Examining the Wage Impact of Immigration on the Canadian Labor Market

Abstract

This paper examines whether the increase in the labor supply caused by the surge in the influx of immigrants that arrived into Canada since the late 1980s had any impact on the real earnings earned by the native Canadian workers. By segregating the national labor force on the basis of the education and experience of the employed workers, it is assumed that immigrants and natives having the same skills are perfect substitutes for production. Using a Pooled Cross Sectional estimation as well as a First Difference estimation method, it was found that in the long run, a 10% increase in the supply of immigrants would lead to a 1.6 % reduction in the weekly real wages earned by the competing native Canadian workers. In the short run, it was found that there was no discernable impact on the wages earned by native workers when labor supply increased due to immigration.