Immmigration and Internal Mobility in Canada

We analyze the impact of temporary foreign workers (TFWs) and permanent immigrants on
interprovincial mobility in Canada. Particular attention is given to the Canadian program of
TFWs that has intensified enormously over the last 30 years. Results of the empirical analysis
are analyzed through the lens of a small theoretical model that incorporates a job-matching
framework (Pissaridès, 1985, 2000) in a migration model à la Harris and Todaro (1970). We
find that the inflow of TFWs into a given province tends to substantially decrease net
interprovincial mobility. This is not the case, however, for the inflow of permanent
immigrants selected through the Canadian point system. On average, each inflow of 100
TFWs is found to decrease net interprovincial migrants within the year by about 50, a number
substantially higher than is present in existing literature. This number increases to 180 in the
long run. The negative impact of TFWs is ascribed to the fact that TFWs are hired directly by
employers, take vacant jobs, and display employment and participation rates of close to 100
per cent. Our paper suggests that, in general, the impact of immigration on labor market
conditions depends critically on the way immigrants are selected.