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The relationship between immigration and unemployment: Panel data evidence from Canada

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  • Latif, Ehsan

Abstract

Using provincial level panel data from the Statistics Canada, this paper examines the impact of permanent international immigration on the unemployment rate in Canada. In the empirical analyses, this study utilizes panel econometric techniques such as FMOLS, DOLS, and panel VECM. The results suggest that, in the short run, immigration has a significant positive impact on unemployment rate and that the unidirectional short-run causality runs from immigration to the unemployment rate. The results further suggest that, in the long run, immigration has a negative but insignificant impact on the unemployment rate. Though Canada attracts highly skilled immigrants, but generally Canadian employers do not recognize foreign education and foreign experience. Consequently, initially, immigrants face difficulties in the job market leading to an increase in the unemployment rate. Overtime, immigrants receive Canadian job experience and in many cases, Canadian education and training. All of these improve immigrants' employment prospect and consequently, in the long run, the adverse impact on unemployment rate is eliminated.

Suggested Citation

  • Latif, Ehsan, 2015. "The relationship between immigration and unemployment: Panel data evidence from Canada," Economic Modelling, Elsevier, vol. 50(C), pages 162-167.
    • Handle: RePEc:eee:ecmode:v:50:y:2015:i:c:p:162-167
    DOI: 10.1016/j.econmod.2015.06.013
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    3. Rümeysa ÇELİK & Irmak ARSLAN, 0. "Göç ve İşsizlik Arasındaki İlişki: Ampirik Bir Uygulama," Journal of Social Policy Conferences, Istanbul University, Faculty of Economics, vol. 0(74), pages 65-75.
    4. Alexandra M. Espinosa & Ignacio Díaz-Emparanza, 2023. "Assessing the Spanish immigration policy with frequency-wise causality in Hosoya’s sense," Empirical Economics, Springer, vol. 65(1), pages 111-147, July.
    5. Kemal ErkişI & Melike Çetin, 2023. "Immigration, growth and unemployment nexus: a long-run analysis for Türkiye," Journal of Community Positive Practices, Catalactica NGO, issue 4, pages 21-41.
    6. Lozej, Matija, 2019. "Economic migration and business cycles in a small open economy with matching frictions," Economic Modelling, Elsevier, vol. 81(C), pages 604-620.
    7. Swapnanil SENGUPTA & Rareș Petru MIHALACHE, 2021. "How do immigration impact unemployment and economic prosperity? An extensive investigation from the OECD nations," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(1(626), S), pages 5-22, Spring.
    8. Martins, Pedro S. & Piracha, Matloob & Varejão, José, 2018. "Do immigrants displace native workers? Evidence from matched panel data," Economic Modelling, Elsevier, vol. 72(C), pages 216-222.
    9. Nyagweta, David Tinashe, 2020. "Labour immigration, per capita income growth, and unemployment in post-apartheid South Africa," MPRA Paper 105421, University Library of Munich, Germany.
    10. Esposito, Piero & Collignon, Stefan & Scicchitano, Sergio, 2020. "The effect of immigration on unemployment in Europe: Does the core-periphery dualism matter?," Economic Modelling, Elsevier, vol. 84(C), pages 249-258.
    11. Tomohara, Akinori, 2022. "Does an increase in the number of immigrant workers reduce unemployment rates? An industry sector unit level analysis in Japan," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 464-476.
    12. Özlem İnanç Tunçer, 2016. "İçgöç, Nüfus Yapısı ve Fiyat Farklılaşması: İstanbul Örneği," Yildiz Social Science Review, Yildiz Technical University, vol. 2(2), pages 53-74.

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