Is there a Race to the Bottom? Evidence of Quantity-Quality trade-offs in Canada’s Provincial Nominee Program with Nicholas Li — Job Market Paper
This paper investigates how decentralization in Canada’s Provincial Nominee Program (PNP) shapes the behavior of provinces competing for immigrants and the resulting economic and policy outcomes. The PNP was designed to give provinces autonomy to select immigrants best suited to their local labor market needs. Yet, its rapid expansion has triggered a complex dynamic of inter-provincial competition.
Using a combination of theoretical modeling and empirical analysis with administrative data from Statistics Canada, the study develops a framework to evaluate how competition among provinces affects migrant allocation, quality, and welfare. The model predicts that smaller or lower-productivity provinces rely more heavily on the PNP to attract migrants but face a trade-off between the quantity and quality of admitted nominees. When multiple provinces expand simultaneously, they generate negative externalities, reducing the average quality of migrants and overall national welfare.
Empirical evidence from the Longitudinal Immigration Database (IMDB) supports these theoretical predictions. Higher PNP intensity within a province is associated with lower entry earnings and weaker retention among nominees, while expansion in neighboring provinces further depresses nominee quality, indicating regional spillover effects. These outcomes suggest that provinces, acting independently, may inadvertently contribute to a “race to the bottom”, relaxing selection standards to meet economic or demographic targets.
The paper concludes that better coordination between the federal and provincial governments, including transparent allocation rules and calibrated federal caps, could mitigate inefficiencies and spillovers. Strengthening this coordination would help ensure that decentralization continues to enhance economic integration and long-term welfare without eroding the overall quality of migration outcomes in Canada.
Why Leave? Retention Trends among Provincial Nominee Migrants in Canada
Chika Agbo
Presented at the Annual Conference of the Atlantic Canada Economics Association (ACEA)
This paper explores how the retention patterns of immigrants admitted through Canada’s Provincial Nominee Program (PNP) have evolved over the past two decades, as the program expanded in scope and scale. The PNP was established in 1999 to empower provinces to attract, select, and retain immigrants aligned with their specific labor market needs. However, while the program has grown rapidly and now accounts for a large share of all economic immigrants, retention outcomes have not remained consistent over time.
Using microdata from the Longitudinal Immigration Database (IMDB) linked to tax records from 2000–2020, this study estimates one-year and five-year provincial retention rates, focusing on principal applicants aged 18–65 at landing. The analysis applies a Linear Probability Model with province fixed effects and a comprehensive set of controls, including demographics, pre-landing tax history, occupation, and labor market conditions. The estimation is divided into three periods: pre-2008, 2008–2014, and 2015–2020, to capture the key policy milestones: the creation of the Canadian Experience Class (2008) and the introduction of the Express Entry system (2015).
Results show that PNP migrants were significantly more likely to remain in their destination province before 2008, consistent with early findings by Pandey and Townsend (2013). However, this advantage eroded over time, and after 2015, provincial nominees became less likely than other economic migrants to stay in their landing province within one year. The decline coincides with the integration of PNP into the Express Entry framework, where a 600-point nomination bonus may have weakened place-based attachment by attracting candidates motivated primarily by permanent residency rather than regional fit.
Retention also varies widely across provinces. Smaller and lower-population provinces such as Prince Edward Island and New Brunswick experienced the sharpest post-2015 declines, while larger provinces like Ontario and Alberta maintained relatively stable rates. Policies that encourage early tax filing and localized integration support in the nominating province could strengthen long-term retention. The results call for a more province-responsive and coordinated PNP design, ensuring that regional immigration efforts continue to promote both local development and national cohesion.
Evaluating the Entry Earnings of Provincial Nominee Program Immigrants
Chika Agbo
Presented at the Annual Conference of the Canadian Economics Association (CEA)
This paper investigates how the entry earnings of immigrants admitted through Canada’s Provincial Nominee Program (PNP) compare to those of other economic immigration streams between 2000 and 2020. The analysis draws on administrative data from the Longitudinal Immigration Database (IMDB), linking landing records, tax files, and information from the Express Entry system to evaluate income trajectories across time and policy regimes.
The study extends the work of Pandey and Townsend (2013), who found that PNP immigrants initially earned more than Federal Skilled Workers (FSW) in the early years of the program (1999–2007). Using a much larger and more recent dataset, this paper re-examines whether those early advantages persisted following major policy shifts, specifically, the introduction of the Canadian Experience Class (2008) and the Express Entry system (2015).
Applying a time-interacted regression framework with controls for age, gender, marital status, and pre-landing Canadian experience, the study estimates year-specific income differentials between PNP migrants and other economic classes. The results reveal a striking reversal: prior to 2015, PNP entrants earned significantly more than Federal Skilled Workers, consistent with earlier findings. However, after 2015, this pattern flipped; PNP immigrants began earning notably less upon entry, even after excluding Canadian Experience Class migrants from the comparison group.
The timing of this shift coincides with the integration of the PNP into Express Entry, a system designed to streamline economic immigration and allocate points based on human capital characteristics such as age, education, language ability, and work experience. Under this framework, candidates receiving a provincial nomination are awarded an additional 600 Comprehensive Ranking System (CRS) points, virtually guaranteeing selection. The findings suggest that this mechanism may have inadvertently lowered the average selection threshold for PNP nominees, allowing provinces to nominate candidates who would otherwise fall below the federal cutoff. As a result, while the system enhanced administrative efficiency, it may have weakened selection quality and reduced average entry earnings among nominees.
A supplementary analysis of Express Entry data supports this interpretation. The core human capital score (without the provincial bonus) is positively associated with higher entry earnings, while the PNP dummy within the Express Entry pool shows an 8% earnings disadvantage relative to other economic migrants. Yet, interaction effects reveal that PNP nominees with high core scores perform better, indicating that provinces capable of strategically aligning nominations with human capital criteria can still achieve strong economic outcomes.
Overall, the findings highlight how policy design and point allocation rules shape economic outcomes under decentralized immigration selection. The paper concludes that revisiting the 600-point provincial bonus and improving coordination between federal and provincial selection systems could help restore the PNP’s effectiveness in attracting high-performing immigrants and ensure that Canada’s decentralized model remains both equitable and efficiency-enhancing.
Chika Agbo
Presented at the Wharton Innovation Doctoral Symposium
This paper examines how Canada’s Provincial Nominee Program (PNP), a key decentralized immigration policy, affects innovation and technological development across provinces between 2000 and 2023. The PNP grants provinces the autonomy to select immigrants based on regional economic priorities, enabling them to attract skilled workers whose expertise aligns with local industry needs. While much of the existing literature focuses on the labor market outcomes of immigrants, this study extends the discussion to the innovation channel, investigating whether decentralized selection mechanisms foster a more dynamic and innovative regional economy.
Using a panel dataset that combines PNP implementation dates, patent filings, and provincial economic indicators, the study employs an event study and a difference-in-differences (DiD) framework to identify the causal effect of PNP adoption on innovation outcomes. The analysis compares innovation trajectories in provinces before and after the introduction of the PNP, relative to those that adopted the program later, while controlling for structural economic differences and time-varying factors.
The results show that the PNP has a limited impact on innovation in the short term. However, the effects differ across provinces. Smaller provinces that mainly used the PNP to fill demographic and labor gaps experience modest improvements in innovation. In contrast, larger provinces with well-developed research and technology sectors record stronger positive effects. Overall, the findings suggest that the innovation gains from immigration policy depend on both the skills of migrants and the capacity of local economies to absorb and make use of new talent.