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UniversityCanadian Immigration Impact on Economy
Immigration Policy Change Overtime
Impact on the Labor market
Positive Effect on Immigration
Negative Effect on Immigration
Canada is a rich multinational and multicultural country, mostly proud of its immigrants and immigration policy. Its history starts with Europeans, seeking for a better life, the slaves from the United States, the Chinese workers, refugees, and others. A peaceful and fully multicultural, Canada accepts different immigrants, who still add to its diversity and, at the same time, create the strong and unique identity. Regarded as the highest immigrant country per capita, it annually hosts 25000 new immigrants, since 1990. In the paper, I will examine Canada’s economic growth and immigration, paying a closer attention to the macro-economy, immigration policy, labor market, and the social structure. The low population density and less skilled workers contributed to the intake of more immigrants; and only recently, applications started to deteriorate. In the future, however, this phenomenon may bring increase in the unemployment rate, the government deficit, and the decrease in GDP when more social benefits are provided for those who are in need. In the discussion part, I will turn to immigration and its positive and negative impacts on the Canadian economy, and whether Canada needs to increase or decrease its immigrant intake.
Canada is a country of immigration; it started as French, British, and the first nation-base society. After that, there were some more Europeans seeking for a better life, the black slaves escaping from the United States, the male Chinese railway workers, refugees, and more; therefore, Canada is well-known as a peaceful multicultural country, in which the settlers and immigrants have contributed to the diversity of the society that creates the strong and unique identity. Today, Canada is the highest immigrant per capita in the world; its average intake is 25000 immigrants per year, since 1990. Through the paper, I will take a closer look to the causality between the economic growth and immigration, which includes the macro view of the economy’s impact, immigration policy, labor market, and social structure. Many of the political parties support that Canada should intake more immigrants, due to the low population density and less skilled workers; however, recently, applications started to deteriorate, according to the statistics of Canada. Moreover, it might lead to further increase in unemployment rate, increase in the government deficit, by providing more social benefits for those who are in need, and decrease in GDP that is against the government’s original ideas. Canada has been one of the favorite places to immigrate, and this paper will answer, whether the immigration has a positive or a negative impact on the Canadian economy, and should Canada increase, sustain or decrease its immigrant intake.
Immigration Policy Change Overtime
In this paper, we will focus on the 19th century, when many events were going on, such as completion of transcontinental railways, economic boom, economic recession, and more; we will explore, how this relates to immigrant and immigration policy. Canadian immigration policy is often used as a promotion tool to achieve the long-term growth and the short-term labor market goal, and often immigration policy is evaluated and modified, based on the “absorptive capacity”. According to Green and Green (1999), “the ideal rate of absorption depends on the ability of the economy to provide employment for new immigrants at the prevailing nominal wage (Green & Green 1999, p. 427). Moreover, the absorptive capacity fluctuates over time, which means, when the unemployment rise absorptive capacity declines, then the capacity reverses during the economic boom. During the early 19th century, a high level of investment and the completion of transcontinental railway definitely promoted economic activity on the agricultural level and the settlement to the West. There were many inflows from other countries, thus Canada introduced a new act, in 1910, which, basically, focused on the origin of the immigrant country. Up until World War I, Canadian farmers needed insurance, since Canada necessitated people to explore the West, before the Americans came, and Canada lacked its own labor resources. After Canada modified the Immigration Act, in 1919, the Act proposed to divide the immigrants into preferred group and non-preferred group.
During the 1930s-1940s, Canada experienced economic recession, and its unemployment rate fell at 11%; therefore, the rates of immigration inflows were dropped to nearly 0%. During the postwar period, there were large influxes from Europe, and many of them met the economic targets for immigration policy. Canadian economy needed many skilled workers, at this time, but, due to the extension of sponsorship rights, many unskilled workers came and it heaved up the unemployment rate. In 1962, Canada abandoned its racist immigration policy, and this formed the base on individual’s set of characteristics, education, and skills.
Later on, Canada introduced the point system, and every candidate gained points on the different categories, and whoever had enough of the points, had a chance to become a part of Canada. Green and Green states that “the form of the original point system indicates success for those who viewed immigration as an immediate labor market policy” (Green & Green, 1999, p. 431), thus, the points system is definitely one of the most suitable ways to select an appropriate candidate.
Now, Canada will be able to find the exact kind of candidate they are looking for, but it also has a critical weakness since people, who have strong personal characteristics, may not necessary, be considered as useful and skilled workers. Canada realized that it might not be effective enough to limit the unskilled worker, and introduced another ten-unit penalty in-point assessment, in 1974. Later on, Canada brings in a new Immigration Act, which puts humanitarian goals, before its economic goals. Canada is thinking ahead and, by the end of the 19th century, they wanted the immigration policy to readjust the age structure, so there will be enough workers to pay for the baby boomer’s pensions and health care. Based on the review dated 1989, it was concludes that “immigration was not the solution for naturally aging population” (p. 434); therefore, Canada began to focus on the economic component of the inflow. And, by 1993, it was the first time Canada did not change the immigration policy, regardless of the high unemployment rate.
According to statistical information, as shown in Graph 1 below (Statistics Canada, 2000), immigrants from all over the world came to Canada and contributed to the country’s economic growth as minority population. Since 1981, almost half of immigrants settled permanently down in Canada. They populated, mostly, big cities since the beginning of the 20th century. Economic opportunities divided the urban economic zone, in which 85% were immigrants and only 57% Canadians. By the end of the 1990’s, 55% of immigrants were reported to live in Ontario. During this period of time, the gap in employment rate widened between the recent immigrants and the immigrants permanently residing in Canada (Statistics Canada, 2000, p. 9).
In 1950’s immigrants, arriving in Canada, come from diverse countries across the world.
In 1990’s, opportunities for employment fell down in many parts of Canada, as a result of recession (Statistics Canada, 2000, p. 10). Many new job seekers, who were Canadians, found it difficult to get a place of employment. Adjustment to labor market of that time was particularly painful for newcomers. To conclude with, immigrants formed an important source of labor in big cities, all over the country. As a rule, recent immigrants faced higher unemployment rates and also their income was much lower, even if they were better educated than Canadian-born immigrants.
Impact on the Labor market
Immigration policy has tremendous effect on the domestic labor market, and Canadian government desperately needed more people in the labor market, since the population rate was low during the 19h century. Canadian immigration policy had been frequently changed, based on the socioeconomic situation and the growth of different industries. During the mid-19th century, Canada was looking for unskilled workers, for the mining and forestry industries and, then, it shifted from the short-term matching skill to occupational structure, which required more skilled workers. After that, immigration changed, due to the humanitarian goals, and became more focused on the long-term demographic goals. Increase in the stock of human capital definitely could help to fill the West, especially, after the transcontinental railway had been built. It was mentioned that Canada “may not be able to achieve either intensive or extensive economic growth without sufficient labor” (Green & Green, 1999, p. 439), which was true during the 19th century when Canada lacked both skilled workers and unskilled workers.
Canada willingly accepted immigrants, where among them, men pre-dominated women. Similar gender ratios concerning immigration were also common for other countries (the United States, Australia). The issue was that employers favored recruitment of men rather than recruitment of women. In the labor market, men were regarded as more permanent than women. Graph 2 below (Statistics Canada, 2000) shows the variation in numbers of Canadian immigrants during the 20th century. Statistically, female workers were suited for domestic work, and they came in numbers from England and Scotland. Men, who arrived in the country for work, were employed as workers at factory or farm hands. The large cities often needed more workers than the Canadian-born could supply them with. The majority of immigrants, originally, came from the United States, and after 1960, a new wave of immigrants from different European countries swept over Canada. Starting from 1900’s, Canada’s legislation, however, prohibited immigration for those who were mentally incompetent, or came from non-European countries. When immigration declined, women outnumbered men (Statistics Canada, 2000, p. 9).
The settlement of immigrants in Canada over the years was not even.
Contrary, until World War 1, new groups of immigrants appeared in Canada to request a permanent settlement, among them, Jewish, Russian, Hungarian, and Italian refugees. Public debated over the issue and criticized the newcomers, particularly those who arrived from European countries. This resulted in the Act of 1906 that prohibited entering of certain groups of invalid persons. The amendment to the Act, later, excluded the immigration of Indians to Canada. Later on, Japanese migration to the new land was also restricted. As a result, immigrants in Canada were grownups, aged between 25 and 64 (Statistics Canada, 2000, p. 5). Immigrants from Britain found themselves in the leading position, as to the biggest number of newcomers, also during the years of Depression. Another regulation, in 1919, provided the deportation of those immigrants, who were considered as enemies to the country. Further, Chinese immigration Act restricted immigration of Chinese people. During World War II, relocation of Japanese-Canadian refugees was made possible. After the war, Canada experienced a new boom of immigrants. They grew in incredible numbers, during the 1950’s, and reached the peak in 1957, with almost 300,000 admissions in a year. When Canadian economy exhibited the signs of slowing down, immigration began to fall again. The government’s policy anticipated a strict control of the rate of immigration, before the 1960’s. Moreover, the net migration was still very high, and it affected the population growth, with record-high birth rates in the late 1940’s up to 1960’s (Statistics Canada, 2000, p. 7). And, in 1956 alone, Canada became the homeland for 37,000 Hungarians.
In addition, using immigration policy to fill the occupational gap may be a good idea in countries, such as the United States, France, and Britain, which are technology leaders and have very close relations with Canada. Since Canada was newly formed during the 19th century, Canada does not have to pay for the investment in human capital and a just immigration policy as a tool to fill the gap; it is important that immigration policy can provide a labor shortage, in the short-term, but, in the long term, Canada will need to increase the skill through education. Also, it was mentioned in that paper that it is morally incorrect to steal from other countries their skilled workers.
Canada’s immigration policy is basically about the observation of the rights family reunification, along with successful contribution to labor market. All peoples could be, practically, admitted if they did not contradict the established regulations. Admissions were also granted on humanitarian bases for those who resided outside of Europe. The newcomers permitted the entry often had diverse cultural backgrounds and they were mainly attracted to urban centers. Over time, the vast differences between immigrants became obscure due to adjustment process. On the other hand, the gap in unemployment and average earning still widened, towards the end of the 20th century.
Even though immigration policy seems to have much potential to promote the economy, it also displays many disadvantages and weaknesses. One of the biggest challenges was how to measure precisely the number of workers Canada needs, and in what sector of the industry? The answer is they cannot calculate this number exactly, since the Canadian government can only roughly estimate, what sector of the industry needs more people, therefore, there is no way to measure, whether those immigrants have the set of skills that the government currently needs. Some people argue that Canadians should be able to fill the gap immediately, through immigration policy, but this presents a number of difficulties. Firstly, immigrants may have difficulties fitting into the industry that they were admitted to, which can be caused by the difference between the two countries’ technology, education, and language barrier. Secondly, immigrants often take a long period of time to fit into the industry and many of them did not end up with the industry that they were first admitted to. It was mentioned in the paper that immigrants often experience a very high unemployment rate and it may take up to 6 months for them to find a job. Thirdly, once the immigrants enter the country, they have the right to move to other places, and it might again be against selected the industry, to which the immigrants were admitted. To conclude with, these difficulties the immigration policy faces, does not provide an immediate supply of labor for Canada.
Positive Effect on Immigration
Immigration does bring many positive effects into the country, the community and society. The more people Canada has, the bigger is that market which directly affects the economy and the larger is the population, and it also means more innovation and skilled workers. A good thing about Canada is that this country does not need to worry about its overpopulation and pollution issues ever, since the population density is low, and Canada has many natural resources. It does not mean that Canada does not need to concern with these issues, but Canada can worry less about them, unlike some Asia countries (China, India). Canada is famous and proud of its multiculturalism, Canada has diverse groups of people and each of them shares with their unique identity. Also, the more people there are in the country, the more taxes the government will receive, and this also applies to pension and healthcare. During the mid- up to the late 19th century, Canada needed more people to come in to share the pension and the healthcare for the baby boomers. Immigration can also foster trade with the former home-country, since the immigrants must be very familiar with their home market advantages and the Canadian market advantages. It is considered as the potential benefit of immigration policy, but the real effect is limited. Some people argue that promoting of immigration policy can effectively change the age structure and, therefore, solve the aging problem. According to the statistic data, the inflow of 200000 immigrants per year will not have sufficient ability and effect on the ongoing aging problem.
Negative Effect on Immigration
Canada is a low population density country; the large amount of immigrants has significant influence on the labor market, wage, employment rate, etc. Canada is facing a large, diversified group of people, and the language and culture is one of the most important issues. Apparently, not all the immigrants know how to speak, either French or English; therefore, the government needs to hire English teachers to help out the new immigrants. Even though it is not that costly to hire an English/French teacher, but it is definitely costly, since there must be more than enough of these kinds of language assistance centers to help out those, who are in need. Many of the newly immigrants may need various assistance, and for those who need help, the Canadian government needs to provide a solution, either financially and socially. Also, due to the Canadian humanitarian goals, Canada has been accepting refugees every year, and it might have some effect on the unemployment rate and the GDP per capita. Moreover, the origin of immigrants is another important component for some under developing countries, or developing countries (Africa, Latin America), as they present a lower wage rate, lower education, and are less unskilled. Another important concept is called “Diaspora effect”, which means that people from the same origin tend to form a community and the community attracts more people from the same hometown, thus, these people who arrive after, have more chances to be less skillful. To conclude with the above discussions, immigration may be beneficial to the Canadian society, but it also has its drawbacks.
Settlement of immigrants in Canada, according to the regions.
The efforts to stabilize the ratio of immigrants in the 20th century.
Green, A. & Green, D. (1999). The Economic Goals of Canada’s Immigration Policy: Past and Present. University of Toronto Press.
Hiebert, D. (2006). Winning, Losing, and Still Playing the Game: The Political Economy of Immigration in Canada. Tijdschrift voor economische en sociale geografie, 97: 38–48.
Boyd, M. & Vickers, M. (2000). 100 Years of Immigration in Canada. Statistics Canada.
Dungan, P., Fang, T. & Gunderson, M. (2010). Macroeconomic Impacts of Canadian Immigration. CIC Research Network Meeting.
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