Centralized vs. Decentralized Immigrant Selection: An Assessment of the BC Experience

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As a complement to the centralized immigrant selection system in Canada, each province or territory has the right to select immigrants through the Provincial Nominee Program (PNP) to satisfy province-specific labour market demand. This paper documents a large short-run earnings advantage of British Columbia Provincial Nominees (BC PNs) compared to Federal Skilled Workers (FSWs). Flexible empirical specification and Oxaca-Blinder decomposition suggest that this earning gap is largely due to the different wage structure of these two groups. PNs do not suffer the lack of credential recognition that FSWs do. Possible reasons for the different wage structure include: previously stayed in Canada, job-offer requirement, and cream skimming. The findings raise debate on the decentralized immigration selection process. On one hand, employers can better recognize and reward the credentials of immigrants. On the other hand, employers tend to pick immigrants from developed English-speaking countries, which leads to possible employer discrimination in the labour market. Balancing the skills of immigrants with cultural diversity is a difficult task.