Last Updated on October 14, 2016
A number of myths about the impact of immigration on a receiving country are busted in a comprehensive new report that concludes newcomers are ‘integral to a nation’s economic growth’.
Immigrants have little impact on wages and do not significantly affect employment of native-born workers, according to the US National Academies of Sciences, Engineering, and Medicine (NASEM) study.
Skilled immigrants may even boost the wages of native-born workers in certain areas, the report says.
Newcomers also help combat unfavourable demographics, reduce prices of goods and services, boost innovation, entrepreneurship, and technological change and feed important economic sectors such as real estate.
The report, titled ‘Economic and Fiscal Consequences of Immigration’, focuses on the US, but many of the conclusions are directly applicable to Canada.
“The panel’s comprehensive examination revealed many important benefits of immigration — including on economic growth, innovation, and entrepreneurship — with little to no negative effects on the overall wages or employment of native-born workers in the long term,” said report panel chair Francine Blau, Frances Perkins Professor of Industrial and Labor Relations and professor of economics at Cornell University.
The evidence ties in with several recent studies in Canada highlighting the benefits of immigration as a crucial feeder of economic growth.
A leading study gives conclusive evidence 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 concludes 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 immigrant children graduating against 24.4 per cent from the established Canadian group.
Contribution of Immigrant Children
|Admission class||Graduated high-school (%)||Graduated university (%)||Average earnings ($)|
|Privately sponsored refugees||91.2||31.7||43,900|
|Refugees landed in Canada||91.4||29.4||35,400|
|THIRD GENERATION CANADIAN (OR MORE)||88.8||24.4||46,100|
Figures: Statistics Canada
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 become closer and closer together.
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 reach 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 might come in the long term, as often the ‘push’ factors of migration mean the nation of origin is not in a position to invest 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.
The NASEM study does accept there are short-term negative immigration impacts.
First-generation immigrants cost more at local level because of the need to educate children. But those children go on to become the strongest contributors in terms of tax out of any section of the population.
Elsewhere, there is also evidence the wages of prior immigrants and native high-school dropouts are reduced by an influx of new immigrants.
Blau said: “Where negative wage impacts have been detected, native-born high school dropouts and prior immigrants are most likely to be affected.
The fiscal picture is more mixed, with negative effects especially evident at the state level when the costs of educating the children of immigrants are included, but these children of immigrants, on average, go on to be the most positive fiscal contributors in the population.”
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