1 Immigration Lecture 8 Don J DeVoretz

2 Benefits and Costs of Immigration Economic Affects of Immigration –Treasury Drain or Gain –Job Market Wage Compression or Expansion Job Displacement or Creation –Goods Market Price Effects - housing inflation Quantity Effects

3 Immigrant Treasury Transfer Immigrants add –2006 $63k discounted Canadians add –2006 $113k discounted Conclusion: –Immigrants subsidize residents

4 Costs & Benefits of Emigration Public Costs –Treasury costs of post-secondary leavers –Externalities: loss of job creation and exports –Loss of future income and taxes Private Costs –Causes retention in % of Cases –Loss of social safety net: age specific –Loss of social contact –Loss of social and physical amenities

5 Immigrants in Labour Market Highly skilled can create or compete for jobs Create jobs if bring complementary human capital Unskilled: Largely temporary or in family class –Largely take jobs Canadians will not do at going wage.

6 Immigrants in Goods Markets Increase Shelter expenses –Housing bubble? Increase transport needs –Scale effects help with public transport –Urban sprawl Increase demand for –Schooling –Health Care

7 Brain Circulation

8 Brain Churning Canada admits 250,000 yearly –3 doors A. Family Class- single screening 100,000 B. Refugees Single screening125,000 C. Skills125,000 Policy is 50/50 Thus net movement is 125,000

9 Risk of Movement to USA

10 Canada’s Churning Costs Canada is engaged in brain exchange Canada loses 10,000 highly skilled to USA Canada imports 18,000 highly skilled ROW Does this Net 8,000 solve the problem ? What if 18,000 does not match 10,000 What is cost of this churning ? –$10 billion circa

11 Conclusions: Brain Exchange Individual Immigrant gains Individual emigrant gains Canada experiences –Minor cost due to settlement costs –Large costs due to productivity loss Sending country experiences gain or loss –Depending on size of remittances and return migration

12 Policy Options Reduce Churning Costs through: Internships Foreign graduate student conversion Bribe Canadians to come home WHY? – Cheaper: Canada program – Unethical to import without compensation