Economic and Social Reports, April 2025

There are six new articles available in today's release of Economic and Social Reports.

Describing how tariffs are conceptually reflected across economic statistical programs

Over time, the effects of tariffs on Canadian exports and on imports into Canada will be reflected in various statistical estimates published by Statistic Canada (as they affect economic activities). The article, "How tariffs are conceptually reflected in key economic statistics," outlines how these effects are captured across key statistical programs, such as the Consumer Price Index, various producer price indexes, retail and manufacturing sales, as well as key macroeconomic indicators, including the balance of payments, gross domestic product (GDP), supply and use tables, and government finances.

Rising number of US non-citizen resident temporary workers in Canada

The movement of temporary foreign workers between the United States and Canada is an important yet understudied aspect of North American labour mobility. A new study, entitled "Recent trends in United States temporary foreign workers in Canada," examines the numbers and characteristics of temporary foreign workers who were US citizens or previous US non-citizen residents.

From 2010 to 2023, the number of US non-citizen temporary workers holding work permits for employment purposes increased from 3,700 to 17,400. In contrast, the number of US citizen temporary workers declined from 61,700 to 38,900. These groups exhibited distinct characteristics: US non-citizens were concentrated in professional, scientific, and technical service industries, while US citizens were overrepresented in educational services, information and cultural industries, and arts, entertainment and recreation.

In 2022, 69% of US non-citizen temporary workers had paid employment income in Canada, compared with 35% of US citizen temporary workers. Among those reporting employment income, US non-citizens had median earnings of $107,600, while US citizens earned $75,900. Both of these earnings were significantly higher than the median earnings of temporary workers from all other countries ($42,500). These strong labour market outcomes highlight the potential of US non-citizen temporary workers as a valuable source of skilled talent for Canada amidst shifting immigration and trade policies in the United States.

Unit labour cost growth has accelerated since the COVID-19 pandemic due to weak Canadian productivity growth

The unit labour cost (ULC) measures the average labour cost of a product and is used to compare price competitiveness between countries. The study, "Unit labour cost growth, inflation and productivity growth in Canada and the United States," shows that in Canada, the ULC growth increased from 2.4% per year before the COVID-19 pandemic (1981 to 2019) to 6.0% per year in 2020 and 2021 and to 4.7% in 2022 and 2023. Also, since the pandemic, the ULC growth in Canada has been significantly higher than the inflation rate, especially in 2020 and 2021. In contrast, the ULC growth was much lower than the inflation rate in the United States during the same period.

After categorizing the ULC growth in the Canadian business sector into its sources, this article found that Canada's weak labour productivity growth since the pandemic has been driving its accelerated ULC growth. Additionally, the large and widening gap between ULC growth in Canada and in the United States since the pandemic is entirely attributable to the labour productivity growth gap between the two countries.

Rates of postsecondary enrolment considerably lower among low-income youth

Getting a postsecondary education is an important factor in long-term labour market success and a key mechanism for youth who grew up in lower income families to achieve more success than their parents did.

The article, "Postsecondary enrolment rates by parental income: National and sub-national trends from 2001 to 2022," shows that postsecondary enrolment rates among 19-year-olds increased from 46.7% in 2001 to 59.5% in 2019. The increase was higher during this period among youth from families in lower income quintiles. (For example, the increase was 11.9 percentage points among youth from families in the bottom income quintile, compared with 6.0 percentage points among their counterparts in the top income quintile.) From 2019 to 2022, postsecondary education enrolment rates declined moderately, both overall and across the income distribution. In 2022, 58.3% of youth aged 19 years were enrolled in postsecondary education, but a large gap existed across income levels. That is, 75.2% of those in the top income quintile were enrolled, compared with 43.2% of their counterparts in the bottom income quintile.

As was the case in Canada as a whole, postsecondary enrolment rates varied substantially across the income distribution in each province in 2022. The gap in enrolment rates between youth in the top income quintile and those in the bottom quintile was lowest in British Columbia (22.0 percentage points), followed by Ontario (28.5 percentage points) and Prince Edward Island (30.6 percentage points). The largest gaps were registered in New Brunswick (45.3 percentage points), Manitoba (44.6 percentage points) and Newfoundland and Labrador (43.5 percentage points).

These gaps in postsecondary enrolment rates across the income distribution are important, as they may result in unequal labour market success based on the income of families that youth were raised in.

Mapping rural and urban economies across Canada

The study, "Mapping the importance of urban and rural economies in Canada: Experimental grid square-based gross domestic product and gross domestic income," is the first to use 1 km by 1 km grid squares to measure the entire Canadian economy. By combining extensive data on individual businesses with detailed information on the location of economic activity, it creates a detailed portrait of urban and rural economies in 2019.

The findings show that, in 2019, about 23% of Canada's GDP was produced in rural areas, which also received nearly 20% of wages (i.e., labour compensation). They also show that about 60% of rural production occurred in areas that are relatively close to major markets, such as southern Ontario, central Alberta surrounding Calgary and Edmonton, and the lower mainland of British Columbia.

These estimates are based on newly developed experimental measures of economic output and income at a very fine geographic scale. These measures can be used to examine how economic disruptions (e.g., climate-related events like flooding and wildfires) might influence local economies.

Small unincorporated firms made up an increasing proportion of Canada's cultural industries from 2008 to 2020

Technological change has created opportunities and challenges for firms in cultural industries, which include film and video production, broadcasting and performing arts. The study, "Cultural industries in Canada: Exploring firm dynamics and measurement," examines the evolution of cultural firms in Canada, analyzing their composition across jurisdictions and in the cultural supply chain, and how technology may play a role in this evolution.

Using firm-level data from 2008 to 2020, this study presents a comparison between unincorporated firms (which typically represent smaller, entrepreneur-run businesses involved in content creation) and incorporated firms (which are typically larger and more established).

Over time, small unincorporated firms have made up an increasingly large percentage of cultural firms, which is consistent with a decrease in barriers to entering creative industries. These small unincorporated firms also seemed to have been less affected by the beginning of the pandemic. In 2020, the number of unincorporated firms decreased by 3.6%, compared with 8.6% for incorporated firms. Additionally, the only type of cultural firms to have grown in number from 2019 to 2020 were small unincorporated firms involved in the manufacturing of creative goods.

These findings contribute to a comprehensive understanding of the shifting cultural marketplace, filling an information gap on these industries and guiding future research and policy considerations.