Economic goals of Immigration Policy-Summary

1. Who did this report? Alan Green (Department of Economics, Queen’s University) and David Green (Department of Economics-UBC)

2. When was it published? July, 1996

3. Who sponsored it? RIIM (Research on Immigration and Integration in the Metropolis—The Vancouver Centre is funded by grants from the Social Sciences and Humanities Research Council of Canada; Citizenship and Immigration Canada; Simon Fraser University; the University of British Columbia and the University of Victoria)

4. Authors’ Summary:

(1) Immigration policy in Canada is complex. It is difficult to determine what the main goal of it is because much of it is set out of the public eye.

(2) This paper examines key institutional features of Canada’s immigration policy.

(3) The paper divides Canada’s history into a series of sub-periods, each defined by a specific goal.

(4) For each period, the paper discusses the emergence or disappearance of key institutional features as well as how the regulatory system was used to meet particular goals.

(5) The research found that Canada’s immigration policy has been defined by a large amount of flexibility. Specific regulations and policy directions are set through Orders in Council rather than Acts of Parliament.

(6) Historically, the government has used that flexibility to increase or decrease immigration to make sure that immigration does not exceed Canada’s absorptive capacity.

(7) Canada’s immigration policy history has been defined by an ongoing battle between proponents of using immigration for long-term (economic growth and demographic) goals and proponents of using it for short-term (current labour market) goals.

(8) In context, Canada’s current immigration policy is dramatically different from historical norms. Canada has abandoned the concept of absorptive capacity as traditionally defined. (Example: Failure to cut back immigration during the labour market difficulties of the 1990’s.)

(9) Current policy appears to be based on the idea that immigration generates economic growth. This represents a victory for the long-term proponents, but the government provides little evidence to support its case.

(10) Questions remain about why the shift in policy has occurred and why current levels of immigration exist.

5. Immigration policy in Canada is like a Gordian Knot. By looking at the components of the knot historically, we will be able to untangle the direction in which current immigration policy is moving.

6. Aim of paper: Explore the evolution of immigraton policy and use that as a basis for addressing 3 questions:

(1) What is the goal of current immigration policy?

(2) How does it relate to past goals and to Canada’s long-term development?

(3) Who wins and who loses from this policy?

7. Who are the stakeholders in the setting of immigration policy?

(1) Land owners

(2) Owners of Capital

(3) Labour

(4) The immigrant community

(5) The government

8. Interests of first 3:

(1) Land owners want a steady flow of immigrants to increase the productivity of their factor and to bid up its price. (Examples of land owners: Railway companies and established farmers in the past and urban developers and home owners in the present)

(2) Owners of Capital: Increased labour inflows add to the supply of urban workers and possibly moderate wage increases; before free trade, import protection and a larger population due to immigration expanded capital-owners’ markets within Canada.

(3) Labour has had a mixed attitude towards immigration: If gains from economies of scale can be exploited, importing skilled labour might expand job opportunities and incomes for unskilled Canadians. If unemployment is high, foreign labour (particularly from very low wage countries) could drive down wages.

9. Interests of last two:

(1) New immigrants might want to re-unite their families, but might not want the increased competition in the job market that might result.

(2) Government may respond to pressure from various interest groups such as immigrant groups in order to get re-elected. Government bureaucrats and politicians may pursue goals that expand their own power and prestige even if none of the other stakeholders view those goals as particularly important.

10. Three main elements of immigration policy-setting stand out:

(1) The flexibility built into the Immigration Act: defining the Act in very broad terms; assigning Cabinet extensive powers of control (Orders in Council which do not need to be brought before the House for debate or before the public for review)

(2) Government has often said one thing and done another.

(3) There has been an ongoing conflict between short (labour market policy)and long term goals of immigration policy ( demographic goals–generating population growth and achieving economies of scale).

11. PERIOD I: 1870-1913:

(1) First Immigration Act was written in 1869.

(2) Immigration policy was part of a general set of national policies (building of transcontinental railways, protecting Canadian industries, and settling the west).

(3) Second Immigration Act (1910) was written in very broad terms and gave control over the level and composition of immigration to Cabinet.

(4) Goal of immigration policy in 1870-1913: to secure farmers, farm workers and female domestics.

(5) Policy met three objectives: (a) It was consistent with the aims of The National Policy. (b) Active recruitment of immigrants accelerated the population growth rate. (c) It appeased the Nativists in Canada.

(6) The first period of large-scale immigration introduced several themes into immigration regulation that were to be repeated in the ensuing decades: (a) When excess demand for labour increased, the government expanded recruitment beyond traditional source countries. (b) This action was taken through Orders in Council, without the possibility of public debate. (c) The government stated one thing publicly (they would recruit farm labour in traditional source countries) and did another (they recruited in other countries). (d) Business and land-owners were the winners while labour, especially unskilled workers, was the potential loser.

12. PERIOD II: 1919-1929:

(1) Revisions were made to the 1910 Immigration Act in 1919.

(a) A literacy test was established for all prospective immigrants.

(b) The government gave itself the power to limit the number of immigrants admitted in a given period and to refuse admission to potential immigrants due to conditions temporarily existing in Canada.

(c) The government added the word nationality to that of race to define the origin of immigrants. In other words, it gave itself the power to restrict entrants on the basis of country.

(d) Apart from immigrants coming from Britain or the U.S., the revisions required every prospective immigrant to have a valid passport and for continental immigrants to have a visa prior to leaving.

(e) The government established preferred countries (Britain, the U.S., The Irish Free State, Newfoundland, Australia, New Zealand and South Africa) and non-preferred countries (Northern and Western Europe–equals if they were farmers or farm labourers–, Eastern and Southern Europe, Other Regions). Immigrants from other regions were admitted only if they were sponsored by a relative legally admitted to Canada.

(g) Between 1919 and 1923, the Minister decided which countries were preferred. In 1923, the list of such countries was defined.

(2) The goal of securing farmers, farm labourers and domestic workers remained intact until 1929 (Empire Settlement Act of 1922, Three Thousand Family Scheme of 1924, Railways Agreement of 1925).

(3) The concept of short-run absorptive capacity was introduced between 1919 and 1929. Trade unions persuaded the government to establish the Employment Service Council in 1918, a federal body, one of whose mandates was to control the level of immigration. This had something to do with introducing the concept of absorptive capacity: in periods of high unemployment, the level of immigration was supposed to be low; vice versa for opposite periods.

(4) Steering immigrants to specific sectors and regions was part of stated government policy from the late 1800’s, but only became a fact after 1919.

(5)Winners: Farmers and large land owners; unskilled urban labour; business (as a result of the expansion in the domestic market), especially the CPR and the CNR.

13. PERIOD III: The 1930’s and 1940’s

(1) Order in Council PC 695 closed the door to most newcomers.

(2) Exceptions were the following:

(a) A British subject or U.S. citizen with sufficient means to support the individual until employment was found.

(b) A wife or unmarried child under 18 of a person legally admitted to and resident in Canada who has the means to care for these dependents.

(c) An agriculturalist with sufficient means to farm in Canada.

(d) A destination province could object.

(e) Exceptions did not apply to any Asiatic race.

(3) Nation-building, which had been of key importance to the government from 1870 to 1930 had now become nation -preserving

14. PERIOD IV: 1946-1960

(1) Mackenzie King’s statement before the House in May, 1947 set the tone for immigration regulations for about 15 years.

(a) The government would use immigration to foster population growth.

(b) Immigration would be selective.

(c) The numbers of immigrants would be subject to the economy’s absorptive capacity.

(d) Canada has the right to determine who will enter. It is a privilege, not a fundamental human right, of any alien to enter Canada.

(e) The people of Canada do not wish, as a result of mass immigration, to make a fundamental change in the character of our population. Large-scale immigration from the Orient would change the fundamental composition of the population and be certain to give rise to social and economic problems….

(2) King’s statement is noteworthy for what it did not say:

(a) There is no mention of provincial concerns.

(b) There is no mention of the particular problems faced by Quebec.

(c) It said nothing about from which countries immigrants would be sought, types or numbers..

(d) All the difficult and important questions were to be managed by Order in Council out of the public eye.

(3) Canada was still seen by many as an essentially unfilled country that needed more people to realize its full potential.

(4) Immigration soon included people from Southern Europe. This caused problems because immigrants from southern Europe, Italy in particular, made much more use of sponsorship rights than immigrants from traditional source countries. The result was a much more unskilled inflow.

(5) This entire period was characterized by a conflict between two federal departments: (a)Citizenship and Immigration and (b) Labour. Long-term Cand I saw no problem; shorter-term Labour saw it as a
disaster because the immigration of large numbers of unskilled people came at a time of rising unemployment.

(6) The use of immigration to fill skill gaps is significant since it recurs many times in the next 30 years.

(7) The government attempted to revoke sponsorship rights, but this caused such a negative reaction that the government backed down. This was the first evidence of the burgeoning political power of that community.

(8) The Minister was given power to overrule his officers. This caused large numbers of immigrants who had lost their right to gain admission to appeal directly to the minister. This created quite large backlogs.

(9) Labour was probably the loser; business and land or resource owners were the winners.

15. PERIOD V: 1960-1973

(1) Despite Immigration Minister Ellen Fairclough’s intention to emphasize skills in new immigrants, sponsorship rights prevailed and many unskilled continued to arrive.

(2) When the government tried to correct this situation by permitting only Canadian citizens the right to sponsor, the immigrant community mounted a srong response and the government withdrew its idea.

(3) The government’s solution to this problem was the point system introduced in 1967. This limited the discretionary powers of immigration officers and provided them with a set of explicit guidelines.

(4) The point system indicates success for those who viewed immigration as an immediate labour market policy.

(5) Once again, changes had been made without revising the Immigration Act. Neither parliament nor the public was involved.

(6) The point system reflects the fact that immigration was and is an economic policy tool in Canada, not a population expansion policy or a refugee policy. (Editor: This is worthy of much note!)

(7) The focus on skills was a policy which potentially benefitted both labour and business.

16. PERIOD VI: 1974-1985

(1) This was a period of business cycles. It was a test of the point system which in some ways failed.

(2) A new Immigration Act was brought in on April 10, 1978. It defined 3 main goals:

(a) Reunion in Canada of Canadian residents with close family members from abroad

(b) Fulfillment of Canada’s legal oblgations to refugees and upholding of its humanitarian traditions

(c) Fostering of a strong and viable economy in all regions of Canada

(3) The new Act reflected a shift away from economic goals.

(4) The new Act did not give the Department the power to set limits on the number of immigrants in various components of the inflow. Officials could not cut off the number of family members processed nor could they deny any applicant who had the required number of points the right to enter.

(5) These features made it more difficult to manage the composition of the inflow and would haunt

efforts to control immigration in the years to come.

(6) The government handled this problem by (a) focussing on applicants with prearranged employment or those who could be directed to specific occupations and (b) substantially altering the size of the inflow.

17. PERIOD VI: 1986-1993

(1) Reports given to the new Conservative government in 1985 expressed concern that fertility in Canada had fallen below replacement levels with the implication that the population would decline.

(2) Independent immigrants were no longer required to have arranged employment.

(3) Immigration was to be used to increase population growth and readjust the population’s age structure

(4) The inflow went from 83,402 in 1985 to 152, 098 in 1987.

(5) Immigration was to be used as a source of capital and as a means of establishing trade links.

(6) Lobbying groups succeeded in having never married, adult, non-dependent children moved from the assisted relative class to the family class.

(7) The Conservative government also commissioned a three-year Demographic Review which turned out to contradict what the government had been acting on.

(a) Inflows of 200,000 to 300,000 could only postpone the point at which population stabilization and decline would occur.

(b) Immigration inflows larger than that range were probably politically unfeasable.

(c) Even wild immigration scenarios with 50% of the inflow under age 15 would not have a large impact on the age structure.

(d) Immigration was not the solution for a naturally aging population.

(8) The government of Canada has not decided on an optimum population size. Size is subject to the influence of lobbying.

(9) The government said it would put increased emphasis on the economic component of the inflow, but it did not.

(10) They committed to stable inflows of about 1% of the current population and increased the inflow to nearly 250,000 in 1993 in spite of a persistently poor labour market. This was the first time a
Canadian government had done that.

(11) The government’s policy stance in the early 1990’s appears to have been confused.

(12) Losers: Labour

(13) Winners: business, land-owners, developers and immigration lobbyists


(1) The main defining feature of Canadian immigration policy is flexibility. (Power over immigration was in Cabinet’s hands from 1910 to 1952 when it was placed in the hands of the Minister. In 1992, the Minister received even more power.)

(2) Another key feature has been an emphasis on absorptive capacity. Every major increase in unemployment was accompanied by major cuts in immigration.

(3) Canada followed a preferred/nonpreferred country policy starting at the end of WWI and continued this until the early 1960’s. It does not have this policy any more.

(4) Another feature is a broad regulatory system set in place in the 1960’s (Family, refugee and assessed-the assessed has become a residual.)

(5) Immigration has been used to increase population and to meet demands for labour.


(1) The Liberals’ 1995 document, Into The 21st Century: A Strategy For Immigration and Citizenship introduced a new policy framework. Key elements:

(a) Immigration levels are to be maintained at 1% of the population level (a target range).

(b) Refugee management is to be moved into a separate system with separate resources and goals.

(c) Equality of family and assessed classes is to be achieved–even if it means falling short of targets.

(d) Four occupational categories are established and a limit is set in each category.

(e) Education is increased in point value (16 to 20); English or French proficiency is increased (15 to 20); personal suitability is increased (10 to 16).

(f) A national clearinghouse on worker accreditation is established as well as a programme to identify occupations where there is a shortage of labour.

(g) Emphasis is placed on the economic component of immigration and on the need to avoid immigrants becoming a burden on social programmes.


(1) Changes continue to be done through Orders in Council. No real public airing of policy changes has occurred.

(2) Willingness to set limits is different from what has happened previously.

(3) Splitting the refugee component from other immigration is a strengthening of Canada’s obligations.

(4) The new policy breaks with most of Canda’s policy history by abandoning absorptive capacity.

(5) This is a victory for the true believers.

(6) If the new and proposed regulations minimize costs and have immigrants pay for more settlement services, they are likely to be successful.

(7) Two contradictions in new policies:

(a) C and I will provide provinces with the opportunity to choose independent immigrants who meet economic objectives. (Federal government says this is not effective.)

(b) C and I will make the selection system more favourable to technicians and trades workers.

(Census figures show that university-educated workers have lower unemployment rates and higher incomes than technicians and trades workers.)

(8) There seems to be no clear reason for the high inflow. (More flexible workforce??)

(9) There seems to be no specific goal beyond the claim that more immigrants generate more growth.

(10) There is no clear reason why current inflows of 200,000 to 250,000 are appropriate.

(11) Only reason: the government has mainly its own faith in the benefits of immigration to support its decision.

(12) Losers: labour and immigrants themselves.

(13) Winners: Immigrant groups and business


(1) Flexibility given to C and I has meant that immigration has not been debated very openly.

(2) Current immigration policies break with absorptive capacity and historical events which provided a reason for immigration.

(3) The current policy appears to have been set by true believers who hold firmly to a faith in the long-term benefits of high levels of immigration. Big problem: the government has not presented evidence to justify this faith.

(4) Unanswered questions:

(a) Why has the government abandoned a long-established pattern of expansion of immigration in good times and cutbacks in bad?

(b) Why has it decided to maintain high immigration levels in the face of high unemployment?

(c) Why has a target of 1% of the population been chosen?

(d) Why has the switch to a long-term view of the benefits of immigration occurred now?

(e) Is the latter a reflection of the loss of power of labour groups in the current political landscape?