First, measuring economic slack is fraught with well-known difficulties. Second, both theory and empirical studies suggest that the wage-inflation pass-through varies over time and depends on many factors. Arguably, the structural changes under way in advanced economies imply that the pass-through may be on the decline.
Canada’s immigration policy has long been considered a success because of its record of attracting immigrants with the necessary skills to be absorbed into the labour force and to make important economic contributions. This approach will be particularly crucial going forward as the workforce gets older.