Are Temporary Foreign Workers Filling only Labor Shortages? The Case of Canada

Abstract

A temporary foreign worker (TFW) program is meant to fill short-term labor shortages and, constraints are imposed on employers for resident workers not to be affected in getting jobs. Often, employers consider that such a program imposes time-consuming administrative barriers and they pressure the government to obtain easier and faster access to TFWs. The Canadian policy was modified in two Western provinces from a required high time-consuming labor market test for all occupations to prove labor shortages to an immediate hiring of TFWs for occupations in a given list. Using DDD, it is tested whether priority to local workers was ensured under the new program. The analysis shows that much faster access to TFWs accelerated rises in unemployment in some high- and low-skill occupations and, impacts were quite different across the two provinces and industries. Thus, some domestic workers have been negatively affected. The main cause was a lack of clear information about local occupational labor shortages and political supports to employers for cheaper labor.