Is Immigration Good For the Canadian Economy?

Transcription

1 Is Immigration Good For the Canadian Economy? Professor Mikal Skuterud Department of Economics, University of Waterloo World in Motion: International Migration and Refugee Challenges Third Age Learning Guelph February 1, 2017

2 Overall, there is too much immigration in Canada. Source: Focus Canada, Fall 2016, Environics Institute.

3 Overall, immigration has a positive impact on the economy of Canada. Source: Focus Canada, Fall 2016, Environics Institute.

4 Can immigration address aging population?

5 Can immigration address aging population?

6 Can immigration address aging population?

7 Can immigration address aging population?

8 GDP per capita There is no question that immigrants raise Gross Domestic Product (GDP). But it s not the total size of the pie that matters; it s the average size and how it s divided. Do immigrants raise GDP per capita? Who benefits from immigration? Who loses?

9 GDP per capita There is no question that immigrants raise Gross Domestic Product (GDP). But it s not the total size of the pie that matters; it s the average size and how it s divided. Do immigrants raise GDP per capita? Who benefits from immigration? Who loses?

10 GDP per capita There is no question that immigrants raise Gross Domestic Product (GDP). But it s not the total size of the pie that matters; it s the average size and how it s divided. Do immigrants raise GDP per capita? Who benefits from immigration? Who loses?

11 GDP per capita There is no question that immigrants raise Gross Domestic Product (GDP). But it s not the total size of the pie that matters; it s the average size and how it s divided. Do immigrants raise GDP per capita? Who benefits from immigration? Who loses?

12 Theoretical Considerations

13 Constant Returns to Scale (CRS) y = f (z 1, z 2,..., z k ) CRS definition: if you double all the inputs (the z s), output (y) doubles Every year Canada admits roughly 1% of its population in new immigration Does this simply scale up the z s and y by 1.01? Then no change in GDP per capita. Is CRS a good approximation of reality?

14 Constant Returns to Scale (CRS) y = f (z 1, z 2,..., z k ) CRS definition: if you double all the inputs (the z s), output (y) doubles Every year Canada admits roughly 1% of its population in new immigration Does this simply scale up the z s and y by 1.01? Then no change in GDP per capita. Is CRS a good approximation of reality?

15 Constant Returns to Scale (CRS) y = f (z 1, z 2,..., z k ) CRS definition: if you double all the inputs (the z s), output (y) doubles Every year Canada admits roughly 1% of its population in new immigration Does this simply scale up the z s and y by 1.01? Then no change in GDP per capita. Is CRS a good approximation of reality?

16 Constant Returns to Scale (CRS) y = f (z 1, z 2,..., z k ) CRS definition: if you double all the inputs (the z s), output (y) doubles Every year Canada admits roughly 1% of its population in new immigration Does this simply scale up the z s and y by 1.01? Then no change in GDP per capita. Is CRS a good approximation of reality?

17 Constant Returns to Scale (CRS) y = f (z 1, z 2,..., z k ) CRS definition: if you double all the inputs (the z s), output (y) doubles Every year Canada admits roughly 1% of its population in new immigration Does this simply scale up the z s and y by 1.01? Then no change in GDP per capita. Is CRS a good approximation of reality?

18 Are Immigrants Different From Us? Do immigrants have a different mix of skills than the existing workforce? Substitute z s: immigrants tend to drive down wages of native-born workers with similar skills. Complementary z s: immigrants will raise the wages of native-born workers whose productivity benefits from immigrants skills. Countries gain most from scarce skills. Capital owners likely benefit most from immigration, particularly skilled migrants.

19 Are Immigrants Different From Us? Do immigrants have a different mix of skills than the existing workforce? Substitute z s: immigrants tend to drive down wages of native-born workers with similar skills. Complementary z s: immigrants will raise the wages of native-born workers whose productivity benefits from immigrants skills. Countries gain most from scarce skills. Capital owners likely benefit most from immigration, particularly skilled migrants.

20 Are Immigrants Different From Us? Do immigrants have a different mix of skills than the existing workforce? Substitute z s: immigrants tend to drive down wages of native-born workers with similar skills. Complementary z s: immigrants will raise the wages of native-born workers whose productivity benefits from immigrants skills. Countries gain most from scarce skills. Capital owners likely benefit most from immigration, particularly skilled migrants.

21 Are Immigrants Different From Us? Do immigrants have a different mix of skills than the existing workforce? Substitute z s: immigrants tend to drive down wages of native-born workers with similar skills. Complementary z s: immigrants will raise the wages of native-born workers whose productivity benefits from immigrants skills. Countries gain most from scarce skills. Capital owners likely benefit most from immigration, particularly skilled migrants.

22 Are Immigrants Different From Us? Do immigrants have a different mix of skills than the existing workforce? Substitute z s: immigrants tend to drive down wages of native-born workers with similar skills. Complementary z s: immigrants will raise the wages of native-born workers whose productivity benefits from immigrants skills. Countries gain most from scarce skills. Capital owners likely benefit most from immigration, particularly skilled migrants.

23 Education of immigrants (black bars) vs. existing workers (grey bars)

24 Wider effects Entrepreneurship: willingness to take risks may be a scarce skill that immigrants bring. Trade: immigrants may expand trade owing to superior knowledge of and preferential access to source-country market opportunities. Innovation: immigrants may raise productivity by generating new ideas

25 Wider effects Entrepreneurship: willingness to take risks may be a scarce skill that immigrants bring. Trade: immigrants may expand trade owing to superior knowledge of and preferential access to source-country market opportunities. Innovation: immigrants may raise productivity by generating new ideas

26 Wider effects Entrepreneurship: willingness to take risks may be a scarce skill that immigrants bring. Trade: immigrants may expand trade owing to superior knowledge of and preferential access to source-country market opportunities. Innovation: immigrants may raise productivity by generating new ideas

27 Canadian evidence

28 Earnings gap (log points) of a year-old recent male immigrant Period of High school Some post- University arrival or less secondary degree Source: 1986, 1991, 1996, 2001, 2006 Canadian Censuses.

29 Canadian immigration by source country,

30 Cause of immigrant earnings deterioration? At least one-third (likely more) is due to source country shift away from Europe towards Asia (Aydemir and Skuterud 2005) But why does country of origin matter? Credential recognition issues (Conference Board of Canada) Educational quality (Sweetman 2004) Language and literacy skills (Ferrer, Green and Riddell 2006) Discrimination (Oreopoulos 2010)

31 Oreopoulos audit studies Over six-thousand mock resumes, with identical educational credentials and work experience, but different names, were sent to Toronto employers posting online job ads. What impact do names have on callback rates? Source: Philip Oreopoulos, Why Do Skilled Immigrants Struggle in the Labour Market? A Field Experiment with Six Thousand Resumes, NBER Working Paper Series, No

32 Examples of mock resumes

33 Resumes sent April-November 2008 Name John Martin Emily Brown Arjun Kumar Shreya Sharma Ali Saeed Fatima Shiekh Zhang Long Fang Wang Callback rate 15.8%

34 Resumes sent April-November 2008 Name John Martin Emily Brown Arjun Kumar Shreya Sharma Ali Saeed Fatima Shiekh Zhang Long Fang Wang Callback rate 15.8% 12.1%

35 Resumes sent April-November 2008 Name John Martin Emily Brown Arjun Kumar Shreya Sharma Ali Saeed Fatima Shiekh Zhang Long Fang Wang Callback rate 15.8% 12.1% 11.0%

36 Resumes sent April-November 2008 Name John Martin Emily Brown Arjun Kumar Shreya Sharma Ali Saeed Fatima Shiekh Zhang Long Fang Wang Callback rate 15.8% 12.1% 11.0% 10.8%

37 Implicit Association Test

38 Implicit Association Test

39 Implicit Association Test

40 Implicit Association Test

41 Implicit Association Test

42 Implicit Association Test

43 Implicit Association Test

44 Implicit Association Test

45 Implicit Association Test

46 Implicit Association Test

47 Can we reorganize the pairings to make it easier? What if we put African American with Bad and European American with Good?

48 Implicit Association Test

49 Implicit Association Test

50 Implicit Association Test

51 Implicit Association Test

52 Implicit Association Test

53 Implicit Association Test

54 Implicit Association Test

55 Implicit Association Test

56 Implicit Association Test

57 Implicit Association Test

58 Implicit Association Test

59 Implicit Association Test

60 Study repeated with Greek names, 2010 Name John Martin Emily Brown Arjun Kumar Shreya Sharma Zhang Long Fang Wang Milos Papadopoulos Alexa Dranias Callback rate 13.4% 9.2% 10.8% 10.7%

61 Policy response in mid-2000s Pre-migration credential assessment Pre-migration language testing Two-step migration Preference given to applicants with Canadian post-secondary education and/or pre-arranged employment employment.

62 Earnings gap (log points) of a year-old recent university-educated male immigrant Immigrant Arrival Cohort Australia Canada USA

63 Earnings gaps by immigrant origin country China India Immigrant Arrival Cohort Immigrant Arrival Cohort Philippines North America Immigrant Arrival Cohort Immigrant Arrival Cohort Australia Canada USA

64 USPTO patent citation Inventor: Dave Williams, El Paso, TX (US) Assignee: Axxion Group Corporation, El Paso, TX (US) Filed: Aug. 24, 2000

65 US immigrants and patents Hunt and Gauthier-Loiselle (2010) find that 1 ppt increase in the state-level population share comprised of college-educated immigrants raises patents per capita by 9-18 Effect larger than implied by individual-level immigrant-native differential in patenting rates.

66 CanadianBaseline evidence FD-WLS estimates University-educated University-educated & STEMemployed Immigrant population share (1.677) (2.992) (9.795) * (14.881) Native population share 4.457* (2.391) (3.303) (10.070) (12.587) Log mean age (1.257) (1.507) (1.233) (1.452) Log mean income (1981) (0.112) (0.008) (0.013) Log population (1981) (0.008) (0.012) (0.115) Log mean income (0.607) (0.615) Employment rate (1.266) (1.261) Log expected patents per capita * (0.116) * (0.118) Year fixed effects Yes No Yes No Year-region fixed effects No Yes No Yes R-squared Number of observations

67 Earnings gap (%) by generation of Canadian men Race Child Foreign-born Canadian-born immigrants parents parent(s) Black Chinese South Asian White Notes: A child immigrant is someone who immigrated to Canada before the age of 12. Estimates are log point differences from a single least squares regression, which includes controls for education; work experience; part-time status; marital status; mother tongue and English/French fluency; industry; occupation; and geography. Source: Mikal Skuterud, The Visible Minority Earnings Gap Across Generations of Canadians, Canadian Journal of Economics 43(3), August 2010,

68 Summary Overall, the CRS perspective is probably a good approximation. Deteriorating performance of new immigrants is concerning, but recent gains are reassuring, as is performance of subsequent generations. Need to distinguish what we want to be true and the evidence. A neutral effect is good news, given the revealed-preference gain to immigrants.

69 Summary Overall, the CRS perspective is probably a good approximation. Deteriorating performance of new immigrants is concerning, but recent gains are reassuring, as is performance of subsequent generations. Need to distinguish what we want to be true and the evidence. A neutral effect is good news, given the revealed-preference gain to immigrants.

70 Summary Overall, the CRS perspective is probably a good approximation. Deteriorating performance of new immigrants is concerning, but recent gains are reassuring, as is performance of subsequent generations. Need to distinguish what we want to be true and the evidence. A neutral effect is good news, given the revealed-preference gain to immigrants.

71 Summary Overall, the CRS perspective is probably a good approximation. Deteriorating performance of new immigrants is concerning, but recent gains are reassuring, as is performance of subsequent generations. Need to distinguish what we want to be true and the evidence. A neutral effect is good news, given the revealed-preference gain to immigrants.