IDEAS home Printed from https://ideas.repec.org/p/ott/wpaper/1212e.html
   My bibliography  Save this paper

Human Capital Quality and the Immigrant Wage Gap

Author

Listed:
  • Serge Coulombe

    (Department of Economics, University of Ottawa, 120 University St., Ottawa,Ontario)

  • Gilles Grenier

    (Department of Economics, University of Ottawa, 120 University St., Ottawa,Ontario)

  • Serge Nadeau

    (Department of Economics, University of Ottawa, 120 University St., Ottawa,Ontario)

Abstract

We propose a new methodology for analyzing determinants of the wage gap between immigrants and natives. A Mincerian regression framework is extended to include GDP per capita in an immigrant’s country of birth as a proxy for the quality of education and work experience acquired in that country. In this regard, a central finding is that Canadian immigrants’ returns to schooling and work experience significantly increase with the GDP per capita of their country of birth. The contribution of quality of schooling and work experience to the immigrant wage gap is also examined. It is shown that lower human capital quality completely negates the endowment advantage that immigrants have in the areas of schooling and work experience, so that this factor is key to understanding why they earn less than Canadian natives. Since data on GDP per capita are available for most countries in the world over long periods of time, the proposed methodology can be applied to analyze immigrant wage gaps for a large set of countries for which common statistics on natives and immigrants are available.

Suggested Citation

  • Serge Coulombe & Gilles Grenier & Serge Nadeau, 2012. "Human Capital Quality and the Immigrant Wage Gap," Working Papers 1212E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:1212e
    as

    Download full text from publisher

    File URL: http://sciencessociales.uottawa.ca/economics/sites/socialsciences.uottawa.ca.economics/files/1212e.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Myeong-Su Yun, 2005. "A Simple Solution to the Identification Problem in Detailed Wage Decompositions," Economic Inquiry, Western Economic Association International, vol. 43(4), pages 766-772, October.
    2. Nicholas Bloom & John Van Reenen, 2007. "Measuring and Explaining Management Practices Across Firms and Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(4), pages 1351-1408.
    3. Philip Oreopoulos, 2009. "Why Do Skilled Immigrants Struggle in the Labor Market? A Field Experiment with Six Thousand Resumes," NBER Working Papers 15036, National Bureau of Economic Research, Inc.
    4. David Card, 2005. "Is the New Immigration Really so Bad?," Economic Journal, Royal Economic Society, vol. 115(507), pages 300-323, November.
    5. David E. Bloom & Gilles Grenier & Morley Gunderson, 1995. "The Changing Labour Market Position of Canadian Immigrants," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4b), pages 987-1005, November.
    6. Joseph Schaafsma & Arthur Sweetman, 2001. "Immigrant earnings: age at immigration matters," Canadian Journal of Economics, Canadian Economics Association, vol. 34(4), pages 1066-1099, November.
    7. Serge Nadeau & Aylin Seckin, 2010. "The Immigrant Wage Gap in Canada: Quebec and the Rest of Canada," Canadian Public Policy, University of Toronto Press, vol. 36(3), pages 265-285, September.
    8. Eric A. Hanushek & Ludger Woessmann, 2008. "The Role of Cognitive Skills in Economic Development," Journal of Economic Literature, American Economic Association, vol. 46(3), pages 607-668, September.
    9. Serge Coulombe & Gilles Grenier & Serge Nadeau, 2014. "Quality of Work Experience and Economic Development: Estimates Using Canadian Immigrant Data," Journal of Human Capital, University of Chicago Press, vol. 8(3), pages 199-234.
    10. Ather H. Akbari, 1996. "Provincial Income Disparities in Canada: Does the Quality of Education Matter?," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 337-339, April.
    11. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    12. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, November.
    13. Cawley, John & Heckman, James & Vytlacil, Edward, 2001. "Three observations on wages and measured cognitive ability," Labour Economics, Elsevier, vol. 8(4), pages 419-442, September.
    14. Abdurrahman Aydemir & Mikal Skuterud, 2005. "Explaining the deteriorating entry earnings of Canada's immigrant cohorts, 1966 - 2000," Canadian Journal of Economics, Canadian Economics Association, vol. 38(2), pages 641-672, May.
    15. Bloom, Nicholas & Van Reenen, John, 2011. "Human Resource Management and Productivity," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 19, pages 1697-1767, Elsevier.
    16. Serge Coulombe & Jean-François Tremblay, 2004. "Literacy, Human Capital and Growth," Working Papers 0407E, University of Ottawa, Department of Economics.
    17. Morissette, Rene & Frenette, Marc, 2003. "Will They Ever Converge? Earnings of Immigrants and Canadian-born Workers over the Last Two Decades," Analytical Studies Branch Research Paper Series 2003215e, Statistics Canada, Analytical Studies Branch.
    18. Nicholas Bloom & Christos Genakos & Raffaella Sadun & John Van Reenen, 2011. "Management Practices Across Firms and Countries," CEP Discussion Papers dp1109, Centre for Economic Performance, LSE.
    19. Abdurrahman Aydemir & Mikal Skuterud, 2005. "Explaining the deteriorating entry earnings of Canada's immigrant cohorts, 1966 – 2000," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(2), pages 641-672, May.
    20. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1, July.
    21. Bernt Bratsberg, 2002. "School Quality and Returns to Education of U.S. Immigrants," Economic Inquiry, Western Economic Association International, vol. 40(2), pages 177-198, April.
    22. Moses Abramovitz, 1956. "Resource and Output Trends in the United States since 1870," NBER Chapters, in: Resource and Output Trends in the United States since 1870, pages 1-23, National Bureau of Economic Research, Inc.
    23. Sweetman, Arthur, 2004. "Immigrant Source Country Educational Quality and Canadian Labour Market Outcomes," Analytical Studies Branch Research Paper Series 2004234e, Statistics Canada, Analytical Studies Branch.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kai Ingwersen & Stephan L. Thomsen, 2021. "The immigrant-native wage gap in Germany revisited," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(4), pages 825-854, December.
    2. Christl, Michael & Köppl-Turyna, Monika & Gnan, Phillipp, 2017. "Wage Differences Between Immigrants and Natives in Austria: The Role of Literacy Skills," GLO Discussion Paper Series 145, Global Labor Organization (GLO).
    3. Susumu Imai & Derek Stacey & Casey Warman, 2019. "From engineer to taxi driver? Language proficiency and the occupational skills of immigrants," Canadian Journal of Economics, Canadian Economics Association, vol. 52(3), pages 914-953, August.
    4. Feng Hou & Yuqian Lu, 2017. "International students, immigration and earnings growth: the effect of a pre-immigration host-country university education," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-24, December.
    5. Serge Coulombe & Gilles Grenier & Serge Nadeau, 2014. "Quality of Work Experience and Economic Development: Estimates Using Canadian Immigrant Data," Journal of Human Capital, University of Chicago Press, vol. 8(3), pages 199-234.
    6. Serge Coulombe & Robin Boadway & Michel Beine, 2016. "Moving Parts: Immigration Policy, Internal Migration and Natural Resource Shocks," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 446, March.
    7. Guy Lacroix & Marie Albertine Djuikom Tamtchouong, 2018. "Dynamic Causal Effects of Post-Migration Schooling on Labour Market Transitions," Cahiers de recherche 1802, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.
    8. Gwyneth Donahue, 2021. "Equal Convergence? Convergence Patterns Among Immigrants by Occupation," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 49(3), pages 293-304, September.
    9. Schiff, Maurice, 2014. "Brain Drain, Educational Quality and Immigration Policy: Impact on Productive Human Capital in Source and Host Countries, with Canada as a Case Study," IZA Discussion Papers 7955, Institute of Labor Economics (IZA).
    10. Brunow, Stephan & Jost, Oskar, 2019. "Wages of migrant and native employees in Germany: new light on an old issue," IAB-Discussion Paper 201910, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gilles Grenier & Serge Nadeau, 2010. "Why is Immigrants’ Access to Employment lower in Montreal than in Toronto?," Working Papers 1005E, University of Ottawa, Department of Economics.
    2. Serge Coulombe & Gilles Grenier & Serge Nadeau, 2014. "Quality of Work Experience and Economic Development: Estimates Using Canadian Immigrant Data," Journal of Human Capital, University of Chicago Press, vol. 8(3), pages 199-234.
    3. Ana Ferrer & W. Craig Riddell, 2008. "Education, credentials, and immigrant earnings," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(1), pages 186-216, February.
    4. Picot, Garnett & Sweetman, Arthur, 2005. "The Deteriorating Economic Welfare of Immigrants and Possible Causes: Update 2005," Analytical Studies Branch Research Paper Series 2005262e, Statistics Canada, Analytical Studies Branch.
    5. Brahim Boudarbat, 2011. "Labour market integration of immigrants in Quebec: a comparison with Ontario and British Columbia," CIRANO Project Reports 2011rp-09, CIRANO.
    6. Casey Warman, 2007. "You Can Take It With You! The Returns To Foreign Human Capital Of Male Temporary Foreign Workers," Working Paper 1125, Economics Department, Queen's University.
    7. Maude BOULET & Brahim BOUDARBAT, 2015. "The Economic Performance of Immigrants with Canadian Education," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 15(2), pages 23-40.
    8. Fang, Tony & Samnani, Al-Karim & Novicevic, Milorad M. & Bing, Mark N., 2013. "Liability-of-foreignness effects on job success of immigrant job seekers," Journal of World Business, Elsevier, vol. 48(1), pages 98-109.
    9. Sweetman, A. & van Ours, J.C., 2014. "Immigration : What About the Children and Grandchildren?," Discussion Paper 2014-009, Tilburg University, Center for Economic Research.
    10. Abdurrahman Aydemir & Wen-Hao Chen & Miles Corak, 2013. "Intergenerational Education Mobility among the Children of Canadian Immigrants," Canadian Public Policy, University of Toronto Press, vol. 39(s1), pages 107-122, May.
    11. Green, David A. & Worswick, Christopher, 2012. "Immigrant earnings profiles in the presence of human capital investment: Measuring cohort and macro effects," Labour Economics, Elsevier, vol. 19(2), pages 241-259.
    12. McHale, John & Rogers, Keith, 2009. "Selecting Economic Immigrants: An Actuarial Approach," CLSSRN working papers clsrn_admin-2009-64, Vancouver School of Economics, revised 28 Nov 2009.
    13. Li, Qing & Sweetman, Arthur, 2014. "The quality of immigrant source country educational outcomes: Do they matter in the receiving country?," Labour Economics, Elsevier, vol. 26(C), pages 81-93.
    14. Maloney, William F. & Sarrias, Mauricio, 2017. "Convergence to the managerial frontier," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 284-306.
    15. Abdurrahman Aydemir & Wen-Hao Chen & Miles Corak, 2013. "Intergenerational Education Mobility among the Children of Canadian Immigrants," Canadian Public Policy, University of Toronto Press, vol. 39(s1), pages 107-122, May.
    16. Carl Lin, 2016. "How Do Immigrants From Taiwan Fare In The U.S. Labor Market?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 61(05), pages 1-38, December.
    17. Marc Frenette, 2011. "How does the stork delegate work? Childbearing and the gender division of paid and unpaid labour," Journal of Population Economics, Springer;European Society for Population Economics, vol. 24(3), pages 895-910, July.
    18. Jason Dean, 2018. "Does it matter if immigrants work in jobs related to their education?," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-42, December.
    19. Alexander Murray & Andrew Sharpe, 2011. "Human Capital and Productivity in British Columbia," CSLS Research Reports 2011-10, Centre for the Study of Living Standards.
    20. Michele Campolieti & Morley Gunderson & Olga Timofeeva & Evguenia Tsiroulnitchenko, 2013. "Immigrant Assimilation, Canada 1971–2006: Has the Tide Turned?," Journal of Labor Research, Springer, vol. 34(4), pages 455-475, December.

    More about this item

    Keywords

    Wage differentials; immigrants vs. Canadian natives; human capital quality; immigration policies; work experience; education;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ott:wpaper:1212e. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Aggey Semenov (email available below). General contact details of provider: https://edirc.repec.org/data/deottca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.