The Displacement Effect oflmmigration on Domestic Wages and Employment in Canada

Abstract

Throughout the years and particularly in recent discussion, immigration has been a repeated subject in Federal policy and regulation; this has been especially pronounced in the past few years, considering the inflow of immigrants to the country from the Middle East, and now, the U.S.This paper utilises 2001 and 2006 Census data in order to estimate the impact of immigration on native-born Canadian labour market outcomes and the extent to which immigration displaces these outcomes specifically it looks at: 1) annual native earnings as a result of an increase in the immigrant to total Canadian population ratio; and 2) the unemployment to employment odds ratio of native-barns as a result of an increase in immigration flows. The results follow the general trend of findings that if there is an effectt it is very insignificant. The study does find that an increase in the ratio results in an increase (however small) in annual native earnings, which complements findings from existing literature regarding the complementarity of natives and immigrants.The findings also suggest that an increase in the ratio leads to higher unemployment odds for native-horns, but that this effect is not as strong as it is for other individualistic controls that may affect earnings. Overall, the effects of immigration on native earnings from this study do not suggest displacement of employment or of earnings.