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The Deteriorating Economic Welfare of Immigrants and Possible Causes: Update 2005

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Author Info
Picot, Garnett
Sweetman, Arthur

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Abstract

This paper reviews the increase in the earnings gap between immigrants and Canadian-born over the past two decades, and the current explanations of this labour market deterioration among recent immigrants in particular. The paper also outlines the rising gap in low-income rates between immigrants and non-immigrants. Like previous research, the paper concludes that the earnings gap at entry has increased for immigrants entering Canada during the 1990s, as compared to those of the 1970s. Furthermore, the gap in the low-income rate has been increasing. The rate of low income has been rising among immigrants (particularly recent immigrants) during the 1990s, while falling among the Canadian-born. The rise in low-income rates among immigrants was widespread, affecting immigrants in all education groups, age groups, and from most source countries (except the "traditional source regions"). Immigrants with university degrees were not excluded from this rise in low-income rates, in spite of the discussion regarding the rising demand for more highly-skilled workers in Canada. As a result of both rising low-income rates among immigrants, and their increasing share of the population, in Canada's major cities virtually all of the increase in the city low-income rates during the 1990s was concentrated among the immigrant population. Also reviewed here are the explanations discussed in the literature for the deterioration of immigrant economic outcomes. Three major sources are identified as being empirically important, all of which follow from declining labour market outcomes. First, the change in the characteristics of immigrants (e.g., from different source regions, rising levels of educational attainment, etc.) appears to have accounted for about one-third of the increase in the earnings gap at entry (i.e., the gap between immigrants and comparable Canadian-born). Second, decreasing economic returns to foreign work experience appears to play an equally large role

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Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2005262e.

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Date of creation: 27 Jun 2005
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Handle: RePEc:stc:stcp3e:2005262e

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Related research
Keywords: Labour; Ethnic diversity and immigration; Wages; salaries and other earnings; Immigrants and non-permanent residents; Integration of newcomers; Labour market and income;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Aydemir, Abdurrahman, 2003. "Effects of Business Cycles on the Labour Market Assimilation of Immigrants," Analytical Studies Branch Research Paper Series 2003203e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  2. Peter S. Li, 2003. "Initial Earnings and Catch-Up Capacity of Immigrants," Canadian Public Policy, University of Toronto Press, vol. 29(3), pages 319-337, September. [Downloadable!] (restricted)
  3. 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. [Downloadable!] (restricted)
  4. Baker, Michael & Benjamin, Dwayne, 1994. "The Performance of Immigrants in the Canadian Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 12(3), pages 369-405, July. [Downloadable!] (restricted)
  5. J. B. Burbidge & L. Magee & A. Leslie Robb, 2002. "The Education Premium in Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 28(2), pages 203-217, June. [Downloadable!] (restricted)
    Other versions:
  6. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-89, October. [Downloadable!] (restricted)
  7. Paul Beaudry & David A. Green, 2000. "Cohort patterns in Canadian earnings: assessing the role of skill premia in inequality trends," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 907-936, November. [Downloadable!] (restricted)
    Other versions:
  8. Aydemir, Abdurrahman & Skuterud, Mikal, 2004. "Explaining the Deteriorating Entry Earnings of Canada's Immigrant Cohorts: 1966-2000," Analytical Studies Branch Research Paper Series 2004225e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
    Other versions:
  9. Hou, Feng & Picot, Garnett, 2003. "The Rise in Low-income Rates Among Immigrants in Canada," Analytical Studies Branch Research Paper Series 2003198e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  10. David E. Bloom & Morley Gunderson, 1989. "An Analysis of the Earnings of Canadian Immigrants," NBER Working Papers 3035, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. 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. [Downloadable!]
  12. Richard B. Freeman & Karen Needels, 1993. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 45-68 National Bureau of Economic Research, Inc. [Downloadable!]
    Other versions:
  13. Frenette, Marc & Morissette, René, 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. [Downloadable!]
  14. 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. [Downloadable!] (restricted)
  15. Meng, Ronald, 1987. "The Earnings of Canadian Immigrant and Native-Born Males," Applied Economics, Taylor and Francis Journals, vol. 19(8), pages 1107-19, August.
  16. repec:fth:coluec:437 is not listed on IDEAS
  17. James Ted McDonald & Christopher Worswick, 1997. "Unemployment Incidence of Immigrant Men in Canada," Canadian Public Policy, University of Toronto Press, vol. 23(4), pages 353-373, December. [Downloadable!] (restricted)
  18. Abdurrahman Aydemir, 2003. "Effects of Business Cycles on Labour Market Assimilation of Immigrants," Labor and Demography 0309009, EconWPA. [Downloadable!]
  19. Picot, Garnett, 1998. "What is Happening to Earnings, Inequality and Youth Wages in the 1990s?," Analytical Studies Branch Research Paper Series 1998116e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  20. Ana Ferrer & W. Craig Riddell, 2008. "Education, credentials, and immigrant earnings," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 186-216, February. [Downloadable!] (restricted)
  21. James Ted McDonald & Christopher Worswick, 1998. "The Earnings of immigrant men in Canada: Job tenure, cohort, and macroeconomic conditions," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 51(3), pages 465-482, April.
  22. Kevin M. Murphy & W. Craig Riddell & Paul M. Romer, 1998. "Wages, Skills, and Technology in the United States and Canada," NBER Working Papers 6638, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  23. Crossley, T.F. & McDonald, J.T. & Worswick, C., 1999. "Immigrant Benefit Receipt: Sensitivity to the Choice of Survey years and Model Specification," Papers 370, Australian National University - Department of Economics.
    Other versions:
  24. Mary L. Grant, 1999. "Evidence of New Immigrant Assimilation in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 930-955, August. [Downloadable!] (restricted)
  25. Abdurrahman Aydemir, 2003. "Effects of Business Cycles on Labour Market Assimilation of Immigrants," Labor and Demography 0309010, EconWPA. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Casey Warman, 2007. "You Can Take it with You! The Returns to Foreign Human Capital of Male Temporary Foreign Workers," Working Papers 1125, Queen's University, Department of Economics. [Downloadable!]
  2. Patrik Marier & Suzanne Skinner, 2008. "The Impact of Gender and Immigration on Pension Outcomes in Canada," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 59-78, November. [Downloadable!] (restricted)
  3. Hou, Feng, 2008. "Immigrants Working with Co-ethnics: Who Are They and How Do They Fare Economically?," Analytical Studies Branch Research Paper Series 2008310e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  4. Picot, Garnett & Hou, Feng & Coulombe, Simon, 2007. "Chronic Low Income and Low-income Dynamics Among Recent Immigrants," Analytical Studies Branch Research Paper Series 2007294e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
  5. Deepti Goel & Kevin Lang, 2009. "Social Ties and the Job Search of Recent Immigrants," NBER Working Papers 15186, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Heisz, Andrew, 2005. "Ten Things to Know About Canadian Metropolitan Areas: A Synthesis of Statistics Canada's Trends and Conditions in Census Metropolitan Areas Series," Trends and Conditions in Census Metropolitan Areas 2005009e, Statistics Canada, Social Analysis Division. [Downloadable!]
  7. Michael Haan, 2008. "The Place of Place: Location and Immigrant Economic Well-being in Canada," Population Research and Policy Review, Springer, vol. 27(6), pages 751-771, December. [Downloadable!] (restricted)
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