Does Canada Underestimate Contribution of Immigrants?

Last Updated on March 22, 2018

Canada could be underestimating the contribution of immigrants because it fails to capture their time as temporary residents, before achieving permanent residence status.

That is the opinion of Mikal Skuterud, an Economics Professor at Waterloo University who used to work for Statistics Canada.

Skuterud argues in an article for Policy Options that the monthly Labour Force Survey (LFS) should include questions that consider an immigrant’s contribution since arriving in Canada – currently the data focuses on the time since they became a permanent resident.

Since Canada is increasingly reliant on a ‘two-step’ immigration system, where foreigners come in as temporary residents before becoming permanent, statistics-gathering should reflect that, Skuterud says.

“Given the growing importance of two-step immigration to Canada, it is time for Statistics Canada to revise the long-form census and LFS questionnaires to better capture the time immigrants spend in Canada before becoming permanent residents,” he writes.

“While having information on year of arrival and landing is optimal, capturing information on years since arrival should be the priority.”

There is already considerable evidence of the net benefits immigrants provide to Canada’s economy over time.

A leading study concludes that immigrants are far more likely to own businesses than their Canadian counterparts, a key growth component.

Released in March 2016 and titled Immigration, Business Ownership and Employment in Canada, the study says that ‘rates of private business ownership and unincorporated self-employment are higher among immigrants than among the Canadian-born population’.

We know this officially for the first time because data based on immigrant business ownership has only recently become available with the introduction of the Canadian Employer-Employee Dynamics Database, which you can access here.

Statistics also show immigrant children consistently beat their peers with Canadian-born parents in terms of educational attainment.

A paper entitled ‘Educational and Labour Market Outcomes of Childhood Immigrants by Admission Class’ by Statistics Canada reveals the children of immigrants graduate high school at a rate of 91.6 per cent, against 88.8 per cent of children who are third generation or more.

When it comes to university, the gap increases, with 35.9 per cent of immigrant children graduating against 24.4 per cent from the established Canadian group.

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Contribution of Immigrant Children

Admission class	Graduated high-school (%)	Graduated university (%)	Average earnings ($)
Skilled-worker	96.2	49.7	46,400
Business	97.8	58.9	46,700
Live-in caregiver	93.3	19	33,500
Family	88.3	21.3	39,200
Government-assisted refugees	91	28.7	41,100
Privately sponsored refugees	91.2	31.7	43,900
Refugees landed in Canada	91.4	29.4	35,400
Other refugees/humanitarian	89.5	25.8	36,400
OVERALL
IMMIGRANTS	91.6	35.9	42,900
THIRD GENERATION CANADIAN (OR MORE)	88.8	24.4	46,100

Figures: Statistics Canada

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At the same time, further figures show the percentage of immigrants in the working-age population has been steadily increasing for the last decade as the Canada-born proportion drops, illustrating the need to make up for the shortfall by bringing in foreign workers.

In 2006 less than 20 per cent of the workforce – those aged 15 and over – were from the landed immigrant population, while more than 78 per cent were born in Canada.

But fast forward 10 years and the latest data released by Statistics Canada shows an immigrant percentage just less than 24, while the Canada-born proportion has dropped almost as low as 74 per cent.

If the trend continues – and there’s no indication it will not – the two percentages will converge.

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The numbers are increasingly dramatic over the last 12 months, when the number of immigrants in work increased by more than 260,000, 6.6 per cent higher than a year ago.

In the same period, the number of native-born workers has decreased by 93,300, although it is showing signs of recovery in the last two months.

Analysts say the data shows Canada has reached the point where it cannot grow without immigrants, with Canadian-born workers exiting the labour force at such a rate.

A further study suggests the more immigrants of a given nationality or culture a country welcomes, the more likely the nation of origin is to invest further down the line.

According to the National Bureau of Economic Research, investment comes in the long term, as often the ‘push’ factors of migration mean the nation of origin is not able to invest in the short term.

A good example of this is Syria, extremely unlikely to invest any time soon, but with refugees spreading all over the world, including more than 30,000 in Canada, investment could flow in more stable times when citizens are looking for places to put their assets.

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