1. 1 Research on Immigration and Integration in the Metropolis www.riim.metropolis.net

2. 2 Disequilibrium on the Canada-Mexico Labour Markets: A case for expanding Canada’s Temporary foreign workers Program? Don J. DeVoretz Professor, Simon Fraser University Canada Co-Director RIIM,Metropolis Project Canada don.devoretz@sfu.ca Presented at Labour Market Interdependence in North America: Challenges and Opportunities of an Aging Population November 13, 2006 Mexico City

3. 3

4. 4

5. 5

6. 6

7. 7

8. 8 Expanding Canada’s Temporary Foreign Worker Program ? Should Canada expand its Seasonal Agriculture Workers Program (SAWP) to include more sectors, occupations and/or regions? Should Canada expand its low-skilled temporary foreign worker policy to sectors, occupations and/or regions? Should Canada expand its high skilled temporary foreign worker policy?

9. 9

10. 10 Normal Case Displacement equals OA Wage compression Wc to Wc’ Who compensates lost workers? Who compensates lost wages? Who decides on optimal number of migrant admissions? –Ab or ad?

11. 11

12. 12 Dynamic Case: Nannies Demand Curve Shifts and Reservation Wage Rises Equilibrium:Pre-Demand Shift –OA Canadians working at W cad –100 % Canadian labour market Demand Shift –Wages rise from W Cad to W US –Reservation Wage Rised for Canadians All New Hires Foreign Born

13. 13 How to Evaluate Impact Under 2 Scenarios ? –Net Benefit Rule: Govt arbitrarily decides on AB Case A: Ambiguous –Why allow AB why not AD or Zero ? –2 Winners and 1 loser Case B: Admit Temporary Workers –All gain to foreign workers and Employers –However, foreign workers set min wage –Implementation Problems of Net Benefit Rule: Where is individual worker ?Property Right on Job How do know supply elasticities for –every market- every individual?

14. 14 THUMB.ORG Temporary Hiring Unskilled Monster Board CIC Set target AB in old Regime Now Agents in Auction Market Decide if AB is Equilibrium : Revenue Canada: –Provides voucher for job - based upon previous T4 –Collects turn-over fee: bonding, vetting and Board »Cost free to Canadian tax payer –Daily quotes of terms for all successful bids and offers Workers: Voucher: –sell job for a fee or retain job –Tenure-less than 365 days

15. 15 Conclusions: Limited Opportunities in unskilled market Expansive possibilities in Skilled market Under proper structure all three can gain No need for gov’t interference Many Details to be worked out –Conversion rights –Security –Bonding of agents