Cut immigration during recessions: study

Adrian Humphreys  Sep 1, 2011 – 6:00 AM ET | Last Updated: Aug 31, 2011 10:30 PM ET

Canada should reduce immigration during deep economic recession, say the authors of a detailed analysis of the earnings of immigrants over their first 10 years in the country that also touts the benefits of selecting newcomers based on earning potential.

Canada should emphasize skill-assessed immigrants because their earning power “consistently and substantially” out-performed other classes of newcomers, the study says.

Written by two Queen’s University professors and released by the Canadian Labour Market and Skills Researcher Network Wednesday, the study calls on policy makers to look closely at how rapidly immigrants are integrating into the Canadian labour market as the wage gap between immigrants and Canadian-born workers widens.

“In setting immigration policy and targets, it is important to know how well immigrants in these different admission categories have done, and which have produced better earnings outcomes,” say authors Charles Beach, professor of economics, and Michael Abbott, associate professor of economics.

They assessed the annual earnings over 10 years of immigrants who arrived in three different years: 1982, 1988 and 1994.

Immigrants enter Canada under different admission categories, each addressing a different objective, both altruistic and selfish — providing labour to help the economy, promoting family welfare through reunification and offering safe haven from war, persecution or natural disaster.

Across all of the landing cohorts, skill-assessed economic immigrants exceeded the average median earnings levels for all immigrants by 30 to 37% for men and by 39 to 56% for women, the authors found.

However, refugees showed the highest earnings growth rates, while those who arrived for reasons of family reunification had the lowest.

The study shows recessions have major negative effects on immigrants’ earnings levels, particularly men. The impact is seen by comparing immigrants arriving in 1988, who faced the early 1990s recession soon after settling, with those arriving in 1994, during the economic recovery. Regardless of which class the immigrant was admitted under, in troubled times, their earnings growth was lower.

“These results reflect on two aspects of Canadian immigration policy,” the authors say. “First, since skill-assessed, independent economic immigrants had substantially higher earnings levels throughout their first 10 post-landing years, Canada should continue to place heavy weight on skill-assessed immigrants.

“Recession appears to have had very marked and long-lasting scarring effects on the real earnings of immigrants,” the authors say. “Perhaps thought should be given to ways to reduce total immigrant admission levels when severe recessions hit.”

The report confirms what many have long suspected, said Sergio Karas, a Toronto immigration lawyer.

“Immigrants who come to Canada with prearranged employment become better integrated and more easily established than those in other immigration categories,” he said.

“The federal government and the provinces must give top priority to address the looming skilled-worker shortage and the entrepreneurial innovation deficit that threaten Canada’s economic future rather than wasting funds on programs that cater to politically driven goals.

“There is no point in bringing immigrants to Canada if they will be unable to find jobs,” Mr. Karas said.

The Canadian Council for Refugees, however, cautioned against assessing immigration to Canada only in dollars and cents. The different categories have differing goals.

“You can’t measure the success of the family reunification program by assessing their rates of earnings,” said Janet Dench, the council’s executive director. “We don’t protect refugees because we think it will be good for the economy — we do it to protect them from persecution.”

Ms. Dench said the government is already leaning too heavily toward skills-assessed, economic immigrants.

The study used data provided by Citizenship and Immigration Canada. The CLMSRN is a network of academic researchers studying the labour market funded through the Social Sciences and Humanities Research Council and Human Resources and Social Development Canada.

National Post

ahumphreys@nationalpost.com

As Irish economy staggers, youth set eyes on Canada.

BY L. IAN MACDONALD, FREELANCE

At Tralee, on Da tour of golf courses in southwest Ireland, a caddy named Danny explained that he had a mortgage of -250,000, or $375,000, on his house. He can't possibly pay it on a caddy's earnings and tips, and the golf season in Ireland ends in mid-October.
He got the mortgage five years ago when he was a foreman in the housing industry, a boom that went bust.
Danny's story is all you need to know about the origins of the Irish financial and economic crisis. Nearly 20 per cent of Ireland's housing stock is empty, and hundreds of thousands of Irish families are holding mortgages now worth twice as much as their homes. As The Irish Times wrote in an editorial last week: "Their assets have plummeted in value but their liabilities have not."
Of 780,000 mortgage-holders, the Irish Independent reported last weekend, 50,000 are three months or more in arrears on their payments. There is much talk of debt forgiveness, or restructuring, for those hardest hit.
But as Danny asks: "Who decides whose debts are forgiven, and how?"
At one time, 20 per cent of the Irish workforce was in the construction industry, building homes and office towers, many of which are now unoccupied. Gleaming new office buildings on the outskirts of Dublin stand empty - "see-throughs," as they are called in the real estate industry, with no curtains, no furniture, no offices and no people.
In the long term, Irish investments in education and infrastructure, as well as low business taxes to encourage investment, will pay off. In the near term, Ireland's challenges are daunting.
When the bubble burst in the United States three years ago, Washington rescued Wall St. by lending it $700 billion U.S., all of which has been paid back. In Ireland, instead of lending money to the banks when the housing bubble burst, the government guaranteed or bought -80 billion ($120 billion) of debt. Since then the European Central Bank has come through with a further -85 billion in loans, and the International Monetary Fund has also stepped in with a bailout. Where it formerly ran a surplus, Ireland's deficit is now one-third of gross domestic product, and its debt is 130 per cent of GDP. Where unemployment was only four per cent before the housing bubble burst, it's now 14 per cent.
And people are leaving Ireland. Again. Not because of famine, but because of the folly of their banks and government.
At the Waterville golf links, a caddy named Robert is finishing up his degree in civil engineering, and is thinking of emigrating to either Canada or Australia. At Tralee, Danny's colleague, David, is a plumber who wants to move to Alberta, where there's a shortage of skilled tradespeople. At Old Head, the caddy master, Paddy, has a son, a mechanical engineer, who has just found a job in Vancouver.
Everywhere our group went, people asked about Canada, which they had heard was booming, and how they could get there.
They have a lot to offer. Ireland's workforce is the one of the most literate and among the most highly skilled in the world. They speak English. There's community support for resettlement in cities such as Toronto with large Irish populations.

The question is, what is Ottawa doing to encourage them to choose Canada over Australia or the United States?
Quite a bit, as it turns out, according to Loyola Hearn, Canada's ambassador to Ireland. A former Conservative MP, Hearn is Newfoundland Irish, which makes him as Irish as anyone.
"We've doubled the number of student and youth visas to 5,000 from Ireland," he was saying the other night. They've all been snapped up. Student visas are being extended from one to two years, to encourage young Irish people to stay on in Canada.
Immigration files are being fast-tracked, though for reasons passing strange, the paperwork is done from the Canadian High Commission in London - which means it takes weeks, even months, when the embassy in Dublin could handle it in days. Given the history between the Irish and the British, the symbolism alone is unfortunate.
There is also the minor inconvenience that Canada isn't easy to get to for those coming from Ireland. There are no nonstop commercial flights except in summer, and then only to and from Toronto on Air Canada.
But that's a pretty minor obstacle given the opportunity to start over again in a welcoming new country. By the time the Irish have worked through all their fiscal issues, the best and brightest of a new generation will have left for distant shores.
"But," as Hearn says, "the Irish are like Newfoundlanders. They may work somewhere else, but they always come home."
imacdonald@irpp.org

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