Fiscal Transfers to Immigrants in Canada: Responding to Critics and a Revised Estimate

This paper responds to the criticism by Mohsen Javdani and Krishna Pendakur of our estimate of the net fiscal transfer to recent immigrants. Specifically, Javdani and Pendakur question our estimate that in fiscal year 2005/06 the average fiscal burden imposed on Canadian taxpayers was around $6,000 for each immigrant.Key findings

• In 2011, we estimated that in 2005 Canada?s immigrant selection policies resulted in an average fiscal burden on taxpayers of $6,000 for each immigrant. Later that year, Mohsen Javdani and Krishna Pendakur from the economics department at Simon Fraser University (J&P hereafter) presented an alternative estimate of this fiscal burden of $450.
• This study concludes that J&P?s lower estimate is due mainly to their choice of a different immigrant cohort and assumptions about the immigrants? absorption of government spending on pure public goods, education, and public housing.
• After taking into account some new data and some issues raised by J&P, this study presents new estimates that show that the fiscal burden imposed by the average recent immigrants is $6,000, which for all immigrants is a total of between $16 billion and $23 billion per year, figures virtually identical to those found in our earlier study.
• This study also rejects arguments made by J&P that immigrants are needed to meet labour shortages, that they bring productivity-increasing economies of scale, and that their children will repay the fiscal burden. New evidence does not provide any grounds for optimism that the offspring of recent immigrants are going to be able to earn enough to compensate current and future generations of Canadians for the fiscal transfers made to their parents by existing Canadians.
• This study also presents new evidence showing that immigrants who were admitted mainly on the basis of pre-arranged jobs have superior economic performance, which supports the policy recommendation made in our 2011 study.