Chapter 11

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The Economics of Immigration. Chapter 11. © 2007 McGraw-Hill Ryerson Ltd. 1. Prepared by Dr. A. Noordeh ... Chapter 11. © 2007 McGraw-Hill Ryerson Ltd. 2.
Chapter Eleven

Learning Objectives

The Economics of Immigration • • • • •

Patterns of immigration “Points System” Impact on native-born Assimilation Drain on public treasury?

Prepared by Dr. A. Noordeh York University Assisted by I. Bershad Chapter 11

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Profile of Immigration to Canada

Profile of Immigration to Canada • Until the mid-1980s overall immigration levels fluctuated considerably • 200,000+ immigrants per year since then • Per-capita P it immigration i i ti llevels l are slightly li htl lower • Source regions have changed dramatically

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Profile of Immigration to Canada

Profile of Immigration to Canada

Top Ten Immigrant Sources, 1995 and 2004

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• Two “levers”

• Admitting immigrants to alleviate specific skill shortages or contributing to economic growth • Family reunification • Sanctuary from political persecution

– Number of immigrants – Who is admitted

• Wh Whatt the th policymakers li k are ttrying i tto achieve?

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Immigration Policy

The Policy Environment

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The Policy Environment

Two Classes • Assessed – Evaluated on the basis of their likely contribution and success in Canadian labour market

• Non Non-assessed assessed – Family and refugee classes

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• Minimum work experience, minimum fund, and minimum score • Point System (2005)

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The Impact of Immigration on Employment and Wages

Canada’s Immigration Policy

– Education Ed ti M Max. Score S – Official Language // – Work Experience // – Arranged Employment // – Adaptability //

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Impact on Supply Only S0 S1

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Impact on Supply and Demand S0 S1

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Effects of Immigration

Economic Assimilation

• Positive Effects – Fill markets where there is already a shortage – Increase derived demand – Alter trade patterns – Invest

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• Assimilate in terms of hours working • Starting out at a lower level than a native born individual • Expect E t wages to t increase i over time ti (if positively selected)

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• Initially the immigrant may suffer an earning penalty (entry effect) • As the immigrant ages, his/her earnings should also rise • If assimilation is quick

Earnings Immigration

Entry effect

– disparity offset by a short catch-up period

Native-born

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Hypothetical Assimilation Profile

Economic Assimilation Profile

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Age 65 (YSM = 45)

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Measuring Earning Assimilation: Disentangling Cohort and Assimilation Effects

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Annual Earnings by Immigrant Cohort, 1995 and 2000

Measuring Earning Assimilation: Disentangling Cohort and Assimilation Effects

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Immigrant Outcomes and Public Policy • Canadian Point System vs. U.S. Family Reunification – Point system reduces admissions from less developed countries – Has an impact on tilting immigrant selection towards more skilled groups – Independent immigrants fare better than family class and refugee immigrants

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Impact of Immigration on Source Countries – Brain Drain

Summary

• Less-developed countries may lose their most skilled labour to more-developed countries • Home countries bear the cost of education and skilled emigrant reaps the benefits • Possible remedies – decrease taxes (a blunt instrument) – increase opportunities – Increase immigration of similar people Chapter 11

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• Profile of Immigration to Canada • Two policy instruments of the Canadian government to control immigration – Target number – Mix of assessed and non-assessed classes

• The potential impact of new immigrants on the labour market • Assimilation profiles of immigrants • Emigration and “brain drain” Chapter 11

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End of Chapter Eleven

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