Do Third World Immigrants Impose a Cost on Canadian Public Treasury?

The recent rise in Third World immigrant flows into the U.S. and Canada has raised interest in the analysis of immigrant’s impact on host nations. Among the various economic issues addressed in the literature are the immigrant’s impact on the public treasury, the employment and income distribution effects, and the performance of immigrants in the labour market. The purpose of the present paper is to -provide some evidence of the impact on Canadian public finances from immigrant flows from various world sources. In Canada, a popular view argues that immigration should be encouraged from countries with similar cultural values as Canada. It is held that such immigrants have greater assimilative capacity and are likely to possess skills required in the Canadian labour market.’ Despite this concern over the immigrants’ country of origin, no study to date has been conducted in Canada to provide an economic justification for giving any country preference. The present study is an attempt to fill this gap. To this end, a life-cycle model ‘for the consumption of public services and payment of taxes is estimated for immigrant households from various source countries. The public services consumption and tax payments of immigrant groups are then compared to those of non-immigrants. Finally, the net transfer balances of each of the immigrant groups with the non-immigrant population are provided.