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Explaining the Deteriorating Entry Earnings of Canada’s Immigrant

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Author Info

  • Abdurrahman Aydemir

    (Family & Labour Studies Division, Statistics Canada)

  • Mikal Skuterud

    (Family & Labour Studies Division, Statistics Canada)

Abstract

The study explores causes of the deterioration in entry earnings of Canadian immigrant cohorts by estimating an empirical specification that nests a number of competing explanations found in the Canadian literature. To do this, we use the pooled sample of Canadian-born and immigrant men employed full-year, full-time from the complete 20 percent samples of the 1981, 1986, 1991, 1996 and 2001 Canadian Censuses. Our results indicate that no more than one-third of the deterioration can be explained by compositional shifts in the knowledge of an official language, mother tongue and region of origin of recent immigrant cohorts. We also find little or no evidence that declining returns to foreign education are responsible. Roughly one-third of the deterioration appears to be due to a persistent decline in the returns to foreign labour market experience which has occurred almost exclusively among immigrants originating from non-traditional source countries. We are able to explain two-thirds of the overall decline in the entry earnings of Canada’s most recent immigrants without any reference to entry labour market conditions. When we also account for entry conditions, our results suggest that Canada’s immigrants who arrived in the 1995-1999 period would otherwise be enjoying entry earnings that were significantly higher than the entry earnings of the 1965-1969 cohort.

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File URL: http://128.118.178.162/eps/lab/papers/0409/0409006.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Labor and Demography with number 0409006.

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Length: 32 pages
Date of creation: 08 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpla:0409006

Note: Type of Document - pdf; pages: 32
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Web page: http://128.118.178.162

Related research

Keywords: immigration; entry earnings; cohort effects; earnings assimilation; credentials;

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References

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  1. Friedberg, Rachel M, 2000. "You Can't Take It with You? Immigrant Assimilation and the Portability of Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 221-51, April.
  2. 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.
  3. 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.
  4. Bloom, D. & Grenier, G. & Gunderson, M., 1993. "The Changing Labour Market Position of Canadian Immigrants," Working Papers 9305e, University of Ottawa, Department of Economics.
  5. Kee, Peter, 1995. "Native-Immigrant Wage Differentials in the Netherlands: Discrimination?," Oxford Economic Papers, Oxford University Press, vol. 47(2), pages 302-17, April.
  6. 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.
  7. Paul Beaudry & David Green, 1997. "Cohort Patterns in Canadian Earnings: Assessing the Role of Skill Premia in Inequality Trends," NBER Working Papers 6132, National Bureau of Economic Research, Inc.
  8. Robert F. Schoeni, 1998. "Labor market assimilation of immigrant women," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(3), pages 483-504, April.
  9. Antecol, Heather & Kuhn, Peter J. & Trejo, Stephen, 2003. "Assimilation via Prices or Quantities? Labor Market Institutions and Immigrant Earnings Growth in Australia, Canada, and the United States," IZA Discussion Papers 802, Institute for the Study of Labor (IZA).
  10. Chiswick, Barry R & Miller, Paul W, 1985. "Immigrant Generation and Income in Australia," The Economic Record, The Economic Society of Australia, vol. 61(173), pages 540-53, June.
  11. Sherrie A. Kossoudji, 1989. "Immigrant Worker Assimilation: Is It a Labor Market Phenomenon?," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 494-527.
  12. David A. Green & Christopher Worswick, 2004. "Immigrant earnings profiles in the presence of human capital investment: measuring cohort and macro effects," IFS Working Papers W04/13, Institute for Fiscal Studies.
  13. 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.
  14. Harriet Duleep & Mark Regets, 1997. "Measuring immigrant wage growth using matched CPS files," Demography, Springer, vol. 34(2), pages 239-249, May.
  15. 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.
  16. Abdurrahman Aydemir, 2003. "Effects of Business Cycles on Labour Market Assimilation of Immigrants," Labor and Demography 0309010, EconWPA.
  17. 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.
  18. 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.
  19. 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.
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Cited by:
  1. Kristyn Frank & Kelli Phythian & David Walters & Paul Anisef, 2013. "Understanding the Economic Integration of Immigrants: A Wage Decomposition of the Earnings Disparities between Native-Born Canadians and Recent Immigrant Cohorts," Social Sciences, MDPI, Open Access Journal, vol. 2(2), pages 40-61, April.
  2. Aydemir, Abdurrahman & Sweetman, Arthur, 2006. "First and Second Generation Immigrant Educational Attainment and Labor Market Outcomes: A Comparison of the United States and Canada," IZA Discussion Papers 2298, Institute for the Study of Labor (IZA).
  3. Sylvia Fuller & Leah Vosko, 2008. "Temporary Employment and Social Inequality in Canada: Exploring Intersections of Gender, Race and Immigration Status," Social Indicators Research, Springer, vol. 88(1), pages 31-50, August.
  4. 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.
  5. Marc Frenette, 2011. "How does the stork delegate work? Childbearing and the gender division of paid and unpaid labour," Journal of Population Economics, Springer, vol. 24(3), pages 895-910, July.
  6. 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.
  7. 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.

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