Abstract

The presence of temporary foreign workers (TFWs) in Canada is a long-standing subject of political controversy. While there exists a significant body of economic research concerning the effects of TFWs on wages and unemployment, the effects of their presence on employers' training decisions have yet to be examined. In this paper, I will synthesize research on Canada's temporary foreign worker program and the literature on risks associated with human capital investments in order to develop a model of the effects of TFWs on employers’ training and hiring decisions. I find that Canada's Temporary Foreign Worker Program may indeed allow employers to efficiently mitigate the hold-up problem in low-wage labour markets.