The Economic Impact on Canada of Immigration

Grady, Patrick (2006): The Economic Impact on Canada of Immigration.

Abstract

This paper presents the simplest supply-and-demand textbook model of how immigration works in a market economy (Borjas, 1999, pp.89-93). While it may be oversimplified in that it assumes that all labour is homogeneous and that machinery and equipment, land, and other productive resources are fixed and that it ignores any dynamic impact of immigration, it is a good starting point for an analysis of the economic impacts of immigration in Canada.

Using this model with parameters taken from the literature, the immigration surplus for Canada, which represents an estimate of the cumulative economic benefits of immigration, can be calculated to have been 0.33 per cent of GDP in 2001 or $3,594 million (Table 1). The most striking thing about this estimate is that it is not very large in macroeconomic terms, especially when contrasted with the large redistribution of income that results from immigration.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic impact of immigration, immigration surplus
• Subjects: J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J60 - General; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand

References

Borjas, George J. (1999) Heaven’s Door: Immigration Policy and the American Economy (Princeton University Press).

Hamermesh, Daniel S. (1993) Labor Demand (Princeton University Press), chapter 3.

Grubel, Herbert (2005) "Immigration and the Welfare State in Canada: Growing Conflicts, Constructive Solutions," Fraser Institute Public Policy Sources, Number 84, September.