fact, crowding out and suppressing the wages of existing residents is essential.

This E-Brief examines the impact of Canada’s surging NPR population on the quality of the LFS data by comparing the LFS’s population estimates with official population estimates from Statistics Canada’s Centre for Demography. The results reveal a substantial and growing divergence in official and LFS population estimates starting in 2021. While it is unclear to what extent this is affecting estimates of wage growth and unemployment, the growing discrepancies suggest there is reason for concern…

Source: The Growing Data Gap on Canada’s Temporary Resident Workforce