Skuterud et al: How We Subverted our Skills Based Immigration System

2025/12/11 Leave a comment

Valid critique:

In 2023, with little fanfare and no political opposition, the federal government gave itself the power to subvert Canada’s world-renowned skilled immigration system.

That system was formerly centred on the “points system,” called the Comprehensive Ranking System (CRS) in its most recent incarnation. 

Under the CRS, applicants for permanent residency were evaluated on their education, work experience, and language proficiency and the highest scoring applicants were admitted. The result was a continuous inflow of top talent chosen without political influence that benefited the Canadian economy and was admired by many countries (and emulated by some).   

But in 2023, the government created a new category-based feature in the system. That feature gave the immigration minister the power to prioritize categories of immigrants and move them to the front of the line. A rules-based system was replaced with a discretion-based system. 

The result is an opaque system that is exposed to political lobbying, looks like a lottery to prospective migrants, and squeezes out highly skilled candidates. In 2025, the leading category of immigrants under the new category-based system are francophones applying to live outside Quebec. 

Contributing to Canada’s patchwork immigration system, provincial nominee programs, which give provinces the ability to prioritize groups unable to meet the standard of the points system, account for an ever-increasing share of immigrant admissions. 

Admitting fewer skilled immigrants reduces our country’s productivity and tax revenue making it harder to fund social programs. It also affects Canada’s ability to attract the world’s best and brightest students to our post-secondary institutions, which are collectively reeling from plummeting international enrolment. 

Under the Canadian Experience Class (CEC) program, former international students with a Canadian postsecondary credential and one year of work experience in a skilled occupation are eligible to transition to permanent resident status without leaving the country. 

The CEC program’s intention is a good one – we attract whiz kids from around the world and provide them with an education that Canadian employers can easily evaluate. When this path works, it works well. International students pay high fees, lowering tuition costs for Canadians, and those who stay end up doing well in Canada’s labour markets. 

However, this approach can be abused when postsecondary institutions use immigration, not education, to lure foreign students. This has contributed to the growth of low-quality programs and distorted incentives on all sides. The problem lies in policy design.

In response to unsustainable growth in Canada’s non-permanent resident population and worries about housing, healthcare and labour market effects, the government has cut international student admissions for 2026 by 50 percent. 

The reduction is facing criticism from the postsecondary sector, but critics are overlooking that universities and colleges are not even reaching the quotas they have been given under the already reduced caps. New foreign student arrivals are on track to reach less than 160,000 in 2025, far below the government’s cap of 305,900. 

Foreign student applications to Canada’s universities and colleges have declined dramatically because prospective students no longer see a clear path to staying in Canada. Graduate students in computer science who want to stay are being told that learning French is their best option. And they fear that when they graduate, a different arbitrary category will be the priority. The current system discourages the best foreign students from applying to Canadian postsecondary institutions and blocks many of those who graduate from remaining in Canada.  

What should be done?

First, turn back the clock. Return to the immigration system that existed as recently as 2019 when immigrants were admitted through a single selection system that prioritized candidates with the highest future Canadian earnings. That system was transparent, predictable, and not easy for lobbyists to manipulate.  

Second, send a clear message that Canada welcomes foreign students. At a time when our goods exporting industries face major challenges, we should promote one of our most valuable services exports – educating international students. Education is an export that is uniquely dependent on trust, as students must live in Canada to consume the product.

Third, refine the points system to better target international graduates with the best earnings prospects. This would lead to increased demand by international students for programs with high post-graduate earnings and benefit our immigration program. Demand for programs that offer low earnings returns would moderate attracting only those international students who are coming solely for the education, since these programs would provide no realistic pathway to PR status.  

Canada needs immigration reform now. What we have now is a bungled system that prioritizes lobbying effort over the very real contribution that immigration can make to the Canadian economy.

David Green is a professor at the Vancouver School of Economics, Philip Oreopoulos is distinguished professor in economics at the University of Toronto. Craig Riddell is emeritus professor at the Vancouver School of Economics. Mikal Skuterud is economics professor at the University of Waterloo, and the Rogers Phillips Scholar of Social Policy at the C.D. Howe Institute and Christopher Worswick is professor of economics at Carleton University and a research fellow at the C.D. Howe Institute.

Source: How We Subverted our Skills Based Immigration System

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Poilievre calls for federal government to end temporary foreign worker program 

2025/09/05 Leave a comment

Some initial comments on the CPC proposal:

…The Canadian Federation of Independent Business (CFIB), a small-business lobby group, condemned Mr. Poilievre’s proposal to scrap the program, saying that there were “zero” employers of entry-level workers who use the program for cheap labour. 

“We have many parts of Canada – particularly in rural and remote communities – with very few available entry-level workers for jobs on which local people depend,” said Dan Kelly, president of the CFIB, in a post on X.

Mr. Poilievre’s criticism of the program as exploitative has been voiced for years by international human-rights organizations and migrants’ rights groups. 

…In a recent interview with The Globe, Mikal Skuterud, a labour economist at the University of Waterloo, said that immigration is not the main driver of higher youth unemployment. Instead, he pointed to weak economic conditions and a sharp reduction in job vacancies that are making it tougher for people to secure employment.

Source: Poilievre calls for federal government to end temporary foreign worker program

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Ottawa yet to launch program announced last year that would grant permanent residency to low-wage workers

2025/08/12 Leave a comment

Second thoughts?

More than a year after announcing a new immigration stream that would have granted permanent residency to low-wage workers already in Canada, the federal government has yet to move ahead on formally launching the program – suggesting that Ottawa could be backing away from the plan altogether. 

The plan targeting low-wage workers was informally announced in April 2024, through the Canada Gazette. Consultations were set to begin last year on amending immigration laws to admit a “new permanent economic class of workers in TEER 4 and TEER 5 jobs.” 

But the program was not included in July’s version of Immigration, Refugees and Citizenship Canada’s forward regulatory plan, which details coming changes to federal immigration rules and programs over the next three years. 

Training, Education, Experience and Responsibilities, or TEER, is a job categorization system used by the government for immigration purposes. TEER 4 and TEER 5 workers usually have either a high-school diploma or no formal education at all, and examples of their occupations include delivery service drivers, caregivers, food production and retail workers. 

IRCC spokesperson Sofica Lukianenko said in a late July e-mail to The Globe and Mail that the department will “continue to examine the role of immigration in meeting labour market needs at TEER 4 and 5 occupations.” …

Scrapping an immigration program that would grant PR to low-wage workers would be a wise move if the government’s larger goal is to increase gross domestic product per capita through prioritizing higher-skilled immigrants, argues Mikal Skuterud, a professor of labour economics at the University of Waterloo. 

Prof. Skuterud was highly critical of the TEER 4 and TEER 5 pathway plan when it was announced last year, telling The Globe at the time that it would suppress wages and undermine public support for immigration. He said Ottawa intended to launch the program to hedge against the growing problem of visa overstayers, as offering foreign workers currently in Canada a direct path to PR en masse would reduce both temporary resident and undocumented populations. …

Source: Ottawa yet to launch program announced last year that would grant permanent residency to low-wage workers

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Premiers push for more power over immigration as Ford takes aim at federal minister 

2025/07/25 Leave a comment

Best commentary to date below by Campbell Clark:

Premiers say they plan to take more control over immigration as Ontario Premier Doug Ford criticized the federal Immigration Minister and said he would be issuing his own work permits in the province.

At the conclusion of the three-day premiers’ meeting on Wednesday, provincial and territorial leaders called for an increase to economic immigration levels to meet their labour needs and said they would use powers under the Constitution to seize more control over immigration, including to issue work permits.

Mr. Ford, who is wrapping up his time as chair of the Council of the Federation, which comprises all 13 premiers, criticized federal Immigration Minister Lena Diab, accusing her of not being on the same page as Prime Minister Mark Carney on giving premiers more autonomy over immigration.

“We need the Prime Minister to be very, very clear with his minister. She needs to work with the provinces and territories to fix Canada’s immigration system and make it more responsive to economic and market needs,” Mr. Ford said at the closing press conference in Ontario’s cottage country.

Support among the Canadian public for rising immigration has dropped in recent years. To address that and to alleviate pressure on housing and public services, the previous government of Justin Trudeau reduced targets for the number of permanent and temporary residents – including international students – that Canada will accept. 

On Wednesday, the premiers stressed that provinces and territories – and not Ottawa – are best placed to gauge whether migrants are needed to fill jobs. They said they would use a seldom-invoked power under Section 95 of the Constitution, which allows provinces to make laws on immigration, including to issue work permits. 

“I’ll speak for Ontario. We will be issuing our own work permits. We aren’t going to sit around and wait for the federal government,” Mr. Ford said.

At the press conference, Quebec Premier François Legault said there are now consistent demands from each province to have more jurisdiction over immigration. He said that when it comes to processing asylum claims, “it makes no sense that it takes three years to assess a file, whereas in other countries, such as France, it takes three months.”

This puts a strain on public services and housing, and he said he was glad the federal government is “at long last” acting to reduce backlogs in the asylum system. Ottawa has introduced the Strong Borders bill which, if it becomes law, would restrict who could claim asylum and give Ottawa more power to cancel applications.

Mr. Ford said Ontario has a large number of asylum seekers living in hotels who are healthy and willing to work, but unable because work permits take too long. Last year, there were close to 100,000 asylum seekers in Ontario, he said….

Source: Premiers push for more power over immigration as Ford takes aim at federal minister

Regg Cohn’s take:

…After trumpeting his friendship with Carney , Ford made it clear that he wants everyone singing from the same song sheet. Now, after buttering up the PM for months and signing MOUs with his fellow premiers, Ford is calling in his first IOU.

He complained publicly and pointedly that Diab “wasn’t on the same page as her prime minister — we need the prime minister to be very, clear with his minister, she needs to work with the provinces and territories to fix Canada’s immigration system.”

There’s no time to waste — or wait.

“I’ll speak for Ontario — we will be issuing our own work permits,” Ford asserted.

“I have a tremendous amount of asylum-seekers that are up in Etobicoke and in the hotels. They’re healthy, they’re willing to work hard, working people, but they’re waiting over two years, and they’re just sucking off the system, non-stop,” he continued.

Source: Opinion | Being Mark Carney’s buddy won’t release Doug Ford from the pull of political gravity

Campbell Clark and Mikal Skuterud’s excellent critique:

…But Mr. Trudeau’s last immigration minister, Marc Miller, took some strong steps in 2023 and 2024 to repair some of the damage. He capped the number of foreign students and slashed the number of provincial nominees.

That hasn’t fixed all that ails the immigration system, but it was a step forward. 

But on Wednesday, the premiers asked Ottawa to undo it. They want the numbers of provincial nominees to be doubled, to bring them back up to their previous level.

Premiers like to be able to tell local businesses they can deliver workers. Or to tell aging communities newcomers will arrive.

But Waterloo University economics professor Mikal Skuterud notes that it is a bit of a mirage. “There’s no way to restrict the mobility of immigrants, nor should we want to,” he said. That leads to potential immigrants seeking the provincial program with the lowest standards but moving elsewhere.

The premiers’ own justification for asking for bigger numbers of provincial nominees – that they know their own labour markets better – is itself a good reason to reject their request.

Using immigration to try to plug holes in labour markets, by recruiting foreigners to fill current job openings, is a failed approach. By the time they arrive, those occupations might not be in high demand. They might be outdated in a few years. Micromanaging the labour market doesn’t work. Supply and demand, and the adjustment of wages, takes care of that.

That’s why Canada’s economic immigration system turned to a different approach almost 25 years ago to focus on human capital. A system was developed that granted points for criteria such as education, experience and language skills.

That’s one of the things that Mr. Trudeau’s government mucked up. It introduced new categories, often for short periods, that gave more points to certain types of workers who didn’t meet the points standards, including hairdressers and estheticians.

That was on top of the expanding provincial nominee programs. Quebec has had powers to select immigrants since the 1970s, intended as a power to preserve its language and culture. But after 2001, other provinces made agreements with Ottawa for nominee programs. Most have lower criteria that squeezed out applicants with more points for their human capital.

All those things have turned an economic-immigration system that was supposed to be based on predictable scores into a hodge-podge of programs built on the desires of lobby groups. 

To potential immigrants, that made Canada’s immigration system look random.

“The consultants and immigration lawyers love this because it complicates the system and makes it more like a lottery, or something that has to be gamed,” Prof. Skuterud said.

A foreign student or temporary worker might not meet the criteria for permanent residence, but they might one day become eligible under a new category or provincial program. That encourages people who might be ineligible for permanent residence to take a gamble on coming to Canada as a temporary resident – and it doesn’t always work out.

We don’t need more of that complicated mess. We need less of it. …

Source: The last thing Canada needs is premiers mucking up immigration even more






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Theo Argitis: Canada’s great immigration experiment is ending 

2025/06/20 Leave a comment

Good take:

For nearly the first time in our history, Canada’s population growth has come to a near standstill. Remarkably, the state of things is such that we are celebrating this as a policy success and long-overdue correction.

Statistics Canada released its quarterly population estimates, showing the country grew by 20,000 people in the first three months of this year. That’s the third weakest quarterly increase in data going back to 1946—and less than one-tenth the average quarterly gain over the past three years.

Four provinces and one territory—Newfoundland and Labrador, Quebec, Ontario, British Columbia, and Yukon—actually posted population declines.

The numbers reflect the dramatic reversal of policy late last year by the former Trudeau government, when it abruptly tightened permit approvals for international students and foreign workers after overseeing record immigration levels since 2021.

Under the plan, the intake of new permanent residents, or what the government calls immigrants, would be lowered from 485,000 in 2024 to 365,000 by 2027.

The number of non-permanent residents living in Canada—which had increased five-fold since 2015 to more than 3 million—would be cut by about one million over two years.

That post-pandemic rush of newcomers exacerbated housing shortages, strained public services, and disrupted the job market. It was perhaps the worst policy error of the past two decades, and in need of correction.

But, ironically, the sharp reversal in policy is now creating its own problems, impacting everything from demand for cell phones and banking services to funding for universities and colleges.

The whole episode has been a mass social experiment that will be studied for years.

“You’re going to see a ton of research on this, no question, because it’s like this little experiment here in Canada that no other country has done to this extent,’’ said Mikal Skuterud, a labour economist at the University of Waterloo and director of the Canadian Labour Economics Forum. “And there’s all kinds of dimensions to how this impacted the economy.”

The latest numbers suggest the government’s curbs are beginning to work. While still elevated, the number of non-permanent residents has started to decline—down almost 90,000 from its peak in September. The number of permanent residents, or immigrants, is now running at an annual pace closer to 400,000, down from nearly half a million.

Prime Minister Mark Carney has essentially adopted the Trudeau plan, which if successful will keep the current population steady at about the current 41.5 million level over the next two years. It would mark the first time since Confederation in 1867 that the country saw zero population growth.

Yet when viewed over the full horizon, the curbs will simply bring the average population growth rate for the decade back to about 1.3 percent, which is much closer to historical norms. We’re simply correcting a major policy anomaly.

Looking back, it’s too early to know for certain what effect the population surge had on wages and joblessness, according to Skuterud, who notes that younger Canadians, in particular, may have borne the brunt of it, given they tend to compete with newcomers for entry-level jobs.

What’s less in dispute is how the immigration surge lowered average living standards.

The evidence suggests that looser entry requirements over recent years brought in lower quality workers. Because of this, the economy failed to grow in line with population. The size of the pie didn’t grow fast enough to keep up with the number of people trying to take a slice.

The end result was the erosion of public confidence in immigration, which could linger in Canadian politics for years.

This is particularly true among younger Canadians, who now appear more open to curbing immigration levels. For many, tighter labour markets and more affordable housing—not higher population numbers—are the priority. Slower immigration supports those goals.

So, how did the government misjudge the situation so badly? And is there a lesson here for the Carney government?

Part of the problem stemmed from the unique distortions of the pandemic. The government overestimated labour shortages and then overcompensated by opening the immigration floodgates.

But there was also a broader miscalculation. Trudeau emerged from the pandemic with renewed ambitions and a belief that he had an expanded mandate to pursue transformative change, including on the immigration front.

Ambition, however, has a way of outpacing reality. And overshooting is always a risk when leaders grow too confident in their ability to enact change.

Carney is now putting forward an ambitious agenda of his own. Whether he’ll draw any lessons from Canada’s great immigration experiment remains to be seen.

Source: Theo Argitis: Canada’s great immigration experiment is ending

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Experts urge parties to rethink immigration priorities

2025/04/10 Leave a comment

Perspectives from economist Mikal Skuterud, focussing on need to focus on high skilled immigrants, Gauri Sreenivasan, CCR, on refugee concerns and myself on the opportunities for rethinking immigration policies and priorities. pdf link not password protected.

Source: Experts urge parties to rethink immigration priorities, pdf

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Todd: This should be the first Canadian election that focuses on migration

2025/03/28 Leave a comment

I suspect, however, that it will not given that immigration, like so many other issues, is drowned out by the existential crisis of the Trump administration. But yes, appointments by PM Carney provide a hook to raise the issue and cite the excessive influence of the Century Initiative in past government policy before former immigration minister reversed course. As I have argued before, his changes provide space for immigration policy discussions without being labelled as xenophobic or racist.

Skuterud’s comments on rotating immigration ministers is valid and unfortunately former minister Miller was shuffled out by PM Carney:

A controversial appointment put migration in the headlines on the same weekend that Prime Minister Mark Carney announced a snap election.

The investment fund manager and former head of the Bank of Canada, who won the Liberal leadership contest two weeks ago, became the subject of news stories focusing on how he has chosen Mark Wiseman, an advocate for open borders, as a key adviser.

Wiseman is co-founder of the Century Initiative, a lobby group that aggressively advocates for Canada’s population to catapult to 100 million by 2100. Wiseman maintains Canada’s traditional method of “screening” people before allowing them into the country is “frankly, just a waste of time.” The immigration department’s checks, he says, are “just a bureaucracy.”

Wiseman believes migration policy should be left in the hands of business.

The appointment of Wiseman is an indication that Carney, a long-time champion of free trade in capital and labour, is gathering people around him who value exceptional migration levels and more foreign investment, including in housing.

Carney denied a charge by Conservative leader Pierre Poilievre that bringing in Wiseman “shows that Mark Carney supports the Liberal Century Initiative to nearly triple our population to 100 million people. … That is the radical Liberal agenda on immigration.”

Carney tried this week to distance himself from the Century Initiative, telling reporters Wiseman will not be advising him on migration.

For years, migration issues have been taboo in Canada, says SFU political scientist Sanjay Jeram.

But the Canadian “‘immigration consensus’ that more is always better” is weakening, Jeram says. Most people believe “public opinion toward immigration has soured due to concerns that rapid population growth contributed to the housing and inflation crises.” But Jeram also thinks Canadian attitudes reflect expanding global skepticism.

Whatever the motivations, Poilievre says he would reduce immigration by roughly half, to 250,000 new citizens each year, the level before the Liberals were elected in 2015. The Conservative leader maintains the record volume of newcomers during Trudeau’s 10 years in power has fuelled the country’s housing and rental crisis.

Carney has said he would scale back the volume of immigration and temporary residents to pre-pandemic levels, which would leave them still much higher than when the Conservatives were in office.

What are the actual trends? After the Liberal came to power, immigration levels doubled and guest workers and foreign students increased by five times. Almost three million non-permanent residents now make up 7.3 per cent of the population, up from 1.4 per cent in 2015.

Meanwhile, a Leger poll this month confirmed resistance is rising. Now 58 per cent of Canadians believe migration levels are “too high.” And even half of those who have been in the country for less than a decade feel the same way.

Vancouver real-estate analyst Steve Saretsky says Carney’s embracing of a key player in the Century Initiative is a startling signal, given that migration numbers have been instrumental in pricing young people out of housing.

Saretsky worries the tariff wars started by U.S. President Donald Trump are an emotional “distraction,” making Canadian voters temporarily forget the centrality of housing. He says he is concerned Canadians may get “fooled again” by Liberal promises to slow migration, however moderately.

Bank of Canada economists James Cabral and Walter Steingress recently showed that a one per cent increase in population raises median housing prices by an average of 2.2 per cent — and in some cases by as much as six to eight per cent.

In addition to Carney’s appointment of Wiseman, what are the other signs he leans to lofty migration levels?

One is Carney’s choice of chief of staff: former immigration minister Marco Mendicino, who often boasted of how he was “making it easier” for newcomers to come to the country. Many labour economists said Mendicino’s policies, which brought in more low-skilled workers, did not make sense.

By 2023, the Liberals had a new immigration minister in Marc Miller, who began talking about reducing migration. But Carney dumped Miller out of his cabinet entirely, replacing him with backbench Montreal MP Rachel Bendayan. Prominent Waterloo University labour economist Mikal Skuterud finds it discouraging that Bendayan will be the sixth Liberal immigration minister in a decade.

New ministers, Skuterud said, are vulnerable to special interests, particularly from business.

“It’s a complicated portfolio,” Skuterud said this week. “You get captured by the private interests when you don’t really understand the system or the objectives. You’re just trying to play whack-a-mole, just trying to meet everybody’s needs.”

Skuterud is among the many economists who regret how record high levels of temporary workers have contributed to Canada being saddled with the weakest growth in GDP per capita among advanced economies.

Last week, high-profile Vancouver condo marketer Bob Rennie told an audience that he pitched Carney on a proposal to stimulate rental housing by offering a preferred rate from the Canada Mortgage Housing Corp to offshore investors.

We also learned this week that Carney invited former Vancouver Mayor Gregor Robertson to run as a Liberal candidate. Robertson was mayor during the time that offshore capital, mostly from China, flooded into Vancouver’s housing market. When SFU researcher Andy Yan brought evidence of it to the public’s attention, Robertson said his study had “racist tones.” Two years later, however, Robertson admitted foreign capital had hit “like a ton of bricks.”

It’s notable that Carney, as head of the Bank of England until 2020, was one of the highest-profile campaigners against Brexit, the movement to leave the European Union.

Regardless of its long-lasting implications, Brexit was significantly fuelled by Britons who wanted to protect housing prices by better controlling migration levels, which were being elevated by the EU’s Schengen system, which allows the free movement of people within 29 participating countries.

For perhaps the first time, migration will be a bubbling issue this Canadian election.

While the link to housing prices gets much of the notice, SFU’s Jeram also believes “the negative framing of immigration in the U.S. and Europe likely activated latent concerns among Canadians. It made parties aware that immigration politics may no longer be received by the public as taboo.”

Source: This should be the first Canadian election that focuses on migration

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Canada’s temporary resident population declines for the first time in 3 years

2025/03/20 1 Comment

Corrective action working, although Skuterud notes not enough:

The number of temporary residents in Canada has declined for the first time in three years, in the wake of a series of policy changes introduced by Ottawa last year to reduce immigration levels.

New data from Statistics Canada shows that there were roughly 30,000 fewer non-permanent residents in the country as of Jan. 1, 2025, compared to Oct. 1, 2024.

The total number of non-permanent residents stood at just over three million people, or 7.3 per cent of the population, down from 7.4 per cent the previous quarter.

The decrease in the number of temporary residents is causing overall population growth to slow. In the fourth quarter of 2024, the population grew by 0.2 per cent to roughly 41.5 million people, the slowest rate of growth since late 2020, when many border restrictions were in place because of the pandemic.

Canada’s population is still increasing, just not at the rate it did in 2022 and 2023….

Achieving Ottawa’s 5-per-cent non-permanent resident target is less realistic now than a year ago, according to Mikal Skuterud, an economist at the University of Waterloo. Prof. Skuterud estimates that in order to meet the target, the number of temporary residents will have to decline by almost 32 per cent in two years.

If that happens, the Canadian population will subsequently decline by 0.4 per cent over two years, Prof. Skuterud’s calculations show….

Source: Canada’s temporary resident population declines for the first time in 3 years

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Skuterud: The Growing Data Gap on Canada’s Temporary Resident Workforce

2025/02/13 Leave a comment

Useful recommendations:

Statistics Canada’s Labour Force Survey (LFS) underestimates the rapidly growing non-permanent resident (NPR) population. This undercount potentially distorts important economic indicators, such as nominal wage growth and unemployment rates, because NPRs disproportionately influence these measures as a growing share of new labour market entrants.

To address this data gap, this E-Brief recommends revising the LFS to better identify NPRs by including specific questions about study or work permits and exploring the possibility of linking survey data to immigration records for improved accuracy.

Introduction

Canada has experienced a dramatic increase in its non-permanent resident (NPR) population in recent years. Before 2020, NPRs never comprised more than 3 percent of Canada’s population. As of October 2024, they comprised 7.4 percent of the population. While initial concerns over runaway NPR population growth were focused on overheating housing markets, by mid-2024, worries turned to the contribution of NPRs – particularly international students – to rising youth unemployment rates.

Evaluating the labour market impacts of Canada’s growing NPR population requires timely, high-quality data on Canada’s labour force. It is well known that Statistics Canada struggles to sample NPRs, in part due to challenges related to how Statistics Canada’s Labour Force Survey (LFS) sampling frame is constructed. The LFS samples dwellings, not individuals, and gathers data on all persons usually living at the sampled address, including NPRs. There may be ambiguity about whether the address where NPRs are sampled is their usual residence, resulting in their exclusion from the survey.1 Skuterud (2023) highlighted a significant and widening discrepancy between the share of NPRs in Canada’s labour force estimated using the LFS and administrative data from Immigration, Refugees and Citizenship Canada (IRCC).2 With continued growth in the NPR population since 2023, there is reason to believe this discrepancy has grown.

Why does this matter? The accuracy of the LFS’s estimates of nominal wage growth and unemployment rates are critical in informing the Bank of Canada’s monetary policy decisions and collective bargaining negotiations across the country. As IRCC introduces policies to rein in NPR entries, understanding whether international students are, in fact, crowding out and suppressing the wages of existing residents is essential.

This E-Brief examines the impact of Canada’s surging NPR population on the quality of the LFS data by comparing the LFS’s population estimates with official population estimates from Statistics Canada’s Centre for Demography. The results reveal a substantial and growing divergence in official and LFS population estimates starting in 2021. While it is unclear to what extent this is affecting estimates of wage growth and unemployment, the growing discrepancies suggest there is reason for concern…

Source: The Growing Data Gap on Canada’s Temporary Resident Workforce

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The Potential of Canada’s International Education Strategy: Evidence from the “MIT of the North”

2024/09/14 Leave a comment

Excellent case study and analysis by Mikal Skuterud and others that challenges Canada to adopt a strategic approach to international students and education focussing on quality, not quantity:

UWaterloo is best known for its academic programs in computer science, mathematics, and engineering, which has earned it the moniker the “MIT of the North.” Evidence that UWaterloo’s international student graduates struggle in Canadian labour markets relative to their Canadian-born counterparts graduating from the same academic programs with similar academic standing provides a direct test of the skill underutilization hypothesis. The evidence also offers critical lessons on whether policy efforts to realize the full economic potential of international students are best directed at augmenting employer hiring behaviour through DEI initiatives, for example, or at improving the attraction and selection of international talent and promoting skill formation, including language training.

Our main findings are:

1. Roughly 70 percent of UWaterloo’s international students transition to Canadian permanent residency (PR), twice the rate of international students at the national level. There is little difference in the transition rates of UWaterloo’s students with the highest and lowest academic achievement and little evidence that policy efforts since 2008 to ease foreign students’ Permanent Residents transitions has impacted UWaterloo graduates, unlike at the national level. This suggests these policies have primarily affected the immigration outcomes of lower quality graduates, including community college graduates.

2. Canadian-born students at the 95th percentile of the skill distribution leave Canada after graduation at twice the rate of Canadian-born students at the 5th percentile. While the best international students are twice as likely to outmigrate as the best Canadian-born graduates, there were five times more Canadian-born graduates of UWaterloo between 2005 and 2021. This implies that Canadian students have contributed more in absolute numbers to “brain drain” in recent years than international students at UWaterloo.

3. The average post-graduation earnings of UWaterloo’s international students not only exceed Canadian-born graduates of UWaterloo, but also Canadian-born university graduates nationally. Moreover, the earnings advantage of UWaterloo’s international student graduates has increased over time as the economic returns to degrees in technology and engineering, where UWaterloo’s foreign students are heavily concentrated, have increased relatively more.

4. Comparing students graduating at the same time from the same academic programs with similar academic standing, we find evidence of disparities in international students’ average earnings after graduation. The earnings gaps are largest for East Asian, especially Chinese-born graduates. They are also concentrated among academically weaker students and appear to be entirely explained by deficiencies in English language proficiency. The results provide no evidence consistent with the common belief that immigrants’ skills are underutilized in the Canadian economy. In fact, we find that measured skills are more important in determining the labour market earnings of foreign-born than Canadian-born graduates.

Overall, our analysis points to the potential of Canada’s International Student Strategy to boost economic growth. However, given the extent to which student outcomes vary by program of study and institution, realizing this potential requires prioritizing quality over quantity in foreign student admissions. Unfortunately, the Strategy has become preoccupied with growth, especially in the college sector.

We recommend redirecting the Strategy in two directions. First, IRCC needs to offer international students a single transparent pathway to economic-class immigration that relies exclusively on an enhanced Comprehensive Ranking System to select candidates with the highest expected future Canadian earnings. The success of the CRS in predicting immigrants’ future earnings can be enhanced significantly by adding applicants’ fields of study, school identities, and post-graduation earnings to the set of criteria used.

Second, Canada can do more to influence the choices that the world’s best and brightest students make themselves about where to study and settle after graduation. Options include using targeted tuition subsidies to attract exceptional prospective foreign students to the country’s top university programs in technology and engineering and income tax schemes to incentivize the highest quality graduates to work in Canada after graduation.

Source: https://clef.uwaterloo.ca/wp-content/uploads/2024/09/CLEF-074-2024.pdf

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