Do university-educated immigrants recover economically from a slow start?

The selection of highly educated immigrants is based in part on the premise that they can better adapt to the labour market and will have, on average, better economic outcomes than less-educated immigrants. Earlier research indicates that this is the case. However, some university-educated immigrants have a slow start in the initial years after immigration. Little Canadian research has considered whether these immigrants eventually catch up with similarly educated immigrants who have early economic success. Likewise, it is unknown whether they outperform less-educated immigrants. Using the Longitudinal Immigration Database, this study looks at the long-term economic outcomes of university-educated economic principal applicant immigrants who immigrated at the ages of 20 to 44 during the period from 1990 to 2014 by their earnings level in the initial years after immigration. The analysis finds that, in the third year after immigration, those who had no earnings or the lowest earnings during the first two years after immigration experienced large observed negative earnings gaps compared with those who had higher initial earnings. This group also earned less than the average earnings among principal applicants with a high school education or less, although this gap was eliminated by the seventh or eighth year after immigration. The gap between university-educated immigrants with no or low initial earnings and their counterparts with high initial earnings persisted, although it was considerably reduced with years since migration. The university-educated principal applicants with high initial earnings earned 3.5 to 4.8 times more than those with no initial earnings or the lowest initial earnings three years after landing; by year 15, this was reduced to 1.6 to 2.0 times more, which is still a significant gap. These general patterns held across different economic classes (e.g., Federal Skilled Worker Program, provincial programs and Canadian Experience Class). Multivariate analyses found that differences in background characteristics explained little of the observed gap in any given year, or of the change in the gap over time. Most of the explanation for the gap, and the persistence of a gap after many years in Canada, rests with other factors that are not empirically examined in this study, including (1) unobserved characteristics such as motivation, interpersonal skills, and the quality of the university education or job experience; (2) the inability to sufficiently improve human capital for a host of possible reasons; or (3) the possibility of scarring, whereby a poor initial employment experience leads to poorer economic outcomes in the longer run. It is likely that all these possibilities play some role in the persistent gap.