Study: Difference in earnings between the less and more highly educated immigrants entering Canada, 1984 to 2007
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A new study shows that the relative earnings advantage that university-educated immigrants have over their less-educated counterparts shortly after their arrival in Canada has narrowed over the last 30 years. However, university-educated immigrants continue to experience stronger earnings growth then their less-educated counterparts, with time spent in Canada and, hence, have higher earnings over the medium-term. This pattern was observed among immigrants who arrived during different periods and among both economic and family class immigrants.
The research paper, "The Human Capital Model of Selection and the Long-run Economic Outcomes of Immigrants," examines the trends in the earnings differentials by education among immigrants who arrived in Canada over the period from the early 1980s to the mid-2000s. It focuses on two questions. First, did the well-documented decline in entry earnings among immigrants over the last quarter century vary by educational level and by admission class? Second, did the earnings advantage that the highly educated held over less educated immigrants change with time spent in Canada?
The data show that university-educated immigrants arriving in the 1980s and early 1990s had significantly higher entry earnings than their less-educated counterparts. However, this pattern changed for arrivals in the 2000s. Among economic principal applicants—those who are selected by the points system—the entry earnings advantage decreased continuously for successive groups of highly educated entering immigrants and by the early part of this century had become significantly smaller.
For example, male economic principal applicants arriving between 1984 and 1988 with a bachelor's degree earned 52% more during the first five years after arrival than their counterparts with a high school diploma. This earnings advantage decreased to 39% among the 1989 to 1993 arrivals, and further to 13% among the 2004 to 2007 arrivals. The decline in the relative economic advantage of those with a higher education was a result of falling real entry earnings (after inflation) among more highly educated economic immigrants. The decline in real entry earnings was not observed among economic principal applicants with a trades or high school education or among family class immigrants.
However, the earnings advantage of university-educated entering immigrants over the less educated increased with time spent in Canada. For example, among the 1989 to 1993 arrivals, the earnings advantage of male economic principal applicants with a bachelor's degree over the high school educated grew from 39% during the first 5 years in Canada to 58% after 16 to 20 years in Canada.
Among the 1999 to 2003 arrivals, the earnings advantage for immigrants with a bachelor's degree over those with high school graduation increased from 6% during the first 5 years to 17% after 6 to 10 years in Canada. Similar patterns were observed among female economic principal applicants.
Note to readers
The data are derived from the Longitudinal Administrative Databank, which is a longitudinal 20% sample of all Canadians who file tax returns. All immigrants who arrived between 1984 and 2007 and who filed a tax return at any time during their tenure in Canada are included in the sample.
The research paper "The Human Capital Model of Selection and the Long-run Economic Outcomes of Immigrants" part of the Analytical Studies Branch Research Paper Series (Catalogue number11F0019M), is now available from the Browse by key resource module of our website under Publications.
Similar studies are available in the Update on Social Analysis Research module of our website.
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