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Chronic Low Income and Low-income Dynamics Among Recent Immigrants

  • Hou, Feng
  • Picot, Garnett
  • Coulombe, Simon
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    The deteriorating economic outcomes among immigrants entering during the 1980s and 1990s have prompted much public concern and policy debate. In 1993, immigrant selection procedures were further modified to increase immigrants' educational attainment and the share of immigrants in the "skilled" economic class. By 2000, dramatic increases in the educational attainment of entering immigrants and the share in the skilled class were observed. In the face of these and other changes, this research focuses on three issues: (1) whether entering immigrants economic outcomes improved after 2000 (the last date for which we have such information from the census), (2) low-income dynamics among successive cohorts of entering immigrants, including changes in the entry and exit probabilities, and the extent of "chronic" low income among successive cohorts, and, (3) whether rising educational attainment and increasing share in the "skilled" class resulted in improvements in economic outcomes as measured by poverty entry, exit and chronic low income. Based on the Longitudinal Administrative Database (LAD) and the Longitudinal Immigration Database (IMDB) data, we find that low-income rates among recent immigrants deteriorated after 2000. Low-income rates of immigrants during their first full year in Canada reached 3.5 times that of the Canadian born in 2002 and fell to 3.2 times in 2004. These rates were higher than at any time during the 1990s (at around 3.0). However, this rise in low income was concentrated among immigrants who had entered very recently (in Canada one or two years), suggesting an increase in the short-term adjustment problem in the 2000s as compared to the 1990s. The downturn in the technology sector after 2000 might be a partial explanation, as the share of entering immigrants in information technology (IT) and engineering occupations rose dramatically over the 1990s. Among immigrants entering Canada during the 1990s, most experienced low income at some time during their first decade in Canada (about 65%). Most of those entering low income did so in the first year in Canada, when the likelihood of entry was in the 34% to 46% range, depending upon the entering cohort. If immigrants escaped low income in their first year, the likelihood of entry in subsequent years fell dramatically to below 10%. However, as with the Canadian born, many spells of low income are short lived. From 35% to 40% exited low income after one year. In both the raw data and after conditioning on the characteristics of immigrants, poverty dynamics outcomes deteriorated for immigrants entering Canada after 2000-the probability of entry rose, and of exit fell. In order to capture entry, exit and re-entry patterns in a single measure, a "chronic" low-income measure (in low income four of the first five years in Canada) was produced. About one-fifth of immigrants entering Canada during the 1990s found themselves in chronic low income, a rate about 2.5 times

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    Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2007294e.

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    Date of creation: 30 Jan 2007
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    Handle: RePEc:stc:stcp3e:2007294e
    Contact details of provider: Postal: Tunney's Pasture, Ottawa, Ontario, K1A 0T6
    Web page: http://www.statcan.gc.ca

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    1. 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.
    2. 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.
    3. 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.
    4. Aydemir, Abdurrahman & Chen, Wen-Hao & Corak, Miles, 2006. "Intergenerational Earnings Mobility among the Children of Canadian Immigrants," IZA Discussion Papers 2085, Institute for the Study of Labor (IZA).
    5. 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.
    6. David E. Bloom & Morley Gunderson, 1989. "An Analysis of the Earnings of Canadian Immigrants," NBER Working Papers 3035, National Bureau of Economic Research, Inc.
    7. 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.
    8. 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.
    9. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, December.
    10. Michael G. Abbott & Charles M. Beach, 1993. "Immigrant Earnings Differentials and Birth-Year Effects for Men in Canada: Post-war-1972," Canadian Journal of Economics, Canadian Economics Association, vol. 26(3), pages 505-24, August.
    11. 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.
    12. Ross Finnie & Arthur Sweetman, 2003. "Poverty dynamics: empirical evidence for Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 36(2), pages 291-325, May.
    13. 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.
    14. 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.
    15. 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.
    16. 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).
    17. 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.
    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.
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