Study Proves H-1B Restrictions in U.S. Led to Immigrants Coming to Canada

Restrictions on H-1B visas to the United States imposed during Donald Trump’s presidency led to a surge of 76,000 additional admissions of college-educated immigrants to Canada in 2018 and 2019, a Bank of Canada study reveals.

In Third-Country Effects of U.S. Immigration Policy, Agostina Brinatti and Xing Guo note this inflow represents 3.5 per cent of the stock of college-educated immigrants in Canada, or about two per cent of all workers in the high-skilled service sector.

“The U.S. restrictions led to an increase in skilled immigration to Canada and had significant effects on production, especially in high-skilled service sectors,” note Brinatti and Guo in that report released on Dec. 27.

Put in place by the American government to protect the jobs of workers in the United States, the tougher H-1B visa rules implemented in 2017 did, in fact, help a small group of American workers who competed directly with immigrants in the labour market, conclude Brinatti and Guo.

“However, it negatively affected American workers employed in other occupations in sectors that contracted,” they conclude.

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“We also find that the role of international trade in the policy’s effects on the welfare of American workers can be significant. When the U.S. imposes restrictions, immigrants seek to migrate to other economies. Because these receiving economies compete with the U.S. in international markets, this tougher competition drives down wages for American workers, undermining the initial goal of job protection.”

The biggest boons to Canada of the more restrictive H-1B visa rules in the U.S. was an increase in the number of computer scientists immigrating to Canada and a boost to the labour force in high-skilled service sectors such as information and culture, business and professional services, and finance and insurance.

“This increase in the immigrant labour force reduces labour costs and induces an aggregate expansion of production of 0.8 per cent,” the study reveals.

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“Even though all sectors expand, they do not do so at the same rate. Notably, production in high-skilled service sectors responds the most due to the larger increase in the supply of immigrant labour and also these sectors’ higher reliance on immigrants.”

With the tighter restrictions on immigration to the U.S., more foreign investors also looked at setting up their businesses in Canada and used the Start-Up Visa (SUV) immigration program to gain their permanent residence.

Candidates applying under the SUV program can initially come to Canada on a work permit supported by their designated Canadian investor before their application for permanent residence is finalized.

The entire process of applying for permanent residence to Canada through the SUV is currently estimated by the IRCC to take 37 months.

SUV Provides Immigrant Investors With A Way To Gain Their Permanent Residency In Canada

Under the SUV, three types of private-sector investors are considered: angel investors, venture capital funds, and business incubators.

A designated venture capital fund must confirm that it is investing at least $200,000 into the qualifying business. Candidates can also qualify with two or more commitments from designated venture capital funds totalling $200,000.

A designated angel investor group must invest at least $75,000 into the qualifying business. Candidates can also qualify with two or more investments from angel investor groups totalling $75,000.

A designated business incubator must accept the applicant into its business incubator program. It is up to the immigrant investor to develop a viable business plan that will meet the due diligence requirements of these government-approved designated entities.

Investing and the development of the business is usually done with the help of business consultants in Canada’s start-up ecosystem with oversight from experienced corporate business immigration lawyers who can ensure a start-up’s business concept meets all industry-required terms and conditions.

The basic government-imposed candidate eligibility requirements for the SUV are: