Economic and Social Reports
Immigrant labour market outcomes during recessions: Comparing the early 1990s, late 2000s and COVID-19 recessions

Release date: February 23, 2022

DOI: https://doi.org/10.25318/36280001202200200003-eng

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Abstract

The labour market outcomes of recently arrived immigrants are often more negatively affected during recessions than those of the Canadian born. Entering the labour market during a recession may also result in “scarring” effects for both immigrants and Canadian-born workers. But the severity and characteristics of recessions vary significantly and may affect the outcomes of immigrants differently. This paper compares immigrants’ outcomes during the past three recessions. The early-1990s recession was more severe and lasted longer than the 2008/2009 recession. The 1990s recession had a large differential impact on the employment rates and earnings of recent immigrants, relative to the Canadian born, while the milder 2008/2009 recession had relatively little differential effect. Both recessions hit the goods-producing sector hardest, and disproportionately affected men, younger workers, and workers with lower levels of education and low seniority. During the COVID-19 downturn, accommodation and food services and retail trade were hit particularly hard; low-wage workers bore the brunt of the recessionary effect, along with less educated workers and young women. Recently immigrated women experienced a greater increase in unemployment than Canadian-born women during the COVID-19 recession, caused in part by their over-representation in some of these groups. There was a small difference between recently immigrated and Canadian-born men in employment and unemployment rates during the COVID-19 recession. There was evidence consistent with possible “scarring” effects for the longer-term earnings of immigrants entering during the early 1990s recession. Evidence from the 2008/2009 recession did not support such a conclusion. It is too early to assess the longer-term effects of the COVID-19 downturn.

Authors

Feng Hou is with the Social Analysis and Modelling Division, Analytical Studies and Modelling Branch, at Statistics Canada. Garnett Picot is with the Research and Evaluation Branch at Immigration, Refugees and Citizenship Canada.

Acknowledgements

This study was conducted in collaboration with Immigration, Refugees and Citizenship Canada. The authors would like to thank Cédric de Chardon, Rebeka Lee, René Morissette and Mikal Skuterud for their advice and comments on an earlier version of this paper.

Introduction

Immigrants often have more negative labour market outcomes during recessions than those born domestically. For Canada, Aydemir (2003) found that higher unemployment in the year of entry, typically during recessions, had an adverse effect on the labour force participation and employment probability of immigrants, relative to the Canadian born. Abbott and Beach (2011) found similar results during the early 1980s and early 1990s recessions. Hou and Picot (2014) showed that a national unemployment rate increase of 1.0 percentage point in the year of admission was associated with a 2.9 percentage point decline in earnings of immigrant men arriving that year, among immigrants admitted between 1980 and 2010. Kelly et al. (2011) found that the unemployment rate gap between immigrants and the Canadian born widened during and after the 2008/2009 recession, although there was significant regional variation. For the U.S., Orrenius and Zavodny (2009) concluded that immigrant economic outcomes are more strongly tied to the business cycle than those of the domestic born. Dustmann et al. (2010) observed larger unemployment responses to negative economic shocks for immigrants than for the domestic born in the United Kingdom and Germany.

Other researchers have focused on the “scarring” effect of entering the labour market during a recession. The idea is that entering the labour market during a period of high unemployment has a negative effect not only at that time, but also years into the future. Both U.S. and British studies have found the same results (Rothstein, 2020; Tumino, 2015). In a recent review, the consensus was that those scarring effects are substantial (Borland, 2020).

These effects may also be found among immigrants. Aydemir (2003) concluded that entering Canada during periods of high unemployment negatively affected immigrants’ economic integration trajectories over the coming years. A U.S. study by Mask (2018) found that for every 1.0 percentage point increase in the national unemployment rate upon arrival, refugees experienced a 3.5 percentage point reduction in wages after 5 years and a 3.7 percentage point reduction in employment after 4 years.

The characteristics of the last three recessions

Scarring effects likely differ across recessions, depending upon the nature of the downturn. The COVID-19 recession was significantly different from both the 2008/2009Note and the 1990-to-1992Note recessions. During the relatively mild 2008/2009 recession, employment bottomed out at about 98% of its pre-recession level after about eight months; during the early 1990s, the employment trough was reached 2.5 years in, at about 96.5%. During the COVID-19 downturn, employment fell rapidly to about 87% of its pre-recession levels after two months, but the recovery was also much faster. Employment returned to pre-recession levels 53 months after the recession began in the 1990s, versus 27 months in the 2008/2009 period (Gilmore and Larochelle-Cote, 2011). The final outcome for the COVID-19 recession remains to be seen, but by September 2021, total employment regained its pre-recession level.

There were considerable differences in the industries hit hardest by the three recessions. The COVID-19 downturn was concentrated among food and accommodation services and retail trade (Statistics Canada, 2021). The recessions of 2008/2009 and 1990 to 1992 were quite different. In both cases, the drop in GDP was concentrated among goods-producing sectors, notably manufacturing and construction. Consumer-based services such as retail trade and food and accommodation experienced a much smaller decline (Cross, 2011).

Differences in industries affected by the recessions resulted in different population groups bearing the weight of the downturns. With the good-producing sector being hit hardest in the two earlier recessions, workers in that sector, men, younger workers, the less educated and workers with low seniority were impacted most (Chan et al., 2011). During the pandemic, low-wage workers in particular were affected. The average layoff rate during the first few months of 2020—the worst of the downturn—was around 13% for workers in the bottom wage quartile, compared with only 2% to 3% on those in the top wage quartile. Among the employed, the proportion working at least one-half of their usual hours at the peak of the downturn (April 2020) fell by 65% among workers in the bottom wage decile compared with pre-downturn levels, but increased by 15% among those in the top wage decile (Statistics Canada, 2021). Other groups experiencing considerable employment loss during the pandemic included the less educated, recent immigrants and young women aged 18 to 24. Women and men aged 25 to 54 experienced similar patterns of employment loss and unemployment during the downturn and recovery (Statistics Canada, 2020 and 2021).

In addition to the severity and duration of each recession, other factors may also influence the relative outcomes for recent immigrants. For example, since the early 2010s, new immigrants were selected increasingly from the temporary foreign worker pool. They are generally more established economically and may be less affected by recessions than immigrants directly admitted from abroad, as was mostly the case in the 1990s.

The relative outcomes for recent immigrants during the 1990s and 2008/2009 recessions

The early 1990s recession had a much greater differential impact on recent immigrantsNote than did the less severe 2008/2009 recession. From 1993 to 1994, the employment incidenceNote among recent immigrant men dropped 14 percentage points below its pre-recession levels, compared with only 6 percentage points for men in the comparison group (including the Canadian born, and longer term immigrants who landed at least 10 years earlier, aged 20 to 49). Similar results were observed for women.Note The differential effect was smaller in the 2008/2009 recession. Between 2008 and 2010, the decline in employment incidence was small for both recently immigrated men and their comparison group (1.5 percentage points), and only marginally greater for female recent immigrants (2.0 percentage points, compared with 1.2 for the comparison group) (Chart 1).

Chart 1 Employment incidence among recent immigrants and the comparison group

Data table for Chart 1 
Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1 Recent immigrants, Comparison group, Recent immigrant men , Recent immigrant women, Comparison group men and Comparison group women, calculated using percent units of measure (appearing as column headers).
Recent immigrants Comparison group
Recent immigrant men Recent immigrant women Comparison group men Comparison group women
percent
1988 92.1 77.5 93.8 79.1
1989 91.6 77.7 93.4 79.8
1990 89.4 76.2 91.9 79.5
1991 84.9 72.1 90.2 78.4
1992 81.6 68.7 89.0 77.5
1993 78.5 63.3 87.8 75.8
1994 78.3 62.1 87.8 75.8
1995 78.0 61.3 87.7 76.3
1996 78.3 60.4 87.6 76.5
1997 79.3 60.8 88.3 77.6
1998 80.5 61.8 88.7 78.7
1999 82.0 63.1 89.1 79.5
2000 83.1 64.8 89.2 80.6
2001 83.8 65.5 90.6 82.7
2002 83.2 64.9 90.0 82.5
2003 83.6 65.2 90.0 82.9
2004 84.3 65.8 90.1 83.2
2005 86.1 66.5 90.7 83.6
2006 85.6 67.2 90.3 83.7
2007 86.4 68.1 90.4 83.9
2008 87.1 68.5 90.2 84.0
2009 85.5 66.9 89.0 83.1
2010 85.6 66.5 88.7 82.8
2011 86.6 67.0 89.2 83.2
2012 87.3 67.4 89.3 83.2
2013 87.8 67.8 89.1 83.2
2014 88.7 68.9 89.2 83.4
2015 89.0 69.9 89.0 83.5
2016 89.6 70.8 88.9 83.6
2017 90.6 71.4 89.4 83.9
2018 91.8 73.5 89.6 84.4

Median annual earnings among individuals with positive earnings tell a similar story (Chart 2). During the 1990s recession, the decline was considerable among recent immigrants, falling 24% from peak to trough among men and 15% among women. The comparison group experienced an 8% decline for men and no decline in annual earnings among women. The 2008/2009 recession saw virtually no decline in earnings among recently immigrated women and their comparison group, and a small decline among recently immigrated men (Chart 2). Overall, recent immigrants were hit much harder, both in absolute terms and relative to the comparison group, during the early 1990s recession than of 2008/2009.

Chart 2 Median earnings among recent immigrants and the comparison group

Data table for Chart 2 
Data table for Chart 2
Table summary
This table displays the results of Data table for Chart 2 Recent immigrants, Comparison group, Recent immigrant men , Recent immigrant women, Comparison group men and Comparison group women, calculated using 2018 dollars units of measure (appearing as column headers).
Recent immigrants Comparison group
Recent immigrant men Recent immigrant women Comparison group men Comparison group women
2018 dollars
1988 33,893 21,550 48,957 27,914
1989 35,682 22,690 49,404 28,417
1990 34,030 22,596 48,425 28,738
1991 29,894 21,132 46,345 28,291
1992 28,382 20,791 46,534 28,979
1993 27,250 20,176 45,906 28,815
1994 27,803 19,725 46,629 29,186
1995 27,948 19,611 46,266 28,950
1996 28,269 19,378 45,996 28,759
1997 29,520 19,614 46,332 29,041
1998 31,482 20,429 47,007 29,792
1999 33,489 20,885 47,423 30,318
2000 35,436 21,506 47,921 30,806
2001 35,445 21,142 47,869 31,138
2002 33,782 20,134 47,746 31,106
2003 32,860 19,742 47,450 31,090
2004 33,356 20,071 47,779 31,372
2005 33,937 20,204 48,196 31,623
2006 34,675 20,699 49,008 32,453
2007 35,566 21,279 49,570 33,370
2008 36,360 21,992 50,017 34,077
2009 34,860 22,114 48,815 34,477
2010 34,351 22,075 49,196 34,334
2011 34,333 22,117 49,558 34,341
2012 35,660 22,628 50,469 34,815
2013 36,621 23,232 51,188 35,305
2014 37,662 23,672 51,413 35,410
2015 38,832 24,807 51,168 35,839
2016 38,848 25,135 50,358 35,875
2017 40,592 26,116 51,310 36,455
2018 42,939 28,223 52,089 37,354

How did immigrants entering Canada during the recession of the early 1990s and 2008/2009 fare economically in subsequent years?

Given the concern about possible scarring effects, it is useful to examine how immigrants entering Canada during the two recessions fared economically in subsequent years, compared with those entering prior to the recession during better economic times.

Regarding the 1990s recession, the decline in employment incidence experienced by successive new immigrant cohorts between 1988 and the mid-1990s is evident in Chart 3. Those entering Canada between 1991 and 1993 had much lower incidence of employment shortly after landing. However, about 7 to 15 years after landing there was relatively little difference in employment incidence between the cohorts that entered Canada prior to the recession (e.g., 1988 to 1989) and those that entered throughout it (1991 to 1993). There is little evidence of poorer long-term employment outcomes among cohorts entering during the recession.

Chart 3 Employment incidence by year of immigration and year since immigration among those aged 20 to 44 at immigration, 1988 to 1993 arrival cohorts

Data table for Chart 3 
Data table for Chart 3
Table summary
This table displays the results of Data table for Chart 3. The information is grouped by Years since immigration (appearing as row headers), 1988, 1989, 1990, 1991, 1992 and 1993, calculated using percent units of measure (appearing as column headers).
Years since immigration 1988 1989 1990 1991 1992 1993
percent
1 84.4 82.5 76.7 72.7 67.2 67.1
2 83.3 79.0 74.2 70.6 68.5 68.7
3 79.6 76.3 72.1 70.9 69.4 69.8
4 77.2 72.9 71.9 71.0 70.1 71.4
5 73.0 72.4 71.5 71.3 71.5 72.9
6 72.9 72.8 72.4 73.1 73.6 74.1
7 73.5 74.0 74.4 75.0 74.7 74.9
8 74.6 75.7 76.3 75.8 75.5 76.3
9 76.1 77.2 76.5 76.0 77.0 76.0
10 77.6 77.4 76.8 77.8 76.8 76.1
11 77.5 77.3 78.1 77.4 76.9 76.3
12 77.4 79.1 77.8 77.5 76.8 78.1
13 79.3 78.5 78.0 77.3 78.7 77.3
14 79.0 78.6 78.0 79.3 77.9 77.6
15 78.8 78.5 79.7 78.3 78.1 77.7
16 78.4 80.1 78.7 78.6 78.1 76.5
17 79.8 79.0 78.6 78.5 76.9 76.0
18 78.7 78.9 78.4 77.5 76.4 76.5
19 78.4 78.6 77.4 76.8 76.6 76.3
20 77.9 77.5 76.6 77.2 76.2 76.2

Data on median earnings paint a different picture (Chart 4). As expected, median annual earnings were much lower among immigrants entering Canada during the recession (e.g., the 1991, 1992 and 1993 entering cohorts) than among the cohorts who entered prior to the recession in 1988 or 1989.Note However, this difference persisted over time. Even 20 years after entry, the recession cohort (1992 cohort) earned 13% less than the 1988 cohort. This result may be in part caused by differences in the observable characteristics of entering cohorts, or differences in economic conditions during various years. However, even after controlling for such factors,Note differences—although reduced—remained.Note For example, 20 years after landing, the earnings difference between the 1988 and 1992 cohorts was 7% rather than 13%.

Chart 4 Median earnings by year of immigration and year since immigration among those aged 20 to 44 at immigration, 1988 to 1993 arrival cohorts

Data table for Chart 4 
Data table for Chart 4
Table summary
This table displays the results of Data table for Chart 4. The information is grouped by Years since admission (appearing as row headers), 1988, 1989, 1990, 1991, 1992 and 1993, calculated using 2018 dollars units of measure (appearing as column headers).
Years since admission 1988 1989 1990 1991 1992 1993
2018 dollars
1 25,820 23,270 19,580 18,580 18,640 18,740
2 29,530 25,070 22,650 21,340 21,940 21,930
3 29,560 26,920 24,660 23,820 23,720 23,530
4 31,170 28,320 26,900 25,460 25,280 25,740
5 32,250 30,560 28,550 27,120 27,340 28,020
6 34,290 31,860 30,310 29,290 29,540 30,090
7 35,570 33,550 32,280 31,500 31,580 32,130
8 36,760 35,280 34,160 33,120 33,540 33,170
9 38,450 37,220 35,830 34,770 34,190 34,160
10 40,170 38,700 37,250 35,540 35,060 34,830
11 41,590 40,030 38,230 36,380 35,670 36,140
12 42,410 40,490 39,060 37,020 36,960 36,820
13 42,800 41,210 39,340 38,220 37,440 37,840
14 43,350 41,750 40,390 38,680 38,600 38,890
15 43,840 42,650 41,010 39,840 39,500 39,370
16 44,890 43,170 41,820 40,640 40,090 39,270
17 45,160 44,070 42,650 41,090 39,800 40,080
18 46,170 44,710 43,120 40,930 40,500 40,210
19 46,760 45,080 42,810 41,490 40,460 40,840
20 46,820 44,630 43,500 41,530 41,110 41,460

Together, these results suggest that immigrants entering Canada during the early 1990s recession had a lower employment rate than immigrants entering prior to the recession, but this difference did not seem to persist several years after entry. Average annual earnings differences between pre-recession and recession cohorts did persist for many years afterward.

A similar analysis was conducted for immigrants landing in the years surrounding the 2008/2009 recession. Employment and earnings outcomes from up to 10 years after landing were examined for all entry cohorts admitted between 2006 and 2013. The results indicate that there was a continuous improvement in both employment rate and earnings from the 2006 cohort to the 2013 cohort, both immediately after landing and after 10 years in Canada. This is consistent with earlier work indicating an improvement in entry earnings for immigrants over these years (Hou et al., 2020). There was no indication that the 2008 and 2009 landing cohorts experienced poorer longer-run outcomes than other cohorts in spite of their entering during a recession. This may be related to the fact that the recession was a relatively mild one and that, during this period, more economic immigrants were selected from among temporary foreign workers.

The relative outcomes of recent immigrants during the COVID-19 recession

It is too early to determine what long-term effects the COVID-19 recession will have on the economic outcomes of recent immigrants. However, their experience during the recession, relative to the Canadian born, can be addressed. Recent immigrants—particularly women—are overrepresented in the accommodation and food service sector and in lower-paying jobs, and tend to have shorter job tenureNote than the Canadian born. Recent immigrants often have difficulty transferring their educational and employment qualifications into positive labour market outcomes and finding steady work with a good salary. Thus, it is possible that recent immigrants were more negatively affected by the COVID-19 recession than Canadian-born individuals.

Female recent immigrants had poorer outcomes than their Canadian-born counterparts, with higher unemployment rates and lower employment rates, both prior to and during the recession. Male recent immigrants had employment and unemployment outcomes similar to those of the Canadian born (charts 5 and 6) during both periods. In terms of the relative change in these outcomes during the recession, results suggest a marginally greater effect on employment and unemployment rates for male recent immigrants (aged 20 to 54) than on their Canadian-born counterparts. Female recent immigrants experienced a greater differential effect regarding unemployment, as well as employment rates, mainly in May and June 2020.Note Overall, the differential effect of the COVID-19 recession on unemployment among female recent immigrants was significant, while it was relatively small among male recent immigrants.

Chart 5 Monthly unemployment rates among workers aged 20 to 54, by immigration status, 2019 to 2021

Data table for Chart 5 
Data table for Chart 5
Table summary
This table displays the results of Data table for Chart 5 Canadian-born men, Recent immigrant men, Canadian-born women and Recent immigrant women (appearing as column headers).
Canadian-born men Recent immigrant men Canadian-born women Recent immigrant women
percent Margin of error (percent) percent Margin of error (percent) percent Margin of error (percent) percent Margin of error (percent)
2019
January 6.9 0.4 5.9 1.1 4.3 0.3 8.1 1.3
February 6.7 0.4 5.6 1.1 4.1 0.3 8.3 1.4
March 6.3 0.4 6.7 1.2 4.3 0.3 8.0 1.3
April 6.2 0.3 6.2 1.1 4.3 0.3 7.4 1.3
May 5.5 0.3 5.7 1.1 4.1 0.3 7.7 1.3
June 5.1 0.3 5.5 1.0 3.7 0.3 8.5 1.3
July 5.2 0.3 5.7 1.1 4.8 0.3 8.9 1.4
August 5.3 0.3 7.3 1.2 5.9 0.3 9.6 1.4
September 4.6 0.3 4.9 1.0 4.0 0.3 8.7 1.3
October 4.6 0.3 4.8 1.0 3.8 0.3 8.7 1.3
November 5.6 0.3 6.6 1.1 3.9 0.3 9.2 1.4
December 5.3 0.3 6.4 1.1 3.5 0.3 8.8 1.4
2020
January 6.5 0.4 5.8 1.1 3.9 0.3 11.2 1.5
February 6.2 0.4 5.5 1.1 3.8 0.3 10.5 1.5
March 8.2 0.4 7.2 1.3 7.1 0.4 13.7 1.8
April 13.8 0.6 12.4 1.7 11.2 0.5 19.2 2.2
May 13.4 0.5 14.1 1.8 11.8 0.5 21.7 2.2
June 10.7 0.5 12.0 1.7 10.1 0.5 19.7 2.2
July 10.1 0.5 10.7 1.6 9.0 0.5 20.1 2.2
August 9.4 0.5 9.3 1.5 10.2 0.5 15.2 1.9
September 7.9 0.4 8.8 1.5 6.6 0.4 10.8 1.6
October 7.4 0.4 9.9 1.6 6.3 0.4 10.5 1.6
November 7.7 0.4 9.2 1.5 6.0 0.4 11.3 1.7
December 7.9 0.5 9.3 1.5 5.9 0.4 10.5 1.6
2021
January 9.6 0.5 9.8 1.6 7.9 0.5 12.7 1.8
February 8.5 0.5 9.7 1.5 6.0 0.4 11.9 1.7
March 8.3 0.5 8.6 1.4 5.3 0.4 12.9 1.8
April 8.3 0.5 9.0 1.4 6.1 0.4 10.8 1.7
May 7.6 0.4 9.9 1.5 6.3 0.4 13.0 1.8
June 6.6 0.4 9.4 1.4 5.1 0.3 11.0 1.6
July 6.6 0.4 9.2 1.4 6.4 0.4 11.6 1.7
August 6.5 0.4 7.7 1.3 7.5 0.5 11.8 1.6
September 6.2 0.4 6.3 1.1 4.8 0.4 9.0 1.5
October 6.0 0.4 1.2 1.2 0.3 0.3 11.1 1.6
November 5.5 0.4 1.1 1.1 0.3 0.3 8.3 1.3
December 5.1 0.4 5.1 1.0 3.6 0.3 8.7 1.4

Chart 6 Monthly employment rates among individuals aged 20 to 54, by immigration status, 2019 to 2021

Data table for Chart 6 
Data table for Chart 6
Table summary
This table displays the results of Data table for Chart 6 Canadian-born men, Recent immigrant men, Canadian-born women and Recent immigrant women (appearing as column headers).
Canadian-born men Recent immigrant men Canadian-born women Recent immigrant women
percent Margin of error (percent) percent Margin of error (percent) percent Margin of error (percent) percent Margin of error (percent)
2019
January 81.3 0.5 84.4 1.6 80.9 0.5 64.4 2.0
February 81.8 0.5 84.4 1.7 81.1 0.5 65.9 2.0
March 82.5 0.5 83.7 1.7 80.7 0.5 64.9 2.0
April 83.3 0.5 84.2 1.6 81.1 0.5 66.8 2.0
May 85.7 0.5 84.6 1.6 82.5 0.5 66.8 2.0
June 86.2 0.5 85.0 1.6 83.1 0.5 66.6 1.9
July 86.1 0.5 85.1 1.6 80.9 0.5 65.7 2.0
August 86.0 0.5 83.6 1.6 81.4 0.5 66.3 1.9
September 85.5 0.5 85.3 1.5 82.0 0.5 66.6 1.9
October 84.9 0.5 85.8 1.5 82.3 0.5 66.1 1.9
November 84.2 0.5 84.5 1.6 82.1 0.5 65.7 1.9
December 83.7 0.5 84.0 1.6 82.5 0.5 66.5 1.9
2020
January 82.0 0.5 83.9 1.6 81.5 0.5 65.0 2.0
February 82.9 0.5 84.1 1.6 81.7 0.5 64.3 2.0
March 80.1 0.6 79.5 1.8 76.8 0.6 59.2 2.2
April 71.5 0.7 71.4 2.1 69.9 0.7 52.2 2.3
May 75.0 0.6 72.4 2.1 71.9 0.7 53.6 2.3
June 79.8 0.6 77.9 2.0 76.2 0.6 57.1 2.3
July 80.9 0.6 80.1 2.0 76.3 0.6 58.7 2.3
August 81.6 0.6 81.8 1.9 76.7 0.6 62.2 2.3
September 82.0 0.6 81.9 1.9 79.3 0.6 66.4 2.2
October 82.5 0.6 80.9 1.9 79.5 0.6 66.8 2.2
November 82.0 0.6 82.8 1.8 79.6 0.6 65.2 2.2
December 81.1 0.6 81.8 1.8 79.3 0.6 65.1 2.2
2021
January 79.1 0.6 81.7 1.9 77.0 0.6 64.6 2.3
February 80.3 0.6 80.8 1.9 78.6 0.6 64.2 2.2
March 81.1 0.6 82.5 1.8 79.6 0.6 64.1 2.2
April 81.3 0.6 82.5 1.8 79.2 0.6 66.1 2.2
May 83.3 0.6 81.8 1.8 79.7 0.6 64.2 2.2
June 84.3 0.5 82.0 1.7 81.6 0.6 67.1 2.1
July 84.4 0.6 83.1 1.8 79.6 0.6 66.6 2.1
August 84.7 0.6 83.5 1.7 79.6 0.6 67.7 2.1
September 84.2 0.6 84.5 1.6 81.3 0.6 70.2 2.0
October 84.2 0.5 85.0 1.7 81.2 0.6 70.0 2.0
November 84.3 0.5 86.2 1.6 81.8 0.6 71.0 2.0
December 84.3 0.6 86.3 1.6 81.9 0.6 70.2 2.0

An earlier study examined the transition rate at which workers left and entered employment during the downturn and recovery (Hou et al., 2020). The monthly transition rate of employment to non-employment is the share of individuals employed in one month who are not employed the following month. Prior to the lockdown, this rate was low and similarNote for both recent immigrants and the Canadian born. Early in the pandemic, it jumped to 17% among recent immigrants, compared with 13% among the Canadian born. By the end of 2020, the rate had returned to the approximate pre-recession level, around 4% for both groups. The rate of transition out of employment was highest among recently immigrated women, reaching 20% in April 2020, which was 7 percentage points higher than that of Canadian-born women. Statistical analysis indicated that this gap was largely caused by the over-representation of recently immigrated women in lower-wage jobs, shorter tenure jobs, and being employed in the accommodation and food services sectors.Note

In addition to leaving employment at a higher rate, recent immigrants also returned to employment at a lower rate during the initial period of recoveryNote (Hou et al., 2020). Again, movement into employment during the early recovery was lowest among recently immigrated women, lower than for Canadian-born women. This difference was driven by differential employment growth between recent immigrant and Canadian-born women within industrial sectors (notably accommodation and food services) and low-wage jobs.

Summary

This paper documents the labour market outcomes of immigrants relative to the Canadian born during the past three recessions, which were different in their severity and duration. The early 1990s recession was the most severe, with employment at below pre-recession levels for over four years. That of 2008/2009 was much less severe and employment effects lasted just over two years. In both recessions, it was the good-producing sector that was hit the hardest, notably manufacturing and construction. As a result, men, younger workers, the less educated, and workers with low seniority were impacted the most. The COVID-19 downturn was very different, as it was the result of a government-induced shutdown to curb the pandemic. Employment loss was swift and significant, but short lived relative to the earlier two recessions. The services sector was affected most severely, notably food and accommodation services and retail trade. By consequence, low-wage workers carried the burden of the decline, along with the less educated, and young women.

The more severe early 1990s recession had a much greater negative differential impact on recent immigrants than did that of 2008/2009 or of COVID-19. The 2008/2009 recession had little differential effect between recent immigrants and the Canadian born on employment rates and earnings. An earlier study did document a somewhat greater rise in unemployment rate among recent immigrants (Kelly et al. 2011). There was also evidence of a possible, significant scarring effect on the future earnings of immigrants that entered Canada during the early 1990s recession. There was little evidence of such an effect during the 2008/2009 recession.

At the trough of the COVID-19 downturn, female recent immigrants experienced a greater increase in unemployment rate than did their Canadian-born counterparts. This outcome was caused in part by a greater rise in the rate of transition out of employment during the downturn, which was in turn largely caused by the over-representation of recently immigrated women in lower-wage jobs with shorter tenure and in the accommodation and food services sectors. However, these differential effects were short lived. By eight months to one year into the recession, they had largely disappeared. There was little difference between male recent immigrants and their Canadian-born counterparts regarding the effect of the COVID-19 recession on employment and unemployment rates.

It is too early to tell whether the COVID-19 recession will have scarring effects on immigrant labour market outcomes. While unemployment increases were significant, they did not reach the levels observed during the early 1990s and were more short lived. On the other hand, long-duration unemployment, which may drive scarring more than short spells of unemployment, grew much faster and to higher levels during the COVID-19 recession than during two earlier recessions.Note

References

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