The Economic Contribution of Immigration in Canada—Recent Developments
What do we know? What does it mean for policy?
Serge Nadeau, Director*
Research Group on the Economics of Immigration
University of Ottawa
May 20, 2011
Résumé
Ce document est une synthèse de la Conférence sur l’économie de l’immigration tenue
les 28 et 29 octobre 2010 à l’université d’Ottawa. La conférence fût organisée par le
Groupe de recherche sur l’économie de l’immigration de l’université d’Ottawa en
partenariat avec Citoyenneté et immigration Canada (CIC) et Ressources humaines et
développement des compétences Canada. Dans le contexte des consultation publiques
récemment lancées par CIC, il est important de noter que plusieurs des changements
proposés au processus de sélection des travailleurs qualifiés (fédéral) sont en accord avec
les conclusions de la conférence, tels qu’une nouvelle répartition des points pour
encourager l’immigration de jeunes immigrants, l’introduction de seuils linguistiques
minimaux, et une réduction des points accordés à l’expérience de travail afin d’accorder
plus de points pour les compétences linguistiques.
Summary
This document is a synthesis of a conference on the economics of immigrations held on
October 28 and 29, 2010 at the University of Ottawa. The conference was organized by
the Research Group on the Economics of Immigration of the University of Ottawa in
partnership with Citizenship and Immigration Canada (CIC) and Human Resources and
Skills Development Canada. In the context of the public consultation process recently
launched by CIC, it is noteworthy that evidence presented at this conference is generally
supportive of the proposed changes to the selection process of federal skilled workers,
including redistributing age points to encourage the immigration of younger immigrants,
introducing minimum language requirements, and reducing points for work experience to
allow more points for language skills.
*
On behalf of the Research Group on the Economics of Immigration, I would like to thank the members of
the Conference on the Economics of Immigration program committee: Benoit Delage, Human Resources
and Skills Development Canada (HRSDC); Gilles Grenier, University of Ottawa (co-chair of the
committee); Bruce Jamieson, Citizenship and Immigration Canada (CIC); and Chris Worswick, University
Carleton (co-chair of the committee). The view expressed in this paper are mine and do not necessarily
reflect the views of CIC or HRSDC.
1.
Introduction
It is a truism that Canada is a nation of immigrants. For example, Statistics Canada
estimates that in 2006, almost 20 percent of all Canadians were born abroad—the highest
proportion in 75 years (Statistics Canada 2009). It also estimates that net international
immigration contributed to about two-thirds of Canada’s population growth between
2001 and 2006, and that it could become the only source of population growth by about
2030 (Statistics Canada 2007). However, while immigration can contribute to the quality
of life of Canadians by fulfilling humanitarian objectives and increasing social diversity,
it is not clear that it has a positive effect on our economic well-being. Indeed, there is
ample evidence that immigrants’ labour market performance is not as good as that of
Canadian born individuals in terms of participation rate and earnings (see, for example,
Aydemir and Skuterud 2005 and Green and Worswick 2010). Some researchers have
even argued that immigration in Canada may have resulted in a lower productivity and
average wage for Canadians, and may also have had a negative net fiscal impact on
public resources (see, for example, Aydemir and Borjas 2007 and Grubel 2009).
In that context, the Research Group on the Economics of Immigration (RGEI) at
the University of Ottawa in partnership with Citizenship and Immigration Canada and
Human Resources and Skills Development Canada held a conference on the economics
of immigration at the University of Ottawa on October 29 and 30, 2010. The objective of
the conference was manifold including examining key factors affecting the economic
contribution of immigrants; looking at the role of policy in explaining current outcomes;
and considering future directions for and identifying knowledge gaps in the policy
development process (see conference program in Appendix A). It goes without saying
that this conference was not the be all and end all on the issue of immigration.
Nevertheless, there were a number of important findings. This document highlights
common threads and points of divergence. They are organized under five headings:
macroeconomic impacts of immigration; key determinants of immigrant labour market
success; some social aspects of immigration; program evaluations; and policy
implications.
2
2.
The macroeconomic impacts of immigration
In theory, immigration can affect the economy in a number of ways. To begin with, there
is the impact on the domestic labour market. The influx of immigrants increases labour
supply, which can lower domestic wages and reduce employment among domestic
workers. The magnitude of the impact on employment will depend in part the flexibility
of domestic wages. If domestic wages are not flexible (as is often the case in Europe)
then the impact on employment may be significant. On the other hand, if domestic wages
are flexible (as is more often the case in North America) then the impact on employment
will be smaller (but the negative impact on the wages of those who are employed will be
greater).
In addition, while immigration may help avoid labour market bottlenecks, it
can slow down interregional labour market adjustments (see Gross and Schmitt 2010). 1
But, as noted by Dungan, Fang and Gunderson (2010) at the conference,
immigration can be associated with many other factors that can offset these potentially
negative effects. If immigrants are on average more skilled than domestic workers and if
these skills are fully recognized by employers, then we should expect immigration to
increase aggregate productivity and therefore GDP per capita in the long run. Immigrants
also increase aggregate demand, in particular through increased demand for housing but
also through increased investment (especially coming from business class immigrants).
In addition, immigration can foster trade with the former home country.
The overall impact of immigration on the domestic labour market is thus an
empirical issue: it depends on whether the negative effects on the supply side of the
labour market can be offset by the potentially positive effects of immigration on
productivity and increased aggregate demand.
The same applies to the expected impact of immigration on government fiscal
balances (expenditures including transfers minus taxes).
In times when the ageing
population is expected to impose a heavy fiscal burden through age-related programs
such as pensions and health care, immigration is often looked upon as a possible way to
1
Two key macroeconomic impacts of immigration that were not discussed at the conference but that are
crucial in the policy immigration process are the distributional impact of immigration (which is generally a
reduction of the income of workers who compete with immigrants and an increase in the income of those
who employ immigrants) and the impact of immigration on economic growth per se. For example,
Aydemir and Borjas (2007) estimate that an immigration-induced change of 10 percent in the supply of
labour is associated with a three to four percent change in wages in the opposite direction.
3
mitigate that burden. As with the impact of immigration on the domestic labour market,
the impact on fiscal balance is theoretically indeterminate. Immigrants use government
services like education and health care, and receive transfers like employment insurance,
social assistance and public pensions. But they also pay taxes. Further, by adding to the
population size, immigration helps spread the cost of some public goods such as national
defence. Immigration can also alter the age distribution of the population in a way that
yields more taxes and less public expenditure. Given these various forces working in
different directions, the impact of immigration on government fiscal balances is thus,
again, an empirical issue. It depends in particular on the age, education and skill level of
immigrants.
2.1
Empirical evidence
Most empirical studies find that immigration has little or no impact on domestic labour
markets and government fiscal balances. The study by Dungan, Fang and Gunderson
presented at the conference is no exception to that. Using the University of Toronto
FOCUS model for the Canadian economy, it looks at the impact of immigration on real
GDP and GDP per capita; unemployment; productivity and net government balances. It
finds that if immigrants are currently paid their marginal product (in the sense that if the
labour markets recognize their skills for what they actually are), then while immigration
at its current level is likely to have a small positive effect on government fiscal balances,
it will slightly reduce GDP per capita in the long run (see Table 1). Assuming a real GDP
per capita of approximately $40,000 a year, the figures in Table 1 suggests that the
current intake of approximately 250,000 immigrants a year reduces real GDP per capita
over 10 years by a stream equivalent of roughly $60 a year. However, if immigrants
earned as much as Canadian born individuals (which could be accomplished whether by
selecting more skilled immigrants and/or improving skill recognition of immigrants
and/or integrating immigrants more quickly and fully in the domestic labour markets),
then it would increase real GDP per capita over 10 years by a stream equivalent of about
$200 a year (or about $800 for a family of four), which is not negligible.
One way or the other though, while immigration at current levels probably
slightly improves fiscal balances (see Table 1 and Table 2), it is not likely to be a panacea
4
for the looming pension and especially health care expenditures associated with an ageing
population as it is sometimes touted to be.
Table 1: Macroeconomic Impacts of Immigration†
(Scenario 1: Census 2006 immigrant earnings ratio)
Changes from base case
Real GDP (%)
Real GDP per capita (%)
2012 2013 2014 2017 2021
0.4
0.2
0.9
0.3
0.9
0.1
100
59
-0.1
200
144
-0.2
300
196
-0.2
600 1000
288 539
0.0 -0.1
Labour productivity (%)
0.1
0.1
-0.2
-0.3
-0.5
Federal fiscal balance ($Bill)
Provincial fiscal balance ($Bill)
1.3
0.8
2.6
1.7
2.7
2.0
3.7
1.9
8.8
3.8
Total population (‘000)
Employment (‘000)
Unemployment rate (pc pts)
1.2
-0.4
2.3
-0.3
†
Projections are based on an assumed increase of 100,000 additional immigrants per
year above base-case levels. Alternative assumptions would yield roughly
proportionate projections.
Source: Dungan, Fang and Gunderson (2010).
Table 2: Macroeconomic Impacts of Immigration†
(Scenario 2: Immigrants are paid the same as domestic workers )
Changes from base case
2012 2013 2014 2017 2021
Real GDP (%)
Real GDP per capita (%)
0.5
0.2
1.0
0.5
1.3
0.5
2.0
0.4
3.4
0.8
Total population (‘000)
Employment (‘000)
Unemployment rate (pc pts)
100
40
0.0
200
116
-0.1
300
182
-0.2
Labour productivity (%)
0.2
0.4
0.3
0.4
0.6
Federal fiscal balance ($Bill)
Provincial fiscal balance ($Bill)
1.2
0.8
2.9
1.9
3.9
2.8
6.3
4.2
12.4
7.2
600 1000
305 537
-0.1 -0.1
†
Projections are based on an assumed increase of 100,000 additional immigrants per
year above base-case levels. Alternative assumptions would yield roughly proportionate
projections.
Source: Dungan, Fang and Gunderson (2010).
5
2.2
Immigration as a solution to population ageing
In his keynote address, David Bloom makes the point that while demographics matter a
lot to economic growth (for example, the increase in the ratio of working-age to nonworking-age population may have accounted for roughly one-third of the “East Asian
miracle”), it is unrealistic to believe that immigration could be the sole answer to
population ageing in developed economies. For Europe, for example, Bloom shows that
even if all Sub Saharan Africa inhabitants were to immigrate to Europe by 2050, the ratio
working-age to non-working-age population in Europe would still be below that what it is
in 2010 (see Figure 1). This reinforces results found elsewhere that only extreme and
probably unpalatable increases in immigration could solve the problem of population
ageing in Canada.2 That being said, the fact remains that immigration can help solve the
issue of population ageing (and, in that respect, the focus should be on accepting young
and educated immigrants) and there are several reasons besides concerns about
population ageing why Canada should continue welcoming immigrants, including
fulfilling humanitarian objectives and increasing social diversity.
2
For example, Guillemette and Robson (2006) find that stabilizing the ratio working-age to non-workingage population in Canada would require increasing immigration by more than threefold for decades.
6
3.
Key determinants of immigrant labour market success
As noted in the previous section, as it stands, the impact of immigration on Canada’s
economic well being is more or less a tossup.
In fact, at this juncture, the real economic
concern about immigration is the performance of immigrants themselves as they are
having increasing difficulty successfully integrating the Canadian labour market.3
Addressing this concern would be beneficial not only for the immigrants themselves but
also for the economy as a whole. Several papers presented at the conference add to our
knowledge of the factors that affect the labour market performance of immigrants.
3.1
Factors that positively affect labour market success/earnings of immigrants
These factors include having an arranged employment offer; being proficient in at least
one of Canada’s official languages; being young; having work experience in Canada; and
having a post-secondary degree.
•
Arranged employment offer (AEO): Bégin, Goyette and Riddell (2010) find that
having an AEO at the time of landing is the factor that affects the earnings of
immigrants the most. One year after landing, federal skilled (immigrant) workers
(FSWs) who had an AEO at the time of landing earn 74 percent more than those who
did not have one.4 However, the gap in earnings between those who had an AEO and
those who did not diminishes over time.
•
Language proficiency: The importance of knowing English and/or French for
immigrant success in Canada’s labour market is a recurring theme in the literature and
many papers at the conference reinforce this point. For example, Bégin, Goyette and
Riddell (2010) find that FSWs who are very proficient in either language earn as
much as 39 percent more than FSWs who are minimally proficient in either of them.
3
Studies that document or review the literature on the declining economic performance of Canadian
immigrants include Bloom, Grenier and Gunderson (1995), Picot and Sweetman (2005) and Reitz (2006,
2007a, 2007b).
4
As pointed out by Marc Frenette in his comments on the Bégin, Goyette and Riddell (2010) paper at the
conference, one must be careful when interpreting the effect of a change in a dummy variable in semilogarithmic earning equations when the coefficient of that dummy variable is large. In this document, I
report the estimates given in Bégin, Goyette and Riddell (2010) even though more accurate estimates would
be obtained using the method proposed in Halvorsen and Palmquist (1980), which says that if β is the
coefficient of the dummy variable, then the percent change in earnings is 100·{exp(β)−1}. Thus, for
example, a more accurate estimate of the effect of having an AEO on earnings would be 110 percent
(instead of 74 percent).
7
Bastien, Bélanger and Ledent (2010) find that mastering English or French increases
the probability of finding a skilled job by 50 percent for immigrants outside Québec,
while mastering English doubles the chances of finding a skilled job in Québec but
mastering French has no discernable impact. A number of studies presented at the
conference also showed that proficiency in either English or French significantly
reduces instances of immigrants not having their foreign qualifications recognized
(see Torres 2010, Houle and Yssad 2010). Bonikowska, Green and Riddell (2010)
also show that while not having English or French as a first language does not
negatively affect the literacy and numeracy skills of immigrants with Canadian
education, it does for those of foreign-educated immigrants. Finally, Clarke and
Skuterud (2010) suggest that one reason why immigrants in Australia perform better
than immigrants in Canada is because Australia’s selection policy puts greater
emphasis on English-language ability.
•
Age: Age at landing is a significant predictor of employment earnings. Results in
Bégin, Goyette and Riddell (2010) show that immigrants who were less than 30 years
old at landing earn 27 percent more than people who were 50 or older. Similarly,
Bastien, Bélanger and Ledent (2010) find that the probability of finding a first skilled
job declines exponentially with age: immigrants in the 25 to 29 years old age group
are respectively 25, 40, 49 and 65 percent more likely to find a first skilled job than
immigrants in the 30-34, 35-39, 40-44 and 45+ age categories.
•
Education: Education is another important determinant of immigrant success in the
labour market. For example, Bégin, Goyette and Riddell (2010) find that immigrants
who have either a master’s degree or a Ph.D earn 17 percent more than immigrants
who have 13 years of study or less. Likewise, Bastien, Bélanger and Ledent (2010)
show that the probability of landing a skilled job is significantly is 30 percent higher
if the immigrant has a master’s degree or a Ph.D.
•
Domestic work experience: Bégin, Goyette and Riddell (2010) add to the already
ample evidence in the literature that domestic labour market experience is more
valued than pre-immigration experience (see, for example, Frenette and Morissette
2003, Aydemir and Skuterud 2005 and Green and Worswick 2010). According to
them, immigrants who work in Canada for at least one year prior to applying as a
8
FSW earned 27% more than those who did not have Canadian work experience prior
to migration, while immigrants who worked for three years or less in another country
than Canada do not get any reward for this experience.
3.2
Factors that negatively affect labour market success/earnings of immigrants
The conference highlighted two factors having a negative impact on immigrant labour
market success: having relatives in Canada (or more generally, the so-called diaspora
effect) and the country of origin of immigrants.5
•
Diaspora effect: In his state of the art lecture, Michel Beine, using evidence from the
U.S. and Europe, makes the point that one of the most important factors explaining
the size and composition of flows of immigrants is the so-called diaspora effect. That
is, immigrant communities living in a country attract other immigrants from the same
countries and these immigrants tend to be less skilled and less economically
successful (see Beine 2010). Bégin, Goyette and Riddell (2010) find supporting
evidence for this effect in Canada: having relatives in Canada lowers expected
immigrant earnings by eight percent.
This is also consistent with Pandey and
Townsend (2010) who suggest that provincial nominee immigrants in Manitoba do
not perform as well as other provincial nominees because Manitoba, unlike other
provinces, operates a program stream whereby having a job lined-up is not required,
but having friends or family living in the province is important for prospective
immigrants to qualify for the program.
•
Country of origin: As is usually found in the literature, Bégin, Goyette and Riddell
(2010) find that FSWs whose last country of permanent residence was the United
Kingdom or North America earn significantly more than FSWs who came from other
countries.
As will be discussed below, this probably reflects the lack of
transferability of the skills (e.g., education and experience) acquired in countries with
different culture and education systems than Canada.
5
Another factor identified by Bégin, Goyette and Riddell (2010) as potentially negatively affecting
immigrant success in the labour market is having studied in Canada for at least two years prior to
migration. However, this is hard to explain as one would expect this effect to be positive. Their estimate
may be picking up the effects of some omitted factors in the statistical analysis. For example, the authors
suggest that this may reflect the possibility that some immigrants are still pursuing their studies.
9
3.3
Recognition of foreign qualifications
In recent years, we have observed a shift in the countries of origin of immigrants from
countries similar to Canada in terms of language and culture (e.g., U.S., U.K.) to
countries less similar to Canada (e.g., China, India). At the same time, recent immigrant
cohorts have performed poorly in the labour market, despite being more educated and
more experienced. In particular, immigrants seem increasingly overqualified for the jobs
they hold in Canada. A common explanation is that immigrants have appropriate skills
but credentials are not recognized as Canadian employers are unfamiliar with the
education systems and job markets of these “different” countries. Another explanation is
that Canadian employers discriminate against immigrants from countries that are
different from Canada in terms of language and culture. One way or the other, the fact
remains that the ability of immigrants to transfer the skills they acquired before
immigrating is essential for their successful economic integration. A number of studies
presented at the conference further document the extent of over-qualification/skilloccupation mismatch among immigrants. However, a number of other studies presented
at the conference suggest that another reason why we observe such widespread
occupational-skill mismatch among immigrants is because we use the wrong metric to
assess skills; in particular, these studies suggest that measuring education and work
experience in terms of inputs (e.g., diplomas earned or years spent) may be misleading
because the contribution of these inputs to human capital varies depending on where (that
is, in what country) they are acquired.
Incidence of seemingly over-qualification among immigrants
Immigrants work in jobs in Canada that require much lower non-manual skills and much
higher manual skills than the jobs they were working in when they were in their countries
of origin (Imai, Stacey and Warman 2010). Pescarus (2010) finds that 47 percent of
individuals who immigrated to Canada between 2001 and 2006 are overqualified (in
terms of education) for the jobs they occupy compared to 25 percent of Canadian born
individuals. Pescarus notes that a major reason for this is the lack of recognition of
foreign education. In the same vein, Houle and Yssad (2010) find that the probability of
immigrants having their foreign credential or work experience recognized depends on
10
where (that is, in what country) they attained their highest level of education or had their
last permanent residence.
The comparability of immigrant skills across countries of origin
An alternative explanation for the lack of recognition of credentials is that because of the
way they are measured, the skills of immigrants may not be comparable across countries
of origin. For example, one year of schooling (or of experience) acquired in certain
countries may be worth less than one year of schooling (or of experience) acquired in
Canada or in some other countries. This explanation is supported by a number of studies
presented at the conference and has important policy implications. In particular, it
suggests that measuring the skills of immigrants in terms of inputs like years of education
and experience, as it is done under Canada’s current immigration points system, may not
be appropriate—a better approach would be to account for “quality.”
In their paper, Bonikowska, Green and Riddell (2010) find that although
immigrants have in general more years of education and more years of experience than
Canadian born individuals, their literacy, numeracy and problem solving skills (as
measured by the International Adult Literacy and Skills Survey) are significantly lower
than those in the latter group. Further, they find that these differences in skills depend on
where human capital was acquired.
For example, immigrants who completed their
education prior to their arrival in Canada have significantly lower skills than otherwise
similar immigrants who obtained some or all of their education in Canada. Regardless of
these differences in skill levels and acquisition, however, they clearly reject the
hypothesis that immigrants receive lower returns on their basic cognitive skills than the
native born, which argues against discrimination-based explanations for differences in
earnings between immigrant and native-born workers, and also against the notion that
Canadian employers’ difficulties in appropriately recognizing immigrants’ skills is a
systemic issue.
Sharaf (2010) also provides strong evidence that source countries’ schooling
quality affects the returns to education for immigrants. Using schooling quality indices
developed by Hanushek and Kimko (2000), he shows that “a considerable fraction of the
immigrants who are apparently over-educated are in fact under-educated after controlling
11
for their schooling quality.” Although incidence of over-education is still present after
correcting for schooling quality, it is the change in incidence of under-education that is
dramatic: it almost doubles from about 18 to 35 percent for male immigrants and from
about 19 to 38 percent for female immigrants. Similarly, Bastien, Bélanger et Ledent
(2010) find that having a degree from a “western country” institution significantly
increases the probability of landing a skilled job.6
3.4
Training
Training could improve the integration of immigrants in the labour market. However,
immigrants are significantly less likely than Canadian born individuals to participate in
employer sponsored training: 22.7 percent compared with 32.3 percent (Boudarbat and
Boulet 2010). However, the reasons for this are unclear (except for size of business, none
of the possible explanatory factors examined by Boudarbat and Boulet are statistically
significant). It is puzzling that language ability seemingly reduces the probability of
training for immigrants (Hansen and Zhou 2010).
4.
Some social aspects of immigration
Although immigration and trade have symmetric effects on wages (Mundell 1957), there
is generally much more public opposition to immigration than to trade. The reason for
this is that, unlike trade, immigration involves more than economic displacements. It also
involves changes in the composition of the receiving country’s population: its habits,
culture and religion. In his keynote address, Christian Dustmann, based on data from the
2002 European Social Survey, reports that while people care about the “conventional”
economic effects of immigration (on their wages, taxes and benefits), compositional
concerns are significantly more important in understanding the variation in attitudes
toward immigration policy. For example, statistics show that in Europe, 70 percent of the
gap between the most- and least- educated respondents on the issue of whether
immigration should be increased or reduced is attributable to differences in the intensity
of concern over compositional issues, while differences in economic concerns account for
between 10 and 15 percent (Card, Dustmann and Preston 2009).
6
Bastien, Bélanger and Ledent (2010) define “western country” to include Canada, United States, Northern
and western Europe countries, Australia, New Zealand, Japan and Israel
12
Another immigration policy related social issue that was raised at the conference
relates to the “happiness” of immigrants.
Immigrants appear to be slightly (but
statistically significantly) less happy than Canadian born individuals. Income and social
capital factors (e.g., sense of belonging) tend to reduce the “happiness gap.” This result
suggests that the emphasis on economic and social integration in immigration policy is
well placed (Grant and Townsend 2010).
5.
Program evaluations
Results on the effectiveness of three programs were presented at the conference: the
Federal Skilled Worker (FSW) selection system under the Immigration and Refugee
Protection Act (IRPA), Provincial Nominee Programs (PNPs) and the Temporary Foreign
Worker Program (TFWP).
5.1
The FSW selection system under IRPA
A new selection system for skilled workers was introduced with the implementation of
IRPA on June 28th 2002. The objective of the new selection system is to help select
immigrants with maximum long-term labour market potential. The major differences
between the new and the old systems are that the new system does not put any weight on
specific vocational preparation and occupation, but put significantly more weight on
education and experience and the knowledge of one of Canada’s official language (see
Table 3).
In the first study ever of the effectiveness of the selection criteria under IRPA,
Bégin, Goyette and Riddell (2010) compare the labour market performance of FSWs
selected under pre-IRPA with that of FSWs selected under IRPA, and examine the factors
that have the greatest impact on FSWs’ successful integration in the labour market. They
find that IRPA FSWs have significantly better labour market performances than their preIRPA counterparts for every cohort and taxation year studied. For example, IRPA FSWs
earn on average almost $17,000 more a year than their pre-IRPA counterparts over the
2002-2006 period. They also find that all the selection factors under the IRPA system are
good predictors of success in the labour market except for experience outside Canada and
partner’s education which have significant impacts only if the applicants receive full
13
marks on these criteria.7
However, they find that while the country of origin of an
immigrant is not part of the selection criteria, it is a very significant predictor of success
in the labour market (see the discussion in Section 3.2. and 3.3 in that regard).
Table 3: Selection factors under the pre-IRPA and the IRPA regimes
Criteria
Pre-IRPA points (%)
IRPA points
Education
16 (14)
25
Official Language
15 (13)
24
8 (7)
21
Experience
SVP – specific vocational preparation
18 (16)
Age
10 (9)
10
Arranged Employment
10 (9)
10
Personal Suitability
10 (9)
Adaptability
10
Relative in Canada
5 (4)
Occupation
10 (9)
Demographic Factor
10 (9)
Under adaptability (5)
Total
112
100
Pass Mark
70
75/67
Source: Bégin, Goyette and Riddell (2010)
While Canada’s selection point system under IRPA clearly is an improvement
over the pre-IRPA system, it appears that Australian immigration policy (which also uses
a point system for the selection of skilled immigrants), whether in selecting or settling
immigrants, seemingly results in better labour market outcomes for new immigrants.
Clarke and Skuterud (2010) conclude that to the extent that the differences reflect
selection policy (e.g., greater emphasis on English-language ability), these policies seem
to be working primarily by influencing the source country distribution of immigrants
rather than by identifying more successful immigrants among those applying from the
same source country (in other words, if one controls for country of origin, then
7
Partner’s education is part of the Adaptability criteria in Table 3 and can be worth as much as five points.
14
immigrants in Australia are not significantly more successful than immigrants in
Canada).
5.2
Provincial Nominee Programs
PNPs are becoming a key component of immigration policy.
Citizenship and
Immigration Canada estimates that by 2012, about one-third of all economic immigrants
to Canada will have entered through these programs (Auditor General of Canada 2009,
page 12).
Pandey and Townsend (2010) compare the earnings and retention rates of
immigrants selected under PNPs and those selected under the FSW selection system in
the first two years after landing.
They find that provincial nominees earn substantially
more than FSWs: 39 percent higher in Manitoba, 62 percent in Atlantic Canada and 98
percent in the rest of Canada, but that this advantage disappears over time (as they point
out, this may reflect the fact that provincial nominees generally have jobs lined up when
they arrive). Pandey and Townsend (2010) also find that while the retention rates of
provincial nominees are similar to those of FSWs in Atlantic Canada and the rest of
Canada, they are significantly higher in Manitoba. They suggest that this may be because
unlike other provinces, Manitoba operates a stream in which a job offer is not required,
but having friends or family in the province is important.
5.3
The Immigrant Investor Program
According to Ware, Fortin and Paradis (2010), Canada’s Immigrant Investor Program is
an unmitigated success:
considering that about 2,500 immigrants enter the country
through this program every year, they estimate that the program provides a direct
economic contribution of $1.9 to $2.0 billion per year to the Canadian economy (that is,
between $770,000 and $800,000 per immigrant).
They also find that the Canadian
program is generally competitive to similar programs set-up in other countries to attract
wealthy immigrants. The main advantage of Canada’s program is that it has relatively
low financial requirements (encouraging younger immigrants). Its main weakness is
waiting time: 31 months compared to 14 weeks in the UK and 12 months in Australia for
example.
15
5.4
The Temporary Foreign Worker Program
The objective of temporary foreign worker (TFW) programs is to provide short-term
solutions to shortages of regional or occupational labour. Although no full evaluation of
Canada’s TFW program was presented at the conference, Gross and Schmitt (2010)
discussed some of its impact on inter-provincial labour market adjustments. They find
that the expansion of the program to all low-skill occupations in 2002 slowed down interprovincial labour market adjustments. They find that the pricing (that is, the implicit and
explicit costs of hiring a TFW) has been too low to encourage employers to seek workers
from high-unemployment provinces before seeking authorization to hire TFWs.
However, the economic benefits of the program in terms of reducing labour market
bottlenecks are not examined in their paper.
6.
Policy implications
The economic contribution of immigrants is an important consideration in devising
immigration policy. While immigration may not be the panacea to Canada’s population
ageing challenges that it is sometimes played up to be, the fact is that it has been and will
probably remain an important pillar of Canada’s governments labour market strategy for
the foreseeable future. In that context, all other things the same, it is important that
immigrants be as economically successful as possible.
This section discusses key
emerging policy themes from the conference in that regard. They are arranged under
three headings: attracting successful immigrants, recognizing foreign qualifications and
providing training to immigrants.
6.1
Attracting successful immigrants
While the FSW selection system under IRPA clearly is an improvement over the preIRPA system, it does not mean that it could not be still improved upon. By far, the most
frequently recurring themes at the conference are the importance of age and language; the
non-comparability of education and work experience across countries of origin; and the
diaspora effect. In particular,
•
the works of Bastien, Bélanger and Ledent, Bégin, Goyette and Riddell and
Dungan, Fang and Gunderson suggest that the current FSW selection point system
16
should be revised to even more favour immigrants who are young and who are
proficient in either English or French (for example, the “ramp” for the points
associated with the age and language selection criteria could be much steeper);
•
the works of Bastien, Bélanger and Ledent, Bégin, Goyette and Riddell,
Bonikowska, Green and Riddell, Sharaf and Clarke and Skuterud suggest that
education and work experience should be discounted if they have not been earned
in Canada or in countries whose economies are in comparable state of
development as that of Canada (Canada could follow Quebec’s example where,
in the case of domaines de formation privilégiés, full points for education are only
attributed for degrees obtained in Quebec or equivalent to Quebec degrees); and,
•
the works of Beine, Bégin, Goyette and Riddell and Pandey and Townsend
suggest that fewer points should be awarded for having relatives living in Canada.
It is noteworthy that these findings are generally supportive of the changes to the
selection process of federal skilled workers recently proposed by Citizenship and
Immigration Canada (Citizenship and Immigration Canada 2011).
These proposed
changes include:
6.2
•
redistributing age points to encourage the immigration of younger immigrants;
•
introducing minimum language requirements; and
•
rebalancing work experience points to allow more points for language.
Recognizing foreign qualifications
The recognition of foreign qualifications is an issue of great importance for immigration
policy. Canada’s FSW selection process is meaningful only if the immigrants selected
under this process are successful in finding employment in occupations that fully utilize
their skills.
While at first glance it may appear that the lack of recognition of foreign
qualifications may be an endemic problem in Canada, the work of Bonikowska, Green
and Riddell suggests otherwise. In particular, their work clearly rejects the hypothesis
that immigrants receive lower returns on basic cognitive skills than native-born workers,
which argues against discrimination-based explanations for differences in earnings
17
between immigrant and native-born workers, and also against the notion that Canadian
employers’ difficulties in appropriately recognizing immigrants’ skills is a systemic
phenomena.
6.3
Training
While no specific policy direction with regards to training can directly be drawn from the
papers presented at the conference, some can be drawn indirectly. Given that more than
two-thirds of all immigrants landing in Canada are admitted under the family unification
or the refugee programs (and are therefore not admitted because of their skills), and given
the determinants of success in the labour market identified at the conference and
discussed in Section 3, the focus of governments efforts in the area of immigrant training
should continue to be on basic skills (including language skills and literacy) training.
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APPENDIX I
CONFERENCE PROGRAM
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