# Analytical Studies Branch Research Paper Series Intergenerational Education Mobility and Labour Market Outcomes: Variation Among the Second Generation of Immigrants in Canada

by Wen-Hao Chen and Feng Hou
11F0019M No. 418
Release date: February 18, 2019 Correction date: March 29, 2019

## Correction notice

This version of the publication dated March 2019 replaces an earlier version dated February 2019. Corrections have been made to this publication as miscoding was found in the program used to produce the data tables. The tables and corresponding results have now been rectified.

## Abstract

Using 2016 Canadian Census data, this article examines the socioeconomic status of the second generation of immigrants, whose population has become increasingly diverse. The analysis focuses on group differences by visible minority status in two aspects relating to socioeconomic mobility: (1) intergenerational progress in educational attainment, which indicates the ability to achieve higher education regardless of parents’ education, and (2) the relationship between education and labour market outcomes, which reveals the ability to convert educational qualifications into economic well-being. The results in general paint a very positive picture for the children of immigrants regarding the first aspect, while mixed results are evident for the second aspect. In particular, some visible minority groups are characterized by high educational attainment and high earnings, while some other groups experience low education mobility and low labour market returns to education. These results suggest that there are divergent paths of socioeconomic integration among the second generation.

Keywords: Second generation of immigrants, social mobility, visible minority

## Executive summary

Previous Canadian literature has showed a bright socioeconomic outlook for the children of Canadian immigrants—the second generation—as they generally outperform the third-plus generation in education and in the labour market. Despite optimistic overall results, large variation exists among different groups of the second generation. As immigrants to Canada have shifted significantly from Europe to Asia, Africa and Latin America over the past decades, the ethnic composition of the second generation has become more diverse. This raises questions about the long-term outcomes of immigrant families from diverse cultural backgrounds. Any marked differences in socioeconomic outcomes across visible minority groups therefore could pose a challenge to social inclusion in Canada.

Using 2016 Canadian Census data, the study examines group differences in socioeconomic status among the second generation of immigrants in two aspects: (1) intergenerational progress in educational attainment, and (2) the relationship between educational attainment and labour market outcomes. The analysis differentiates 10 second generation groups: White, South Asian, Chinese, Black, Filipino, West Asian or Arab, Latin American, Southeast Asian, Korean, and Japanese.

Regarding intergenerational education progress, the results show significant improvement for the children of immigrants in all visible minority groups. Nearly all second generation groups had higher university completion rates than the third-plus generation Whites. The education progress across generations is especially salient among Chinese, South Asian, and Korean Canadians, but rather moderate among Black and Latin American men, and absent among Filipino men.

As for the relationship between educational attainment and labour market outcomes, mixed results are found. Overall, the study reveals that not all the children of immigrants are able to convert their high educational achievement into labour market success. Four distinct groups are identified. The first group, which includes second generation Chinese, South Asian, Korean, and Japanese Canadians, is characterized by higher educational mobility and decent labor market outcomes. The second group experienced good educational mobility but low employment and below-average earnings. This pattern best describes the experience of second generation West Asians or Arabs, and, to a lesser extent, Southeast Asians. The third group includes second generation Blacks and Latin Americans who showed moderate educational mobility and low educational attainment among men, together with low earnings for both men and women. The last group—second generation Filipinos—exhibited little educational mobility and low earnings among men.

These results suggest that there are divergent paths of socioeconomic integration among the second generation. In particular, it highlights the need to understand why some visible minority groups of the second generation struggled in achieving decent annual earnings despite having higher rates of university completion and higher shares of high-skill jobs. More group-specific studies are needed to examine the unique challenges facing each major group.

## 1 Introduction

The second generation of immigrants—individuals who were born in Canada to at least one immigrant parent—constitutes a large component of the Canadian population. According to the 2016 Census, about 6.1 million Canadians are second generation. In 2016, the second generation made up 27% of the nation’s population younger than 25 and 16% of the population aged 25 to 44. Since the members of the second generation were raised and educated in Canada, common labour market barriers that adult immigrants often face, such as language or foreign credential recognition, do not apply to them. Therefore, the socioeconomic outcomes of the second generation, particularly in comparison with those of individuals with two Canadian-born parents, can shed light on the long-term integration of immigrant families from diverse socioeconomic and cultural backgrounds.

It is well documented that the second generation outperforms the third-plus generation (individuals who were born in Canada to two Canadian-born parents) in education, and does similarly well in the labour market (Aydemir and Sweetman 2007; Boyd 2002; Boyd and Grieco 1998; Picot and Hou 2010, 2011). Despite optimistic overall results, large variation exists among different groups of the second generation (Boyd 2008). For instance, second generation Chinese and South Asians have much higher university completion rates than second generation Blacks and Filipinos (Abada, Hou and Ram 2009). Similarly, not all second generation groups outperform the third-plus generation. Among those with similar educational levels and job characteristics, second generation visible minorities, Blacks in particular, have lower earnings than third-plus generation Whites (Hou and Coulombe 2010; Picot and Hou 2010; Skuterud 2010). Previous studies have suggested that the diverse socioeconomic outcomes within the second generation result primarily from the interplay between what immigrant groups brought with them into the receiving country (e.g., their socio-cultural background and human capital), and the different socioeconomic contexts they encounter in the receiving society (e.g., macroeconomic conditions, government resettlement policies, public attitudes towards immigration in general as well as towards a particular immigrant or refugee group) (Alba and Nee 2003; Hou and Bonikowska 2017; Portes and Zhou 1993).

These studies imply that the usual optimistic socioeconomic outlook for the children of immigrants may no longer be certain today, as the second generation of non-European immigrants has come of age. Since the 1970s, the source regions of immigrants have shifted significantly from Europe to Asia, Africa and Latin America. The change in the source regions has contributed to the rapidly rising diversity among the second generation. In 2016, 56% of the second generation aged 15 to 24 and 31% of those aged 25 to 44 were members of a visible minority group, up from 31% aged 15 to 24 and 9% aged 25 to 44 in 2001.Note Furthermore, the ethnic or cultural composition of the visible minority second generation became more diverse as members of smaller minority groups gained visibility through their increase in population share. Among second generation adults aged 25 to 44, for instance, the share of some small groups—in particular Filipinos, Southeast Asians, and Latin Americans—has increased over fourfold over the 2001-to-2016 period.

The growing diversity in the second generation raises questions about their integration and inclusion in Canadian society. This is particularly the case for some second generation groups that only recently became numerous. While some previous studies have looked at group differences in socioeconomic outcomes among the second generation, they often focused on educational attainment and earnings per se, without paying sufficient attention to group differences in intergenerational progress as well as the relationship between education and labour market outcomes. For the children of immigrants, the ability to achieve higher education regardless of parental education, as well as the ability to convert educational qualifications into labour market outcomes, would imply a high degree of opportunity. Any marked differences in these outcomes across visible minority groups therefore would imply a lack of integration and present an obstacle to social inclusion in Canada.

The present study fills the gap in the literature by examining group differences in two aspects: (1) intergenerational progress in educational attainment, and (2) the relationship between education and labour market outcomes including employment rates, occupational attainment, and earnings. Using data from Canadian Censuses, this study divides the second generation into 10 groups as identified in the Employment Equity Act. These groups are White, South Asian, Chinese, Black, Filipino, West Asian or Arab, Latin American, Southeast Asian, Korean, and Japanese. Third-plus generation Whites are included as a reference group. The analysis is restricted to individuals aged 25 to 44 in 2016.

## 2 Group differences in intergenerational education mobility

### 2.1 Educational attainment of immigrant parents and of second generation groups

Table 1 presents the university completion rates (i.e., the percentage with at least a bachelor’s degree) of the parents of the second generation. Since the 2016 Census did not collect information on parents’ education, a generational linkage in education is made by matching a synthetic cohort of parents, identified from the 1991 Census. Specifically, the sample in Table 1 was constructed based on immigrants who had Canadian born children under age 20 in the 1991 Census since their children would have been aged 25 to 44 in 2016.Note

The rates varied considerably across the second generation groups. Among the fathers, those of second generation Korean and Japanese Canadians had the highest rates, followed by the fathers of West Asians or Arabs, Chinese, Filipinos and South Asians. The university completion rates of immigrant fathers in these six groups were over twice as high as those of the fathers of third-plus generation Whites. Meanwhile, the fathers of second generation Whites, Blacks, Southeast Asians and Latin Americans had university completion rates similar to those of the fathers of third-plus generation Whites. The group variation in university completion rates was similarly large among mothers. In particular, over one-third of the mothers of second generation Filipinos had a university degree, compared with less than 1 in 10 among the mothers of Blacks, Latin Americans, and Southeast Asians.

﻿
With a university degree Sample size Fathers Mothers 30.8 21.9 11,849 11,778 16.8 7.9 7,416 10,063 33.6 19.7 9,919 10,197 33.2 35.9 2,917 3,923 18.5 8.7 2,254 2,589 33.7 21.7 4,662 3,839 13.6 9.6 1,896 2,644 42.5 27.4 830 935 38.1 22.6 351 483 17.8 13.3 74,368 71,695 21.6 15.2 117,167 119,011 15.2 10.6 492,854 560,890 Note: Parents' education levels are based on immigrants with Canadian-born children aged younger than 20 in 1991. "All second generation" also includes smaller second generation groups not listed in this table. Source: Statistics Canada, 1991 Census of Population.

Table 2 presents the university completion rates among the second generation aged 25 to 44 in the 2016 Census. By construction, they are likely to be the children of the immigrant parents in Table 1. Overall, there was a clear intergenerational progress in educational attainment across visible minority groups, especially for women: university completion rates were higher among second generation groups than among their respective parents’ groups. Second generation women had higher university completion rates than men in all groups. This pattern was very different from that of their immigrant parents shown previously. This suggests a marked gender difference in intergenerational education improvement.

﻿
Observed university completion rate Adjusted university completion rate Sample size Men Women Men 48.2Note *** 61.6Note *** 41.6Note *** 54.2Note *** 13,646 12,966 19.8Note *** 35.5Note *** 12.3Note *** 26.9Note *** 10,868 11,858 60.6Note *** 72.6Note *** 54.1Note *** 65.4Note *** 11,676 10,665 28.1Note *** 45.6Note *** 21.1 37.9Note *** 4,036 3,774 35.7Note *** 46.2Note *** 31.3Note *** 40.1Note *** 2,673 2,613 39.2Note *** 48.1Note *** 34.5Note ** 42.4Note *** 2,647 2,374 16.1Note *** 25.1Note *** 10.8Note *** 18.5Note *** 2,425 2,483 62.4Note *** 71.3Note *** 54.2Note *** 62.9Note *** 996 944 45.7Note *** 56.4Note *** 42.4Note *** 51.9Note *** 611 667 30.0Note *** 42.7Note *** 26.6Note *** 39.7Note *** 117,687 116,716 33.3Note *** 45.9Note *** 28.5Note *** 41.1Note *** 171,416 169,451 21.2 33.2 22.5 34.6 554,847 555,116 Note ** significantly different from reference category (p < 0.01) Return to note ** referrer Note *** significantly different from reference category (p < 0.001) Return to note *** referrer Note: The adjusted university completion rates are estimated from regression models controlling for province or territory of residence, major census metropolitan area, age and home language. "All second generation" also includes smaller second generation groups not listed in this table. Source: Statistics Canada, 2016 Census of Population (20% sample microdata file).

### 2.2 Intergenerational progress in educational attainment

Intergenerational progress in educational attainment is examined by comparing the average university completion rates of immigrant parent groups with those of second generation groups (Chart 1). For women, the largest increase in university completion rates compared with their immigrant mothers was seen by second generation Chinese (53 percentage points), Korean (44 percentage points), and South Asian (40 percentage points) Canadians. Marked intergenerational improvement in education was also observed for women who were second generation Southeast Asians (38 percentage points), Japanese (34 percentage points) and Whites (29 percentage points). For comparison, the university completion rate for third-plus generation White women increased by 23 percentage points relative to their mothers.

For second generation men, their gains in educational attainment were smaller. Again, the largest improvement in university completion rates between the two generations was found among Chinese (27 percentage points) and Koreans (20 percentage points) Canadians. By contrast, little or moderate change was found for Blacks (3 percentage points), Latin Americans (3 percentage points) and Filipinos (-5 percentage points). For all other groups of second generation men, the growth of university completion rates ranged from 6 to 17 percentage points across generations.

Second generation Filipino men were the only group that experienced little intergenerational improvement in educational attainment. They were less likely than their immigrant fathers to complete a university education.  Second generation Filipina women achieved a university completion rate that was only 10 percentage points higher than that of their mothers. Low intergenerational education mobility among Filipinos was also found in the United States (Zhou and Xiong 2005).

These results show that the shares of visible minority groups finishing university education become more unequal across immigrant generations, as a result of the different growth in intergenerational education mobility between the groups. For instance, the gaps in the university completion rates between Blacks and Chinese were only 17 percentage points among immigrant fathers and 12 percentage points among immigrant mothers, but they widened to 41 percentage points among second generation sons and 37 percentage points among second generation daughters.

Data table for Chart 1
University completion rates Immigrant parents of second generation groups Second generation groups aged 25 to 44 Fathers 30.8 21.9 48.2 61.6 16.8 7.9 19.8 35.5 33.6 19.7 60.6 72.6 33.2 35.9 28.1 45.6 18.5 8.7 35.7 46.2 33.7 21.7 39.2 48.1 13.6 9.6 16.1 25.1 42.5 27.4 62.4 71.3 38.1 22.6 45.7 56.4 17.8 13.3 30.0 42.7 15.2 10.6 21.2 33.2 Note: A 45-degree straight line divides the chart in two. Sources: Statistics Canada, 1991 and 2016 Censuses of Population.

Despite significant differences among visible minority groups, Table 2 reveals that most second generation groups (except Black men and Latin Americans), both men and women, had higher university completion rates than third-plus generation Whites.Note Part of the advantage of the second generation in educational attainment was related to their concentration in large urban areas where more universities are located and the demand for educational credentials is stronger. When differences in geographic distribution, age and home language were taken into consideration, the differences in university completion rates between most second generation groups and third-plus generation Whites became smaller. However, second generation Blacks and Latin Americans (both men and women) had even lower university completion rates than third-plus generation Whites (see the adjusted rates in Table 2).

In addition to being an important end in itself, educational attainment is a crucial contributor to success in the labour market. But does the second generation convert its high educational achievement into labour market success? And to what extent does this differ across visible minority groups? Section 3 examines three different labour market outcomes—employment, occupation and earnings.

## 3 Group differences in labour market returns to education

### 3.1 Employment rates

Table 3 presents the employment rates for individuals aged 25 to 44 in 2016. In general, most second generation visible minority groups had similar employment rates as third-plus generation Whites. Chinese and Filipina women had higher employment rates (by about 3 percentage points) than third-plus generation White women. Employment rates were relatively low among Blacks, West Asians or Arabs, and Latin Americans. For instance, about 77% of second generation Black men were employed, compared with 86% of third-plus generation Whites. About 73% of second generation West Asian or Arab women were employed, compared with 82% of White women in the third-plus generation.

Some variation in the employment rates across second generation visible minority groups may be related to group differences in socio-demographic characteristics such as age, geographic location, education, home language and work availability. When these factors were taken into consideration, the gap in employment rates for Blacks and West Asians or Arabs—relative to those of third-plus generation Whites—changed only slightly (Table 3, right panel). Other unobservable characteristics, such as family or gender roles related to cultural or religious factors, may play a role in employment decisions which requires further investigation.

﻿
Observed employment rate Adjusted employment rate Men Women 83.8Note *** 80.9Note * 83.1Note *** 78.7Note *** 76.7Note *** 77.9Note *** 79.6Note *** 77.8Note *** 86.8Note ** 85.2Note *** 85.8 81.9 86.5 85.3Note *** 85.7 83.3Note * 82.0Note *** 82.9 85.1 83.4 82.4Note *** 73.1Note *** 83.4Note *** 72.9Note *** 82.4Note *** 78.6Note *** 86.1 81.4 84.9 83.3 83.7Note * 80.1 86.5 85.1Note * 84.2 82.6 87.4Note *** 81.8 86.4Note *** 80.9Note *** 86.1Note * 81.6 85.6Note *** 80.6Note *** 85.8 81.7 86.0 82.0 Note * significantly different from reference category (p < 0.05) Return to note * referrer Note ** significantly different from reference category (p < 0.01) Return to note ** referrer Note *** significantly different from reference category (p < 0.001) Return to note *** referrer Note: The adjusted employment rates are estimated from regression models controlling for province or territory of residence, major census metropolitan area, age, home language, educational level, marital status and school attendance during the nine-month period prior to the survey. Source: Statistics Canada, 2016 Census of Population (20% sample microdata file).

### 3.2 Occupational attainment

While holding a job is important to economic well-being, the quality of the job also matters. One metric is the extent to which high educational attainment among second generation groups leads to high-skill occupations. Table 4 presents group differences in the share of workers in high-skill occupations. High-skill occupations refer to senior management occupations, specialized middle management occupations and occupations usually requiring university education, including professional occupations in business and finance; natural and applied sciences; health; education, law and social, community and government services; and art and culture.

There were large differences across visible minority groups in the percentage of workers in high‑skill occupations (left panel). About 40% or more of second generation Chinese, Koreans, Japanese, and South Asians worked in high-skill occupations, compared with 20% (men) to 31% (women) among third-plus generation Whites. Second generation West Asians or Arabs, Southeast Asians, Filipinos and  Whites were also more likely to work in high-skill occupations, albeit to a lesser extent, than third-plus generation Whites. By contrast, the shares of second generation Latin Americans and Blacks working in high-skill occupations were similar to or smaller than those of third-plus generation Whites.

Education contributed substantially to group differences in occupational attainment. This can be seen by comparing Table 4 with Table 2, as the share of workers in high-skill jobs increases with university completion rates. This explains why high-skill jobs are more prevalent among second generation Chinese, South Asians, and Koreans. When factoring out education and other demographic characteristics (Table 4 right panel), these groups had similar rates of working in high-skill occupations as third-plus generation Whites.

﻿
Observed share working in Adjusted share working in Men Women high-skill occupations high-skill occupations 39.0Note *** 47.8Note *** 24.4Note *** 34.3Note *** 19.1 29.8Note ** 19.5Note *** 30.7Note *** 46.2Note *** 50.8Note *** 26.4Note *** 32.6 27.0Note *** 37.2Note *** 23.1Note * 33.1 29.4Note *** 34.9Note *** 24.2Note *** 32.3 33.9Note *** 38.5Note *** 24.6Note *** 31.4 15.9Note *** 22.9Note *** 20.7 31.2 41.2Note *** 49.1Note *** 20.2 30.8 38.1Note *** 42.7Note *** 25.6Note ** 31.4 26.6Note *** 36.2Note *** 22.0Note * 32.0Note * 28.6Note *** 37.6Note *** 22.4Note *** 32.1Note *** 19.9 31.0 21.7 32.6 Note * significantly different from reference category (p < 0.05) Return to note * referrer Note ** significantly different from reference category (p < 0.01) Return to note ** referrer Note *** significantly different from reference category (p < 0.001) Return to note *** referrer Note: The adjusted shares of individuals working in high-skill occupations are estimated from regression models controlling for province or territory of residence, major census metropolitan area, age, home language, educational level, marital status and school attendance during the nine-month period prior to the survey. Source: Statistics Canada, 2016 Census of Population (20% sample microdata file).

### 3.3 Annual earnings

Finally, Table 5 presents average annual earnings, which are the product of hourly wage and annual hours worked. In spite of significant educational advantages, most second generation visible minority groups did not earn substantially more than third-plus generation Whites. This is consistent with previous Canadian studies (e.g., Hou and Coulombe 2010; Picot and Hou 2010). However, our findings reveal marked variation across groups.

Among men, Chinese, South Asians, Koreans, and Japanese earned more (from 5% to 14%) than third-plus generation White men, while earnings disadvantages (-5% to -29%) were found for other visible minority groups. Second generation Black and Latin American men had the lowest earnings: about $16,000-$18,000 below third-plus generation Whites.

The earnings patterns for second generation women were better. Chinese and Korean women earned about 30% more than White women of the third-plus generation. Black and Latin American women had significantly lower earnings than third-plus generation White women.

Group differences in earnings were partly related to differences in education, geographic distribution, age and other demographic factors. If these factors were held constant, second generation Chinese, South Asian, Filipino, Japanese, and Korean men would earn less than their observed earnings. This is mainly because these groups had higher educational attainment and were more concentrated in major metropolitan areas than third-plus generation Whites. Conversely, the adjusted earnings for second generation Latin American and Southeast Asian men became higher compared with the unadjusted earnings, mostly because of their younger average age and higher share of not speaking an official language at home. The adjustment had similar effects among women, although second generation Chinese women still had higher earnings (by 10%) than third-plus generation White women.

﻿
Observed average annual earnings Adjusted average annual earnings Men Women 68,300Note *** 50,800Note *** 62,900 44,800 46,500Note *** 40,900Note *** 51,900Note *** 40,400Note *** 68,100Note *** 57,300Note *** 60,300Note *** 49,100Note *** 54,600Note *** 48,100Note *** 52,100Note *** 44,000 49,600Note *** 42,200 58,900Note *** 45,800 59,700 44,000 59,700Note *** 42,400Note ** 44,500Note *** 37,300Note *** 55,400Note *** 42,400Note *** 71,600Note *** 55,700Note *** 60,500 45,800 66,000 49,300Note *** 56,500Note * 42,300 68,400Note *** 48,200Note *** 62,700Note *** 43,900Note *** 65,700Note *** 48,200Note *** 61,300Note *** 44,000Note *** 62,700 43,500 64,000 44,700 Note * significantly different from reference category (p < 0.05) Return to note * referrer Note ** significantly different from reference category (p < 0.01) Return to note ** referrer Note *** significantly different from reference category (p < 0.001) Return to note *** referrer Note: The adjusted earnings are estimated from regression models controlling for province or territory of residence, major census metropolitan area, age, marital status, home language, educational level and school attendance during the nine-month period prior to the survey. Source: Statistics Canada, 2016 Census of Population (20% sample microdata file).

## 4 Conclusion

This article examines group differences in socioeconomic status among the second generation of immigrants, focusing on two important life course transitions: intergenerational progress in educational attainment and the relationship between educational attainment and labour market outcomes. The results show large variations across visible minority groups. The following four different patterns are identified.

(1) High educational mobility and attainment, and decent labor market outcomes: This pattern can be seen in second generation Chinese, South Asian, Korean and Japanese Canadians. All these four groups experienced a substantial intergenerational improvement in education and achieved a very high rate of university education. With their high university completion rates, these Asian groups in general performed well in the labour market. Second generation Chinese, South Asians, and Koreans, in particular, were overrepresented in high-skill occupations relative to third-plus generation Whites. With their superior educational advantages, as well as their higher concentration in high-skill occupations, they had higher average annual earnings than third-plus generation Whites, particularly among women.

(2) Good educational mobility and attainment, low employment and below-average earnings: Second generation West Asians or Arabs and Southeast Asians are in this category. In general, they also enjoyed significant upward intergenerational education mobility (particularly among women), and achieved high university completion rates. In spite of their high university completion rates, West Asian or Arab women and Southeast Asian men had low employment rates relative to third-plus generation Whites. Among those who were employed, they were more likely than third-plus generation Whites to work in high-skill jobs. However, they had below-average earnings among men.

(3) Moderate educational mobility and attainment, low-skill occupations and low earnings: This pattern best describes the experience of second generation Blacks and Latin Americans. They had the lowest university completion rates among the second generation groups, mostly because their parents had very low levels of education, and intergenerational improvement was moderate among men. They were also less likely to work in high-skill jobs, and their average earnings were among the lowest among second generation groups.

(4) Little educational mobility and low earnings: Second generation Filipino men were the only group in the study that experienced little improvement in education across generations. They also had low earnings relative to third-plus generation White men.

As for second generation Whites, their pattern can be characterized by moderate educational mobility and attainment, and good labour market outcomes. While their rates of working in high-skill jobs were not particularly high compared with other visible minority groups, they were among groups with the highest annual earnings.

In sum, this study suggests that there are different pathways to the integration of immigrant children, as the ability to achieve higher education regardless of their parental education as well as the ability to convert educational qualifications into labour market outcomes tended to differ significantly across different second generation groups in Canada. While some visible minority groups have experienced a large degree of intergenerational progress in education and were able to achieve high levels of educational attainment, they still fared differently in terms of labour market outcomes. Particularly, some second generation visible minority groups lagged behind third-plus generation Whites in annual earnings despite having higher rates of university completion and higher shares of high-skill jobs. The large variations in socioeconomic outcomes across second generation groups remain even when factoring out the usual socio-demographic influences.

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