4. Economics

a. state of knowledge

From a narrow technical perspective, the review reports little research on economics and immigration, as immigration can be subsumed under the generic heading of labour, a factor of production. Taking a broader view one can find 200 articles. The only areas where a "well developed" or plentiful economics literature exists, in relation to the policy research topics, is in the area of the economic performance of immigrants. And by and large immigrants are found to do well. They also are not a net fiscal drain on the public purse, through over-reliance on welfare services. (In this case Canada remains somewhat different from the United States.)

But there is no literature on the economic performance of children of immigrants. To the extent that the educational attainment of immigrants or their Canadian born children enhances the productivity of labour, this too might be explored. The specific issue of the educational attainment of immigrant students, and the children of immigrants, -- particularly in fields relating to science, technology, commerce -- could be seen as contributing to the development of human capital. But this does not seem to be part of the economics literature.

In general it is found that immigrant earnings do eventually catch up to those of the native born. But analysts differ as to how long the catch-up takes, and if all groups do indeed catch up. The good news is that it is found that different types of comparable immigrants catch up with earnings of comparable native born. This means that discrimination may be minimal in the area of remuneration for comparable work. The review claims that racial discrimination does not seem to lower incomes either. But it may be that discrimination acts against immigrants and/or visible minorities in areas relating to labour force participation, unemployment, or occupational choice.

The less good news is the evidence that the ratio of human capital endowments of more recent immigrants compared to the native born is lower than that of previous cohorts, in part because the endowments of the host population have increased over time, and in part because Canada's immigration policy may be less selective. It is not clear whether this makes catch up with comparable native born easier or harder. But the problem remains that with lower levels of human capital, even catch up will likely yield lower returns in terms of productivity and output for Canadian society.

There are no economic studies cited focusing on the impact of immigration on the urban workforce. But a few studies do show that immigrant labour does not in general substitute for the native born, and in the long run there is no impact of immigration on the unemployment rate. Also the existence of documented niches for immigrant workers can be seen as evidence of complementarity.

Studies of immigrants and entrepreneurs are largely descriptive summaries of intentions of immigrant entrepreneurs. Technical economics does not see entrepreneurship as important for economic growth or for job creation. The literature which exists is not by economists. In any event, the evidence is that immigrants tend to be over-represented as entrepreneurs (leaving aside the entrepreneur/investor program). Possible explanations are "blocked mobility" or discrimination, or "transplanted cultural traditions." Only two studies examined the fiscal impact of immigration, which show small, positive impacts.

In many other areas the economics literature is claimed to be "sparse." There is apparently no technical economics literature dealing with the effects of immigration on competitiveness, industrial structure, capital- labour ratio, urban workforce, local wages and working conditions, technology/diversity of consumer goods and investment patterns, a city's domestic or international orientation, exports and imports, tourism, demand for public space, infrastructure and need for public investment, public and private school financing, and networking in the labour market. All these were subjects listed in the original Metropolis prospectus. But many of these topics are studied by other disciplines.

The literature on niches and segmented labour markets is more pessimistic about immigrant performance than is the literature on the economic performance of immigrants compared to the Canadian born. In other words these niches or segmented labour markets are seen as less rewarding job ghettos, due either to discrimination or to lower levels of human capital.

In addition, there is a general theoretical economic argument that feels that investment capital is mobile, so one does not need immigration to achieve its positive effects, as in investor programs. If there are profitable investment opportunities in Canada, international or local capital will discover them. Thus investor immigrant capital is not new capital. Similarly, technological change and innovation does not need immigration, but can be obtained through trade and international dissemination of knowledge.

Nevertheless, immigration in total may have a small but positive impact on economic activity in Canada.

b. research agenda

The reviewer claims that many of the lacunae in the field are best left unresearched. Among those that do deserve additional research attention are:

a. the study of the impact of immigration on trade. But a purely urban focus on economic trade issues is not seen as helpful.

b. the economic performance of children of immigrants, which may require the development of new data sources, or census questions on birthplace of parents.

c. the problem of accreditation of immigrants

d. the question of whether immigrants' human capital does in fact lead to savings in educational expenditures, and more importantly whether any positive economic effects of immigration in fact accrue to the native born population. This question has been ignored by the tradition which simply compares immigrant and native born economic performance.

e. how to resolve the inconsistency between research on the economic performance of immigrants, which shows advantages, with that of niches and segmented labour markets, which shows disadvantages.

f. the issues of substitutability and complementarity of immigrants with native born labour

g. issues of the geographic and occupational mobility of immigrants

h. the impact of immigration on the dependency ratio and transfer payments, on net fiscal balance, and on housing markets using the city as the unit of analysis.

There is also claimed to be no relevant economics literature on immigration and globalization. It is not clear if this would include in general a literature on international migration and international economics (e.g. comparative economic development) in which Canada would have a part.

In addition, the review recommends against studies of immigrant economic networks, given the absence of a supporting structure of theoretical and empirical work. This may be true for economics, but there is significant sociological literature identifying the importance of informal networks with immigrant/ethnic communities in many spheres of economic activity.

The reviewer identifies a key research question, mentioned above, which the economics literature has not addressed. This concerns the impact of the economic performance of immigrants on the economic performance of native born Canadians. This may be due to the unavailability of micro level data which lend themselves to such comparisons, as well as a political agenda driven by a concern for equity for immigrants.

The economics literature reviewed has not included studies of possible impacts of employment equity policies, which is more likely to be found in a public policy literature.

The relation of immigration and human capital might also be of interest to some labour economists, apart from the items listed above. The issue of the possible under-valuing of immigrants' foreign educational credentials and work experience requires additional work. A different issue would be the study of the educational concentrations and occupational specialization of immigrants, and the second generation, as they relate particularly to science and technology. Immigrants and their children tend to be over-represented in these areas. In addition studies of the costs and benefits of immigration could consider the resources saved with the immigration of an already trained adult immigrant.

Throughout the post-war period shortfalls in specific occupations have often been addressed through targeted immigration and recruitment efforts. It might be useful to examine or conduct evaluation studies of these efforts.

c. methodological issues

There is little technical economics literature relevant to immigration concerns, and certainly issues of immigrant integration. Other perspectives such as political economy, as well as "soft" studies of "economic" activities by sociologists (e.g. qualitative studies, fieldwork, or ethnographies of immigrant/ethnic enclaves or enterprises) may shed some light on the economics of immigration. This is outside the boundary of conventional economics literature. The formal economics literature is usually characterized by multi-variate regression models and other advanced quantitative econometric techniques. Such approaches may be inadequate for studying issues like the structure and functioning of new businesses established by immigrant entrepreneurs.

Studies of the economic costs and benefits of immigration generally use national data, and it remains to be seen whether one can construct paradigms and data sources to conduct comparable analyses at the level of cities. This has not yet happened. There is an area of economics devoted to the urban economy, and it may be worthwhile to raise the issue of immigration and labour markets within that sub-disciplinary context.

The economics literature, like that of other disciplines, usually ignores in its analyses variation in immigrant category: family, independent, or refugee, as explanatory variables for economic performance.

There is no discussion in the economics review of the issue of the underground economy. By definition conventional data sources are inadequate for the study of the underground economy, and thus new methods are required to address these topics. But clearly the issue might be worthy of study particularly if it is the case that immigrant participation therein follows unique patterns. To the extent that some immigrants (grandparents or older children) perform unpaid labour such as child care for their grandchildren, or unpaid work in a small family owned business, the economic contributions of immigrants would be underestimated in most econometric models.

Patterns of remittances sent back to the home country might also have an impact on levels of consumer demand and investment.

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A PRELIMINARY STOCK-TAKING ON IMMIGRATION RESEARCH IN CANADA

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