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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.

Suggested Citation

  • David E. Bloom & Morley Gunderson, 1989. "An Analysis of the Earnings of Canadian Immigrants," NBER Working Papers 3035, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3035
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    1. 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.
    2. 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.
    3. 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 620-629, June.
    4. 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.
    5. Milton Harris & Bengt Holmstrom, 1982. "A Theory of Wage Dynamics," Review of Economic Studies, Oxford University Press, vol. 49(3), pages 315-333.
    6. Katz, Eliakim & Stark, Oded, 1984. "Migration and Asymmetric Information: Comment," American Economic Review, American Economic Association, vol. 74(3), pages 533-534, June.
    7. George J. Borjas, 1982. "The Earnings of Male Hispanic Immigrants in the United States," ILR Review, Cornell University, ILR School, vol. 35(3), pages 343-353, April.
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    Cited by:

    1. Neagu, Ileana Cristina, 2009. "Career placement of skilled migrants in the U.S. labor market : a dynamic approach," Policy Research Working Paper Series 4891, The World Bank.
    2. Amelie F. Constant & Klaus F. Zimmermann, 2011. "Migration, Ethnicity and Economic Integration," Chapters,in: International Handbook on the Economics of Integration, Volume III, chapter 7 Edward Elgar Publishing.
    3. Myles, John & Picot, Garnett, 2005. "Income Inequality and Low Income in Canada: an International Perspective," Analytical Studies Branch Research Paper Series 2005240e, Statistics Canada, Analytical Studies Branch.
    4. Carroll, Christopher D & Rhee, Byung-Kun & Rhee, Changyong, 1999. "Does Cultural Origin Affect Saving Behavior? Evidence from Immigrants," Economic Development and Cultural Change, University of Chicago Press, vol. 48(1), pages 33-50, October.
    5. Duleep, Harriet & Regets, Mark, 2002. "The Elusive Concept of Immigrant Quality: Evidence from 1970-1990," IZA Discussion Papers 631, Institute for the Study of Labor (IZA).
    6. Christopher Worswick, 1996. "Immigrant Families in the Canadian Labour Market," Canadian Public Policy, University of Toronto Press, vol. 22(4), pages 378-396, December.
    7. Mattoo, Aaditya & Neagu, Ileana Cristina & Özden, Çağlar, 2012. "Performance of skilled migrants in the U.S.: A dynamic approach," Regional Science and Urban Economics, Elsevier, vol. 42(5), pages 829-843.
    8. Poirine, Bernard, 1997. "A theory of remittances as an implicit family loan arrangement," World Development, Elsevier, vol. 25(4), pages 589-611, January.
    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.
    10. 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.
    11. 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.
    12. Licht, Georg & Steiner, Viktor, 1993. "Assimilation, labour market experience, and earnings profiles of temporary and permanent immigrant workers in germany," ZEW Discussion Papers 93-06, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    13. Fuess, Scott Jr. & van den Berg, Hendrik, 1995. "The impact of transactional activities on productivity growth in Canada, and a comparison with the United States," The North American Journal of Economics and Finance, Elsevier, vol. 6(1), pages 1-15.
    14. Peter S. Li, 2001. "The Market Worth of Immigrants' Educational Credentials," Canadian Public Policy, University of Toronto Press, vol. 27(1), pages 23-38, March.
    15. Coulombe, Simon & Hou, Feng & Picot, Garnett, 2007. "Le faible revenu chronique et la dynamique du faible revenu chez les nouveaux immigrants," Direction des etudes analytiques : documents de recherche 2007294f, Statistics Canada, Direction des etudes analytiques.
    16. 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.
    17. Coulombe, Simon & Hou, Feng & Picot, Garnett, 2007. "Chronic Low Income and Low-income Dynamics Among Recent Immigrants," Analytical Studies Branch Research Paper Series 2007294e, Statistics Canada, Analytical Studies Branch.
    18. Hou, Feng & Picot, Garnett, 2009. "The Effect of Immigrant Selection and the IT Bust on the Entry Earnings of Immigrants," CLSSRN working papers clsrn_admin-2009-37, Vancouver School of Economics, revised 26 Jun 2009.
    19. Bauer, Thomas K. & Lofstrom, Magnus & Zimmermann, Klaus F., 2000. "Immigration Policy, Assimilation of Immigrants and Natives' Sentiments towards Immigrants: Evidence from 12 OECD-Countries," IZA Discussion Papers 187, Institute for the Study of Labor (IZA).

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