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An Analysis of the Earnings of Canadian Immigrants

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  • David E. Bloom
  • Morley Gunderson

Abstract

This paper reports estimates of simple wage equations fit to cross-sectional and pseudo-longitudinal data for Canadian immigrants in the 1971 and 1981 Canadian censuses. The estimates are used to assess (1) the usefulness of cross-sectional analyses for measuring the pace of immigrant earnings growth, (2) the labor market implications of admissions policies that place different weights on the work skills possessed by prospective entrants, and (3) the relative impact of selective outmigration and job-matching on the shape of immigrant earnings distributions as duration of stay increases. The estimates provide evidence of a small to moderate assimilation effect that suggests that immigrants make up for relatively low entry wages, although the wage catch-up is not complete until 13 to 22 years after entry into Canada. These results are revealed clearly in both the pseudo-longitudinal and the cross-sectional analyses. The estimates also provide evidence that the unobserved quality of immigrants' labor market skills declined following changes in Canada's immigration policies in 1974 that led to a sharp increase in the proportion of immigrants admitted on the basis of family ties. Finally, since there is no evidence that the variance of immigrant earnings increases with their duration of stay in Canada, and since there are no differential immigrant-native changes in higher-order moments of the earnings distribution as duration of stay increases, the results are inconclusive with respect to the importance of selective outmigration and job matching in the evolution of immigrant earnings distributions over time.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3035.

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Date of creation: Jul 1989
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Publication status: published as With Christopher L. Cavanagh, published as "An Analysis of the Selection of Arbitrators", American Economic Review, Vol. 76, no. 3 (1986): 408-422.
Handle: RePEc:nbr:nberwo:3035

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  1. Chiswick, Barry R, 1978. "The Effect of Americanization on the Earnings of Foreign-born Men," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 897-921, October.
  2. Milton Harris & Bengt Holmstrom, 1981. "A Theory of Wage Dynamics," Discussion Papers 488, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Katz, Eliakim & Stark, Oded, 1984. "Migration and Asymmetric Information: Comment," American Economic Review, American Economic Association, vol. 74(3), pages 533-34, June.
  4. Jasso, Guillermina & Rosenzweig, Mark R, 1990. "Self-Selection and the Earnings of Immigrants: Comment," American Economic Review, American Economic Association, vol. 80(1), pages 298-304, March.
  5. Long, James E, 1980. "The Effect of Americanization on Earnings: Some Evidence for Women," Journal of Political Economy, University of Chicago Press, vol. 88(3), pages 620-29, June.
  6. George J. Borjas, 1982. "The earnings of male hispanic immigrants in the United States," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 35(3), pages 343-353, April.
  7. Carliner, Geoffrey, 1980. "Wages, Earnings and Hours of First, Second, and Third Generation American Males," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 87-102, January.
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