The Economics of Migration

Why does a country like Canada open its doors to immigrants? Why do people leave their country and make another country like Canada their own? What are the costs involved when people immigrate?

This article tries to provide answers to these questions and help people appreciate the “economics” of migration.

International migration is the movement of people from one country (the sending country) to another country (the receiving country) in which the people reside for a noticeable period of time. Many people certainly believe that international migration has played an important role in the expansion of the receiving country.

You may have observed that the population of Canada consists of descendants of those who immigrated from Europe, Asia, and other continents. How and why did this happen?

Canada’s immigration policy is, in part, a human resources program. Canadian immigration policy has the objective of recruiting qualified workers and professionals to contribute to the Canadian economy. Canada encourages workers and professionals with needed skills and experiences to immigrate in order to better match the supply of labor with the demand for it.

To help us understand and appreciate the present situation of immigration to Canada, it is worth looking at the decisions that Canada has made on immigration through the years.

Before World War 1, Canada opened its doors to immigrants and even advertised in Europe to attract foreign nationals. After World War 1 however, Canada switched from actively recruiting immigrants to limiting them. This was especially when the hard times hit in the 1930s. In 1974, Canada shifted to liberal policy toward relatives. Family members and refugees began to arrive at a fast rate in the 1980s.

Steadily, Canada has been restricting the entry of unskilled workers and the ability of visitors to Canada to seek employment. Immigrants are also encouraged to settle in areas that are under populated and that are short of needed human resources for the purpose of reducing the geographic dimension of structural unemployment. To restrict immigration, Canada begun using a ‘quota’ and/or ‘selection criteria’ system and started regulating selected profession. Since then, Canada has experienced an unprecedented cultural diversity and job competitions.

Even as immigrants feel that they can live the “Canadian dream” and give themselves the opportunities of a better life, they also incur the costs of immigration. Monetary costs include the transportation and other expenses of migration, as well as lost wages while relocating. Migrants usually feel uprooted from friends and relatives. They also feel uncertain about many dimensions of life in a new, strange country. Most have to learn new customs and a new language. They may have to endure hostility and considerable adjustments in their new country.

An empirical study of migrant workers in 2005 reveals the following main findings:

  • “Directly competing workers in the receiving countries do have their pay lowered, relative to less immigrant-threatened occupations and relative to such non-labor income”;
  • “Immigrants often take jobs that are increasingly unpopular with the natives of the prosperous receiving countries (ex. long hours in convenience stores, nanny, fast food crews, etc.)
  • “Immigrant earnings catch up partly, but not completely.
  • (To be continued)