The income gap between Canada's newest immigrants and other Canadian workers has narrowed significantly, a new report from the parliamentary budget officer said Friday.

The report found that in 2018, new immigrants — or those who have been permanent residents for only a year — had a median income about 78 per cent of that earned by all tax filers.

In 2014 it was 55 per cent.

The PBO said the trends coinciding with this change include greater Canadian work experience, more immigration from South Asia and greater family connections in the country.

The report also found new immigrants with professional jobs such as engineers and applied scientists made particularly significant gains.

The PBO estimated that if the income gap were to be completely eliminated, productivity growth in Canada could rise by as much as 0.21 percentage points. 

The Liberal government increased annual immigration targets and plans to welcome 500,000 immigrants in both 2025 and 2026, almost twice the number admitted in 2015.

The PBO said its report was intended to "inform expectations" regarding that policy change.

The report said the substantial increased in the immigration targets will grow the Canadian economy over the long term by increasing the workforce.

"Whether that translates into a benefit for the existing population is uncertain, especially over the short to medium term when the newcomers need to be integrated into the economy," the report said. 

This report by The Canadian Press was first published Jan. 12, 2024.