A Critique of “Macroeconomic Impacts of Canadian Immigration… Using the Focus Model” (Dungan, Fang and Gunderson, 2010)

This paper provides a critique of an analysis of the macroeconomic impact of a 100,000 per year increase in immigration over a ten year period beginning in 2012. It was prepared by Peter Dungan, Tony Fang and Morley Gunderson using the FOCUS macroeconomic model of the University of Toronto Institute for Policy Analysis. The methodology relies on microeconomic information, much of which is dated, from earlier studies of the impact of immigration in Canada and other countries to gauge the microeconomic impact that is used to shock the various exogenous variables and equations of the model. As is often the case in such studies, the model overrides are the most important determinants of the simulation results as most, if not all, the important impacts of immigration are not built into the structure of the model. This critique provides specific examples of where this is the case and presents a case that the model results substantially overestimate the positive impact of increased immigration