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Skilled immigration to fill talent gaps: A comparison of the immigration policies of the United States, Canada, and Australia

  • Masud ChandEmail author
  • Rosalie L. Tung
Article
Part of the following topical collections:
  1. Migrants, Migration Policies, and IB Research

Abstract

The globalization of the world economy, the growing boundary-less nature of the workforce, and the reduction in immigration and emigration barriers to the movement of people have helped fuel a “war for talent” (Chambers et al. in McKinsey Q 3(3):44–57, 1998) worldwide. In this paper, we study the immigration policies of three of the most popular destinations of skilled immigrants – the US, Canada, and Australia. According to the 2018 Global Talent Competitiveness Index (Global Talent Competitiveness Index, 2018), these three countries were among the top 15 most attractive destinations in the world, attracting two-thirds of all skilled immigrants worldwide. We analyze the policy frameworks of these countries in terms of attracting skilled immigrants and their evolution over time. We compare and contrast these frameworks and explain how they are similar to and different from each other. We also analyze the background of the immigrants and their overall success in integrating into their host societies. Finally, we provide recommendations on how to make these policies more effective, and how they could help countries in the global battle for talent.

Keywords

skilled immigration immigration policy United States Canada Australia 

Introduction

The globalization of the world economy1, the growing boundary-less nature of the workforce (DeFillippi & Arthur, 1996; Stahl, Miller, & Tung, 2002), the growing share of intangibles and knowledge-intensive assets in industrialized economies (Mudambi, 2008), and the reduction in immigration and emigration barriers to the movement of people (Tung, 2016) has helped fuel a “war for talent” worldwide (Beechler & Woodward, 2009; Chambers, Foulon, Hanfield-Jones, Hankin & Michaels, 1998). This global battle for talent is further exacerbated by the aging of the population in almost all industrialized countries including some emerging markets, such as China (Chand & Tung, 2014a), and the resultant expected skilled workforce deficit in key areas of their economies. Attracting skilled immigrants and integrating them in high-value adding activities can also help with the call to design and implement policies that create economically viable clusters connected with global value chains (Lundan, 2018; Turkina & Van Assche, 2018).

There were about 28 million high-skilled migrants (defined by the Organization for Economic Cooperation and Development – OECD – as those with at least one year of tertiary education) in OECD countries in 2010, reflecting an increase of nearly 130% since 1990. This increase is the result of several forces, including efforts by policy-makers to attract human capital, pull factors generated by spillover effects and anchor organizations, lower transportation and communication costs, and the rising number of international students (Kerr, Kerr, Ozden, & Parsons, 2016). High-knowledge activities, which lead to high-value addition, tend to be concentrated in global knowledge centers, most of which are located in industrialized countries (Mudambi, 2018).

While OECD countries account for less than one-fifth of the world’s population, they host most of the world’s high-skilled migrants. Four English-speaking countries – the United States (US), the United Kingdom (UK), Canada, and Australia – are host to nearly 70% of skilled immigrants to OECD countries. In 2010, the US hosted almost one-half of all high-skilled migrants to the OECD and one-third of high-skilled migrants worldwide (Kerr et al., 2016). By 2017, the latter statistic had climbed to almost one-half of all skilled immigrants worldwide (Van Dam, 2018). Skilled workers play a vital role in the knowledge economy, and thus, from a policy perspective, the attraction of skilled workers becomes critical to enhancing productivity and maintaining global competitiveness. Many host countries have higher concentrations of skilled immigrants in particular occupations. For example, immigrants account for some 57% of scientists in Switzerland, 45% in Australia, and 38% in the US. Foreign-born individuals made up 27% of all physicians/surgeons and over 35% of medical residents in the US in 2010 (Kerr et al., 2016).

Skilled immigration creates both advantages (opportunities) and disadvantages (challenges) for different stakeholders in both the home and host countries. For host countries, this leads to greater competition for certain jobs that contributes to the perception by some that “foreigners” are taking jobs away from locals, but also an opportunity to benefit from the complementarities and agglomeration effects created by industry and talent clusters (Ozgen, Nijkamp, & Poot, 2012; Kerr, 2010). Previous studies of the impact of immigration on wages have found the effect to be either non-existent or fairly modest, with the typical elasticity of wages with respect to inflows of immigrant workers estimated to be around 0.1 (Beine & Coulombe, 2018; Grossman, 1982; Borjas, 1987; Card, 1990). For sending countries, the loss of skilled workers raises concerns over brain drain if such emigration were permanent. With globalization, however, high-skilled emigrants can create badly needed connections in their countries of origin (COO) to global sources of knowledge, capital, and goods. This is further enhanced by the reality that a growing number of emigrants now return home with higher social and human capital levels and/or create “dual beachheads of business” (Saxenian, 2002) in both their COO and countries of residency (COR). Traditionally, national borders have often been viewed in the context of underlying cultural and institutional differences, thereby posing constraints to the bilateral or multilateral flow of goods, services and ideas. The movement of high-skilled immigrants from one country to another and the establishment of “dual beachheads of business” (Saxenian, 2002) present a new perspective where well-integrated immigrants can play important roles in boundary spanning across borders and connecting disparate elements of the global value chain (Schotter et al. 2017; Mudambi 2018).

In this paper, we study the immigration policies of three of the largest destinations of skilled immigrants: the US, Canada, and Australia. According to the 2018 Global Talent Competitiveness Index, an annual benchmark measuring how countries and cities grow, attract, and retain talent published by INSEAD, these three countries are among the top 15 most attractive destinations for high-skilled migration (Global Talent Competitiveness Index, 2018). Collectively, these three countries attract about two-thirds of all skilled immigrants worldwide. In addition, these three countries also share a common cultural heritage as well as institutional similarities that make comparisons across their policies easier.

A comparative analysis of the policies and programs to attract skilled immigrants across these three countries can provide important insights into the strengths and weaknesses of each. It can also help explain what part of the policy frameworks work well and what aspects could be enhanced and/or modified. In addition, it provides an opportunity for policy-makers to study best practices from each other in this regard. Thus, the comparative analysis of the immigration policies of the three most attractive destinations for skilled migration can shed useful insights into the formulation of policies and programs and their implementation, thereby contributing to the theoretical literature as well as practical implications associated with how countries can more effectively win the “war for talent”.

In the next part of the paper, we look at the issue of skilled migration across countries and the different policy frameworks that have been put in place to attract skilled immigrants. We next examine the skilled immigration frameworks of the US, Canada, and Australia as well as their relative success in both attracting and integrating immigrants. We then compare and contrast these frameworks and discuss the relative success of the policies and programs in each country in terms of both attraction and integration of skilled immigrants. Finally, we provide recommendations on how to make these policies more effective, thereby enabling countries to compete more successfully in the global battle for talent. We use immigration data from different government agencies in the three countries, including different multinational bodies, various indices such as the Global Talent Competitiveness Index and the Multiculturalism Index (Global Talent Competitiveness Index, 2018; Multicultural Policy Index, 2010), and policy documents from the respective governments.

Skilled immigration

Skilled immigrants are an important source of talent, innovation, and revenues for host governments. According to a 2016 study on immigration by the US National Academy of Sciences, an immigrant with a college degree who arrives in the US at age 25 will pay about half a million dollars more in US taxes than she/he will consume in lifetime government services. For an immigrant with an advanced degree, the fiscal surplus is almost $1 million (National Academy of Sciences, Engineering and Medicine, 2016). While foreign-born people account for roughly 13% of the US population, immigrant entrepreneurs create some 25% of new companies. In some states, that percentage is even higher: in both New York and California, for example, more than 40% of new businesses were started by immigrants. In addition, immigrants accounted for roughly a quarter of all US patent filings in 2016 (Blanding, 2018).

The shortage of skilled science and engineering talent in the US has acted as a bottleneck for companies investing in innovation with domestically available talent (Lewin, Massini, & Peeters, 2009). According to the World Bank, immigrants in the US make up more than a quarter of all STEM (science, technology, engineering, and mathematics) jobs in the health care, information, finance, and education industries, and represent over one-half of all computer scientists, software developers, software engineers with master’s degrees, and 60% of all STEM workers with PhDs (Van Dam, 2018). At least 35% of awardees of Canada Research Chairs (a Canadian government initiative to promote research excellence at Canadian universities) are foreign-born, even though immigrants constitute just one-fifth of the Canadian population. Immigrants to Canada win disproportionally higher numbers of prestigious literary and performing arts awards: immigrants comprise 29% and 23% of winners of the Giller Prize, a prestigious literary award in Canada, and the Governor General’s Performing Arts Award that recognizes excellence in that field, respectively (Conference Board of Canada, 2010). Currently, immigrants are responsible for about 71% of Canada’s population growth considering the low birth rate in that country. In July 2019, Canada’s population registered a 1.4% increase, the highest among the G-7 countries. This increase is driven primarily by immigration from abroad (Statistics Canada, 2019). The Conference Board of Canada predicts that Canada’s population growth will be driven entirely by immigrants by the year 2040 (Vomiero, 2018). Australia’s immigration program is projected to add up to 1% to annual average GDP growth from 2020 to 2050 (The Treasury and Department of Home Affairs, Government of Australia, 2018). Immigrants are also substantial contributors to innovation. In 2018, while immigrants made up only 13% of the US’s population, they accounted for 39% of US resident Nobel Prize winners in Physics, Chemistry, and Medicine, and 31% of Nobel Prize winners in all categories in the past 20 years. They also made up 37% of all MacArthur Foundation ‘genius award’ winners in the US since 2000 (Scheve & Slaughter, 2018).

Across the world, policy-makers increasingly recognize the important role that human capital plays in a country’s economic development, thus contributing to the “war for talent” whereby both industrialized countries as well as emerging markets often vie for the same talent pool (Kapur & McHale, 2005; Boeri et al., 2012). International trade is “increasingly in terms of value chain activities” (Mudambi, 2008: 707), and high-skilled immigrants can potentially add value to this through their tacit knowledge and possession of transnational social networks that can act as conduits of information and trust between their COO and COR. To facilitate economic development at home, a growing number of emerging economies seek to entice returnee immigrants since they see them as a source of highly skilled talent with Western-style managerial experience and entrepreneurial skills that simultaneously possess domestic market knowledge and access to networks in the host country (Tung & Lazarova, 2006; Tung & Chung, 2010). As of 2015, about 44% of the 172 United Nations member states have declared an explicit interest in attracting more skilled migrants to their countries (Czaika & Parsons, 2017). Indeed, two-thirds of OECD nations have implemented or are in the process of introducing policies specifically aimed at attracting skilled migrants. Reasons advanced to support such policies include spurring technological progress (Kerr & Lincoln, 2010), raising productivity (Peri et al., 2015), and fostering economic growth (Boubtane et al., 2014).

The US, which has been the largest destination country for skilled migrants since WWII, enacted the Immigration and Naturalization Act, also known as the Hart–Celler Act, in 1965. This legislation abolished an earlier quota system based on national origin that gave preference to Western Europeans and established a new immigration policy based on family reunification and attracting skilled labor to the US. Canada and Australia, two of the next largest destinations for international migrants, also steadily changed their immigration policies after WWII. They gradually moved away from racially selective migration policies favoring white and European settlers and toward policies focusing on the selection of newcomers based on their skills and on their potential contribution to society as well as family reunification (Paquet, 2017).

In the last two decades, policies aimed at increasing high-skilled immigration have been accompanied by a huge surge in high-skilled migration. Between the censuses of 2000/2001 and 2010/2011, OECD countries witnessed a nearly 70% rise in the number of tertiary-educated immigrants to a total of 35 million. This represented the largest increase in terms of both numbers and proportions in the history of OECD (Arslan et al., 2014). While the number of high-skilled immigrants has risen rapidly, the degree to which different policies are effective in attracting such immigrants is a matter of some debate (Bhagwati & Hanson, 2009). We next take a look at the broad policy approaches that different countries have used to attract skilled immigrants.

Policy approaches by countries to select skilled immigrants

Overall, there are two broad policy approaches that countries use to select high-skilled individuals, although individual country policies often have elements of both. The first approach is merit-based, often utilizing a points system. It focuses on screening individual applicants for admission and is sometimes referred to as a supply-side approach to migration. It is based on the human capital accumulation model, which seeks to increase the proportion of workers in the population whose skills, education and training are perceived to be in short supply or of long-term economic value to an economy. The second approach is an employer-driven model. This approach emphasizes firms selecting skilled workers who are then screened by the government for admission to the country. This is also described as a demand-side approach (Kerr, Kerr, & Lincoln, 2015).

Merit- or points-based systems admit immigrants who have sufficient qualifications and experiences from a list that typically includes language skills, work experience, education, and age. Less commonly used criteria (or those that are assigned less weight) include the presence of applicant’s relatives or the education and work experience of the applicant’s partner (Papademetriou & Sumption, 2011). Under this system, highly qualified migrants can typically apply for immigration in the absence of job offers, although a job offer may grant preferential access (Czaika & Parsons, 2017). The points-based system tends to be more transparent, flexible, and relatively easily adjustable by policy-makers to meet the country’s evolving economic needs. A major downside of this approach is that, since employers are not directly involved in their selection, it may admit immigrants who are unable to find work at their skill level once they immigrate. This can over time undermine both integration and the long-term economic benefits from immigration (Papademetriou & Sumption, 2011).

Employer-driven systems put the onus on employers to select the workers they need subject to government regulations. Selection by an employer is evidence that the immigrant’s skills are in demand and valued, and that s/he will have a job upon arrival. Government regulation can ensure that, even though employers select potential immigrants, the latter must possess minimal levels of education, language proficiency, or earnings to ensure that they are highly skilled (Papademetriou & Sumption, 2011). Employer-driven systems are designed for immediate employability of incoming migrant labor. The US skilled immigration system as well as most European systems are employer-driven to a large extent. While such requirements are effective in selecting migrant workers who can be employed quickly, they may have the effect of bypassing skilled migrants who do not fill an immediate shortage in the domestic labor market (Czaika & Parsons, 2017).

One major concern about the employer-driven model is that employers might manipulate the system to access cheap labor. Relatively easy access to a foreign labor pool might also reduce the need for employers to invest in the training and development of domestic workers, thus driving down local wages. From the immigrant’s point of view, employer-driven systems often tie workers to specific jobs, making it difficult for them to report abuse or to respond to changing market conditions by moving jobs. There is also the fear that employer-based migration might lead to illegal immigration if workers lose their jobs (Papademetriou & Sumption, 2011). Under the Trump administration in the US, where there are rising anti-immigration sentiments, this system has become a rallying cry of “nationalists” that foreigners are “stealing” jobs from the locals.

Canada and Australia are examples of countries that largely implement a points-based system for skilled immigration, although they do have elements of the demand-side approach as well. Their systems select individuals based on their education, language skills, work experience, age, and existing employment arrangements. The US uses mostly an employer-driven program for high-skilled immigration, with the H-1B and L1 visas as primary categories (explained in a later section) (Kerr et al., 2015).

Whether a country has implemented an employer-driven system, a merit-based system, or a mixture of both, partly depends on the policy-makers’ priorities when addressing long-term deficiencies in human capital compared with short-term labor market shortages (Papademetriou & Sumption, 2013). Despite countries leaning toward a demand- or a supply-side orientation, in reality, immigration policies tend to be comprised of a mixture of both demand and supply elements (Parsons et al., 2014). For example, Australia and Canada combine their merit-based systems with priority occupation lists that partially constitute demand and employer-driven elements (Koslowski, 2014). In the case of Canada, priority for permanent residency is given to those who have worked in Canada for at least two years and to foreign students who have completed their degrees in Canada (the “Canadian Experience Class”; Canada, Immigration, Refugees and Citizenship, 2018). Because the quota for the number of permanent residents per year is fixed, each Canadian Experience Class immigrant translates into one less spot for applicants who have achieved the point system numerical threshold, but who do not satisfy the Canadian work experience or Canadian university criteria. In the case of Australia, the required work experience for immigrants to apply must be in occupations listed on the Skilled Occupation List, an Australian government list that is continually updated in consultation with employers and unions in order to meet labor market needs based on sector and skills (Department of Home Affairs, 2019b). We next study in detail the skilled immigration system in each of these countries.

US skilled immigration system

Given the size (population-wise) of the US – the US has almost nine times the population of Canada and 13 times that of Australia – the US has the largest immigrant population in the world in terms of absolute numbers, with 47 million immigrants as of 2015 (UN Population Division, 2017). This represents almost one-fifth of all the 244 million international migrants worldwide and about 15% of the US population. The US admitted 1.18 million legal immigrants in 2016, of whom 20% were family-sponsored, 47% were the immediate relatives of US citizens, 13% were employment-based preferences, 4% were part of the Diversity Immigrant Visa program (an annual US government lottery program for receiving US permanent residence that aims to diversify the immigrant population of the US by granting 50,000 visas annually), and 13% were refugees or asylum seekers (Department of Homeland Security, 2017). The two family-based categories together account for almost two-thirds of the immigration into the US and have been referred to by critics as promoting “chain migration”.

High-skilled immigration has important consequences for that country’s economic development. Because high-skilled immigrants in the US are disproportionately in the STEM fields, they are more likely to help spur innovation. There is some evidence of this, as US states and localities that attract more high-skilled foreign labor have experienced faster rates of growth in labor productivity (Hunt & Gauthier-Loiselle, 2010; Peri, 2012). Individuals who are ethnic Chinese and Indian, a large proportion of whom appear to be foreign-born, account for rising shares of US patents in computers, electronics, medical devices, and pharmaceuticals (Kerr & Lincoln, 2010). The National Survey of College Graduates shows that foreign-born individuals are far more likely than native-born to obtain a patent, and more likely still to obtain a patent that is commercialized (Hunt, 2011).

The largest segment of the US skilled immigration program is the H1-B visa. This is a visa for highly skilled people which allows US employers to employ foreign workers in “specialty occupations”, defined as those demanding application of specialized knowledge, such as engineering or accounting. The visas are popular in part due to their “dual intent” feature, which allows for the firm to also petition for permanent residency on behalf of the worker. Most H-1B visa holders have a bachelor’s degree or higher, and about 70% of the visas in recent years went to STEM-related occupations. Also, about two-thirds of visas in recent years have gone to Indian nationals (Kerr et al., 2016). In 2015, there were 348,669 applicants filed for the H-1B of which 275,317 were approved (Department of Homeland Security, 2016). The H-1B work-authorization is limited to employment by the sponsoring employer. The duration of stay is three years, extendable to six years. An exception to the maximum length of stay applies in certain circumstances. A total of 65,000 H1-Bs are regularly awarded each year. An additional 20,000 H-1Bs are available to foreign nationals holding a master’s or higher degree from US universities (Kerr et al., 2016). H1-B non-immigrants who work at universities in a teaching capacity are excluded from the ceiling.

The H1-B visa entails considerable costs and paperwork on the part of the employer. Before the employer can file a petition with the United States Citizenship and Immigration Services (USCIS), the employer must ensure and prove that hiring the foreign worker will not adversely affect US workers. This is done by the employers’ attesting on a labor condition application certified by the Department of Labor that employment of the H-1B worker will not adversely affect the wages and working conditions of similarly employed US workers. Employers must also provide existing workers with notice of their intention to hire an H-1B worker (American Immigration Council, 2018). Under the Trump administration, a number of administrative changes have slowed down the processing of H-1B visas, including more scrutiny of evidence that a foreign worker possesses the required qualifications and temporary suspension of the “premium processing” option which fast-tracked applications for an additional $1500 fee, resulting in a backlog of applications (Bhuiyan & Castillo, 2019). H1-B workers are required to work for their sponsoring employers until a green card is approved, a process that can sometimes take six years or more from the time of green-card application (Kerr & Kerr, 2016).

Since 2006, USCIS has received a greater number of petitions than there are visas available because the annual cap for H-1B visas does not meet the current demand for high-skilled workers. If the cap is hit during the first five business days, USCIS conducts a lottery to determine which employers’ petitions for H-1B workers will be processed. Between fiscal year (FY) 2008 and FY 2019, the annual H-1B cap was reached within the first five business days on seven occasions, including all the years from 2014 onwards. Petitions are selected through a computer-generated random process in order to meet the cap of 65,000 for the general category and 20,000 for the US advanced degree “cap exemption.” (American Immigration Council, 2018). From FY 2010 to 2016, the largest numbers of H-1B recipients were in the New York metropolitan area (247,900 H-1B visa petition approvals, or 29% of all H-1B visa petition approvals in the country), followed by Dallas (74,000), Washington, DC (64,800), and Boston (38,300) (Ruiz & Krogstad, 2018).

Prior research has shown that H-1B workers complement US workers, fill employment gaps in many STEM occupations, reduce potential outsourcing, enhance wage growth (especially among the college-educated), and expand job opportunities for all (Information Technology Industry Council, 2012; Peri, Shih, & Sparber, 2015; Nell & Sherk, 2018). There is little empirical evidence to show that highly skilled, temporary foreign workers have adversely affected native-born workers. Unemployment rates are low for occupations that use large numbers of H-1B visas, with many STEM occupations having very low unemployment compared to the overall national unemployment rate. These very low unemployment rates could potentially signal a demand for labor that exceeds the supply (Information Technology Industry Council, 2012). In a study of the long-term effect of STEM employment growth on native workers in 219 US cities, Peri et al. (2015) found that, between 1990 and 2010, H-1B-driven increases in STEM workers in a city were associated with significant increases in wages paid to college-educated locals, and smaller but still significant increases for non-college-educated locals (Peri et al., 2015). However, other studies have yielded more mixed results. For example, Doran, Gelber, & Isen (2016) in their study of firms with H1-B visa lotteries found that increased H-1Bs could possibly reduce some employment for workers in small- and medium-sized firms, and lead to lower median earnings per worker. They also found that new H-1B visas have led to only modest increases in innovation. In their study of the impact of high-skill technology workers on H1-B visas on the US economy between 1994 and 2001, Bound, Morales, & Khanna (2017) found that, while they (H1-B visa holders in technology firms) helped enhance innovation and profits and, thus, reduce prices in the tech sector, they also contributed to a lowering of wages and employment for US technology professionals.

Many workers who ultimately obtain US permanent residence first enter the country as students (Rosenzweig, 2006, 2007). In global rankings of scholarship, US institutions of higher education account for four of the top ten programs in engineering, for seven of the top ten programs in natural sciences and mathematics, for seven of the top ten programs in life sciences, and for eight of the top ten programs in medical sciences2. Although US universities continue to dominate the STEM disciplines globally, individuals who were born abroad increasingly make up the US STEM workforce. The share of US college-educated workers in STEM occupations who are foreign-born rose from 6.6% in 1960 to 28.1% in 2012, with workers of Indian origin increasing from almost zero in 1960 to 9.3% in 2012, and now comprising nearly one-third of all foreign workers in the STEM disciplines (Hanson & Liu, 2018). While the high quality of US education is an important component, the high demand for studying in the US also derives from the contact that it facilitates with potential US employers (Bound, Demirci, Khanna, & Turner, 2015). A job offer from a US business is essential to obtain a temporary work visa or an employer-sponsored green card for most potential high-skilled immigrants.

US universities and colleges can indirectly serve as gatekeepers of potential immigrants through their selection of individuals for the F1 (student) or J1 (exchange visitor) visas. In 2015, inclusive of renewals, 385,000 and 321,000 F1 and J1 visas, respectively, were issued (Kerr et al., 2016). While these visas are not valid for work, US firms often recruit graduates of US schools using visas like the H-1B. About 45% of new H-1B visas in FY 2014 went to US-based applicants, including student–work transitions (Kerr et al., 2016). Another route for foreign students to stay in the US starts with the optional training program (OPT). This program allows full-time foreign students to gain work experience in their fields after graduation. There is no need for employer sponsorship and there are no annual quotas or caps. People on OPT can be employed for one year after graduation (extendable to three years for STEM graduates). In recent times, the OPT program has become an important pathway for foreign students to work in the US: in 2017, 276,500 work permits were granted under the OPT, with Indian and Chinese students obtaining almost 70% of these (Ruiz & Gramlich, 2019).

Another important visa type that allows skilled immigrants entry into the US is the L1 visa, which is often used by multinational corporations (MNCs), and which allows temporary migration of employees of an international company with offices in both the US and abroad. The migrant must have worked for the company abroad for at least one of the previous three years before coming to the US (Kerr et al., 2016). A total of 78,000 L1 visas were issued in FY 2017 (US Department of State, 2018). A much smaller third category (O1 visas) is intended for migrants with “recognized extraordinary ability” and numbered about 17,000 for FY 2017 (US Department of State, 2018). There is no specific numerical limit for the L1 and O1 categories.

Canada skilled immigration system

Canada has four main categories of immigrant programs: family reunification (closely related persons of Canadian residents living in Canada), economic immigrants (skilled workers and business people), refugees, and humanitarian and other (people allowed in for humanitarian or compassionate reasons). In 2016, Canada admitted 296,346 permanent residents, 53% of whom fell into the “economic immigrants” and “accompanying immediate families” categories. This represented a slight increase from 271,845 total immigrants in 2015 (Hussen, 2018). In all, one in five Canadians are born abroad (Statistics Canada, 2016).

In 2017, the Canadian government set a target of admitting 1 million total immigrants between 2018 and 2020. The target for 2018 was 330,000 immigrants, of which about 190,000 were expected to be economic migrants. The remainder will enter under the family reunification category and the refugee, humanitarian and protected category. The Provincial Nominee Program (PNP) allows provinces to directly select skilled immigrants for settlement in their territory, based on provincially defined criteria since 1998. For example, the province of New Brunswick (NB), which faces an aging population that has led to labor shortages in a number of key areas (Smith, 2018), has a PNP that selects potential migrants based on criteria such as education, language proficiency in English and/or French, age, work experience in desired occupation, and a job offer from a NB employer (New Brunswick Provincial Nominee Program, 2018). About one-third of the economic migrants (61,000) are admitted through the PNPs outside Quebec, and 29,000 through Quebec provincial programs (Collins, 2018).

Skilled immigration to Canada is regulated by Citizenship and Immigration Canada which uses seven sub-categories of economic immigrants (this includes all provincial nominee programs). It includes skilled workers under a number of categories, including the Quebec skilled worker class (potential immigrants with a desire to settle in Quebec who meet the specific points criteria with higher points for specified professions and job offers and higher points for more advanced degrees), federal skilled trades class (skilled tradespeople such as chefs, bakers, electricians, etc.), federal skilled worker program (potential immigrants who meet the points criteria with more points for specified professions and job offers and higher points for more advanced degrees), the provincial nominee class (for provinces other than Quebec potential immigrants based on provincially defined criteria), and the Canadian experience class (skilled workers with Canadian work experience (Canada Immigration, Refugees and Citizenship, 2018). An aspiring economic immigrant usually starts by submitting an application through completion of an online profile to the express entry pool, under one of the several federal Canadian immigration programs identified earlier or a provincial immigration program3. The highest ranked candidates are then invited to apply for permanent residency. In addition, Canada also has immigrant programs for entrepreneurs who start new businesses in Canada. Prior to 2015, the skilled immigration program was completely points-based (points were awarded for seven criteria including age, education, work-experience, Canadian job offer, English/French language skills, and adaptability) and available on a ‘first-come first-served’ basis to applicants. In 2015, changes were implemented that changed the points-based approach to one based more on Canada’s changing economic priorities and partly on employer needs (in the 2019 federal budget, government priorities were listed as “investing in the middle class, building a better Canada, advancing reconciliation, and delivering real change”; Government of Canada, 2019). This system was modified via the creation of a class of applicants with “Canadian work experience (CWE)”, which, in turn, was modified by the introduction of the class qualifying for “Express Entry” (Semotiuk 2016). While the express entry pool is based on the same criteria that existed prior to the 2015 changes, the weights of the criteria were revalued, with additional weight assigned to job offers and points for specific skills and professions updated continually in line with changing economic conditions and employer demand. Furthermore, even though the program is open to people from most countries of the world, recent statistics reveal that they tend to come from certain countries. For example, of the 2350 Express Entry candidates for Canadian permanent residency in 2017 to the British Columbia provincial nominee program, applicants from India and China accounted for 32% and 21% of nominations, respectively (CIC news, 2018).

The requirement of having work experience specifically in Canada (CWE), however, has been criticized by immigrant advocates on various grounds. The use of CWE as a recruitment criterion by companies has been cited as an unnecessary barrier for skilled immigrants when they apply for jobs in Canada, leading to high rates of deskilling (i.e., employed in a job that is below one’s level of education or training) and underemployment (Bhuyan et al. 2017; Chatterjee, 2015; Sakamoto et al., 2010). Another criticism pertains to the destination of these skilled immigrants: in the last few years, most immigrants have settled in Toronto (40%), Vancouver (15%), and Montreal (14%). There are concerns that this has contributed to significantly increased housing demand and hence escalating costs in these cities (Grubel, 2018).

Canadian provinces work with the federal government in creating and managing PNPs and play a limited role in setting targets and selecting economic immigrants, except for Quebec. Because of its distinct cultural heritage, Quebec enjoys a high degree of autonomy in setting its own selection criteria for all economic immigrants: under the Canada–Quebec Accord, Quebec has sole responsibility for the selection of immigrants for that province, while the federal government is responsible for health and background checks, which makes it the only province with such an arrangement with Canada’s federal government. Quebec does not have a PNP but has its own skilled worker program where knowledge of French is prioritized. Other Canadian provinces have more limited rights than Quebec. They can nominate the number of economic migrants they need as part of the national immigration target set by the federal government, but they cannot independently set their intake target and selection criteria. While provinces can nominate (and in Quebec’s case, decide) annual intakes, all cases are still routed through the Federal government in Ottawa for application integrity and vetting for health and security concerns (Collins, 2018).

It would seem that giving provinces a greater immigration policy role has helped to expand the settlement of immigrants beyond Canada’s largest cities, as 34% of economic migrants in 2017 landed in destinations outside Canada’s three most populous provinces, Ontario, Quebec and British Columbia, compared to just 10% in 1997. An important issue for provinces is retention, since immigrants are free to leave as soon as they become permanent residents. The provinces put a strong emphasis on ensuring that economic migrants are welcomed on arrival and are provided with support programs, including access to education and local community networks as well as assistance finding a job for those who are not sponsored by employers (Collins, 2018). One of the biggest success stories of the PNP is Manitoba (with a population of about 1.3 million in 2018), which has added 130,000 migrants between 1988 and 2013. Of all arriving immigrants, 90% found a job within a year and nearly the same number remained beyond acquisition of permanent residency. In Manitoba, changes in the economy and fears of population decline motivated policy-makers to consider immigration as a potential resource for further development of the province (Paquet, 2014).

Australia skilled immigration system

Australia accepted an estimated 163,000 immigrants in 2017, of which about 111, 000 were skilled immigrants4. The number of total immigrants represents a major increase from the 85,000 permanent immigrants accepted in 1996, although down from the peak of 190,000 in 2012 (Doherty, 2018). The decline was attributed to enhanced vetting of applications in the previous year, although the annual immigration target stayed at 190,000. As of 2016, over 28% of Australia’s population of almost 25 million was born overseas (Australian Bureau of Statistics, 2018). The Australian Bureau of Statistics (2018) estimated that 62% of population growth in the last ten years stemmed from immigration. In March 2019, the Australian government announced plans to reduce the number of annual immigrant arrivals to 160,000 from the previous cap of 190,000, starting in the next fiscal year (Smyth, 2019).

Similar to Canada, there are a variety of visa programs, including skilled occupation visas, student visas, and family visas (Department of Home Affairs, 2018a). Skilled immigration generally occurs under the skilled occupation visa category which is usually granted to highly skilled workers. The criteria for skilled immigration visas include having experience in a nominated occupation on the Australian skilled occupation list (an Australian government list of occupations currently acceptable for immigration to Australia that is periodically updated after consultation with different stakeholders to reflect changing labor market conditions and demands), skills assessment from a specified assessing authority, age, and language ability (Department of Home Affairs, 2019a). Immigration candidates are assessed against a merit-based system, with points allocated for certain levels of education (with higher points for more advanced degrees) and experience in the chosen field. These visas are often sponsored by individual states (there are six states in Australia) that recruit workers according to its specific needs. States maintain their own skilled occupation lists, updated periodically in consultation with their stakeholders in line with their own priorities but alongside the federal list. Potential applicants can apply using the state skilled occupation lists if their selected occupation is on that list. Visas may also be granted to applicants sponsored by an Australian business (Department of Home Affairs, 2018a). There is also a separate category for investor class visas that allows people to move to Australia if they invest a certain amount in Australia (a minimum of $1.5 million for at least 4 years in 2018; Department of Home Affairs, 2019b).

One of the continuing challenges in Australia is the geographic distribution of new migrants. In 2017, of the skilled migrants who arrived in Australia, 87% settled in the two largest cities of Sydney and Melbourne.5 This happened in the backdrop of infrastructure challenges in the largest cities while other parts of Australia want more immigrants. For example, South Australian Premier Steven Marshall stated his state would like to have an additional 15,000 skilled migrants annually. In 2017, 56% of immigrants to Australia came from Asia, with India and China as the top two source countries, respectively. Over time there has also been a movement away from family unification programs to skilled migration that targets workforce needs, such as promoting economic growth, filling skill shortages, and slowing median age growth in an aging workforce: in 1996, family migration was about two-thirds of the program, and skilled were one-third, but, by 2017, these proportions were reversed (Doherty, 2018).

In March 2018, the Australian Government announced two pilot schemes that are aimed at supporting talent and innovation in Australia. These schemes are the Global Talent Scheme and Supporting Innovation in South Australia. Together, these seek to support business growth, skills transfer and job creation by attracting high-skilled global talent to help foster innovative businesses in Australia (Department of Home Affairs, 2018b). The Global Talent Scheme will provide Australian businesses, including startups, with a pathway to sponsor high-skilled workers not covered by the temporary skill shortage visa program. It aims to provide cutting edge skills that Australia needs to compete globally, and is specifically designed to attract individuals with STEM backgrounds who are in high global demand. According to Karen Andrews, Minister for Industry, Science and Technology, “Global talent is in demand, and we’re ensuring Australia can attract individuals the with the science, technology, engineering, and math skills needed for areas like robotics and biotechnology which will help these sectors thrive and flow on to benefit all Australians” (The Hon. Karen Andrews MP, 2018). The Supporting Innovation in South Australia scheme is designed to support South Australia in attracting foreign entrepreneurs who have innovative ideas and launch startups; this is separate from the issue of investor visas where immigrants can get a visa on investing a set amount in the receiving country (Department of Home Affairs, 2018b).

In addition, since 1995, different types of state-specific migration mechanisms (similar to Canada’s provincial nominee programs described in the previous section) are in place in Australia. All Australian states have such programs, and some programs also target geographic regions (i.e., settlement outside of major cities) independently from state governments (Paquet, 2017). They allow states to recruit skilled workers, potential entrepreneurs, and other categories of permanent immigrants (Australia, 2001). In 2015, all Australian states combined issued 24,650 visas that represented about 13% of the overall immigration intake of the country and 19% of the skilled immigrants (Australia, 2016). States and territories outside of New South Wales and Victoria (home to Sydney and Melbourne, respectively) are keen to attract more skilled immigrants. These include Tasmania and the Northern Territory6, as well as many rural areas across Australia. While convincing immigrants to move to less common destinations may not be very difficult (for example, settling outside Sydney or Melbourne could count for more points), motivating them to remain there is more challenging. Possible ways of retaining immigrants in less populated regions could be to create more jobs, offer faster family reunification, and give states and territories more say in crafting their own immigration and integration programs (Collins, 2018). In 2019, the Australian government introduced two new regional visa programs that will require skilled workers to live and work in regional areas outside of major cites for three years before being eligible to apply for permanent residency (Grattan, 2019).

A summary of immigrant numbers and background for all three countries is provided in Table 1.
Table 1

Summary of immigrant numbers and background

 

Australia

Canada

United States

Total intake (2016)

163,000

296,436

1,180,000

Total population

24,127,200

35,151,728

322,179,605

Economic migrants (%)

68

53

13

% of population who are foreign-born

28.2

21.9

13.5

Rank

Country of origin of all immigrants 2016

Australia

Canada

United States

1

India

38,264 (14.7%)

Philippines

41,791 (14%)

Mexico

174,534 (14.7%)

2

People’s Republic of China

29,604 (11.2%)

India

39,789 (13%)

People’s Republic of China

81,772 (6.9%)

3

UK

16,982 (6.5%)

Syria

34,925 (12%)

Cuba

66,516 (5.6%)

4

Philippines

12,180 (4.6%)

People’s Republic of China

26,852 (9%)

India

64,687 (5.5%)

5

Iraq

9771 (3.7%)

Pakistan

11,337 (4%)

Dominican Republic

61,161 (5.2%)

6

Syria

8229 (3.1%)

USA

8409 (3%)

Philippines

53,287 (4.5%)

7

New Zealand

8199 (3.1%)

Iran

6483 (2%)

Vietnam

41,451 (3.5%)

8

Pakistan

6315 (2.4%)

France

6348 (2%)

Haiti

23,584 (2.0%)

9

Vietnam

5579 (2.1%)

UK

5812 (2%)

El-Salvador

23,449 (2.0%)

10

South Africa

5397 (2.1%)

Eritrea

469 (2%)

Jamaica

23,350 (2.0%)

Australian numbers represent some humanitarian admissions as well as New Zealand citizens not counted in total immigration intake in the table

Sources Adapted from Canada Immigrant National Origin: 2017 Annual report to parliament. https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/annual-report-parliament-immigration-2017.html; US LPR 2016 https://www.dhs.gov/sites/default/files/publications/Lawful_Permanent_Residents_2016.pdf; Where do Australian immigrants come from? https://www.abc.net.au/news/2018-08-20/where-do-migrants-to-australia-come-from-chart/10133560

Discussion

In the US, most immigrants granted permanent resident status each year are admitted based on family connections, while only 13% are employment-related. Both Canada and Australia, on the other hand, prioritize immigration based on employment rather than family reunion: in both countries, well over one-half of annual immigrant admissions are employment-based. Viewed another way, while the rate of family immigration is similar in all three countries, at between 2.0 and 2.5 family-based immigrants admitted each year per 1000 residents, Canada and Australia admit 4.5 and 5.5 employment-based immigrants per year, respectively, compared to 0.5 for the US (Griswold, 2017; National Academy of Sciences, 2016).

The proportion of skilled immigration intakes could also affect the number of immigrants who end up taking citizenship. In Canada and Australia, roughly 80% of eligible immigrants took up Canadian and Australian citizenship, respectively, compared to 46% of immigrants to the US (Australian Government DIC, 2012; Statistics Canada, 2011). Among immigrants to the US, those born in Mexico, who comprise the single largest group of about one in three of all permanent residents, had significantly lower naturalization rates (just about a third naturalized) compared to other immigrant groups. Language and personal barriers (27% cited the need to learn English to pass the citizenship test), lack of interest (18% cited not having enough time), and financial barriers (8% cited cost of application) are among the main reasons given by Mexico-born permanent residents for choosing not to naturalize. Mexico did not allow its citizens to hold dual-citizenship prior to 1998; lack of awareness of this change could also be one of the reasons why many Mexico-born migrants have chosen not to naturalize (Lopez, Bialik, & Radford, 2018). Naturalized citizens tend to have higher employment rates, are more likely to be in higher-status occupations, and have higher earnings than non-citizen immigrants, thus emphasizing its importance to both the immigrant and her/his country of residence. Becoming a naturalized citizen could act as a proxy for an immigrant’s commitment to the host country and reduced the likelihood of returning to COO. This could increase employers’ willingness to hire, train, and promote naturalized immigrants. In certain professional jobs, having a host-country passport could facilitate international travel. In addition, certain government jobs are open only to citizens (Statistics Canada, 2011).

The Canadian government credits the higher rates of naturalization to its multiculturalism policy. In essence, multiculturalism encourages various ethnic/cultural groups to retain their distinct identities while simultaneously embracing the host country culture (Berry, 2017). The Multiculturalism Policy Index, a research project that monitors the evolution of multiculturalism policies in 21 Western countries, found that Australia and Canada rank 1 and 2, respectively, for an inclusive approach to immigrant integration. They were cited for having an official policy of multiculturalism as reflected in the school curriculum, ethnic representation/sensitivity in the media, exemptions from dress codes of the mainstream culture, acceptance of dual citizenship, funding of ethnic groups and language education, and affirmative action for immigrants. In contrast, countries that espouse an assimilation approach to immigrant integration were ranked much lower, with the US coming in at 11 and Germany and France at 14 and 16, respectively, (Multiculturalism Policy Index Scores, 2010; Ng & Metz, 2015). This may also account, at least in part, for the higher scores of Indo-Canadians vis-à-vis Indo-Americans on their bicultural identity index (BII) (Chand & Tung, 2014b). BII was developed by Benet-Martinez & Haritatos (2005) to gauge the extent to which people that possess two cultural identities are able to reconcile the tensions that may arise from two opposing value systems. Bicultural immigrants who are comfortable with both their COR and COO identities can play important boundary spanning roles in MNCs located in their COOs by facilitating collaboration with COO entities and cross-border understanding and communication (Kane & Lavina, 2017; Schotter et al., 2017). Based on his studies of the acculturation of immigrants to host societies, Berry (1990, 2017) concluded that integration, whereby the immigrant espouses the best of both COO and COR, is the most functional approach. An assimilationist or “melting pot” policy, the approach favored in the US, on the other hand, encourages different ethnic/cultural groups to adapt to the cultural norms of the mainstream culture. This may also explain, to some extent, the lower rate of naturalization of immigrants to the US. The other two modes of acculturation identified by Berry (1990) are separation and marginalization. These modes are dysfunctional and are more common in countries where immigrants feel alienated from mainstream society.

However, the policy of multiculturalism is not without its critics. A key criticism is that it increases the likelihood that immigrants may cherish unwelcome ties to their COO (Citrin et al., 2012). Such unhealthy ties are reflected, for example, in the stories of Croat-Canadians who returned to Croatia to fight in the civil war, or the number of Lebanese-Canadians who needed evacuation during the war with Israel (Satzewich, 2007). Another criticism is that it promotes excessive foreign remittances by immigrants back to their COO (Barber, 2008; De Haas, 2005). However, it should be noted that immigrants provide transnational social networks that facilitate trade and investment opportunities for their countries of residence and introduce the culture of their COO to their host countries, often facilitating international business (Chand and Tung, 2014b; Tung and Chung, 2010). Furthermore, immigrants who maintain ties with their home countries and who remit payments to family members in their COO can be an important source of support/venture funding for development efforts and entrepreneurial startups there (De Haas, 2005; Mirabaud, 2009; Semyonov & Gorodzeisky, 2008; Cummings & Vaaler, 2019).

Florida (2002) in his work on the “creative class” (educated professionals who work in knowledge-based industries like business, finance, technology, law, healthcare and medicine, with a smaller subset of talented individuals in arts, design, media, and education) found that controlling for other factors, the more tolerant (i.e., welcoming) a place is to newcomers, the more talent and skills it will attract. Such human capital is, in turn, associated with economic development and creating high-quality jobs.

In contrast to Florida’s view, however, Moretti (2012) argues that cities become more attractive to cosmopolitan professionals when they build a sound economic base, rather than vice versa. High-skilled immigration also has a positive effect for low-skilled workers. He points out that, in the coming decades, global competitiveness will be associated with a city/country’s ability to “….attract innovative human capital and companies” (2012: 215). He also makes the case for importing “human capital from abroad by allowing skilled immigrants to move here” (2012: 236) as a possible way of achieving this. Storper (2013) makes an essentially similar argument that the location of jobs and opportunities leads to the movement of skilled individuals to these regions in the first place. Diversity and tolerance are more likely outcomes of economic opportunities than causes. Regardless of the causal direction in either argument, there appears to be a definite and positive correlation between high-skilled immigration and economic development.

Statistics show that the influx of skilled and entrepreneurial immigrants has provided valuable economic and social contributions to Canada and Australia, thereby raising the standard of living in these two countries (Collins, 2003; Reitz, 2007). Li and Lo (2012) projected that, given the different acculturation policies between Canada and the US (integration vis-à-vis assimilation), there will be less inflow of high-skilled immigrants to the US and less return migration from Canada (although at present there is no conclusive data to support this). A major driver of offshoring innovation is access to qualified talent (Lewin et al., 2009), and high-skilled immigration could potentially help reduce offshoring of innovation-related activities as their presence increases the talent pool (especially in STEM disciplines) of their COR.

Comparing the two broad-skilled immigration systems (merit-based vis-a-vis employer-driven), we see elements of both in all three countries, although the US has a predominantly employer-driven system, and Canada and Australia exhibit more elements of the former. In the US, for example, while most skilled immigration is employer-based, ‘superstar’ talent (dubbed the “Einstein” visa) can often gain direct access to the US through visas for extraordinary ability and direct green card applications. To avoid the pitfalls of a predominantly merit-based approach, both Canada and Australia have increasingly resorted to seeking employer input into their historically points-based immigrant selection decisions. Overall, there appears to be a move away from pure points-based merit programs and towards some demand-driven elements (National Academy of Sciences, 2016), thereby prioritizing migrants’ employability in the context of a more flexible notion of human capital (Kerr et al., 2016).

The evidence as to which type of skilled immigration model, employer-based vis-a-vis merit-based, works better is somewhat mixed. There is some evidence to show that immigrants fare better under employer-driven models. For example, in Australia, 94% of immigrants admitted under the Employer Nomination Scheme were employed six months upon arrival in the country, which contrasted with 80% of points-based immigrants. Employer-nominated immigrants were also more likely to work in skilled jobs and earn one-third more than their points-based counterparts, based on data between 2008 and 2010. In Canada, the average earnings of the 2003 cohort of points-based immigrants were roughly twice as much for workers who have pre-arranged employment (Citizenship and Immigration Canada, 2010; Department of Immigration and Citizenship, n.d.). On the other hand, points-based systems in general seem to perform better in attracting high-skilled migrants. Major merit-based countries (Australia, Canada, New Zealand) attract, on average, 1.5 times the number of high-skilled migrants when compared with countries (such as the US) that adopt alternative models. The provision of permanent residency is also an important incentive for high-skilled migrants. Countries that provide a more defined path to permanent residency attract, on average, twice the number of high-skilled migrants in comparison with those that do not. The offer of permanent residency – even if permanent residency is not the prime intention of the migrant at the time of entry – increases the option value of staying longer in the host country (Czaika & Parsons, 2017). Overall, it would seem that the provision of better-defined post-entry rights, such as the offer of permanent residency, is effective in attracting high-skilled migrants and reducing the human capital content of short-term labor flows. Despite the potential downside associated with the immediate employability of workers admitted through a points-based system, both approaches have been relatively effective in attracting high-skilled migrants (Facchini & Lodigiani, 2014). This may stem, in part at least, from the generally positive attitude that prospective immigrants have toward the three countries under comparison.

The type of skilled-immigration into the country can also affect intra-country mobility. In their study of the effects of two types of international immigrants in Canada (points-based immigrants and immigrants hired directly by employers through provincial programs), Beine & Coulombe (2018), using data from all ten provinces for the 1981–2011 period, found that the inflow of workers hired through provincial programs into Canada led to a significant decrease in the mobility of Canadians across provinces. The effect held across all segments of the relevant population under investigation and was found to be stronger for young people and for males. There is also some evidence that income inequality might be exacerbated by higher levels of immigration, especially if immigrants mostly fill lower-skilled and lower-paid jobs. For example, Grubel (2018) found that, in Canada, higher numbers of immigrants were associated with depressed wages of low-skilled workers. However, there is little evidence to suggest that this effect holds for immigrants in high-skilled jobs.

The US, Canada, and Australia have aging populations with a growing proportion of people over the age of 65. Currently, all three countries have senior (over 65) populations of between 14% and 16% (Australian Institute of Health and Welfare, 2018). However, these numbers are rising rapidly and, by 2050, it is estimated that the senior population in the US, Canada, and Australia, will account for 20%, 25%, and 23%, respectively, of the total population (Commonwealth of Australia, 2010; Senior Observatory, n.d; Ortman & Velkoff, 2014). Given the overall aging of the population in these three countries, it is important for governments to use skilled immigration as a strategic tool to help maintain or grow the workforce in key areas and increase productivity and innovation. Of course, this assumes that skilled immigrants can find jobs in their areas of expertise and that they integrate well into their host countries. Another way in which immigration can help rejuvenate the local workforce stems from the fact that, in general, immigrants are younger (as age is often a criterion in the merit-based system) and, therefore, are more likely to be of child-bearing age (Radford, 2019).

The success of immigrant entrepreneurs in different countries (for example, in the US, they form 25% of new businesses and employ between 3 and 4 million people) highlights the importance of finding ways to encourage highly skilled immigrants with innovative ideas to start businesses (Brin, 2018). In Canada, the ‘Start-Up’ visa, created for potential entrepreneurs who work with designated Canadian angel investor groups or venture capital funds, is intended to encourage new ideas and innovation in the Canadian economy (Government of Canada, 2018). Australia has a similar entrepreneur visa program that, in addition, requires a mandatory capital backing of $200,000 for the purpose of setting up their businesses in Australia (Department of Home Affairs, 2019a). A proposal is also currently under discussion at the national level, to be first piloted in South Australia, that will allow foreign entrepreneurs and investors with an innovative idea detailed in a business plan to apply for a temporary visa to establish their venture in Australia (without the mandatory capital requirement). If successful, the foreign entrepreneurs/investors can then apply for permanent residency (Immigration South Australia, 2018). In the US, however, the startup visa (the ‘international entrepreneur rule’) enacted at the end of 2016 has yet to become operational, as the Trump administration has indicated that it plans to terminate the program (USCIS, 2018).

The plans to discontinue the US startup visa program is somewhat surprising since previous research has shown the importance of immigrant entrepreneurs to the US economy. Research by Kerr & Kerr (2016) has shown that businesses started by immigrant entrepreneurs performed better than those established by locals with respect to employment growth over three- and six-year periods. These differences exist when comparing immigrant- and native-founded businesses started in the same city, industry, and year. Wadhwa, Saxenian, & Siliciano (2012) found that, for engineering and technology companies founded in the US between 2006 and 2012, nearly one in four had a founder who was foreign-born (in the Silicon Valley this rose to almost 44%). These companies employed over half a million workers and generated sales of over $60 billion. These statistics may have been one of the reasons behind the Trump administration’s proposal in May 2019 to revamp the existing US immigration program that would favor the intake of “top talent” over family reunification (Semotiuk, 2019).

The success of Canada’s PNPs highlights the importance of involving states/provinces in attracting and integrating skilled immigrants. This also seems to have alleviated the strain on the most popular immigrant destinations, as well as in managing the aging and in some cases the shrinking populations of rural and less popular immigrant destinations (for, e.g., Manitoba’s PNP). The increasing strain in terms of infrastructure and housing prices in Sydney and Melbourne combined with the desire for more immigrants in other states and territories in Australia simultaneously underscore the growing importance of this issue.

A summary of key policies to attract skilled immigrants in all three countries is provided in Table 2.
Table 2

List of key skilled immigration policies by country

 

Australia

Canada

United States

Skilled visa types (most common)

Skilled occupations visa, temporary skill shortage visa, global talent scheme, state nominees

Federal skilled worker, federal skilled trades category, provincial nominee, Quebec provincial nominee, express entry

H1B visa, L1 visa, O1 extraordinary ability visa

Criteria for selection using most common skilled immigrant visa type

Age, English language ability, experience in occupation on skilled occupations list, skills assessment from relevant assessing authority, signing the Australian values statement. Job offer not required but helpful

Age, education, work-experience, English/French language ability, adaptability. Job offer not needed but helpful

Job offer, education background with minimum bachelor’s degree in “specialty occupations”, labor condition application certified by the Department of Labor

Entrepreneur visas

Business innovation and investment visa

Startup visa program

International entrepreneur rule (not operational)

Points-based or employer-driven

Mostly points-based with priority for employer sponsorship

Mostly points-based with priority for employer sponsorship

Mostly employer-driven except for O1 which is based on ‘extraordinary ability’

Recommendations

An important issue for policy-makers in all three countries is to combine and adapt the employer-driven and merit-based systems in a way that brings the most benefits in term of attracting and retaining skilled talent. Such hybrid systems could act in a way that prioritizes employer demand while using a points-based or other criterion to distinguish between applications of differing skill levels. Possible ways of developing hybrid systems are:
  1. 1.

    Using a combination of both systems simultaneously. While Australia and Canada have relied traditionally on a merit-based approach, they have recently increased the intake of employer-selected immigrants.

     
  2. 2.

    Awarding extra points for a job offer within the points system. This is similar to Canada’s PNPs. It could also incorporate strategic elements that put a premium on skills, such as nursing and health care aides, needed to care for an aging population.

     
  3. 3.

    Creating a pathway for temporary visa recipients in certain professions to become permanent residents, and visa portability for employer-selected immigrants. This ensures permanency for immigrants and portability of their jobs in response to changing economic conditions. This would be of great benefit to US H1-B visa holders.

     
  4. 4.

    Prioritizing foreign students who graduate from local universities as sources of skilled immigrants, possibly by creating a separate immigration pathway for them. Canada has a policy of encouraging this, while the US and Australia do so to a much lesser extent. This could also incorporate priority processing in areas of key importance, such as the STEM disciplines.

     

The importance of innovating continuously in immigration policies to deliver the best possible outcomes both for the host countries and the incoming immigrants cannot be overstated. Policies need to be flexible to respond to changing market conditions as well as prevailing social and economic trends and immigrant integration outcomes. The ultimate goal should be to welcome highly skilled immigrants while meeting employer needs in a timely manner and facilitating immigrants’ successful economic and social integration.

In the case of the US, it is important to incorporate elements in its immigration system that increases the number and proportion of skilled migrants among the immigrant pool. This is where a study of the merit-based systems in Canada and Australia, which attract a much higher proportion of skilled immigrants compared to the US, would be helpful. Given the substantial evidence of the positive contribution of skilled immigrants to the US economy, it is important for policy-makers to make it easier for skilled immigrants to move there and contribute to their full potential. Haas (2019) points to adopting a smart immigration system that allows talented foreigners to come and stay, along with investments in infrastructure and education, as some of the key factors in the US’s continued existence as a global superpower. Despite the generally anti-immigration sentiments of the Trump administration, it appears to be finally heeding this advice. In May 2019, President Trump proposed an immigration plan that would increase skills-based immigration in the US while keeping overall legal immigration numbers unchanged. This would be achieved by reducing family-based legal immigration. Skilled immigrants would be selected based on a points system that would prioritize education and English language proficiency (Liasson & Montanaro, 2019; Keith, 2019). However, as of July 2019, the proposal has not generated much bipartisan interest.

In the case of Canada and Australia, while they have attracted a higher proportion of high-skilled immigrants, they can do a better job in incorporating employer-driven methods that prioritize immigrant skills that meet the current needs of industry. This will also help reduce the problem of under-employment of skilled immigrants, i.e., the proportion of immigrants who are employed in jobs that do not make full use of their education or skills.

Another important area for policy-makers to look at is the involvement of sub-national actors, including state/provincial/territory governments and even local jurisdictions, to achieve better immigrant integration. This could involve ensuring that needed skills and abilities are matched to immigration quotas not just at the federal but also at the state/provincial and local levels. This could also help reduce the strain on the major hubs of immigrant arrivals, thereby spreading arrivals over a larger geographic area, thus helping provide talent for localities outside the main urban hubs while simultaneously helping newly-arrived immigrants get jobs and accessing government services in less congested environments. For areas that do not have a large immigrant population, it would help ensure that incoming economic migrants receive a warm welcome on arrival, are provided with immigrant support programs, access to local community networks, and assistance in finding a job (for those not sponsored by employers). In an April 2019 report that drew attention to the need for “Heartland visas”, Ozimek, Fikri, & Lettiere (2019) asserted that, because most skilled immigrants have chosen to settle in “booming metro areas”, heartland communities have fallen behind. An estimated “80% of US counties, home to 149 million Americans, lost prime working age adults from 2007 to 2017, and 65% will again over the next decade”. The establishment of a Heartland visa program can help redress this situation.

A proposal to allow US states to have a voice in skilled immigration was put forward by Senator Ron Johnson, currently Chair of the Senate Homeland Security and Government Affairs committee, through the proposed ‘State Sponsored Visa Pilot Program Act’ in 2017. This would allow individual states to design and implement a state sponsored skilled work visa program whereby individual states could use their own criteria, under federal oversight, to sponsor skilled workers, entrepreneurs and innovators for three years. The immigrants would be required to live and work in the state that sponsored them. The proposed legislation would not, however, create a separate pathway to citizenship (Bier, 2017). If enacted, this legislation could help address the Heartland visa proposal discussed above.

In a similar vein, to reduce the strain on major metropolitan hubs, a proposal by the Brookings Institute for developing several medium-sized metropolitan areas into regional “tech hubs” could hold promise. The federal government could create a program through which medium-sized metropolitan areas (defined as having populations of between 250,000 and 1 million, e.g., Yakima, Washington, or Tulsa, Oklahoma) could compete for major federal investments and designation as a “Rising Tech Hub”. These areas would need to have a critical mass of educational institutions, transportation links, diversified labor markets, and businesses to grow and attract more economic activity. In exchange for federal tax relief, infrastructure, and research benefits, these metropolitan areas would work to generate public–private partnerships and investment opportunities to create and sustain an advanced industry hub. This, coupled with less strict zoning laws that could lead to reduced housing prices, would make it more desirable for workers, both high- and low-skilled, to relocate to support growing high-skill industries in these new hubs (Hendrickson, Muro, & Galston, 2018). The Heartland visa program to attract highly skilled immigrants would complement the Brookings proposal to develop regional “tech hubs”.

In short, skilled immigration that is strategic in anticipating the needs of the aging/dwindling population in heartland regions of these three countries that have traditionally been viewed as less attractive destinations for settlement can help partially redress this situation. For example, providing extra points or fast-tracking of certain professions, such as nurses or health care aides specializing in geriatric care, would make sense, especially in local communities where they are in short supply. Another possibility is making available the option of ‘premium processing’ in key professions where the potential immigrant can pay a higher fee to have a decision on her/his case within a predetermined duration, thus reducing processing delays. This needs to be done in conjunction with bringing in state/provincial and local level actors into the discussion with federal policy-makers of which professions to prioritize, how to fast-track potential immigrants, and how to ensure that they stay in the local regions once they become permanent residents. After the immigrants arrive, the key issue for the local region is retention, since immigrants can leave at any time once they become permanent residents. A good example of a successful program in this regard is the Manitoba PNP.

Governments at all levels also need to ask themselves what type of relationship they wish to see between incoming skilled immigrants and their COOs. While Australia and Canada have chosen a path of multiculturalism in this regard (although Australia’s multiculturalism policy is under review), the US has a more assimilation-oriented policy. Important questions that governments need to ask include the extent to which they encourage ties between immigrants and their COOs, the encouragement of diverse cultures within their midst, the degree to which dual citizenship is encouraged, and the meaning of what ‘American’ or ‘Canadian’ or ‘Australian’ is in societies that are becoming increasingly multi-ethnic. While there are pros and cons of each of these policies, evidence suggests that countries that rank higher on the multiculturalism index tend to attract a higher proportion of skilled immigrants as well as convince a higher proportion of eligible residents to become citizens. At the same time, there are numerous anecdotes of immigrants having unhealthy ties to their COOs in countries that espouse multicultural policies.

Another important policy issue for governments is the extent to which they want to encourage entrepreneurs with innovative ideas to move to and start businesses in their countries (this is separate from the issue of investor visas where immigrants can get a visa by investing a set amount in the receiving country). Given the success of immigrant entrepreneurs and entrepreneurs with an immigrant background, it is important to create a pathway for aspiring entrepreneurs to start businesses in these countries. While the exact form and type of these pathways would vary across countries, at a minimum, these pathways should include visas that allow aspiring entrepreneurs with vetted business plans (possibly vetted by industry groups and/or angel investor groups regulated by the government) to enter and stay in the country for a certain number of years, after which, if they meet certain pre-established benchmarks (such as the ability to generate a certain amount of revenue, create jobs, pay taxes, or a combination thereof), they are allowed to apply for permanent residency. These benchmarks could be based on prevailing economic and social needs, so they could differ across industries (e.g., lower in industries considered of strategic importance or key to future innovation, such as healthcare, biotechnology, or robotics).

A summary of key recommendations to attract and retain skilled immigrants in all three countries is provided in Table 3.
Table 3

Recommendations by country

 

United States

Canada

Australia

Employer-driven/points-based system

Hybrid system that adds a points-based dimension to existing employer-based system. Could include a separate points-based category

Hybrid system that increases employer participation in process. Could include expansion of the provincial nominee program

Hybrid system that increases employer participation in process. Could include a separate category for state-based employer sponsorship

Regional participation

Make state consultation a part of setting immigration targets. Involve state and local governments in settlement and regional retention plans

Expand provincial participation in setting federal immigration and settlement targets. Local governments may also be consulted, especially in regards to boosting retention

Expand state/territory participation in setting federal immigration and settlement targets. Local governments may also be consulted, especially in regards to boosting retention

Integration policy

No. 10 on multicultural index implies a more assimilationist integration policy. Could benefit from examining policies that enhance integration in multicultural countries (e.g., multiculturalism of school curriculum in Australia and Canada)

No. 2 on multiculturalism index. Focus on enhancing key strengths mentioned in index, ensure integration policy is inclusive and enjoys broad public support, and examine causes of unwelcome ties to COO

No. 1 on multiculturalism index. Focus on enhancing key strengths mentioned in index, while ensuring that integration policy is inclusive and enjoys broad public support

Encouraging entrepreneurship

Implement the startup visa and/or create new entrepreneur visa program, possibly in conjunction with industry and investor groups

Expand start-up visa in consultation with industry and investor groups

Continue with current entrepreneur visa and possibly expand it in key areas in conjunction with state needs

Strategic orientation in terms of aging populations

Immigration encouraged in key areas/professions affected by aging populations. Fast-track applicants and/or consider separate track for skills in short supply. Involve rural areas in discussion on how to retain key professionals in the area

Constant innovation in immigration policies

Continuous dialogue with diverse stakeholders, flexible and innovative solutions that have broad-based public support based on changing economic and social conditions, incorporate best practices from other countries

Conclusion

Despite the emergence of immigration as a hot-button issue in a growing number of countries, such as the US under the Trump administration, the ability to attract and retain skilled immigrants remains a vital issue for all countries in the global war for talent (Chambers et al., 1998). To be successful, policy-makers need to engage in constant dialogue with different stakeholders and come up with innovative solutions that have broad-based public support. Policies need to be sufficiently flexible to incorporate changing economic and social conditions while being inclusive of different stakeholders. Policy-makers also need to be open to incorporating best practices from other countries and in learning from each other. The skilled immigration policies of the US, Canada, and Australia, along with some of our recommendations to further improve on these, are a good starting point for policy-makers to create a competitive advantage in the global war for talent. The need for openness may be challenging in light of the rising populist sentiments in a growing number of countries. National boundaries often provide group identities, and, when globalization is perceived to be diminishing, these identities (for example, by large numbers of immigrants not integrating into their host societies), it can be seen as a threat to the national identity and lead to strong negative reactions. Any policy solution must be cognizant of these perceived threats to national identity (Mudambi, 2018). However, policies designed to work hand-in-hand with the nation state to foster international cooperation on this important issue should help allay some of these concerns. The US, Canada, and Australia have to a certain extent a tradition of being ‘creedal nations’ based on shared values rather than nations based on shared ethnic, tribal, or religious backgrounds, and this shared tradition could be helpful in moving this discussion forward. It is vital that policies designed to attract and retain skilled immigrants are based on a constant monitoring of the economic, social, and technological environment, are flexible and innovative, are inclusive in regard to the different stakeholders in the process, and have broad-based public support.

Notes

  1. 1

    Despite rising anti-globalization sentiments, cross-border flows of data have accelerated, referred to by McKinsey as “the new era of digital globalization” (McKinsey Global Institute, 2016)

     
  2. 2

    See Academic Ranking of World Universities http://www.shanghairanking.com/FieldSCI2016.html

     
  3. 3

    In July 2019, the federal skilled worker express entry program had an average processing time of about 6 months.

     
  4. 4

    The total number of immigrants rises to 262,500 if we include New Zealand citizens and migrants entering on humanitarian grounds

     
  5. 5

    By comparison, Canada, which faces similar challenges, had about 70% of migrants settle in its three largest cities of Toronto, Montreal and Vancouver (Grubel, 2018). In the US, immigrants are somewhat more spread out, but the 20 largest metro areas are still home to about 65% of new arrivals (Radford, 2019).

     
  6. 6

    As a comparison, Tasmania’s population density is similar to Idaho’s, while Northern Territory’s is less than Alaska’s, the least densely populated US state.

     

Notes

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Copyright information

© Academy of International Business 2019

Authors and Affiliations

  1. 1.Department of Management, W. Frank Barton School of BusinessWichita State UniversityWichitaUSA
  2. 2.Beedie School of BusinessSimon Fraser UniversityBurnabyCanada

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