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Foreign human capital and the earnings gap between immigrants and Canadian-born workers

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  • Fortin, Nicole
  • Lemieux, Thomas
  • Torres, Javier

Abstract

We use new information on the location of study of immigrants available in the 2006 Canadian Census to estimate returns to Canadian and foreign human capital. We find that controlling for the source of human capital (Canadian versus foreign) helps account for a large share of the immigrant/native-born wage gap. We show that commonly-used imputation procedures (e.g. Friedberg, 2000) that assign domestic and foreign education based on age at arrival tend to overestimate the returns to foreign education and underestimate the returns to foreign work experience. We also find that the immigrant/native-born wage gap is highly heterogeneous across places of birth even after including location of study fixed effects, although this inclusion markedly reduces the negative country of origin effects for countries like China, Pakistan, and India. Finally, we note substantial heterogeneity in the portability of human capital across fields of study.

Suggested Citation

  • Fortin, Nicole & Lemieux, Thomas & Torres, Javier, 2016. "Foreign human capital and the earnings gap between immigrants and Canadian-born workers," Labour Economics, Elsevier, vol. 41(C), pages 104-119.
  • Handle: RePEc:eee:labeco:v:41:y:2016:i:c:p:104-119
    DOI: 10.1016/j.labeco.2016.05.021
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    References listed on IDEAS

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    2. Randall Akee & Maggie R. Jones, 2019. "Foreign vs. U.S. Graduate Degrees: The Impact on Earnings Assimilation and Return Migration for the Foreign Born," Working Papers 19-17, Center for Economic Studies, U.S. Census Bureau.
    3. Dilmaghani, Maryam, 2020. "Beauty perks: Physical appearance, earnings, and fringe benefits," Economics & Human Biology, Elsevier, vol. 38(C).
    4. Paul Berbée & Jan Stuhler, 2023. "The Integration of Migrants in the German Labor Market: Evidence over 50 Years," RF Berlin - CReAM Discussion Paper Series 2315, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    5. Lange, Martin & Pfeiffer, Friedhelm, 2019. "The human capital selection of young males seeking asylum in Germany," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 53(1), pages 1-8.
    6. Zhiming Cheng & Ben Zhe Wang & Lucy Taksa, 2021. "Labour Force Participation and Employment of Humanitarian Migrants: Evidence from the Building a New Life in Australia Longitudinal Data," Journal of Business Ethics, Springer, vol. 168(4), pages 697-720, February.
    7. Nadiya UKRAYINCHUK & Carine DRAPIER, 2021. "Exhausted migrant effect : La santé des travailleurs immigrés en France," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 53, pages 69-100.
    8. Irakli Japaridze & Uma Kaplan, 2023. "Cultural and economic integration of immigrants in Canada: “Do you play Hockey?”," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 57(1), pages 1-14, December.
    9. Nick Manuel & Miana Plesca, 2020. "Skill transferability and the earnings of immigrants," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(4), pages 1404-1428, November.
    10. Maryam Dilmaghani, 2022. "The link between smoking, drinking and wages: Health, workplace social capital or discrimination?," Industrial Relations Journal, Wiley Blackwell, vol. 53(2), pages 160-183, March.
    11. Aydede, Yigit & Dar, Atul A., 2022. "Native-born-immigrant wage gap revisited: The role of market imperfections in Canada," CLEF Working Paper Series 50, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    12. Le Quang, Huy & Vallizadeh, Ehsan, 2022. "The returns to school-quality-adjusted education of immigrants in Germany," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 56, pages 1-8.
    13. Huy Le-Quang & Ehsan Vallizadeh, 2022. "The returns to school-quality-adjusted education of immigrants in Germany," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 56(1), pages 1-15, December.

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    More about this item

    Keywords

    Immigrant assimilation; Human capital; Wage gap;
    All these keywords.

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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