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"One frequently touted motivation for immigration is demographics."

The other is just freedom.

Econ 101: Figure out the price, set the rules of the game; don’t decide the quantity, or determine the outcome.

If only "Set up old folks homes near the beach at Boracay" was an easy sell to elderly Canadians.

Some American Banker:

Months and months of snow and ice does kind of old after a while... I'm figuring by next February, even Brighton Beach in Brooklyn might seem like a tropical paradise!

Should this article have been set in DeanSwift typeface? It appears to offer a novel, interesting, but Somewhat_to_the_Right_of_Ann_Rand solution to the carbon problem, viz.,
a) don't try to reduce Canadians per-capita emissions, just limit (?reduce?) the number of Canadians
b) don't let Third World folks get any silly notion of having a First World lifestyle.
However, it does highlight the hard fact that, at least for the foreseeable future, much of Canada is incapable of sustaining a 21st-century FirstWorld lifestyle without external subsidy.

Joseph -

Much of the Canadian discussion around immigration policy is couched in purely parochial terms: at best the question asked is "is this good for Canada or bad for Canada?" Sometimes, one suspects, the question driving policy is "Is it good for our political party or bad for our party?"

This post, on the other hand, makes a very limited attempt to carry out a global utilitarian calculus. Canada is cold, and that makes living here intrinsically carbon-intensive. We live in environmentally unsustainable ways. Think Newmarket or Brampton or Langley or Surrey or any of those other communities with thomping great carbon footprints. We live in those ways because of poor urban planning and poor transit infrastructure and because of a system of incentives that make a long commute the best option available to people.

Third world folks can get rich - and are getting rich- without necessarily engaging in the kind of carbon-intensive consumption that we Canadians engage in.

In terms of maximizing global well-being, it is not at all obvious that persuading professional people inIndia, the Philippines, and China to move to Canada where their skills, education and experience aren't recognized, and in some cases they may struggle because of language difficulties, is good policy.

If the aim is actually to make life better for third world folks, there are other options - like trade or aid or other kinds of development policy - that may well be better from a global well-being point of view than immigration.

If human economic life is carbon-positive, we're hooped. It doesn't matter if excess carbon is being dumped into the atmosphere at Canadian levels or Filippino levels.

As a thought experiment, imagine replacing carbon-positive energy production with carbon-negative energy production. Now Canadians are sequestring more carbon than anyone else!

Nor is this a particularly improbable goal: hydro, nuclear and biofuels plus renewables and the esoteric options (carbon sequestrating fossil fuel energy production,, etc) should cover off the problem in a couple of construction phases --say, twenty years or so. Right now, apart from the environmental arguments against nuclear power, the main objection to this vision is that it's too much work and/or too expensive. To address that concern, we need to get the Canadian economy moving. And while I know that academics may find this hard to believe, we're facing one heckuva labour shortage, which will only get worse as the demographic bulge continues to move north.

Professor Wooley -
1)Yes,immigration policy is inevitably extensively driven by emotion & cynical exploitation thereof.
2)Canada is certainly difficult, & the difficulties have exacerbated by bad policy, but is it too late for amendment of life, is depopulation the only answer? If indeed immigrants bring ingenuity to fix & frugality to avoid excessive consumption, aren't they part of the solution?
3)Persuading? Professional people are surely, ex officio, capable of assessing the difficulties that await them. The closed-shop policies of local professionals are a form of rent seeking which deprives Canada of scarce talent,increases cost of social services, and should be fixed.
4)Certainly, helping people in situ is often the best way, especially for the less skilled/educated. Regrettably, for some Canadians, it has the added advantage that they don't actually have to live next door )~_~)

“In terms of maximizing global well-being, it is not at all obvious that persuading professional people in India, the Philippines, and China to move to Canada...”

Who decides this utility function, Frances? If we admit more people to Canada and it increases global prosperity faster through remittance, who is to decide that this is wrong?

The issue of carbon production is an issue of price. Please read Bob Litterman or Robert Pindyck on carbon pricing. Set the price and let the equilibrium relax to wherever it goes. The last thing we need are economists telling us that we should rejoice in poverty because the poor produce less carbon.

Erik: "we're facing one heckuva labour shortage"

In what parts of the country? In what sectors? Or is this the labour shortage that I've been hearing is just around the corner for as long as I can remember?

The upcoming labour shortage relies upon a number of assumptions. First, that baby boomers are going to want to stop working completely. I don't see that happening, especially given how little many have saved. Second, that baby boomers are going to be interested in spending money in their retirement. I don't see that happening either. The retirees I know seem much more enthusiastic about my proposed "solve the demographic crisis by exporting old folks to warm places" solution than they are about spending money paying for snow removal here at home. Third, to the extent that there is an upcoming labour shortage, I see no evidence that it will be in the sectors/regions where immigrants live. I.e. that we won't have massive mis-match between immigrant skills and job vacancies.

Now you could say "but tech companies are complaining that they can't hire workers." I might point out three things (a) supply curves slope upwards. Pay salaries and offer lifestyles comparable to those of US firms, and there might be a little bit less leakage to the US. (b) training. I recently met a really smart physics grad from a top Canadian university who was unemployed. With training, he would certainly be capable of doing a programming job. But he needed a bit of training. Canadian employers aren't used to having to do that (c) universities that create artificial shortages in some areas, e.g. software engineering, by making the most desirable programs incredibly difficult to get into.

On your general point about the planet is f**cked, yeah, you may be right.

"I recently met a really smart physics grad from a top Canadian university who was unemployed."

As someone who is a "really smart physics grad", trust me, if this guy is stuck in unemployment, he isn't that bright then. Becoming a programmer is pretty far down the line for a "really smart physics grad" - and besides a "really smart physics grad" should already be a pretty decent programmer. But I can hire great programmers in heartbeat and few have studied any physics. A "really smart physics grad" needs to re-train himself as fast as possible in something a little more abstract than "programming" but also practical, e.g., data analytics, machine learning, math finance, optimization, statistical inference etc. If you're "really smart" you can do this reinvention by yourself pretty quickly. All the quants I work with, we all have PhDs in physics, engineering, or mathematics. None of us studied math finance at university. We didn't get employment training. No one told us what to learn or hold our hand. We picked up the textbooks and papers in the field and worked through the material, and then we networked. We then showed that we can make firms money.

Sorry, but a CV that effectively says I'm a "really smart physics grad" is just about useless. So what? Show what you can learn. Show that you are motivated to be useful to others. If you expect others to train you, you won't compete with people like me or the people I work with. You don't need your employer to re-train you; you need to determine your own level of involvement in life.

I won't speak to Avon's programming vacancies (because I would start talking about my employer's IT purchases and it would probably escalate into a stroke or possibly a drive-by shooting), but we will hire anyone who walks through the door. So that's your labour shortage. It is, admittedly, a local shortage, but "Vancouver" is a large locality, and not the only one suffering. At this point the local shortage of labour in many industries and many localities is getting to the point where it could absorb the nation's idled labour force --at least to my eyeball.

Sure, the employment pitch is literally: "Wanted: frozen foods category manager; responsibilities include stock control, replenishment, restocking, and organising grocery store deep freezers and handling outside vendors. Work conditions will include deep freezer environment while maintaining world-class customer service and industry-leading personal appearance guidelines. Requirements: high level of physical fitness and upper body strength with implicit height requirement, unlimited availability, including night shifts. Compensation: minimum wage less union dues, no night shift or management premiums, no guarantee of minimum hours. Scheduling by seniority."

You can, as an economist, reasonably ask what the hell is going on when a labour shortage is met with a response like this. Fortunately, I'm not an economist, and don't need to explain anything, just pile it on as another anomaly that a Unified Theory of Secular Stagnation needs to account for.

Sure, flippantly phrased, but there really is something perverse and rotten going on in our labour market. Speaking as a "reasonably smart physics grad" I do think that our supply-side educational system is going to turn out to be an important part of the UFSS. I'd say more about "profzi" scams (thanks, Frances!), but I'm probably already on the radar for one drive-by shooting threat, and don't want to pile on. I can tell you that we are hiring practically nothing but immigrants at this point.

Erik Lund,

Interesting. My wife hires quality programmers in Drupal, PHP, Ruby/Ruby on Rails, and backend developers really easily. No shortage at all - she gets flooded with great applicants. Perhaps you guys need to offer more serious compensation.


My store's variety manager has been in regular contact with his merchandiser over some malformed records which have rendered it impossible to order certain items. The answer, so far, is that it is impossible to resolve the problem because the people involved in implementing our new, automated replenishment system have "moved on."

From the store level, it sure looks like the problem is that our IT section is endemically understaffed. At least, that's the default perception based on our own experiences. Obviously the problem (apart from the overly ambitious nature of the project) is some kind of misfit between human resoures budget and labour needs. The mystery is how a profit-making enterprise gets itself into this kind of situation.


Poor management aside, that's why I'm calling for a Grand Unified Theory of Secular Stagnation. This stuff has me genuinely puzzled.

Erik Lund,

The free market makes lots of "mistakes". The argument for free markets is not that they are prescient, but they are better than anything else. So yes, all kinds of terrible decisions get made in the private sector, but there is the discipline that comes from the possibility of failure. It takes time and it's not perfect (nothing humans is) but failure ensures that the pressure for better decision making is in the right direction. It's when you can't fail (government) that just awful decision making can persist for a very long time - especially when a powerful or vocal minority captures the process. I see it in my industry all the time.

Have you ever wondered why the banks have so little equity? It's ridiculous, but I'll be honest, a large fraction of my salary comes from rents that government establishes in finance. But if you ask Canadians to allow more competition in banking, or prevent implicit and explicit bail out guarantees (e.g., CMHC), they all freak out as though the current situation is doing them a favour. It's not. It strangles growth. But it pays me a really nice salary which I suspect is well above my marginal product.

1. Do you think these people will have the same number of children in Canada as they would have in their home countries?

2. Will remittances from new arrivals have an impact on consumption beyond Canada's borders (more air conditioners, perhaps)?

3. Living less than an hour from Silicon Valley, I constantly hear about startups and inventions by immigrants from developing countries. Many of those inventions are aimed at solving problems in their homelands. In Canada, do innovations of that nature have a notable positive or negative environmental impact?

4. How soon with climate change turn these potential immigrants into potential refugees?


On the # of kids - it depends a lot on which country they're from. For immigrants from China, answer is likely yes; for other immigrants, there may be a reduction in # of kids. But fertility levels have been falling sharply in many places.

There's some very interesting new and unpublished research from MIkahl Skuterud at Waterloo that finds that Cdn highly skilled immigrants don't do nearly as much patenting as their US counterparts. Here's the abstract:

We examine the effect of changes in skilled-immigrant population shares in 98 Canadian cities between 1981 and 2006 on patents per capita granted to inventors residing in those cities. The Canadian case is of interest because its points system for selecting immigrants is viewed by many as a model of skilled immigration policy. Our naïve and instrumental variables estimates suggest much smaller beneficial impacts of increasing the university-educated immigrant population share than comparable U.S. estimates, whereas our estimates for university-educated natives are virtually identical. The relatively modest contribution of Canadian immigrants to innovation appears to be largely explained by the relatively low employment rates of Canadian immigrants in STEM jobs, including among those educated in STEM fields.

Sorry immigrants from China will probably have more kids than they would have had at home, not less. Though that may be changing with relaxation of one child policy.

From what I've read, Canada is an extreme case when it comes to the relationship between immigrants and the rest of society. I believe I saw something about Canada being the only country where children of immigrant families perform better on average on standardized testing than children of non-immigrant families. Perhaps being an extreme case makes it harder to use international models to predict outcomes (ie. there is no interpolation, only extrapolation). I'm going out on a limb here, but maybe in the US there's an expectation that immigrants are either geniuses or criminals, which has become a self-fulfilling prophesy to a certain extent.

Erik Lund: "You can, as an economist, reasonably ask what the hell is going on when a labour shortage is met with a response like this. Fortunately, I'm not an economist, and don't need to explain anything, just pile it on as another anomaly that a Unified Theory of Secular Stagnation needs to account for."

I don't think an economist needs to answer "why a labour shortage is met with a response like this." It's all covered in introductory micro. There's no shortage, just an unwillingness to pay. Thus, the shortage you've perceived at your employer is just a transaction that is not happening because the labour supply curve is above the labour demand curve. Immigration could shift the supply curve to the right, and decrease the equilibrium wage, giving you a better shot of filling all your positions, but this isn't the same thing as a shortage of workers.

Frances: Outsourcing old age is the plot of Most Exotic Marigold Hotel. Worth a watch if you haven't seen it (but skip the sequel).

In practice, there are many barriers to full outsourcing. While most retirees will happily migrate south for the winter, they also value proximity to family when the weather is better. And because this proximity is of high value, it's usually what wins out when seniors' health declines past the point of being able to travel easily, which also closely matches with the greatest need for care workers.

The demographic challenges could probably still be alleviated by including out-of-country care in our health coverage, at least in lower cost countries.

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