Requirements: 800

Impact of immigration on the labor market

A labor market is a place characterized by the interaction of both employees and workers. In the labor market, competition is paramount among the employees to get the best workers. Concerning that, there is also stiff competition among the workers to get a job that satisfies their desires. Since a labor market is characterized by diversity, immigration has also been paramount in the labor market and has affected the labor market. Canada’s labor market has been affected by immigration mainly in three areas: locals losing jobs, migrant workers in general, and locals’ wages being lowered. Immigration impact is usually dependent on both existing and migrant workers’ skills and how the economy hosting the immigrants is characterized. These factors are not the same in both the short and long term. The short-run period is usually the one affected mostly, unlike the long-run period.

Loss of jobs for locals

The loss of jobs of locals is usually impacted by immigration in the short run. Loss of jobs is caused by competition in terms of skills provided. In this case, the competition is enhanced by substitution factors of both the migrants and the natives. Through this, the locals’ loss of jobs and unemployment will be a formality in the short run. It is so because there has been an increment in the labor force in the market caused by immigrants’ invasion. The unskilled native workers in Canada usually suffer the most regarding the loss of jobs since many employers will resort to the immigrant’s cheap labor (Bratsberg. et al., 2018). Through this, many of the Canadian locals will lose their jobs. Also, regarding the loss of jobs, there are some instances where the immigrants will possess skilled services required in the labor market. Since the market is usually a competitive environment between employers to get the best employees, the unskilled Canadian locals will be substituted by the skilled immigrants. In this case, it will lead to the locals’ loss of jobs in the labor market. Therefore, immigration affects the substitute’s local workers more.

Migrant workers

The migrant workers are also affected by immigration impacts. Immigrants’ welfare is usually affected the most since the migration is usually driven by a high expectation of a better economy, which the immigrants feel they will gain from. Analysis of the Canadian state in the US economy has established that the immigrants do not affect the wages and jobs of the locals in the long run. Immigrants usually come into Canada as unskilled workers and, in that case, become imperfect substitutes for the locals in the host nation’s economy. Therefore, the earlier migrant workers in Canada are usually affected the most since they are the ones who fall victims to substitution by the new immigrants. The effects are usually in terms of wage reductions mostly and, in extreme cases, loss of jobs. Migrants usually engage in technical jobs irrespective of their highly skilled persona merely because most of them are less educated; hence they are not considered for jobs due to a lack of linguistic skills. Due to this, migrants usually complement the Canadian locals and not substituting them. Regarding the same matter, the low-skilled locals tend to use their superior communication abilities to acquire jobs that could have been offered to the migrants if only they knew how to communicate well.

Lowering wages for locals

Immigration also leads to lower wages for Canadian locals. The effects are usually short term based and affects the labor supply needed in the economy. It is so because by engagement of migrants in the labor market proportionately increases available workers in Canada’s prevailing economy. The main factor attributed to lowered wages depends on the skills of the migrants. The skills portrayed by the migrants is a determining factor of either complement or substitution of the locals. When the migrants portray similar skills, it enhances competition in the job market. Through this, the Canadian locals get substituted by the migrants. When competition occurs, the wages are reduced significantly in the short run since employers can offer low wages to the willing worker who offers cheap labor. Because the Canadian locals were the ones dominating the labor market before the migrants’ involvement, they are forced to accept low wages being offered or lose their jobs to the migrants.

Impact of cheap labor on the economy

Cheap labor offered by migrants has also impacted the US’s economy, especially Canada, in several ways. Through the invasion of immigrants in Canada, labor demand has increased significantly, leading to job creation.  Through this, Canada’s employment opportunities increase, and by so, more people will be earning income; therefore, more taxes are paid. More taxes means more revenue that will be used to grow the economy. By migrants increasing labor demand and demand by consumers for goods, producers increase their production activities, which the migrants will work. When production increases in the economy, it means that the nation’s economic status will be boosted highly (Kleemans & Magruder, 2018). The labor market’s occupational and industrial structure is also affected because immigrants are likely to alter the mix of services and goods. An example is that production of goods that require low-skilled laborers will be increased by the immigrants offering low-skilled labor. In the long run, the host nation’s economy will improve productivity and infrastructure and lead to high wages. Therefore, regarding immigrants who have high skills, it will lead to innovative technology, which in the end results will positively affect the economy in Canada. It is so since producers will produce high-quality goods, and the economy can benefit from it through exports hence improving its economic status.

Housing shortages and high pricing

Immigration has led to shortages of houses and high pricing of the available houses in the State of Canada. Immigration has affected the supply and demand of housing in the host nation. Due to the immigrants’ migration, the demand for housing increased (Mussa & Pozo, 2017). Because of high demand by both the migrants and the Canadian locals for available limited houses, it leads to heightened pricing. It is so because when a product is scarce, the owner usually increases the prices of the limited products since there will be competition by buyers to get the product. Sellers tend to increase the prices to acquire more profits from the business. The shortage of houses is influenced by more buyers entering the market to purchase the product even though the supply is very low. In this case, it is both the Canadian locals and migrants. Therefore, it leads to shortages of available houses due to greater demand by immigrants’ involvement.

References

Bratsberg, B., Raaum, O., & Røed, K. (2018). Job loss and immigrant labor market performance. Economica, 85(337), 124-151.

Fingleton, B., Olner, D., & Pryce, G. “Estimating the local employment impacts of immigration: A dynamic spatial panel model.” Urban Studies.

Kleemans, M., & Magruder, J. (2018). Labor market responses to immigration: Evidence from internal migration driven by weather shocks. The Economic Journal, 128(613), 2032-2065.

Mussa, A., Nwaogu, U. G., & Pozo, S. (2017). Immigration and housing: A spatial econometric analysis. Journal of Housing Economics, 35, 13-25.