Would an Increase in High-Skilled Immigration in Canada Benefit Workers?

Abstract EN

This study examines the economic and welfare effects of raising the number of high-skilled immigrants in Canada.

It uses a life-cycle applied general equilibrium model with endogenous time allocation decisions between work, education, and leisure.

According to the simulation results, raising the number of high-skilled immigrants would boost productive capacity and labour productivity but could lower real GDP per capita.

In addition, by raising the supply of high-skilled workers, more high-skilled immigrants would reduce the skill premium and the return to human capital.

This in turn would lower incentives for young adults to invest in human capital and have a dampening effect on the domestic supply of skilled workers.

Finally, it is found that more high-skilled immigrants would be welfare enhancing for medium- and low-skilled workers but welfare decreasing for high-skilled workers.