Moving Parts: Immigration Policy, Internal Migration and Natural Resource Shocks

The Canadian government made major changes in 2014 to both the Temporary Foreign Worker (TFW) Program and the permanent economic immigration system. Under the previous system and its enforcement, temporary foreign workers were in competition with some Canadian residents, resulting in a major political backlash. In addition, permanent immigrants to Canada were not generally moving to locations with the strongest demand for jobs. The federal changes to the TFW Program limited the kinds of workers companies could bring in, made the applications more rigorous, and set an employer-specific cap on the use of TFWs. These changes will lead to a decrease in the number of TFWs working in Canada. In the permanent immigration system, the government modified the traditional points system and created the Express Entry System. International applicants must meet a threshold of points before the government will invite them to apply for immigration. The system is skewed toward labour-market demand. It rewards workers who have skills that the federal government determines the labour market needs. It also rewards permanent immigrants who have a Canadian job offer. We expect that the changes to the permanent immigration system will have many positive results. Immigrants will have better skills and improved job-market outcomes, and they will meet employer needs more closely than permanent immigrants did in the past. Likewise, recent changes to the TFW Program will improve the labour market for existing residents. However, the changes in the immigration system may have some unintended consequences. First, they make it difficult for international students at Canadian universities to become permanent residents. Further, whereas TFWs were the main source of labour-market competition for Canadian residents until 2014, new permanent immigrants will increasingly compete with Canadian residents. This change will have profound implications for interprovincial migration. Lastly, the permanent immigration policy prioritizes skills currently in demand, and that preference may decrease the immigration of workers whose skills may be more important in the longer term. Although, on the whole, the recent changes are an improvement to Canadian immigration policy, the federal government should consider addressing these potential negative consequences as it moves forward with its reforms. Those refinements would entail: • better incorporating recent international graduates of Canadian universities into the permanent immigration system; • creating more permanent immigration opportunities for immigrants with skills the Canadian economy may need in the future, although they are not in demand in today’s labour market; and • addressing the concern that permanent international immigrants will reduce the incentive for Canadian residents to move among the provinces to seek better opportunities. All things considered, in terms of substituting for existing Canadian workers, we argue that the new immigration system will make TFWs less attractive and permanent immigrants more competitive.