Immigrants – Zero Affect on Economy

30 Mar 2011

Immigrants – Zero Affect on Economy

Not a viable solution!

By Patrick Grady

[...]

This paper reviews some of the key facts about productivity. And it notes that immigration is never mentioned as a factor tending to depress productivity. It then goes on to apply the methodology of growth accounting to calculate an estimate of the impact of recent immigration on productivity. This in turn calls into question the wisdom of the Government’s immigration policies as part of any evidenced-based strategy to improve the living standards of Canadians.

[...]

Productivity growth in Canada has increasingly been falling behind that in the United States. While GDP per worker in current US dollars is not the best measure of productivity as it incorporates inflation as well as real increase in output, it is often used for purposes of comparison. By this measure, the productivity gap between Canada and the United States, after remaining relatively stable for decades up to 1983, began to rise significantly thereafter with the increase accelerating after 2000.

Chart 1

In spite of all the recent attention on Canada’s relatively slow productivity growth, the important issue of the implications of the poor labour market performance of recent cohorts of immigrants for productivity growth has yet to be analyzed and quantified as a possible factor.

[...]

The 2006 census data revealing the poor labour market performance of recent cohorts of immigrants are cause for concern, especially when combined with the continued high level of immigration after 2005, which is planned to persist indefinitely in the future. Growth accounting suggests that immigration will continue to have a large and growing negative impact on labour productivity, which will only cease when the immigrants that are selected and admitted are able to earn at least as much as non-immigrants.

Given that the largest proportion of immigrants are NOT selected based on their skills, but rather are dependents of economic class immigrants, family class immigrants or refugees, it doesn’t appear likely that new immigrants will earn as much on average as non-immigrants in the foreseeable future. Thus immigration can be expected to exert a continued depressing effect on productivity.

As an aside, it will unfortunately no longer be possible to monitor the impact of immigration on productivity using the census as the data on the earnings of immigrants utilized in this paper comes from the census long form which is being eliminated in the 2011 census.

But, at least for the present, the data from the 2006 census provides a clear indication that from an economic point of view Canada’s immigration program has lowered productivity growth and has contributed significantly to the growing productivity gap with the United States.

[...]

The fly in the ointment is that only 17% of immigrants are actually selected under the skilled worker program, and that they bring with them or sponsor family members who do not have the same level of skills, and who usually perform worse in the labour market.

To actually increase productivity, immigrants have to be more productive than existing workers in Canada, which, given that earnings reflect productivity, means that they must earn more than existing workers. If the Government were to only admit such immigrants, it could justifiably claim that immigration policy was productivity enhancing.

However, since there is no indication that the Government only intends to admit immigrants likely to achieve a higher than average level of earnings, there is no way that the government’s proposed immigration policy can conceivably be portrayed as helping to lower the Canada-U.S. labour productivity gap.

A Final Word

Don’t believe anyone when they tell you that immigration is raising productivity, or that it is likely to reduce the Canada-U.S. productivity gap. A careful analysis of the data using the standard analytical tool of growth accounting in the most simple and straightforward way possible, shows that this just isn’t true. As the American humorist who called himself Artemus Ward said, “It ain’t so much the things we don’t know that get us in trouble. It’s the things we know that ain’t so”. >to Full Article

ALSO READ:

Myth of Labour Shortages

Canadian Workers Not Wanted

Immigrant Workers Not Needed

***************************************

Canadian Immigration Policy Reform

Mass Immigration’s Negative Effects

….and

Duped By Multiculturalism

Score Card: Immigrants 1, Canadians 0

JAPAN Simply Rejects Mass Immigration