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The Effect of Immigrant Selection and the IT Bust on the Entry Earnings of Immigrants

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  • Hou, Feng
  • Picot, Garnett
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    Abstract

    Immigrant selection rules were altered in the early 1990s, resulting in a dramatic increase in the share of entering immigrants with a university degree and in the skilled economic class. These changes were very successfully implemented following significant deterioration in entry earnings during the 1980s. This paper asks whether these change in immigrant selection contributed positively to immigrant entry earnings during the 1990s. Moving to the 2000s, the paper asks whether, after almost two decades of deterioration, the entry earnings of immigrants improved early in the decade, and if not, why not. We find that through the 1990s, altering immigrant characteristics did little to improve earnings at the bottom of the earnings distribution, and hence poverty rates among entering immigrants. A rapidly increasing share of immigrants with university degrees and in the skilled class found themselves at the bottom of the earnings distribution. They were unable to convert their education and “skilled class†designation to higher earnings. This inability may be related to language, credentialism, education quality, or supply issues, as discussed in the paper. However, the changing charcateristics did increase earnings among immigrants at the middle and top of the earnings distribution. We also find that from 2000 to 2004 the entry earnings of immigrants renewed their slide, but for reasons that differed from the standard explanations of the earlier decline. Following a significant increase in the supply of entering immigrants intending to work in IT and engineering during the late 1990s and early 2000s, these immigrants were faced with the IT downturn. The result was declining entry earnings, concentrated largely among these workers.

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    File URL: http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%2029%20-%20Picott%20and%20Hou.pdf
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    Bibliographic Info

    Paper provided by Vancouver School of Economics in its series CLSSRN working papers with number clsrn_admin-2009-37.

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    Length: 38 pages
    Date of creation: 26 Jun 2009
    Date of revision: 26 Jun 2009
    Handle: RePEc:ubc:clssrn:clsrn_admin-2009-37

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    Web page: http://www.clsrn.econ.ubc.ca/

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    Keywords: immigration; earnings; high tech; immigrants;

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    1. 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.
    2. Aydemir, Abdurrahman & Robinson, Chris, 2006. "Return and Onward Migration Among Working Age Men," Analytical Studies Branch Research Paper Series 2006273e, Statistics Canada, Analytical Studies Branch.
    3. Ana Ferrer & David A. Green & W. Craig Riddell, 2006. "The Effect of Literacy on Immigrant Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
    4. 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, Cornell University, ILR School, vol. 51(3), pages 465-482, April.
    5. 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.
    6. David E. Bloom & Morley Gunderson, 1991. "An Analysis of the Earnings of Canadian Immigrants," NBER Chapters, in: Immigration, Trade and the Labor Market, pages 321-342 National Bureau of Economic Research, Inc.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
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