The labor market effects of immigration: evidence from the Canadian experience

Cummer, Jared
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University of Delaware
In an effort to improve the economic outcomes of immigrants, starting in the mid-1990s the Canadian government introduced regulatory amendments and new legislation that altered the skill composition of new cohorts entering the country. At the same time, the government significantly increased the level of immigration through expanding the Temporary Foreign Worker (TFW) program and landed immigrant entry streams. These policy changes focused on admitting applicants with the skills needed to adjust with long-run shifts in the labor market, while addressing short-term demand. By altering the Canadian immigration system, the government significantly altered the composition of the country's labor force. Immigrant cohorts entering under the new policy regime had a different composition of skills in comparison to earlier cohorts. By focusing on improving immigrant human capital, the Canadian government altered the skill distribution of the labor force. At the same time, increasing landed and temporary immigration levels shifted the short and long-run supply of labor. As a result, changing the composition and number of immigrants entering Canada influences the general labor market equilibrium of the country. This dissertation contributes to the immigration literature by examining the impact that changes to Canadian immigration policy between the mid-1990s and early 2000s had on immigrant and native-born employment outcomes. This research concentrates on the supply-side effects immigration has on labor market outcomes in Canada. In the first empirical chapter, I examine immigrant entry earnings following the major policy changes. Since policy changes varied between entry streams, I estimate the change in entry earnings for landed immigrants and temporary foreign workers, separately. I find that after an initial improvement in the earnings of both immigrant cohorts in the mid-1990s, policy changes in the early 2000s eliminated most of this improvement. In the second empirical chapter, I expand the existing immigration literature through an examination of the employment patterns of landed immigrants. Following the policy changes, I find that landed immigrants are more likely to experience periodic unemployment in comparison to native-born Canadians. I attribute the majority of this difference to weak language abilities and visible minority status. In the final empirical chapter, I analyze the effects of increasing levels of immigration on the existing Canadian workforce. I find that the effects of an immigrant supply shock are concentrated within specific skill groups and regional labor markets. Overall, the results in this dissertation support policy changes that focus on matching potential immigrants with employment opportunities prior to arrival in Canada.