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Fiscal transfers to immigrants in Canada: responding to critics and a revised estimate

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  • Grubel, Herbert
  • Grady, Patrick

Abstract

In 2011, we estimated that in 2005 Canada’s immigrant selection policies resulted in an average fiscal burden on taxpayers of $6,000 for each immigrant. Later that year, Mohsen Javdani and Krishna Pendakur from the economics department at Simon Fraser University (J&P hereafter) presented an alternative estimate of this fiscal burden of $450. This study concludes that J&P’s lower estimate is due mainly to their choice of a different immigrant cohort and assumptions about the immigrants’ absorption of government spending on pure public goods, education, and public housing. After taking into account some new data and some issues raised by J&P, this study presents new estimates that show that the fiscal burden imposed by the average recent immigrants is $6,000, which for all immigrants is a total of between $16 billion and $23 billion per year, figures virtually identical to those found in our earlier study. This study also rejects arguments made by J&P that immigrants are needed to meet labour shortages, that they bring productivity-increasing economies of scale, and that their children will repay the fiscal burden. New evidence does not provide any grounds for optimism that the offspring of recent immigrants are going to be able to earn enough to compensate current and future generations of Canadians for the fiscal transfers made to their parents by existing Canadians. This study also presents new evidence showing that immigrants who were admitted mainly on the basis of pre-arranged jobs have superior economic performance, which supports the policy recommendation made in our 2011 study.

Suggested Citation

  • Grubel, Herbert & Grady, Patrick, 2012. "Fiscal transfers to immigrants in Canada: responding to critics and a revised estimate," MPRA Paper 37406, University Library of Munich, Germany, revised 06 Mar 2012.
  • Handle: RePEc:pra:mprapa:37406
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    File URL: https://mpra.ub.uni-muenchen.de/37406/1/MPRA_paper_37406.pdf
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    References listed on IDEAS

    as
    1. Grubel, Herbert & Grady, Patrick, 2011. "Immigration and the Canadian Welfare State 2011," MPRA Paper 31109, University Library of Munich, Germany.
    2. Picot, Garnett & Sweetman, Arthur, 2011. "Canadian Immigration Policy and Immigrant Economic Outcomes: Why the Differences in Outcomes between Sweden and Canada?," IZA Policy Papers 25, Institute for the Study of Labor (IZA).
    3. Keith Head & John Ries, 1998. "Immigration and Trade Creation: Econometric Evidence from Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 47-62, February.
    4. James Ted McDonald & Casey Warman & Christopher Worswick, 2015. "Immigrant Selection Systems and Occupational Outcomes of International Medical Graduates in Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 41(s1), pages 116-137, August.
    5. Grady, Patrick, 2011. "How are the Children of Visible Minority Immigrants Doing in the Canadian Labour Market?," MPRA Paper 28503, University Library of Munich, Germany.
    6. Ather H. Akbari, 1989. "The Benefits of Immigrants to Canada: Evidence on Tax and Public Services," Canadian Public Policy, University of Toronto Press, vol. 15(4), pages 424-435, December.
    7. Jamie Partridge & Hartley Furtan, 2008. "Immigration Wave Effects on Canada's Trade Flows," Canadian Public Policy, University of Toronto Press, vol. 34(2), pages 193-214, June.
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    Cited by:

    1. Grady, Patrick & Grubel, Herbert, 2015. "Immigration and the Welfare State Revisited: Fiscal Transfers to Immigrants in Canada in 2014," MPRA Paper 67944, University Library of Munich, Germany.
    2. Patrick, Grady, 2015. "An Assessment of the Impact of Conservative Immigration Reform on the Labour Market Performance of Immigrants," MPRA Paper 65529, University Library of Munich, Germany.
    3. Grady, Patrick, 2013. "Conservative Immigration Policy Reform Has Not Yet Produced Any Significant Improvement in the Aggregate Labour Market Performance of Recent Immigrants," MPRA Paper 55586, University Library of Munich, Germany.

    More about this item

    Keywords

    taxes; benefits; fiscal cost of immigration; recent immigrants to Canada;

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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