Does immigration really help the economy? What kind of specific immigration law helps the economy? In Canada today, only about one third of the population believe that immigration is a hindrance rather than an opportunity. According to Jeffery Reitz, Canadians are convinced on the economic advantages of immigration. So much so that in areas of economic distress, Canada implements incentives for immigration to those areas. Even unemployed workers insist that immigration is beneficial.
In Canada, under the point system, there is a greater flow of skilled labor mostly from industrialized countries. When looking at the labor market, immigration represents a shift outward to the right of the labor supply curve which decreases the real wage rate. In Canada this should only affect the high-skilled labor market because they do not allow low-skilled labor into their country. Therefore, immigration of high-skilled labor into Canada should decrease the real wage rate for high skilled jobs like doctors and engineers. In turn, this decreases the wage inequality gap by reducing the wage rate for high end jobs while keeping the low end job wage rate constant. Canadian statistics show that for every 10% increase in the immigration population, real wage decreases by 4% and real wage for people with post graduate degrees is decrease by 7% . In the United States there is the opposite problem. Since most of the United States’ immigrants come in the form of low skilled labor, this reduces the wage rate in the unskilled labor market while keeping the skilled labor market relatively constant. This widens the inequality gap with regard to the real wage rate.
A study done by Stephen A. Camarota, a research director at the Center for Immigration Studies, states that for every 1% increase in the low-skilled immigration population comes a .8% decrease in native low-skilled wages . Borjas states that there is a 44% change in the wage gap between unskilled natives attributable to immigration, whereas there is only a 4.7% change in the wage gap between skilled natives attributable to immigration. Since the United States also allows high-skilled labor to enter the labor force, the wage rates in high-skilled labor fields are also reduced because of the simple increase in supply; however, since there is a much greater inflow of low-skilled immigrants willing to work for a lot less, the wage decrease becomes a lot lower for low-skilled jobs than high-skilled jobs thus increasing wealth inequality. This distinction between wealth equality is a major issue and is a main reason why so many Canadians approve of immigration whereas more and more Americans every year are disapproving immigration.