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DONNER PRIZE FINALIST: Toward Improving Canada's Skilled Immigration Policy

04/30/2012 12:03 EDT | Updated 06/30/2012 05:12 EDT

Does the prime minister wield too much power? Is our skilled immigration policy in need of major reform? What role do museums play in Canadian society? Could Healthy Living Vouchers help in the battle against obesity? These are the questions posed by the four finalists competing for the $50,000 2011/2012 Donner Prize, the award for best public policy book by a Canadian. The winner will be announced on Tuesday, May 1. This is the final excerpt from each of the finalists, which have been published in advance of the prize exclusively for Huffpost readers. Today's is from Toward Improving Canada's Skilled Immigration Policy: An Evaluation Approach by Charles M. Beach, Alan G. Green and Christopher Worswick (C.D. Howe Institute)

Introduction from the authors:

Canadian immigration policy has new challenges in the face of changing demand in the labour market, the beginning of the Baby Boom generation moving into retirement, and the growing international competition for skilled labour. With widespread layoffs and shifts in Canada's industrial structure that affect its occupational requirements, the question arises whether Canada's skilled immigration system is up to the job of enhancing the prospects of both immigrants and the domestic economy. Future immigrants will need to fit into an increasingly complex, knowledge-based and service-based economy. 2011 is the first year that the Baby Boom generation starts turning 65, so that an on-coming flood of retirements will leave major skills shortages that we will have to rely on immigration to help alleviate. The European Union has recently introduced a "blue card" plan similar to the U.S. green card program to attract skilled labour; a number of other countries have been moving towards a point system as part of their efforts to attract skilled labour; and Canada's point system may no longer be operating as effectively as Australia's. So Canada needs to respond to such growing international competition for skilled labour.

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CANADIAN POLICY TOWARD skilled immigration is undergoing a dramatic change of direction as immigrants face major challenges to getting ahead in this country. We have examined the effectiveness of Canada's immigration procedures concerning the inflow of skilled immigrants, and highlighted the need to re-examine the operation of federal policy toward these arrivals. To that end, we developed a tool, an evaluative criterion -- namely, real annual earnings of workers shortly after their arrival, or average entry earnings -- to examine how well immigrants are doing in the Canadian labour market. We then used that criterion to analyze the effect on it of major policy levers of the federal skilled immigration program and of possible changes to those levers. Further, our empirical framework allowed us to put actual dollar figures on the consequences of alternative policy changes. In undertaking this study, we hoped to contribute to moving skilled immigration policy to a more objective, evidence-based approach, as recently recommended in the 2009 auditor general's report.

Here, we review our major findings and offer some thoughts on possible reforms to Canadian immigration policy that would benefit not only Canada but those who wish to build their future here.

First, emphasize the importance of language fluency in the point system's weights on skills and use an objective approach to assessing applicants' proficiency. Evidence in Canada and elsewhere strongly supports the importance of language fluency on the job in getting a job commensurate with the immigrant's training and occupational skills and in subsequently advancing in the labour market. It thus makes a lot of sense to put considerable weight in the point system on that skill. Canada, however, has relied on self-declared and informally checked proficiency claims in assessing such points, and is well advised to consider a more formal, objective approach as Australia has followed for more than a decade.

Second, and more generally, maintain current levels of Economic Class immigrants and assess the acceptability of their foreign educational and professional credentials before they arrive. Australia now operates an apparently more successful point system than Canada. The Economic Class proportion of its total immigration is now running at about 70 percent, compared with 55 to 65 percent in Canada. Since such immigrants invariably perform better in the labour market on average than do other major classes of immigrants (such as the family class or refugees), Canada should consider maintaining the current proportion of Economic Class immigrants within the immigration system.

Third, adopt an asymmetric weight scheme for age in the point system. We found that the effect of the points awarded for age in the federal point system on the earnings outcomes of arriving immigrants is very weak. One way to strengthen this effect would be to move to an asymmetric weight scheme -- as both Quebec and Australia currently use -- whereby points are reduced for older ages beyond a maximum-points age interval. This asymmetry would attract younger applicants, who, as a number of studies have remarked, do much better in the labour market than those who arrive as adults with foreign education and work experience.

Fourth, reallocate points away from work experience and toward younger age in the point system. Foreign work experience is strongly discounted in the Canadian labour market. Part of this revolves around issues with recognizing foreign credentials and professional qualifications, but part also revolves around the ways jobs operate, workplaces are organized, and the technological competence needed in the Canadian context. Thus, since an immigrant's past work experience is not well rewarded, on average, it might make sense to reduce the number of points awarded for work experience in the point system and perhaps reallocate them to younger age instead. In 2004, instead, points allocated for work experience were increased from 9 to 21 and those for age were reduced from 13 to 10. This seems to us a change in the wrong direction. Indeed, the combination of high weight on past work experience and a new emphasis on specified occupations might backfire since the market heavily discounts occupation-specific experience.

Fifth, do not count immigrants arriving under the Canadian Experience Class program as admissions under the Federal Skilled Worker Program. The current system has the effect of reducing the Economic Class share of immigration coming in through the point system screen; instead, it would be better to allow the number of immigrants coming in on the basis of their skills (including through the CEC program) to rise.

Sixth, review the skills of applicants arriving under the Provincial Nominee Program (PNP) and either cap such admissions or allow the cap to vary with the unemployment rate. The PNP has been criticized for the ad hoc approach provinces take to admissions, the large numbers of relatively low-skilled workers they are admitting -- especially in a time of relative economic recession -- and for the program's effect of reducing the overall share of skills-assessed immigrants arriving under the FSWP. At the very least, at a time of relatively high unemployment in Canada, it would make sense to undertake a review of the skills profile of applicants arriving under the program and perhaps to put a cap on such admissions, or allow the cap to vary inversely with the overall unemployment rate.

Seventh, clear up immigration backlogs and processing delays. If one of the goals of the PNP and other recent policy revisions was to shorten the decision process for skilled worker applicants, then perhaps more resources are needed to reduce the current massive backlog of such applicants. Some processing delays also could be due to the higher processing priority currently being given to programs such as the PNP.4 Such priorities should be reviewed.

Canada's immigration system will always have to deal with short-term pressures, but immigration-related decisions also have longer-run implications. The current system has not undergone a major review since the mid-1990s, and an examination now seems due -- one that looks at the longer-run role and objectives of immigration in Canada's future and how best to meet these objectives.

* Alan G. Green also co-authored this book. He was Professor Emeritus of Economics at Queen's University; he passed away on November 3, 2010.