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LABOUR MARKET OUTCOMES AND CHALLENGES OF IMMIGRANTS

Annotated Bibliography by the Labour Market Information and Research Unit

Labour Market and Training Division Ministry of Training, Colleges and Universities

Fall 2005

The issue of labour market experiences of immigrants is important for the design of labour market and immigration policies. With the aging of the Canadian population and its persistently high and growing reliance on immigrants to meet the demands for skills and future labour force growth, the success of the knowledge based economy is expected to depend on the economic integration of immigrants. As a result, wider and more effective initiatives are required to eliminate the barriers to integration of new Canadians into the economy. Labour Market Outcomes and Challenges of Immigrants is an annotated bibliography of research on immigration focusing on economic studies that shed light primarily on the labour market and settlement experiences of immigrants vis-à-vis native-born workers. The majority of the studies included in this bibliography are based on data and research in Canada and the United States. This bibliography includes books, journal articles and working papers. The bibliography is divided into three broad categories: (A) Economic impact and labour market outcome, (B) Data and trends and (C) Policy issues. The listing within each category is ordered chronologically starting from the most recent. The Labour Market Information and Research Unit will periodically revisit and update this bibliography.

Labour market outcomes and challenges of immigrants

Labour Market Information and Research Unit Fall 2005 Ministry of Training, Colleges and Universities

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A. Economic Impact and Labour Market Outcome of Immigration

(I) Economic impact of immigration

Is the new immigration really so bad? David Card (UC Berkeley). Working Paper No. 11547, National Bureau of Economic Research (NBER), Cambridge, Massachusetts, August 2005.

[An earlier version of this paper was published with the same title as Discussion Paper No. 1119, The Institute for the Study of Labor (IZA). April 2004.]

This paper presents an overview and update of the U.S. immigration literature, focusing on two key questions:

• Do immigrants harm the labour market opportunities of less skilled natives?

• How do today’s immigrants perform in the U.S. labour market, and are they successfully “assimilating”?

These questions are at the heart of the debate about immigration in many other countries. The paper suggests that:

• The evidence that immigrants harm native opportunities is slight • The fear that post-1965 immigrants will never assimilate is belied by the

rather surprising educational success of their children. The U.S. data from 2000 Census show that the native population with the lowest level of education faces the most intense labour market competition from immigrants. In 2000, immigrants comprised only 13% of the working age population, but they made up 28% of the population with less than a high school diploma, and over half of all those with less than 8 years of schooling. Econometric regression results suggest that there is no relationship between the relative supply of high school dropouts and their relative wages, but point to a small negative impact on relative employment. Recent evidence on the response of local industry structure to immigration-induced supply shocks shows that the absorption of unskilled immigrants takes place within industries in high-immigrant cities, rather than between industries. It remains a fascinating question how firms in a given industry can adapt their production technology so closely to local supplies of different types of labour without substantial changes in relative wages. A time series analysis shows that the wages of native dropouts (people with less than a high school diploma) relative to native high school graduates have



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remained nearly constant since 1980, despite pressures from immigrant inflows that have increased the relative supply of high school dropout labour. On the question of immigrant assimilation, a major constraint in the U.S. literature has been the absence of true longitudinal data. Limited evidence suggests that immigrant earnings in the United States rise with time, though the gains (about 10-15% in the first 20 years) are not enough to offset the 35-40% immigrant-native earnings gap at arrival. The paper suggests that few of the 40% of immigrants who come to the United States without a high school credential will ever catch up with the average earnings of natives, but immigrants with a college degree or more will earn more than average natives. Evidence on the intergenerational progress of immigrants’ children points to above average levels of educational attainment, even for children whose fathers had much lower schooling than native-born fathers. Data show that immigrants to the United States have about 1.2 to 1.4 fewer years of schooling than natives. On the other hand, second generation immigrants have 0.3 to 0.4 years more education than people whose parents were born in the United States. The paper suggests that most of the U.S.-born children of immigrants will catch up with the children of natives. The relatively strong educational progress of second generation immigrants, together with the limited evidence of adverse effects on less skilled natives, suggest that the new immigration may not be so bad after all.

The labor market impact of high-skill immigration. George Borjas (Harvard University). NBER Working Paper 11217, March 2005, and American Economic Review (forthcoming)

This paper analyzes the impact of immigration on the high skill labour market of the United States. Specifically, this study focuses on how an increase in foreign-born U.S. doctorates affects the earnings of competing workers. It uses data from the Survey of Earned Doctorates and the Survey of Doctoral Recipients. The sample included persons who received doctoral degrees between 1968 and 2000. Econometric estimates suggest that a foreign student influx into a particular doctoral field at a particular time had a significant adverse effect on the earnings of doctorates who graduated in the same field at roughly the same time. A 10% immigration-induced increase in the supply of doctorates lowered the wage of competing workers (regardless of whether they were native-born or foreign-born) by about 3%.



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Increasing the supply of labor through immigration: Measuring the impact on native-born workers. George Borjas (Harvard University). Centre for Immigration Studies Backgrounder, May 2004.

This study examines how immigration affected the labour market outcomes experienced by native-born U.S. men aged 18-65. It uses U.S. census data for 1960, 1970, 1980, 1990 and 2000. The study estimates a production function reflecting constant elasticity of substitution (CES) of factors. Results support the economic theory that an increase in supply of any grade of labour relative to all other productive factors tends to depress wage rates. Specifically, this paper suggests that:

• Immigration has harmed the economic opportunities of the native-born U.S. workers. The effect on wages, however, differs across education groups and race groups.

• The immigration influx in the United States between 1980 and 2000 lowered the wage by 7.4% for high school drop-outs, by 3.6% for college graduates and by around 2% for both high school graduates and workers with some college.

• This immigrant influx lowered the wages of native-born white workers by 3.5%, native-born black workers by 4.5% and native-born hispanics by 5%.

World Economic and Social Survey, 2004: International Migration. United Nations, New York. 2004.

This report provides a comprehensive review of developments in international migration issues. Chapter 4 of this report examines the economic impact of migration on countries of both of origin and destination. From the point of view of the host countries, immigration has three main issues: impact on the labour market, impact on economic growth and fiscal effects of immigration. This report argues that:

• The overall economic impacts of migration are positive albeit modest in relation to the size of the national income of a host country. In general, immigrants contribute positively to economic entrepreneurship, to growth and to fiscal revenues in host countries.

• Skilled or unskilled immigrants fill many positions that the native-born workers cannot or will not fill at the prevailing wage rates.

• Immigrants contribute to the economic growth of the host country by increasing effective demand and by supplying labour needed to reach, and perhaps expand, the production possibilities.



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• However, inflows of unskilled immigrants might have a small adverse effect on the wages of native-born unskilled workers or crowd them out of the labour market.

• Furthermore, immigrants are generally net contributors to government revenues. Young or working-age immigrants can also help to reduce the dependency ratio in developed countries faced with an ageing population in the short and medium terms

The labor demand curve is downward sloping: Reexamining the impact of immigration on the labor market. George Borjas (Harvard University). The Quarterly Journal of Economics, pp. 1335-1374, November 2003.

This study uses U.S. data from the 1960, 1970, 1980 and 1990 censuses and the 1999, 2000 and 2001 Annual Demographic Supplements of the Current Population Survey. The analysis is restricted to men aged 18-64 who participated in the civilian labour force. This paper introduces a new approach for estimating the labour market impact of immigration. The analysis builds on the assumption that similarly educated workers having different levels of work experience are not perfect substitutes. The evidence reported in this paper consistently indicates that immigration reduces both the wage and labour supply of competing native-born workers. The study simulates wage effects of immigrant influx of the 1980s and 1990s on native-born Americans and finds that:

• This immigrant influx reduced the wage of the average U.S. born workers by 3.2%.

• The wage effect, however, differed across education groups. The large influx of immigrants in the 1980s and 1990s reduced wages by 8.9% for high-school drop-outs and by 4.9% for college graduates.

• The wage of high school graduates fell only by 2.6%, while the wage of workers with some college was barely affected (-0.3%).

Trends in immigration and economic consequences. J. Coppel, J. Dumont and I. Visco (OECD). Economics Department Working Papers No. 284, Organisation for Economic Co-operation and Development (OECD), Paris. 18 June 2001.

This paper reviews immigration trends and their economic impacts in a number of OECD countries. While migration systems present similarities across countries, institutional arrangements vary widely and impact on the size and composition of migration flows. Some of the main factors driving immigration are then briefly discussed. The paper also considers the economic, fiscal and social implications of immigration.



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The study suggests that immigration can provide small net benefits to the host country. However, the benefits are not necessarily evenly distributed and some groups, in particular those whose labour is substitutable with immigrants, may lose. The paper also claims that, while migration can partly offset slower growing or declining OECD populations, it cannot provide by itself a solution to the budgetary implications of ageing populations. Finally, the paper touches on some development issues, such as the potential gains from emigration in source countries and the role host countries can play in reducing immigration pressures through more open markets and greater transfers of technology.

Economics of migration. George Borjas (Harvard University). International Encyclopedia of the Social and Behavioral Science, Section No. 3.4, Article No. 38. February 2000.

This article defines migration and discusses various aspects of migration such as: migration and economic efficiency, assimialtion and cohorts effects of migration, labour market impact of migration and the gains of migration to the host country.

The economic benefits from immigration. George J. Borjas (University of California and NBER). Journal of Economic Perspectives, 9(2):3-22, Spring 1995.

This paper describes how natives benefit from immigration and provides a back-of-the-envelope calculation of these benefits. It discusses the impact of immigration on a host country within a competitive, market-clearing framework. The discussion indicates that natives do benefit from immigration mainly because of production complementarities between immigrant workers and other factors of production, and that these benefits are larger when immigrants are sufficiently “different” from the stock of native workers. The available evidence suggests that the economic benefits to the U.S. economy from immigration are relatively small, on the order of $7 to $25 billion annually. The paper however indicates that these gains could be increased considerably if the United States pursued an immigration policy that attracted a more skilled immigrant flow.

The economics of immigration. George J. Borjas (University of California and NBER). Journal of Economic Literature, 32:1667-1717, December 1994.

This paper surveys the themes and lessons suggested by the on-going research on immigration. The most important theme is that an assessment of the



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economic impact of immigration requires an understanding of the factors that motivate persons in the source countries to emigrate and of the economic consequences of pursuing particular immigration policies. As a result, the most important lesson is that the economic impact of immigration will vary by time and by place, and can be either beneficial or harmful. The discussion in this paper mainly focuses on the experience of the United States.

The benefits of immigrants to Canada: Evidence on tax and public services. Ather H. Akbari (Saint Mary’s University). Canadian Public Policy, 15(4):424-435. 1989.

This article examines net impacts of immigrants on the native-born Canadians with respect to consumption of public services and payments of taxes. Specifically, it analyzes the life-cycle theory implication that immigrants, being young at arrival, should benefit the native-born population in a tax-transfer system of Canada. It uses data for 1980 from the 1981 census of population. This study finds that:

• An average immigrant household in Canada received more income (wages, self employment income and government transfers) in 1980 than a non-immigrant household ($20,379 vs $19,075). Immigrants receive income similar to non-immigrants after the third year of arrival and subsequently more.

• An average immigrant household also made higher tax payments than a non-immigrant household in 1980 ($9,498 vs. $8,896). Tax payments by immigrants exceed payments by non-iimigrants after three years of arrival.

• New immigrants consume less public service than native-born Canadians. The gap of consumption of public services between immigrants and non-immigrants narrows gradually, and immigrants who stayed more than 15 years in Canada in 1980 consumed more public services on average than native-born.

• On balance, a native-born Canadian household gains more than $500 from the contribution made by an average immigrant household through public services. Immigrants redistribute funds to non-immigrants through the public treasury.

Immigrants, minorities, and labor market competition. George J. Borjas (University of California and NBER). Industrial and Labour Relations Review, 40(3):382-392, April 1987.

This paper presents estimates of the extent of labour market competition between immigrants and native-born Americans. The study uses data from the



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1980 U.S. census. The sample includes working-age civilian population aged 18-64 who were not self-employed or working without pay. The analysis reveals that immigrants tend to be substitutes for some labour market groups and complements for others. White native-born men tend to be adversely affected by the increase in immigrant supply, whereas black native-born men have, if anything, gained slightly from an increase in the immigrant supply. All these cross-effects of shifts in immigrant supply on the earnings of native-born men are, however, very small. On the one hand, increase in the supply of immigrants do have a sizeable impact on the earnings of immigrants themselves: an increase of 10% in the supply of immigrants, for example, reduces the immigrant wage by about 10%. Thus, immigrants’ main competitors in the labour market are other immigrants.



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(II) Immigrant earnings and income

The deteriorating economic welfare of immigrants and possible causes: Update 2005. Garnett Picot (Statistics Canada) and Arthur Sweetman (Queen’s University). Analytical Studies Branch Research Paper, Statistics Canada, 27 June, 2005.

This paper reviews previous studies done on employment earnings of immigrants. It examines the earnings gap between immigrants and Canadian-born workers during the 1980s and 1990s and the current explanations of the labour market deterioration among recent immigrants. The results are based on data from five Canadian censuses over the period from 1981 to 2001. The data relates to the population aged 16-64 who worked full-time full-year during the reference year. Key findings are:

1) Immigrants arriving in Canada during the late 1990s were highly educated. In 2001, 42% of adult recent immigrants (those who arrived during the previous five years) had a university degree, whereas in 1981, only 19% of recent immigrants had university degrees.

2) Between 1980 and 2000, the earnings of adult recent immigrants who worked full-year full-time fell 13% for men and rose 6% for women. During the same period, the earnings of Canadian-born counterparts rose 10% for men and 11% for women.

3) The earnings gap (between immigrants and non-immigrants) at entry has been increasing with successive cohorts of immigrants for both sexes. Among men, the cohort of the late 1970s (1975-79) earned 90% of that of the Canadian-born at entry (i.e., earnings of immigrants in Canada for 5 years or less). By the late 1990s, the gap was 77% for the immigrant cohort of the late 1990s (1995-99). However, the earnings gap gradually declined over time for both men and women, e.g., the earnings gap for the cohort of the late 1970s was closed after 20 years. After 21-25 years of arrival, immigrants of the 1975-79 cohort earned 8% more than Canadian-born workers.

4) When immigrants are compared to “like” Canadian born, a somewhat different picture evolves. The increasing earnings gap still exists, but the increase is greater after accounting for the differences between immigrants and Canadian born (i.e., controlling for education, work experience, visible minority status, etc.). For example, the entry level earnings of male adults of the 1975-79 immigrant cohort was 83% of the “like” Canadian-born workers, and fell to 60% for the immigrants of the 1995-99 cohort. The greater the earnings gap at entry, the faster the improvement in earnings. Hence the rate of improvement is much greater



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among the 1990-94 cohort than earlier cohorts. Inspite of this, however, earnings remained lower for recent cohorts than earlier cohorts, no matter how long they had been in Canada.

5) Recent immigrants with a university degree were increasingly unable to convert their education and experience into earnings in the way that earlier cohorts had. Declines in earnings at entry were as great for immigrants with university level education. The entry level earnings of male adult immigrants with university degrees who worked full-year full-time, was 82% of Canadian-born equuivalents for the1975-79 cohort, which fell to slightly above 50% for the1995-99 cohort. As with all immigrants, the larger the earnings gap at entry, the faster the growth in earnings.

6) The decline in relative entry level earnings is reflected in the low-income rates among immigrants. Recent immigrants had low-income rates 1.4 times that of Canadian-born in 1980, and by 2000 this had increased to 2.5. The proportion of recent immigrants with family income below the low-income cutoff (before-tax after-transfer LICO) rose from 24.6% in 1980 to 35.8% in 2000. During this period, the low income rates among Canadian-born fell from 17.2% in 1980 to 14.3% in 2000. The deterioration of low-income rates over the past 20 years was not restricted to recent immigrants. It was observed among all immigrant groups, no matter how long they have resided in Canada.

7) The rise in low-income rates among immigrants was widespread, affecting immigrants in all education groups, age groups, and from most source countries. Immigrants with university degrees were not excluded from this rise in low-income rates.

8) Three major sources are identified as important causes of the deterioration of immigrant economic oucomes:

• The change in the characteristics of immigrants (e.g., source regions, rising levels of educational attainment) accounted for about one-third of the increase in the earnings gap at entry

• Decreasing economic returns to foreign work experience also plays an equally large role

• There has been a general decline in the labour market outcomes of all new entrants to the Canadian labour market, and when new immigrants arrive in Canada, they appear to face a similar phenomenon, regardless of age.

9) The reduction in economic return to education does not appear to be behind the deterioration. Immigrants, on average, do have a somewhat lower return to education obtained prior to immigrating (although not to education obtained in Canada), but immigrant average returns to



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education relative to the Canadian-born appear to have been fairly stable over the past two decades.

Explaining the deteriorating entry earnings of Canada’s immigrant cohorts, 1966-2000. Abdurrahman Aydemir and Skuterud Mikal (Statistics Canada). Canadian Journal of Economics, 38(2): 641-672. May 2005.

This econometric study examines the long-term changes in entry earnings of Canada’s immigrant cohorts. It uses data from the five censuses of Canada over the period 1981-2001. The sample includes immigrants who arrived in Canada between 1965 and 1999 and native-born Canadians who entered the labour market during the same time period. The study includes men and women who were between the ages of 18 and 54 years in the census year. The earnings are defined as the sum of employment income and self-employment income of those who worked full-year full-time in the reference year. Key findings are: • Over the last three decades, entry earnings of immigrants and native-born

Canadians deteriorated for successive cohorts of labour market entrants. • The study estimates that about one-third of this decline in entry earnings of

immigrants of successive cohorts may be explained by the compositional shifts in language abilities and region of birth of immigrants away from Europe with an English mother tongue to Asia with a non-English mother tongue.

• Declining wage returns to foreign work experience may explain one-quarter to one-half of the deterioration.

• The study finds no evidence to suggest that returns to foreign education have any deteriorating effect on immigrants’ entry earnings.

• The study suggests that overall macroeconomic factors may have contributed to the unexplained remainder of the decline in entry earnings of immigrants.

• There is strong evidence that skills obtained through work abroad are valued less by Canadian employers than skills obtained through Canadian experience. Regression results suggest that returns to Canadian work experience for immigrants are 4.3% (men) and 3.4% (women) which increase with more years of Canadian experience. On the other hand, the return to foreign work experience for men is 1% which falls with more years of foreign experience. The return to foreign experience for women is close to 0% but rises slightly with more years of foreign experience.

• The study also finds that returns to foreign education have not declined for successive cohorts of immigrants unlike returns to foreign work experience.

• There is no evidence that the foreign education of immigrants is valued less than that obtained in Canada. Regression results show that the return to



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foreign school years is 6.1% (men) and 6.8% (women) as opposed to the return to Canadian school years being 5.7% (men) and 7.3% (women). However, the returns to Canadian school years for immigrants are lower than those for native-born Canadians.

• Econometric estimates indicate that even with similar foreign experience and years of schooling, the entry earnings of immigrant men and women declined with each successive cohort throughout the period since 1965.

• Earnings of immigrants who arrived in 1980-84 were 10% (men) and 14% (women) lower than those of the 1965-69 cohorts with similar amounts of foreign experience and years of schooling. These differentials were 16% (men) and 13% (women) for immigrants who arrived in 1985-89, and 34% (men) and 30% (women) for the 1990-94 cohort. However, these differentials declined to 27% (men) and 22% (women) for those who arrived in 1995-99.

Postsecondary field of study and the Canadian labour market outcomes of immigrants and non-immigrants. Arthur Sweetman (Queen’s University) and Stephen McBride (Stanford University). Statistics Canada Research Paper, October 2004.

This econometric study examines differences in earnings by field of study, exploring the issue for three target groups—Canadian-born, foreign educated immigrants and Canadian educated immigrants. The study uses data from the 1986, 1991 and 1996 Censuses. Results presented in this paper are however based on 1996 census data. The paper provides (i) descriptive statistics, (ii) econometric estimation of the impact of field of study on earnings of each group of population and by level of education, and (iii) predicted annual earnings of a forty-year old average person in 1995. Key findings are:

• There is a clear trend of higher earnings with increasing level of education for immigrants and non-immigrants alike.

• Descriptive statistics show that, across all levels of education, Canadian educated immigrants have comparable or higher earnings than the Canadian born and much higher than foreign educated immigrants. Mean salaries differ across fields within levels of education. The field of study differentials are not as large among immigrants, especially foreign-educated ones.

• Predictions based on econometric regression, though reinforce the earnings differentials across levels and fields of education, provide somewhat different picture of earnings of the three target groups. Predicted earnings of Canadian-born typically exceed those of both immigrant groups when comparing the same field and level of education.



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• Fields with substantially high predicted earnings are: trades and technology, nursing, maths and physical sciences, engineering and applied science, and business and economics

• Fields with lower predicted earnings are: fine and applied arts, literature and humanities and agricultural science.

• Many of the health, physical science and trade field at the college level or bachelor level have earnings that are comparable or higher than the lower earning humanities and fine arts at the master’s level.

• The study suggests that economic premia associated with field of study is quite important, but it appears not to be as important for immigrants as for Canadian-born since the differences between high and low earnings fields of study are usually smaller for the immigrant groups.

• It also shows that there is great economic value in Canadian education.

Immigrant earnings profile in the presence of human capital investment: Measuring cohort and macro effects. David Green (University of British Columbia) and Christopher Worswick (Carleton University). Working Paper No. WP04/13, The Institute for Fiscal Studies (IFS). January 2004.

This paper argues that immigrant earnings profiles in the host country should be viewed in the context of a life-cycle model of human capital acquisition. Within that context, the best comparison group defining the impact of general macro events on immigrants consists of native-born workers who enter the host country labour market at the same time as the immigrants. The study presents evidence that native-born new entrants provide an appropriate comparison for both older and younger immigrants at arrival. Further, the authors argue that a true representation of cross-cohort differences in immigrant contributions of human capital to the host economy must be done in the context of the present value of earnings (i.e., the discounted value of life-time earnings) in the host economy rather than, as is typically done, by comparing earnings at the time of arrival. This study uses Canadian data from the Immigrant Database (IMDB), a dataset formed by linking immigrant landing records for all immigrants arriving in Canada after 1980 to their tax records in all successive years up to and including 1997. Data for native-born Canadians come from the Survey of Consumer Finance. Earnings data used are annual real earnings for men aged 25-64 years. Data show that entry earnings for successive immigrant cohorts fell substantially over the 1980s and entry earnings fell faster in the 1990s. Using native-born new entrants as comparison, also organized into cohorts, the study finds that general earnings patterns for new entrants into the labour market explain a substantial portion (approximately 50% in the 1980s) of the immigrants’ earnings decline.



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Focussing on present values of life-time earnings rather than entry earnings, the paper finds that the 1990s cohorts were not dramatically worse than the 1980s cohorts. Shifts in the country of origin of recent immigrants also play a large role in cross-cohort movements, with these shifts plus the general new entrant effects, accounting for over 90% of the 1980s decline. Zero returns to foreign work experience in terms of entry earnings for immigrants from non-English speaking, non-European immigrants play an important role in this phenomenon, as shifts in composition toward these countries leads to returns to foreign experience falling from substantial positive values in the early 1980s to essentially zero in the 1990s. This points to potential policy concerns over the transferability of human capital acquired through work experience. The fact that general new entrant effects account for so much of the immigrant earnings patterns indicates that part of the concern over immigrant earnings should be redirected to the broader issue of difficulties facing all new labour market entrants.

Will they ever converge? Earnings of immigrants and Canadian-born workers over the last two decades. Marc Frenette and Rene Morissette (Statistics Canada). Analytical Studies Research Paper Series, Statistics Canada, October 2003.

Using census data covering the period 980-2000, this econometric study examines what outcomes would be necessary for today’s recent immigrants to achieve earnings parity with native-born workers. This study focuses on individuals 16-64 with positive earnings who worked at least 40 weeks in the reference year and worked at least 30 hours per week on average.

Main findings are:

• There was a substantial deterioration of entry earnings of both male and female immigrants relative to those of Canadian-born workers during the period from 1980 to 2000.

• For men, in 1980, the average earnings of immigrants who arrived in Canada during 1975-79 were about 13% lower than those of Canadian-born counterparts. In 2000, the average earnings of immigrant men who arrived in Canada during 1995-99 were 28% lower than Canadian-born counterparts.

• For women, in 1980, the average earnings of immigrants who arrived in Canada during 1975-79 were about 20% lower than those of Canadian-born counterparts. But in 2000, the average earnings of immigrant women who arrived in Canada during 1995-99 were about 31% lower than Canadian-born women.



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• This implies that immigrants’ earnings will have to grow at an “abnormally” high rate in the coming years in order to converge with the earnings of native-born workers.

The rise in low-income rates among immigrants in Canada. Garnett Picot, and Feng Hou (Statistics Canada). Analytical Studies Research Paper Series, Statistics Canada. June 2003.

This paper examines the rise in low-income rates among immigrants using census data covering the period from 1980 to 2000. It focuses on the change between the two decades: 1980 to 1990, and 1990 to 2000. The paper concludes that low-income rates have been falling over the past two decades among the native-born Canadians but rising among the immigrants. Main findings are:

• The rise in the low-income rates in Ontario and British Columbia and in the three major Canadian cities during the 1990s in particular, was largely concentrated among the immigrant population.

• Low-income rates among “recent” immigrants (those who immigrated during the previous five years) almost doubled between 1980 and 1995, and then fell during the strong recovery of the late 1990s. However, when focusing on outcomes at business cycle peaks (1980, 1990 and 2000, low-income rates rose continuously for each successive cohort of immigrants.

• The gap in entry level incomes of the recent immigrants relative to the Canadian-born also rose over the 1980-2000 period.

• The changing composition of “recent” immigrants with respect to language, source country, family type and age accounted for, at most, half of the rise in the low-income rate among this group, and likely substantially less than that.

• The increase in low-income among recent immigrants was widespread across all age groups, family types, language groups, education groups, and source regions, especially, Africa and Asia.

• The peak to peak rise in the low-income rate between 1980 and 2000 was not restricted to recent immigrants, and was observed (to a lesser extent) among immigrants who had been in Canada for up to 20 years.

• Low-income rates among immigrants tend to fall with time spent in Canada. Furthermore, among the more recent entering cohorts with the higher low-income rates at entry, the rate of decline is faster. There is evidence of a “catch-up” (to earlier cohorts) among the more recent entering cohorts. However, low-income rates remain higher among immigrant cohorts of the late 1980s and early 1990s than among their



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counterparts in the 1970s (comparing groups with a comparable number of years in Canada).

Initial earnings and catch-up capacity of immigrants. Peter Li (University of Saskatchewan). Canadian Public Policy, 29(3): 319-337. 2003.

This paper estimates the initial earnings gap between immigrants and native-born Canadians, and immigrants’ catch-up capacity, defined as the number of years immigrants take, or expected to take, to reach earnings parity with native-born Canadians. This study uses data from the Immigration Data Base (IMDB) developed by Citizenship and Immigration Canada (CIC) and Statistics Canada. Immigrants who arrived between 1980 and 1996 are included in this study.

Main findings are:

• The employment earnings of both male and female immigrants one year after arrival, were lower for immigrants who came in the 1990s than those who came in the 1980s.

• More recent immigarnts were more likely to have a university degree than those who came earlier.

• Using human capital (education and work experience) and other characteristics of immigrants as predictors, a regression analysis shows that: -- immigrants who came at a yonger age took less time to catch up than older ones. -- immigrants from Europe and the United States took less time to catch up than those from Asia and Africa. -- family-class immigrants took the longest time to catch up to the average earnings of Canadian-born, and principal applicants of the economic class took the least time to catch up

Labour market outcomes of immigrants and racial minority university graduates in Canada. Paul Anisef (York University), Robert Sweet (Lakehead University) and George Frempong (York University). CERIS working paper No. 23, Joint Centre of Excellence for Research on Immigration and Settlement, Toronto. March 2003.

This paper discusses the economic integration of immigrants and visible minorities from a social inequality perspective, and examines how fields of study and education credentials impact the earnings of immigrant racial minorities. It uses data from the 1996 Census. The sample consists of university graduates aged between 24 and 65 who were employed in 1995. The analysis indicates that, in all fields of study, the earnings of immigrant visible minorities, especially those who migrated at an older age, are not commensurate



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with their education level. This finding suggests that whatever adjustment mechanisms have been introduced to smooth the entry of young adult racial minority immigrants into the work force, have been inadequate and/or ineffective.

The complementarity of language and other human capital: immigrant earnings in Canada. Barry Chiswick (University of Chicago) and Paul Miller (University of Western Australia). Discussion Paper No. 451, The Institute for the Study of Labor (IZA), Bonn. March 2002.

This paper analyzes the effects of language on earnings among adult male immigrants in Canada. It uses 1991 Census data. Earnings increase with schooling, pre-immigration experience and duration in Canada, as well as with proficiency in the official languages (English and French). The paper also finds that there is a complementarity between language skills and both schooling and pre-immigration experience. That is, greater proficiency in the official languages enhances the effects of schooling and pre-immigration work experience on earnings. Language proficiency and post-migration experience appear to be substitutes, that is, those with greater proficiency have a smaller effect of time in Canada on earnings.

Do immigrants catch up economically? Derek Hum and Wayne Simpson (University of Manitoba). Policy Options, Institute of Research on Public Policy, Montreal. March 2002.

This paper examines the conventional wisdom that relative to native-born Canadians, immigrants initially experience lower earnings at entry (i.e., a ‘negative entry effect’), followed by a ‘positive assimilation rate’ to match or even surpass the economic performance of natives. It uses data from Statistics Canada’s Survey of Labour and Income Dynamics (SLID), covering the period from 1993 to 1997. The authors employ a model that uses three sets of variables to explain wage growth over time: (i) whether workers are immigrants or visible minorities, (ii) how much training and education immigrants received over the five years, and (iii) how much education they had at the beginning of the period. Results find no evidence that immigrants were assimilating economically during the 1990s in Canada. Main findings are:

• Immigrants with comparable qualifications earned lower wages than the Canadian-born in both 1993 and 1997.

• The assimilation rate was modest for men. The average wage growth between 1993 and 1997 for men was 13.2% for immigrants and 12.9% for



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Canadian-born. The average wage growth for immigrant women was less than native-born women (7.5% vs. 10.8%)

• However, adjusting for the differences in education and experience, the study finds no evidence of assimilation for men,

• Human capital accumulation plays an important role in explaining wage growth. One additional year of experience raises wage growth rate by 9% for a native-born Canadian man compared to less than 5% for an immigrant man. However, the effects of schooling on wage growth are statistically insignificant.

Immigrant earnings: age at immigration matters. Joseph Schaafsma (University of Victoria) and Arthur Sweetman (Queen’s University). Canadian Journal of Economics, 34(4): 1066-1099. November 2001.

This study explores the labour market impact of age at immigration. It estimates the effect of age at immigration on earnings using data from 1986, 1991 and 1996 censuses. The sample included males who were 16-64 and worked more than 40 weeks in the reference year. The study finds a correlation between age at immigration and earnings. The evidence supports three underlying sources of the effect:

• Work experience in the source country yields virtually no return in the host country

• The return to education varies with age at immigration. Those who arrive later in life experience lower returns to both foreign experience and education

• The young acculturate more easily. Visible minority immigrants who arrived before their teen years do not have an earnings deficit relative to their native-born counterparts. Visible minorities who arrived at an older age experience an earnings deficit relative to their Canadian-born counterparts, and this deficit grows with age at immigration.

Immigrant skill utilization in the Canadian labour market: Implications of human capital research. J. G. Reitz (University of Toronto). Journal of International Migration and Integration, 2(3):347-78. 2001

The study assesses the quantitative significance of the under-utilization of immigrant skills. It points out that earnings deficits of immigrants may arise from: (i) lower immigrant skill quality, (ii) under-utilization of immigrant skills, and (iii) pay inequities for immigrants doing the same work as native-born Canadians do. Consistent with numerous studies, data from the 1996 census show that under-utilization of immigrant skills is significant. The study estimates that in 1996



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dollars, the total annual immigrant earnings deficit from all three sources was $15 billion, of which $2.4 billion was related to skill under-utilization, and $12.6 billion was related to pay inequity.

The market worth of immigrants’ educational credentials. Peter S. Li (University of Saskatchewan). Canadian Public Policy, 27(1): 23-38.

[Follow-up articles on this paper: The market worth of immigrants’ educational credentials: A comment. Bert Waslander (Informetrica). Canadian Public Policy, 28(2): 315-320. 2002. Immigrants’ educational worth and years in Canada: A reply. Peter S. Li (University of Saskatchewan). Canadian Public Policy, 28(2): 321-325. 2002].

The study compares the earnings for four groups of individuals: native-born Canadian degree-holders, immigrant Canadian degree-holders (who immigrated to Canada before the age of 13), immigrant mixed education degree-holders (those who immigrated to Canada between the ages of 13 and 24 with at least one degree at the time of census) and immigrant foreign degree-holders (immigrants who came to Canada at the age of 25 or over). It uses the 1996 census data for 15 years and older who had worked in 1995. The findings indicate that immigrants’ credentials carry a penalty compared to those of native-born Canadians, and that a foreign degree affects visible minority immigrants, women and men, more adversely than white.

Not all visible minorities face labour market discrimination. Derek Hum and Wayne Simpson (University of Manitoba). Policy Options, December 2000.

This paper uses Canadian data from the Survey of Labour and Income Dynamics (SLID) for 1993 to examine the economic outcomes by visible minority status. This paper finds that:

• Among native-born Canadians, only black men face a wage gap relative to native born white Canadians by a magnitude of 25.6%. Other visible minority groups (men and women) do not face any significant wage gap.

• Visible minority Immigrant men (black and other minority groups) face a statistically significant wage gap. They receive 14.6% less wage than Canadian-born white people.



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Earnings and employment of visible minority immigrants. Derek Hum and Wayne Simpson (University of Manitoba). Final research report submitted to Prairie Centre of Excellence for Research on immigration and Integration. November 2000.

This research examines the wage gap (i.e., the percentage difference in wages offered to visible minorities relative to those offered to whites) and also the wage growth of different visible minority groups and immigrants in Canada. The study uses data from the Statistics Canada’s Survey of Labour and Income Dynamics (SLID). Main findings are as follows:

• Evidence from cross sectional data suggests that wage disadvantage is related more to immigrant status than visible minority membership per se with the exception of black men. Visible minority members who are immigrants face disadvantage.

• However, this disadvantage for immigrants declines over time with assimilation though the economic assimilation of immigrants is not a speedy process.

Closing the wage gap: Economic assimilation of Canadian immigrants. Derek Hum and Wayne Simpson (University of Manitoba). Paper presented at the CERF/IRPP Conference on “Creating Canada’s advantage in information age”. Ottawa, May 4-6, 2000.

This paper represents a preliminary look at the panel data from the Survey of Labour and Income Dynamics (SLID). It examines only the first five years of the panel in an effort to explore the content of the data itself. In a sense, the paper is exploratory and experimental. In absence of the full six years of panel data, and a larger set of variables, it would be rash to interpret findings from this preliminary investigation as “hard evidence” or to suggest that firm policy suggestions can flow from this cursory analysis. The authors suggest that the results should be treated with extreme caution and care.

Evidence of new immigrant assimilation in Canada. Mary L. Grant (University of Toronto). Canadian Journal of Economics, 32(4):930-955, 1999.

This study examines the assimilation of immigrant earnings to those of native-born Canadians using data from 1981, 1986 and 1991 censuses. It focuses on male 16-64 who worked full-time for forty or more weeks in the reference year. The data exclude residents of the Atlantic provinces and the Territories. Econometric results suggest that:



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• Immigrants arriving in 1980 or earlier experienced zero rate of assimilation (i.e., annual wage of immigrants relative to native-born Canadians did not grow). However, immigrants arriving in Canada during 1981-85 period enjoyed a higher rate of assimilation in their first ffive years in Canada. Their annual wages increased by 17.2% in five years relative to native-born Canadians.

• Decline in relative entry earnings of immigrants stalled in the late 1980s. While the relative entry earnings of immigrants who arrived in 1976-80 period were 17.7% higher than those arrived in 1981-85 period, the relative entry earnings of immigrants who arrived in 1986-90 were similar to those who arrived in 1981-85.

Wage opportunities for visible minorities in Canada. Derek Hum and Wayne Simpson (University of Manitoba). Income and Labour Dynamics Working Paper, Statistics Canada, November 1998 (Also published in Canadian Public Policy, 25:379-394, September 1999)

This is an econometric study that analyzes the wage differentials among different minorities in Canada using data from the first wave of the Survey of Labour and Income Dynamics (SLID). The sample that excludes students, consists of 6,241 men and 5,505 women between the ages 15 and 69 who reported earnings in 1993. The data shows that about 7% of Canadian men and women employed in 1993 self-identified as a visible minority, and 15% of men and 16% of women were immigrants. The regression results suggest that:

• With the exception of black men, there is no significant wage gap between native-born visible minority and non-visible minority. Native-born black men have a statistically significant wage disadvantage of about 24% relative to native-born men who are not members of a visible minority group.

• It is only among immigrants that the question of wage differentials for visible minorities arises. Visible minority men experiences a wage disadvantage of about 13% relative to native-born non-visible minority men. However, a woman immigrant faces a disadvantage of about 19% regardless of her colour relative to native-born women.

Assimialtion, and changes in cohort quality revisited: What happened to immigrant earnings in the 1980s. George J. Borjas (University of California and NBER). Journal of Labor Economics, 13(2):201-245. April 1995.

This article uses the 1970, 1980, and 1990 U.S. census data to determine what happened to immigrant earnings in the 1980s and to determine if pre-1980



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immigrant flows reached earnings parity with native-born Americans. The relative entry wage of successive immigrant cohorts declined by 9% in the 1970s and by an aditional 6% in 1980s. There is little evidence to suggest that immigrants reach wage parity with typical U.S.-born worker during their working lives. Although the relative wage of immigrants grows by 10% during the first 2 decades after arrival, recent immigrants will earn 15%-20% less than natives throughout much of their working lives.

Is there a double-negative effect on the earnings of immigrant women? Charles M. Beach (Queen’s University) and Christopher Worswick (University of British Columbia). Canadian Public Policy, 19(1):36-53, 1993.

This paper investigates whether immigrant women in Canada suffer from a double-negative effect on earnings – that is, have lower earnings than native-born women, that is additional to conventional findings of male-female earnings differentials. The data used is the 1973 Job Mobility Survey of Statistics Canada. The sample consists of female aged 25-64 who were paid employees with positive earnings in 1972.

Major findings are as follows:

• A double-negative effect on earnings does not appear to hold across the board for all immigrant women, but is quite marked for highly educated women. Estimated returns to education for immigrant women are only half those for native-born, a much greater differential for men. An immigrant woman with 20 years of education who works full-time-full-year recieves on average 9-17% lower earnings than her native-born peers. This earnings shortfall underlines the problem of credential recognition in the Canadian labour market.

• The initial earnings gap relative to native-born women changes very little over time.

• The empirical results support a family investment strategy hypothesis where immigrant wives initially subsidize their husbands’ investments in long-run Canada-specific job skills.



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(III) Labour market integration and training

Learning a Living: First results of the Adult Literacy and Life Skills Survey (Chapter 9). Statistics Canada and the Organisation for Economic Co-operation and Development. Ottawa and Paris. 11 May 2005.

The Adult Literacy and Life Skills Survey (ALL) conducted in 6 countries in 2003 find evidences showing that immigrants in Canada and the United States have higher levels of educational credentials but lower levels of usable skills relative to native-born population aged 16-65 years. The ALL survey also compares the labour market outcomes of immigrants by skill levels. The analysis shows that:

• In Canada, both low (skill levels 1 and 2) and medium to high skilled (levels 3 and above) immigrants are disadvantaged in terms of employment compared to native-born workers. Compared to a medium to high skilled native-born worker, a low skilled immigrant is 2.3 times more likely to be unemployed, whereas a native-born low skill worker is 1.5 times more likely to be unemployed. Similarly, a medium to high skilled immigrant is 1.8 times more likely to be unemployed than a native-born worker with same level of skills.

• In the United States, compared to a medium to high skilled native-born worker, a low skilled immigrant is 2.8 times more likely to unemployed, and a low-skilled native-born worker is 2 times more likely to unemployed. However, medium to high skilled immigrants are equally likely to be unemployed as native-born workers with the same skill level.

• In Canada, however, low-skilled native-born adults have slightly higher odds (1.3 times) of earning low income than medium to high skilled native-born workers. The odds of other immigrants of earning low income are not significantly different than those of native-born Canadians.

• In the United States, there are no significant differences in the likelihood of earning low income by skill levels or country of origin.

Job-related training activity by immigrants to Canada. Derek Hum, and Wayne Simpson (University of Manitoba). Canadian Public Policy, 29(4): 469-490. 2003

This paper focuses on the training activities of immigrants and native-born Canadians. It uses data from the 1998 Adult Education and Training Survey (AETS).



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The authors estimate tobit models for men and women to explain the duration of work-related training and find evidence that:

• immigrant training is reduced by about one hour annually for each year that migration is delayed.

• Immigrants who arrive as adults train significantly less than those who arrive as children

• Immigrants who arrive as children do at least as well as the native-born

• Workers in larger firms receive more training and unionized workers receive less training

CLBC Handbook on Immigration and Skill Shortages. Canadian Labour and Business Centre (CLBC). 2003.

This handbook is about the role of immigration in meeting the national skills challenge facing Canada. It discusses trends in immigration in Canada and issues and challenges faced by new immigrants. This handbook also discusses the importance of immgration as a source of skills.



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B. Data and Trends

Longitudinal survey of immigrants to Canada: A portrait of early settlement experiences. Statistics Canada, 13 September, 2005.

This publication is a compilation of research done at Citizenship and Immigration Canada (CIC) and Statistics Canada using data from the Longitudinal Survey of Immigrants to Canada (LSIC). The survey interviews the same selected immigrants at three points in time: approximately six months (Wave 1), two years (Wave 2) and four years (Wave 3) after landing. The target population includes all immigrants and refugees aged 15 and over who landed from abroad between October 1, 2000 and September 30, 2001. The main topics covered in the LSIC include: housing, education, foreign credential recognition, employment, income, the development and use of social networks, language skills, health, values and attitudes and satisfaction with the settlement experience. Results from the first wave were released in September 2003 and the data from the second wave are scheduled to be released in the fall of 2005. The focus of this publication is on the early settlement experiences of immigrants, from pre-migration to the first six months after arrival. First an overview of the LSIC population is provided, looking at both pre-migration characteristics as well as those at arrival. This is followed by a comprehensive look at the first six months of the settlement process, looking at things such as health, housing and mobility; education and training taken since arrival; employment, income and the general perception of the immigrant’s settlement experience. The last section presents a more in-depth look at problems and difficulties newcomers experience in four key areas of integration: accessing health services, finding housing, accessing education and training and finding employment. Some highlights are:

• According to the Longitudinal Survey of Immigrants to Canada (LSIC) 2001, in spite of challenging access conditions to suitable accommodation in some areas of the country, many new immigrants had different housing experiences: most lived in only one place, a few moved more than once and some relied on relatives or a friend temporarily.

• A large number of recent immigrants perceive that they are able to carry on a conversation in at least one of the two official languages. Including language ability as part of the selection criteria for skilled workers seems to have an impact on the language ability of new immigrants.

• New immigrants are generally in good health. Older immigrants and refugees were most likely to report health problems.



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• Although the majority of immigrants were highly educated upon arrival, a large proportion of immigrants have continued with their education or training: specifically taking language training and education leading to a degree or diploma or job-related training.

• Most immigrants had tried to enter the labour market. Skilled worker principal applicants had the highest participation rate. Immigrants in the prime working age (25 to 44 years old) and males were most likely to be employed. By region, the Prairies had the highest employment and lowest unemployment rate.

• Most immigrants brought saving to Canada. Immigrants in the family category report highest family income levels. Employment earnings constitute three quarters of family income. In total, about one-third of LSIC immigrants report not having enough money to meet their basic needs.

• The high proportion of immigrants reporting satisfaction with their early experiences in Canada may indicate that, in spite of obstacles for some of them, most immigrants are adjusting and are committed to establish themselves successfully in Canada.

• The majority of immigrants (92%) expressed their intention to settle permanently and become Canadian citizens. As well, 47% of the immigrants reported that they wanted to bring their relatives to Canada by sponsoring their immigration.

• Moving to a new country is challenging. Although many new immigrants encountered difficulties, it appears problems finding employment was the biggest hurdle. Lack of recognition of foreign qualifications and/or work experience, financial problems and language barriers were the most serious problems reported.

• New immigrants most often depend on relatives or household members and friends for help with problems.

Facts and Figures: Immigration overview – permanent and temporary residents 2004. Citizenship and Immigration Canada (CIC), Ottawa, July 2005.

This publication presents the annual intake of permanent and temporary residents to Canada from 1980 to 2004, as well as the temporary resident population in Canada on December 1st during this period. The main body of the publication is divided into two sections, each depicting selected characteristics for the permanent resident population or the temporary resident population during the ten-year period from 1995 to 2004. A glossary of terms and concepts used in the publication has also been included.



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This year, some tables have been added describing permanent residents’ official language knowledge by province or region and permanent residents by leading mother tongues.

The initial destination and redistribution of Canada’s major immigrant groups: Changes over the past two decades. Feng Hou (Statistics Canada). Analytical Studies Branch Research Paper, Statistics Canada, 29 June 2005.

Using data from five censuses of Canada over the period from 1981 to 2001, this study examines changes in the geographic concentration of Canada’s major immigrant groups with respect to their initial destination and subsequent redistribution. This study focuses on 15 immigrant groups that were among the top 10 source countries in either the 1981 or the 2001 census, based on the number of immigrants who arrived in the preceeding five years. The anlayis focuses on the distribution of immigrants across eight geographic locations including Toronto, Montreal, Vancouver. The author uses a Conditional Logit Choice Model to estimate the distribution of immigrants across eight locations. The results show that:

• New immigrants are much more likely to choose Toronto and Vancouver as their initial destination today than they were two decades ago.

• Redistribution after immigration was generally small-scale, and had inconsistent effects on changing concentration at initial destination among immigrant groups and across arrival cohorts within an immigrant group.

• The size of the pre-existing immigrant community does not significantly affect immigrant locational choice.

Trends in international migration. Annual report, 2004 edition. Organisation for Economic Co-operation and Development (OECD), Paris, March 2005.

This twenty-ninth annual publication analyzes recent trends in migration movements and policies in all OECD member countries and selected non-member economies. It includes a detailed description of the flows, the different channels of immigration and the diversity of nationalities involved. Particular attention is paid to the growing number of migrants from China and Russia in recent flows. More detailed regional analyses examine migration within and from Central and Eastern Europe, East and South-East Asia, Latin America and Sub-Saharan Africa. This volume highlights the role of immigration in population and labour force growth, as well as changes in foreigners’ status with respect to the labour



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market. This year, particular attention is paid to the rates and determinants of the employment of foreigners. Some key points:

• The labour market participation of immigrants is improving, but immigrant women are still marginalized.

• The main socio-economic determinants of labour market access are: i) demographic variables, ii) education, iii) length of residency, and iv) country of origin.

• The report points out that "other things being equal, the determinants of foreigners’ supply of labour are not necessarily different from those for the population as a whole. Foreigners tend to have multiple handicaps (lower education levels, more extended family structure, less working experience) that explain their disadvantage in the labour market in some OECD countries. Consequently, it may be sufficient to adopt general measures that will assist all non-workers through training, vocational guidance, and policies to promote entrepreneurship and employment. Yet in some countries or for some groups (e.g. foreign women, young immigrants and recent immigrants), equal treatment could in fact be discriminatory, given their particular needs and problems."

Longitudinal survey of immigrants to Canada: Process, progress and prospects. Statistics Canada, October 2003.

The Longitudinal Survey of Immigrants to Canada (LSIC), conducted by Statistics Canada and Citizenship and Immigration Canada under the Policy Research Initiative, is a comprehensive survey designed to study how newly arrived immigrants adjust over time in Canada. It uses a longitudinal design to study a sample of immigrants and refugees aged 15 years and older who arrived in Canada between October 2000 and September 2001. About 12,000 of the roughly 164,200 people aged 15 and over who were admitted from outside Canada during this year-long period are interviewed at three different points in time to gather information on their settlement experiences. The first wave of interviews with immigrants for the LSIC was conducted between April 2001 and June 2002, some six months after their arrivals. By late 2005, when all three interviews have been completed, the survey will provide a clear understanding of how the settlement process unfolds for new arrivals. This article provides some key findings from the first wave of interviews. It examines who these immigrants are, where they settled, and why they settled where they did. It also examines their experiences in finding suitable housing, accessing health care services, obtaining education and training and entering the labour force. As well, this article explores some of the barriers that the



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immigrants encountered, and who if any sources of help assisted immigrants in overcoming their difficulties. Some highlights:

• Between October 2000 and September 2001 an estimated 164,200 immigrants aged 15 years and older landed in Canada from abroad as permanent residents. Consistent with trends shown by immigration data from the 2001 Census, the majority of these newcomers (68%) were born in Asia, including the Middle East. Another 15% were from Europe, 9% from Africa and 6% from Central and South America and the Caribbean. The People’s Republic of China was the leading source country of new immigrants to Canada, followed by India, the Philippines and Pakistan

• Of these 164,200 immigrants, 66% were in the prime working-age group of 25 to 44 years. This was almost double the 38% of the Canadian-born population aged 15 years and older who were in the same age group at the time of the 2001 Census.

• Of the immigrants included in the LSIC, economic-class immigrants made up the largest proportion (67%). The economic class comprised 56% principal applicants and 44% spouses and dependents.

• A high proportion of newcomers have university education. Overall, new immigrants who arrived in Canada during the reference period were highly educated. Over half (55%) reported having a university education. The proportion was even higher among newcomers who were aged between 25 and 44 years (69%), more than three times the 22% of the Canadian-born population in the same age group in 2001.

• A majority (82%) of new immigrants reported that they were able to converse well in at least one of Canada’s two official languages when they arrived. Most of those individuals who had skills in an official language were in the prime working-age group of 25 to 44 years (88%) and were university educated (92%). Still, 18% of the 164,200 immigrants were unable to converse in either English or French when they settled in Canada. This was partly because of the high proportion of immigrants from non-English- and non-French-speaking countries.

• The majority of Canada’s most recent immigrants settled in the three largest census metropolitan areas (CMAs): Toronto, Vancouver and Montréal. Of the 164,200 immigrants aged 15 years and older who arrived in Canada from abroad during this year-long period, 74% (121,400) settled in these three metropolitan areas. In contrast, in 2001, these three areas were home to only 26% of the Canadian-born population aged 15 years or older. The CMA of Toronto received the majority (46%) of these newcomers, an estimated 75,400 immigrants. Toronto’s intake was three times higher than that of either Vancouver (15%), the second most popular destination, or Montréal (13%). In a distant fourth place was the CMA of Calgary, which attracted about 5% of



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the new immigrant population, followed closely by Ottawa–Gatineau (4%). Just over 2%—about 3,800 arrivals—chose Edmonton as their destination area. Only 4% of the total new immigrant population resided outside a CMA.

Human capital and earnings of female immigrants to Australia, Canada, and the United States. Heather Antecol (Claremont McKenna College), Deborah Cobb-Clark (Australian National University) and Stephen Trejo (University of Texas). IZA Discussion Paper 575, September 2002.

This paper uses Census data for 1990 and 1991 to show that Australian and Canadian female immigrants have higher levels of English fluency, education and income (relative to native-born women) than do U.S. female immigrants. An explanation for this skill deficit of U.S. immigrant women is that the United States receives a much larger share of immigrants from Latin America than do the other two countries. The apparent English language skill disadvantage of foreign-born women in the United States (relative to foreign-born women in Australia and Canada) shrinks dramatically if immigrants originating in Latin America are excluded.

Bibliography on immigration and settlement in the Toronto Area (Second edition). Michael Doucet (Ryerson University). CERIS Working Paper No. 26, The Joint Centre of Excellence for Research on Immigration and Settlement – Toronto. July 2003.

This bibliography provides a listing of books, monographs, research reports and graduate theses that deal with immigration and settlement in the Toronto area. Journal articles are not included in this bibliography.

International mobility of the highly skilled. Organisation for Economic Co-operation and Development (OECD), Paris, January 2002.

This volume presents a collection of papers prepared for the Seminar on International Mobility of Highly Skilled Workers: From statistical analysis to the formulation of policies, held in Paris, 11-12 June 2001. The book is organized in three parts. The first one presents the definitions and measures of international stock and flows of highly skilled workers and human resources in science and technology. The second discusses trends and economic impact of international mobility of highly skilled workers. The third describes how policy measures, in the area of migration and of science and technology, may influence international mobility of highly skilled workers. According to this study, more and more highly skilled workers are moving abroad for jobs, encouraging innovation to circulate and helping to boost economic growth around the globe. This study suggests that greater co-operation between sending and receiving countries is needed to ensure a fair distribution of benefits.



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A series of country case studies in the report look at what drives the movement of scientists, engineers, computer programmers and other professionals across borders and how entry conditions have generally been eased in the richer countries to match labour shortages in some high-technology industries. It shows that the main increase in flows has been from Asia and Central and Eastern Europe into North America, Australia, Germany and the United Kingdom. There are clear benefits for the home country, the report notes, if migrants return with new technological and entrepreneurial skills obtained abroad, especially if they have capital to invest or have contacts in the international science and technology fields. The sharp expansion of high-technology industries in Chinese Taipei, South Korea and Ireland owes much to returning migrants. Fears of a "brain drain" from developing to technologically advanced countries may be exaggerated, given that many professionals do eventually return to their country of origin. To avoid the loss of highly qualified workers, however, developing countries need to build their own innovation and research facilities, the report says. In this context, it notes that China, for example, has recently launched a program aimed at developing 100 selected universities into world-class research centres. Another way to ensure return, the report suggests, could be to encourage students to study abroad while making study grants conditional on the student's return home.



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C. Policy Issues

Tapping immigrants’ skills: New directions for Canadian immigration policy in the knowledge economy. Jeffrey G. Reitz (University of Toronto). IRPP Choices 11, No. 1, February 2005.

This paper assesses various policy options for Canada’s immigration program, taking into account the broader institutional context and the challenges presented by the transition to a knowledge economy. The author argues that creating institutional capacity to facilitate effective utilization of immigrants’ skills should be a priority for immigrant-settlement policy. The author estimates that the underutilization of immigrants’ skills costs the Canadian economy about $2 billion annually. The decline in immigrant’s overall employment success is continuing, despite vastly improved skill-based selection. The problem is exacerbated by the fact that many of the immigrants who are most affected belong to racial minorities. In the past, two alternatives have been proposed to resolve the problem; namely, to reduce immigration levels and/or to accept the poor labour market outcomes of this generation of immigrants and place all hopes on their children. The author suggests that these alternatives are not attractive. He argues that the most cost-effective policy option is to augment Canada’s institutional capacity to improve the utilization of immigrant skills. The paper points out that the success of Canada’s immigration policy depends on the presence of one essential feature in the emerging global labour market; namely, institutions that link workers to jobs and provide for international transferability of skills. The institutional changes that Reitz proposes are complex. This complexity stems from the number and diversity of players that have to be involved in order to put in place the range of measures necessary to have a real impact, including employers, occupational regulatory and licensing bodies, labour unions, post-secondary educational institutions, credential-assessment providers, nongovernmental organizations representing immigrants, various levels of government and private funding agencies. This paper recommends as follows:

• Better Web-based and other sources of information for immigrants, both before and after their arrival in Canada

• More support for credential-assessment services to improve their labour market effectiveness

• Bridge-training programs to top up immigrants’ skills or fill in the gaps across a wider range of occupations

• Subsidized workplace internship and mentoring programs for immigrants



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• Better human-resource-management-training programs that include training on ethnic diversity issues

• Employers’ recognition of best practices

• Improved public awareness of the problems faced by skilled immigrants in integrating into the Canadian labour market and the consequences of this

Bringing employers into the immigration debate: Survey and Conference. Public Policy Forum. Ottawa. 2004.

The Public Policy Forum surveyed more than 2000 employers across Canada and organized a stakeholder conference in November 2004 to examine ways to integrate immigrants into the Canadian labour force. This report summarizes findings from the survey and the conference. Main findings are as follows:

• The survey finds that Canadian employers are aware that immigrants play an important role in the labour force and will continue to grow as a proportion of the Canadian population. Although employers are generally happy with the skills of immigrants they hire they consistently overlook immigrants as a way to address their workforce needs.

• The survey also finds that employers do not hire immigrants at levels commensurate with their foreign qualification and work experience.

• Canadian work experience is seen as important for employment. One half of respondents consider that Canadian work experience is either a requirement for employment in their organizations or that foreign work experience is not equal to Canadian experience. The public sector is much less likely to accept foreign experience on par with Canadian work experience.

• One reason for employers’ under-employing immigrants is lower language skills of immigrants. Employers indicated that they cannot hire immigrants because immigrants are often unable to describe their skills and experience in an interview.

• According to employers, the benefits of hiring immigrants are: capacity to generate new ideas, organizations’ reputation, development of products for multi-cultural markets and employees’ commitment to the organization.



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Immigrant labour market performance and skilled immigrant selection: The international experience. Daniel Parent (McGill University) and Christopher Worswick (Carleton University). Project Report, CIRANO, Montreal, June 2004.

This paper reviews the immigration experience of Canada, Australia and the United States over the post-World War II period. The existing literature on the labour market performance of immigrants in each country is discussed and interpreted within the context of the immigration policies in place that determined the selection of immigrants of different arrival periods. In addition, it provides a review of studies that compared the effectiveness of different immigrant selection systems. Finally, the paper describes the history of the Quebec immigrant selection system and discusses its possible impact on the inflow of immigrants to Quebec. Key findings are:

• In general, the international evidence suggests that selection of immigrants based on their labour market skills can be an effective way of improving the overall skills of immigrants.

• Language skills and education should be key characteristics that determine the admission of immigrants based on skill. A premium should be placed on education obtained from domestic institutions and/or foreign education credentials that can be easily transferred to the new labour market.

• Granting foreign students permanent residency may be a very effective way of increasing the labour market performance of skilled immigrants because of large benefits that come from admitting immigrants who have domestic education that can be transferred to the new labour market easily.

Integrating immigrant skills into the Ontario economy: A ten point plan. Naomi Alboim. Ideas that Matter and The Maytree Foundation. Toronto, 2003.

This document presents ten ideas developed by Naomi Alboim for The Maytree Foundation. It presents an action agenda for the new provincial government of Ontario. Although written specifically for the new government of Ontario, the plan is also applicable to jurisdictions across Canada. The ten points suggested in this document are:

I. Create an Ontario internet portal to information for skilled immigrants II. Improve collaboration on the assessment of academic credentials to

increase employer confidence



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III. Provide incentives for educational institutions and licensing bodies to develop competency based assessment tools

IV. Review post secondary funding formulas and the statutory framework so educational institutions are encouraged to provide bridging programs as part of their “mainstream” services

V. Work with the Federal government to expand student loan programs VI. Fund labour market language training to be delivered by employers and

educational institutions. VII. Provide incentives to employers, employer associations, and labour to

become more active in the integration of immigrant skills. VIII. Sustain the collaborative efforts of Ontario self-regulated professions to

improve access for international candidates. IX. Support local initiatives to integrate immigrant skills. X. Initiate multi-lateral discussions to create 5-party agreements on the labour

market integration of immigrants.

Canadian immigration policy for the 21st Century.Edited by Charles Beach (Queen’s University), Alan Green (Queen’s University) and Jeffrey Reitz, (University of Toronto). John Deutsch Institute for the study of economic policy, Queen’s University, 2003.

Several major issues faced immigration policy in Canada at the beginning of the twenty-first century. There have been a lot of recent changes to the external environment of Canadian immigration, a number of criticisms raised about current immigration policy in Canada, and several proposals made on how to respond to current labour market needs and settlement patterns of immigrants to Canada. This edited volume contains a large number of research papers examining issues raised by these concerns. Topics covered include international context and immigration policy goals, role of immigration in meeting Canada’s demographic and labour market needs, decentralization of immigration policy with special focus on the Quebec perspectives and the recent Manitoba experience, policy responses to increasing international labour mobility, immigration data resources in Canada, the changing immigrant experience in the labour market including issues of skill recognition and business cycle effects on labour market integration, and social inclusion of immigrants including health of immigrant children and visible minority enclaves in major Canadian cities. The papers and commentaries in this volume were originally presented at the John Deutsch Institute conference on “Canadian Immigration Policy for the 21st Century” held at Queen’s University on October 18-19, 2002. Contributors included Janice Stein, Alan Green, Roderic Beaujot, Chris Worswick, Ted McDonald, Gilles Grentier, Gerald Clement, Don Devoretz, Alice and Masao



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Nakamura and Erwin Diewert, David Card, Michael Abbot, Doug Norris, Arthur Sweetman, Jeffrey Reitz, Victoria Esses, Gernett Picot, Violet Kaspar, Noami Alboim, Barry Chiswick, Craig Riddel and Yvan Turcotte.

Entry class and the earnings attainment of immigrants to Canada, 1980-1995. Richard Wanner (University of Calgary). Canadian Public Policy, 29(1): 54-71. 2003

This study predicts earnings of each entry cohort of immigrants using data from Citizenship and Immigration Canada’s Landing Information Data System (LIDS) for 1980 to 1995 merged with the 1996 census data. The sample is restricted to immigrants between the ages of 25 and 64 who earned positive wages or salaries in 1995, were employed by others, and were at least 20 years of age when they arrive in Canada. Main findings are:

• While the point system which is used to screen both male and female immigrants for skills and labour market suitability tends to select immigrants who have higher earnings upon arrival than those who are not screened, over time the earnings of the two groups converge.

• The models used in this paper provide evidence that even entry cohorts containing a large proportion of refugees eventually have earnings similar to the independent and family classes, which are often presumed to have higher human or social capital. Over time, Immigrants and refugees are also able to acquire the human capital required to be competitive in the host country labour market.

Canadian immigration policy: the need for major reform. Martin Collacutt (Fraser Institute). Fraser Institute, Vancouver, September 2002.

This paper discusses the Canadian immigration policy in light of the overall economic performance of immigrants to Canada. It questions the validity of the argument that large scale immigration is essential to economic growth as well as to offset the aging of the population. The author argues that, in addition to the lack of economic and demographic justification for current immigration levels and priorities, there are indications of social problems arising from the difficulties many immigrants encounter in adapting to the Canadian workforce and society. The important progress Canada has made in becoming a more tolerant and welcoming country to people from all over the world will be placed at risk if Canada fails to bring immigration levels and priorities in line with its economic and demographic needs and absorptive capacity.



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To achieve this, it will be necessary to raise public consciousness of immigration issues through informed debate and discussion. Only when Canadians are aware of the extent to which current immigration policies fail to serve the interests of the country and are prepared to demand that the government make fundamental reforms are we likely to see a significant improvement in the situation.

The case for choosing more skilled immigrants. George Borjas (Harvard University). The American Enterprise, pp. 30-31. December 2000. .

In this article Professor Borjas makes a case that the economic well-being of the U.S. citizens would increase most by choosing more skilled immigrants rather than less skilled ones. He points out that there is a conflict between the type of immigrants preferred by the “typical” workers (who would prefer unskilled immigrants) versus the “typical” U.S. businesses (who would gain more if immigrants were more skilled). So, pursing any particular immigration policy helps some groups and may hurt others. Following the available economic evidence suggesting that the U.S. per capita income would rise most if immigartion policy favoured skilled persons, the paper argues that skilled immigration is the best policy if the U.S. wants immigration that maximises the economic well-being of the native population. In the end, however, immigration policy goals depends on political consensus.

Immigration policy, assimilation of immigrants and natives’ sentiments towards immigrants: Evidence from 12 OECD countries. T. K. Bauer (Bonn University), M. Lofstrom (IZA, Bonn),and K. F. Zimmermann (Bonn University). Discussion Paper No. 187, The Institute for the Study of Labor (IZA), Bonn. August 2000. (Published in Swedish Economic Policy Review, 7(2): 11-53. 2000

This paper explores the possibility that immigration policy may affect the labour market assimilation of immigrants and hence natives’ sentiments towards immigrants. It first reviews the assimilation literature in economics and the policy approaches taken in Europe and among the traditional immigration countries (e.g., Canada, Australia, New Zealand and the United States). This study finds some evidence that the design of an immigration policy may be important for the prospect of immigrant assimilation, or labour market success, and for the development of sentiments of natives towards immigrants. Immigrant assimilation Studies on assimilations suggest that:

• country of origin differences and admission criteria have a strong influence on the labour market performance of immigrants.



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• nearly all countries recently experienced a decline in the so-called “quality” of immigrants, as measured by the upon arrival immigrant-native wage gap. The review has shown that in all cases the decrease in the quality of migrants is related to a change in the country of origin mix of the immigrants. The evidence indicates that especially migrants from different cultural background and from different schooling systems, compared to the culture and schooling system of the receiving country, are responsible for the quality decrease. Examples are Mexicans and Asians in the United States, Asians in Canada and New Zealand and refugees in Europe.

• even though all countries face a decrease in the so called “quality” of immigrants, an assimilation of immigrants to natives can only be observed in those countries that are selecting their migrants according to labour market characteristics such as in Canada and New Zealand.

Natives’ sentiments of immigrants The analysis of natives' sentiments of immigrants suggests that:

• in countries where immigrants are selected according to their labour market characteristics, natives most likely believe that immigrants are generally good for the economy.

• socio-economic characteristics of the respondents such as education, gender and employment status do not seem to explain differences in the perception of immigrants across countries. Results indicate, however, that the relatively more educated have a more positive view of immigrants.

• in the traditional immigration countries, the fear that immigrants take jobs away is the main explanation for thinking that immigration should be reduced. In countries that receive mainly refugees and asylum seekers, natives who think that immigration should be reduced are mostly concerned about increased crime rates. This may be interpreted as general concerns about social tensions.

The economic goals of Canada’s immigration policy: Past and present. Alan Green (Queen’s University) and David Green (University of British Columbia). Canadian Public Policy, 25(4): 425-451, 1999.

This paper examines economic goals of Canadian immigration policy using immigration policy history (since 1870) and current research. The authors present three main arguments:

• Canada’s immigration policy upto the late 1980s was characterized by alternating periods of expansion targeted at specific economic goals and periods of virtual shut down in response to poor domestic labour market conditions.



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• The policy in the 1990s broke with established pattern in not cutting back immigration in response to high unemployment rates and in switching almost completely to long-term goals.

The authors conclude that immigration policy should be seen primarily as a cultural, social and humanitarian policy rather than an economic one.

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