TORONTO — Most Canadian science and engineering graduates are staying in the country long-term, but the brightest young tech talent may still be leaving, a recent study from Statistics Canada suggests.

Researchers at the agency used tax data to track whether students at Canadian post-secondary institutions in science, technology, engineering, mathematics and computer science—the so-called STEM fields—stuck around once they got their degrees. 

The study’s authors noted that retention of STEM graduates had “improved in the last decade for both Canadian and international students,” though graduates from high-ranking universities, and those with advanced degrees, were more likely to head overseas.

For decades, Canadian policymakers and executives have expressed concern about brain drain, lamenting the loss of skilled young people from Canada to the U.S. in particular. Tech founders cite higher tax rates and lower pay as key reasons why engineers and developers studying in Canada head to Silicon Valley to work.

The new StatCan data tells a slightly different story. Among domestic students in STEM fields who finished school between 2010 and 2014, 90.3 per cent filed taxes in Canada in their first year after graduating. Some 87.7 per cent were still doing so after three years, and 85.7 per cent after five years. For those who graduated between 2015 and 2020, the retention rate was slightly better, at 91.2 per cent in year one and 88.9 per cent in year three, respectively.

It’s “good news” that the “vast majority” of Canadian students educated here are staying, said Kari Norman, an economist at Desjardins Group. 

International STEM graduates are still more likely to leave Canada than their domestic classmates, though the gap is narrowing. Some 60.5 per cent of foreign students who finished school between 2010 and 2014 filed Canadian taxes in year one, 56.6 per cent in year three and 55.3 per cent in year five. For the classes between 2015 and 2020, the rates were higher, at 67.4 per cent in the first year after graduation and 63.6 per cent in the third. “We’re doing a better job of keeping them,” said Norman.

For much of the last decade and a half, federal and provincial governments in Canada encouraged schools to bring in more international students, partly to fill funding gaps. For those in STEM fields, co-ops and other placements helped build work experience and made them better candidates for permanent residence. But Ottawa is now capping international student numbers and narrowing the path to permanent residence. That could limit how many foreign STEM graduates can or choose to stay in Canada in the coming years, Norman said.  

While the overall retention numbers have held steady, quality matters as much as quantity, according to Graham Dobbs, a senior research associate focused on innovation and technology at the Conference Board of Canada. It’s a major problem for Canada if the best and smartest students are still leaving, he said.

Higher-achieving students from higher-ranked universities tend to command larger pay packages, Dobbs said. Tech workers in the U.S. make significantly more than their Canadian counterparts, so STEM graduates in Canada will naturally look across the border for opportunities. 

The StatCan study suggests retention rates vary by degree and school. Fewer Canadian and international graduates who got PhDs between 2015 and 2020 were likely to be filing taxes in the country three years later (87.5 per cent and 62.6 per cent, respectively) than students finishing master’s (90.1 per cent and 72.2 per cent, respectively) or bachelor’s programs (89.1 per cent and 55.6 per cent, respectively). “The smarter this talent is, the more we have probably funded their education through grants and scholarships,” Dobbs said.

Graduates from more prestigious programs were also more likely to leave. Among Canadian students graduating from high-ranking universities between 2015 and 2020, 83.5 per cent were still filing taxes here three years later, compared to 91.1 per cent for students from other schools. For international students, the gap was even wider, with year-three rates at 55.6 per cent for high-ranking universities and 67.5 per cent for the rest. “If you’re the best at a top school, then you’re going to be in very high demand,” Norman said. 

Both economists say Canada needs to focus on retaining as many STEM graduates as it can. Policymakers need to create programs to “funnel these graduates into careers,” Norman said.  And while cutting taxes alone won’t help tech companies close the large Canada-U.S. wage gap, governments can make it easier for founders to launch startups and access capital, Dobbs said.