The Costs of Regulatory Federalism: Does Provincial Labor Market Regulation Impede the Integration of Canadian Immigrants?

Abstract

Does regulation impede or facilitate immigrant participation in the labor market? To answer this question, we focus on the growing and increasingly regulated Canadian health-care sector. On the one hand, occupational regulation may facilitate immigrant entry into the labor market as it imposes standards based on credentials, and recent immigrants tend to be highly skilled. On the other hand, regulatory standards are often enforced by provincially designated authorities whose selection criterion may unwittingly penalize those with foreign credentials or experience. Using a longitudinal data set combining information on the regulation of nine Canadian health-care occupations and the Canadian Census from 1991 to 2006, we test whether the introduction of regulation places a greater burden on the immigrant population relative to the native-born. Specifically, we employ a difference in methodology, exploiting variation across provinces and over time in whether an occupation is regulated to identify its effect on the ratio of immigrants-to-native-born workers employed in that occupation. The results indicate that, on average, a province’s introduction of occupational regulation increases the participation of immigrants relative to the native-born by 20 %.