Economic and Social Reports
Provincial Nominee Program: Recent trends and provincial differences in earnings outcomes

Abstract

The actual earnings of provincial nominees and their relative earnings (to those of other economic immigrants) are important indicators of the ability of the Provincial Nominee Program (PNP) to meet provincial labour market needs. This paper updates national-level research on the earnings patterns of provincial nominees and, for the first time, provides provincial comparisons. The focus is on the short- and longer-run earnings of PNP principal applicants who entered Canada from 2005 to 2019. Results show that there were significant differences among provinces in the average earnings of provincial nominees. The highest earnings, both at landing and at five to six years after landing, were observed in Ontario, Alberta and British Columbia, and the lowest in the Atlantic provinces, Manitoba and Saskatchewan. A significant proportion of the observed provincial differences in earnings was related to differences in economic conditions and the background characteristics of PNP principal applicants. However, even after accounting for these factors, significant earnings differences across provinces persisted. Results also show that, among the 2005-to-2014 landing cohorts, entry earnings (one to two years after landing) were higher among provincial nominees than immigrants in the Federal Skilled Worker Program (FSWP), but the latter group had faster earnings growth and surpassed provincial nominees after five years. However, the entry earnings advantage of provincial nominees over FSWP immigrants was reversed in the 2015-to-2019 cohort, with higher entry earnings reported by FSWP immigrants than by PNP immigrants. Multivariate analysis shows that factors such as pre-landing Canadian work and study experience, educational attainment, official language ability, source region, age, and unemployment rate in the province of residence explained almost none of the reversal in entry earnings between FSWP and PNP immigrants that occurred with the 2010-to-2014 and 2015-to-2019 landing cohorts. The paper concludes with a discussion of other possible explanations for the decline in actual and relative PNP immigrant earnings, focusing on the implementation of the educational credential assessment and the Express Entry selection system.

Keywords: Provincial Nominee Program, Federal Skilled Worker Program, earnings

Authors

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

Acknowledgments

This study was conducted in collaboration with Immigration, Refugees and Citizenship Canada. The authors would like to thank Chris Hamilton and James Townsend for their advice and comments on an earlier version of this paper.

Introduction 

The Provincial Nominee Program (PNP) was initiated in almost all provinces^Note and Yukon from 1996 to 2005. The primary objectives of the PNP are (1) to promote immigrant settlement in provinces and communities outside Canada’s three largest cities and (2) to respond to the labour market needs of the provinces. The PNP has expanded rapidly since its inception. In 2019, 35% of all economic immigrants (including principal applicants and spouses and dependants) who landed in Canada came through the PNP—the largest share registered by any single economic immigrant program (Picot, Hou & Crossman, 2023).^Note

The earnings outcomes of provincial nominees are important indicators of the response of the PNP to provincial labour market needs. To this end, this article examines PNP earnings, both in the short and longer term, and draws comparisons with other economic immigrant programs. It further examines the provincial variation in earnings of PNP immigrants, a topic that has received little research attention. There are significant differences among provinces in program criteria, selection methods and economic conditions, which can result in considerable provincial variation in earnings.

Past research

Early research by Pandey and Townsend (2013) on economic principal applicants entering from 1988 to 2008 concluded that, during their first two years in Canada, provincial nominees generally had higher earnings levels than other economic immigrants. This occurred even though provincial nominees had, on average, lower educational attainment—particularly those in Manitoba. The authors speculated that this may have been partly related to the fact that provincial nominees were more likely to have had a job offer and to be working at the time of landing than other entering economic immigrants, notably those in the Federal Skilled Worker Program (FSWP). The authors also found weak evidence that earnings growth was slower among provincial nominees than among other economic immigrants.

Later work asked why provincial nominees had higher earnings than federal skilled workers during the first few years in Canada. The answer pointed primarily to the difference between programs in the share of new immigrants who were temporary foreign workers prior to landing. Importantly, following landing, former temporary foreign workers tended to economically outperform other economic immigrants who did not have pre-landing Canadian work experience (Hou, Crossman & Picot, 2020a). Pandey and Townsend (2017) showed that male temporary foreign workers had higher average initial earnings as permanent residents than other economic immigrants, controlling for background characteristics.

Hou and Bonikowska (2018) also found that economic immigrants with previous Canadian work experience (i.e., temporary foreign workers) had higher earnings in the initial years after immigration than those without. The authors found that this gap decreased substantially over time but persisted. Hou and Picot (2016) reported similar but more nuanced findings for economic immigrants. Temporary foreign workers with medium or high pre-landing earnings experienced higher earnings than those without pre-landing Canadian work experience, but this advantage did not apply to temporary foreign workers with low pre-landing earnings. Hou, Crossman and Picot (2020a) found that, between the 2000 and 2016 landing cohorts, the increase in the share of immigrants with pre-immigration Canadian earnings accounted for 94% of the increase in entry earnings. By comparison, changes in source region, education level, official language knowledge and immigration category played a minor role.

Regarding the difference in earnings between provincial nominees and federal skilled workers, Hou, Crossman and Picot (2020b) concluded that the observed initial earnings advantage of PNP over FSWP immigrants was entirely because of a higher share with medium- and high-level pre-immigration Canadian earnings among PNP immigrants (i.e., temporary foreign workers in higher-paying jobs).

Missing from earlier research is an analysis of provincial differences in the earnings of immigrants landing via the PNP. Each province designs its own programs under the PNP to meet specific provincial objectives. Hence, the details of the program vary among provinces (see Picot, Crossman, & Hou, forthcoming). This can result in significant differences among provinces in the background characteristics of provincial nominees, such as their educational attainment, age, occupation, official language skills, whether they had Canadian work or study experience prior to landing, etc. These differences can, in turn, result in some variation among provinces in the economic outcomes of provincial nominees. This article examines whether such differences explain any provincial variation in the earnings of PNP immigrants. Of course, differences among provinces in economic conditions and the demand for lower- or higher-skilled labour can also affect labour market outcomes.

Data

This study used the Longitudinal Immigration Database (IMDB), which combines the landing records and annual tax information of immigrants (Statistics Canada, 2021). Immigrants who have filed at least one tax return since 1982 are included in the database. The landing records contain immigrant characteristics at the time of landing, including education, age, admission category (e.g., economic class, family class and refugee), source country and self-reported ability to speak an official language. Tax records provide information on annual incomes and place of residence. The most recent IMDB data cover landing information up to 2021 and tax information up to 2020.

The analysis focused on principal applicants in the economic class who were aged 20 to 54 at the time of immigration and arrived in Canada from 2005 to 2019. The starting year was 2005, when the last province (Ontario) signed onto the PNP. About 98% of all economic principal applicants who arrived in the 2005-to-2019 period were aged 20 to 54 at landing. The analysis was further restricted to immigrants who filed income tax in the landing year or the year after, because these years were used to define immigrants’ initial province of residence. Initial province of residence is the province of residence at the end of the landing year for immigrants who filed an income tax return in that year, or the province of residence in the year after, for immigrants who did not file taxes in the landing year.^Note Initial province of residence was used to compare earnings outcomes across provinces. The analysis of provincial differences was restricted to principal applicants who arrived from 2010 to 2019, because the number of PNP immigrants was quite small in some provinces prior to 2010, including Ontario. The analysis of earnings included only immigrants who reported at least $500 (in 2020 constant dollars) in annual earnings in a given tax year.

Earnings differences among economic immigrants^Note

Between the 2005-to-2009 and 2015-to-2019 landing cohorts, entry earnings^Note among the employed (one to two years after landing) declined among provincial nominees, while increasing among other programs of economic immigrants, including federal skilled workers, Canadian Experience Class (CEC) immigrants and “other” economic immigrants (Table 1). Among the 2005-to-2009 and 2010-to-2014 cohorts, provincial nominees had higher entry earnings than federal skilled workers, but for the 2015-to-2019 cohort, the opposite was the case: average entry earnings among provincial nominees were $50,100 (2020 constant dollars), compared with $56,600 among federal skilled workers. Entry earnings of CEC immigrants were significantly higher, at $72,000, while those of immigrants in “other” economic programs were considerably lower, at $38,900 (Table 1).

Furthermore, the earnings growth rate following landing was much higher among federal skilled workers than provincial nominees. In both the 2005-to-2009 and 2010-to-2014 cohorts, average earnings grew by around 15% between years 1 to 2 and years 5 to 6 among provincial nominees and by 35% among federal skilled workers. Thus, for the 2010-to-2014 cohort, longer-term earnings were higher among FSWP immigrants ($61,400) than among PNP immigrants ($58,900), even though entry earnings were higher among provincial nominees. It is too early to know what the longer-term earnings differences will be among more recent cohorts, where entry earnings were already higher among federal skilled workers. CEC immigrants had significantly higher entry and longer-term earnings than other economic immigrants (Table 1). However, the earnings growth rates between years 1 to 2 and years 5 to 6 were lower for CEC immigrants than for FSWP immigrants.



Multivariate analysis

The observed earnings differences between admission programs and across landing cohorts may partly reflect differences and changes in immigrants’ sociodemographic characteristics. For instance, compared with FSWP immigrants, provincial nominees had a smaller share in the landing age group of 40 to 49, a smaller share from South Asia, a higher share from Southeast Asia, a smaller share with a graduate degree, and much higher shares with pre-immigration Canadian work and study experience (Table 2). The differences between PNP and FSWP immigrants in educational levels, age structure, and pre-landing Canadian work and study experience became larger in more recent cohorts (Table 2).



A multivariate regression analysis was used to determine whether a range of economic and demographic variables could account for differences in earnings among economic immigration programs at the national level. The outcome variable was annual earnings. The independent variables included immigrant class, landing cohort (2005-to-2009, 2010-to-2014 and 2015-to-2019 cohorts), immigrant class interacted with landing cohort,^Note initial province of residence, sex, age at landing, official language at landing, educational attainment at landing, source region, marital status, number of children, whether there was pre-landing Canadian work experience, whether there was pre-landing Canadian study experience and the annual unemployment rate in the province.^Note The details of these variables can be found in Appendix Table 1.

Models were run separately for entry earnings (during the first two years following landing) and longer-run earnings (five and six years after landing). In the case of the entry earnings models, the sample included economic principal applicants aged 20 to 54 at landing who had positive earnings in either the first or second year after landing. Data were pooled for the 2005-to-2009, 2010-to-2014 and 2015-to-2019 cohorts. The same approach was taken for the longer-run regressions, except only the 2005-to-2009 and 2010-to-2014 cohorts were used because the analysis was restricted to five to six years after landing.^Note For both the entry and longer-run analysis, two models were constructed. Model 1 included only economic immigrant programs, and the interaction between landing cohort and immigrant program. In addition to the variables in Model 1, Model 2 added the control variables outlined above. Hence, the difference in the results between Model 1 and Model 2 indicates the extent to which the control variables explain the differences among immigrant programs in the observed earnings.

Entry earnings

As noted earlier, PNP immigrant entry earnings were significantly higher than federal skilled worker earnings during the 2005-to-2009 and 2010-to-2014 cohorts. However, by the 2015-to-2019 cohort, the outcomes had reversed (tables 1 and 3). The Model 2 (Appendix Table 1) results provide the predicted values after adjusting for the effects of the explanatory (independent) variables. The explanatory variables—including pre-landing Canadian work experience, pre-landing Canadian education, language spoken at landing, source region, province, provincial unemployment rate and other variables—accounted for 26% to 60% of the difference in entry earnings between provincial nominees and CEC immigrants (Table 3).

However, sociodemographic characteristics accounted for little of the difference in entry earnings between PNP and FSWP immigrants in the 2005-to-2009 and 2015-to-2019 cohorts. In fact, after the explanatory variables were controlled for, the entry earnings advantage held by FSWP immigrants for the 2015-to-2019 cohort would be larger than the observed one.^Note This finding is noteworthy because it reverses earlier patterns seen between FSWP and PNP immigrants. Possible explanations for these earnings differences must go beyond differences in the explanatory variables mentioned above, because the effect of these factors on earnings is already controlled for in the model. A discussion of possible explanations for these differences is included in the conclusion.



Longer-term earnings

The regression models with earnings five to six years after landing are reported in Appendix Table 2. The difference between the observed and adjusted results indicates that about three-quarters of the difference between the PNP and FSWP in the 2005-to-2009 landing cohort can be accounted for by differences in the explanatory variables (Table 4). FSWP immigrants earned significantly less in the longer run than PNP immigrants, largely because they had different background characteristics. Further decomposition analysis showed that differences in the proportion who had Canadian work experience prior to landing were the major contribution. Similarly, about two-thirds of the longer-run earnings advantage held by CEC immigrants over PNP immigrants was attributable to differences in background characteristics, mostly the higher share of CEC immigrants with pre-landing Canadian work experience, their higher level of education and their higher concentration in Ontario.

The longer-run earnings of the 2010-to-2014 landing cohort were the exception, where background variables explained none of the difference in longer-run earnings between FSWP and PNP immigrants (Table 4). Among this cohort, actual earnings were higher among federal skilled workers than provincial nominees in the longer run, despite being lower in the first two years after landing. Unknown factors other than those adjusted for were largely responsible for this earnings advantage.



Provincial differences in earnings

This section addresses three questions: (1) Were there differences among provinces in the earnings of provincial nominees? (2) What was the difference in earnings between provincial nominees and federal skilled workers within the various provinces? (3) How did earnings patterns change across cohorts and years following landing in the provinces?

First, there were large differences between the provinces in both initial and longer-run PNP immigrant earnings in all landing cohorts (Table 5). For example, initial earnings among the 2015-to-2019 cohort of PNP immigrants varied from a low of $36,500 in Manitoba to a high of $59,600 in Ontario. In general, Ontario, Alberta and British Columbia had the highest entry earnings, while the Atlantic provinces, Manitoba and Saskatchewan had the lowest. Longer-term earnings among the 2010-to-2014 landing cohort displayed a similar pattern, with the same provinces registering relatively lower and higher earnings, respectively.



It may be that the earnings gaps between the provinces with higher and lower entry earnings were caused by differences in the types of provincial nominees selected. For example, if a province selects more provincial nominees with lower levels of education, with no pre-landing Canadian work or education experience and with poor official language skills, then it is likely that their earnings will be lower than earnings among PNP immigrants in provinces that tend to select fewer such immigrants. Provincial nominees in provinces with poorer economic conditions, as measured by the unemployment rate, may also experience lower earnings compared with those in other provinces. To assess whether such factors explain the differences in earnings between the lower- and higher-earnings provinces, a regression analysis was conducted, incorporating a rich set of possible explanatory variables.^Note The provincial regression results based on earnings one to two years after landing are reported in Appendix Table 3; those based on earnings five to six years after landing are reported in Appendix Table 4.

The analysis here focuses on earnings differences between provinces with lower-earning provincial nominees—the Atlantic provinces, Manitoba and Saskatchewan—and Ontario, as the representative of the provinces with higher-earning provincial nominees. Even after differences in human capital, pre-landing Canadian work and study experience, and the provincial unemployment rate were accounted for, significant earnings differences of PNP immigrants between Ontario and the Atlantic provinces, Manitoba and Saskatchewan persisted. The difference (adjusted results) in entry earnings ranged from $5,200 to $16,500^Note and, for earnings after five to six years in the province, ranged from $9,100 to $14,600,^Note depending on the province (Table 6). Put another way, the explanatory variables accounted for 6% to 55% of the observed entry earnings gap between the three lower-earnings provinces and Ontario, and 11% to 50% of the observed earnings gap after five to six years in Canada (Table 6). There are other unobserved factors beyond those included in this analysis that contributed to the earnings differences among provincial nominees by province. Observationally similar provincial nominees face different earnings levels, depending on their initial province of residence.



In addition to differences in PNP earnings across provinces, earnings differences among immigrant classes (PNP, FSWP and CEC) also varied across provinces. As at the national level, among the 2010-to-2014 cohort, PNP immigrants displayed substantially higher entryearnings than FSWP immigrants in several provinces. For example, in Ontario, Alberta and British Columbia, provincial nominees had initial earnings $12,500 to $18,000 greater than those of federal skilled workers. However, for the 2015-to-2019 cohort, the situation changed significantly in these provinces. FSWP immigrants had large increases in entry earnings between the 2010-to-2014 and 2015-to-2019 cohorts—as high as 37% in Ontario and 54% in British Columbia.^Note Over the same period, provincial nominees in all provinces had entry earnings that increased slowly, or decreased.^Note As a result, the PNP immigrant entry earnings advantage over federal skilled workers seen in the 2010-to-2014 cohort changed to a provincial nominee disadvantage in the 2015-to-2019 cohort (Table 6).

In all provinces, earnings among federal skilled workers increased faster with years following landing than did earnings among provincial nominees.^Note Hence, with increased years following immigration, federal skilled workers gained in earnings relative to provincial nominees in all provinces.

Finally, CEC immigrants held a significant earnings advantage over PNP immigrants in all provinces except Alberta, both at entry and five to six years after immigration (Table 6).

Conclusion and discussion

This paper examined short- and longer-run earnings of provincial nominee principal applicants who landed from 2005 to 2019, a period when many changes occurred that could affect earnings (e.g., the expansion of the PNP and simultaneous decline of the FSWP; the introduction and rise of the CEC; and the development of unique PNPs in the provinces, often with quite different selection criteria).

Earlier research, based on data up to around the 2015 landing cohort, established that entry earnings were higher among PNP than FSWP immigrants, but earnings of the latter group caught up to and surpassed those of the former after about five years. Other research found that differences in earnings between PNP and FSWP immigrants were largely attributable to differences in the share who had Canadian earnings prior to landing.

These patterns changed with the more recent 2015-to-2019 landing cohort of economic immigrants. The significant advantage in entry earnings (during the first and second years following landing) PNP immigrants traditionally held over those in the FSWP was reversed in the 2015-to-2019 cohort, with FSWP immigrants earning an average of $6,500 more annually than PNP immigrants, compared with $6,900 less in the 2010-to-2014 cohort (unadjusted actual results). Entry earnings increased among FSWP and CEC immigrants, while they declined among provincial nominees. The entry earnings of provincial nominees also declined relative to those of CEC immigrants. Important variables, such as pre-landing Canadian work experience, pre-landing Canadian study experience, educational attainment, official language ability, source region, age and the unemployment rate in the province of residence, could not meaningfully explain the reversal in entry earnings between FSWP and PNP immigrants that occurred with the 2010-to-2014 and 2015-to-2019 landing cohorts.

The decline in the earnings of provincial nominees relative to federal skilled workers among more recent cohorts has important implications, partly because the share of economic immigrants admitted via the PNP has increased, while the share admitted via the FSWP has declined. In 2000, the FSWP accounted for the majority (79%) of economic immigrants, but this fell to 30% by 2019. Over the same period, the PNP grew rapidly, accounting for 1% of economic immigrants in 2000 and 35% in 2019, when it was the largest single category of new economic immigrants.^Note This shift in composition, combined with the earnings trends, would tend to reduce overall average earnings among economic immigrants.

There are some other possible explanations for the fall in the PNP immigrant earnings relative advantage, beyond those that can be addressed with currently available data. One possibility relates to changes in the selection of economic immigrants. In 2013, the FSWP introduced a new requirement that applicants had to have foreign educational credentials formally evaluated through an educational credential assessment (ECA) program. The purpose of the ECA is to authenticate an applicant’s foreign credential and determine the equivalent completed Canadian educational credential (Government of Canada, 2020). Banerjee et al. (2021) showed that, among FSWP immigrants, this requirement had a significant positive effect on entry earnings, increasing the amount by 26% among women and 20% among men. The positive effects on earnings outcomes were particularly evident among economic immigrants from non-Western countries. It seems likely that the human capital of the selected FSWP immigrants, in this case educational qualifications, improved because of the ECA process, thus affecting their earnings.

The majority of economic immigrants in the 2010-to-2014 cohort would not have needed an ECA because it was introduced in May 2013 and needed some time to become fully operational. However, among the 2015-to-2019 cohort, all FSWP immigrants needed an ECA for foreign credentials, but only the 22% of PNP immigrants who went through the Express Entry (EE)^Note process required an ECA. Most provincial nominees are selected by provincial selection processes, rather than the EE system. This pattern could have resulted in increased earnings among FSWP immigrants relative to their PNP counterparts in the 2015-to-2019 cohort, because even among those with observationally comparable levels of education (e.g., a university degree), educational quality^Note was, on average, likely higher among FSWP immigrants than provincial nominees. It is likely that the introduction of the ECA and the resulting increase in educational quality could explain much of the rise in entry earnings among FSWP relative to PNP immigrants between the 2010-to-2014 and 2015-to-2019 cohorts.

The introduction of the EE system in 2015 may also have contributed to the significant increase in relative earnings among FSWP immigrants, compared with those in the PNP. Immigrants selected via the EE system had higher entry earnings than their counterparts selected through the previous points system (IRCC, 2020), and proportionately more FSWP and CEC immigrants than provincial nominees were selected via the EE system during the 2015-to-2019 period. All applicants selected through the EE must go through the ECA for foreign education, take formal tests for official language abilities and meet minimum official language requirements. Among those selected through the EE process, core Comprehensive Ranking System (CRS) scores were higher among immigrants landing via the FSWP (451 points on average over the 2015-to-2019 period) and the CEC (421) than the PNP (371).^Note This indicates that even among principal applicants who landed via the EE system, human capital levels were higher among FSWP and CEC immigrants than among provincial nominees.

It is also possible that, as the criteria for selecting FSWP and CEC immigrants are strengthened, some applicants who would not qualify for either the FSWP or the CEC may seek out the PNP as an alternative avenue to becoming a permanent resident (Thevenot, 2022). The large increase in the number of PNP immigrants may also have resulted in inferior selection regarding unobserved abilities and a reduced match between labour supply and labour market demands at the provincial level, resulting in decreased earnings.

All these factors could have contributed to the rising entry earnings among FSWP and CEC immigrants, while earnings were falling among those in the PNP.

There are other highlights of the study. Following landing, earnings rose more quickly among FSWP than PNP immigrants. Among the 2010-to-2014 cohort, the latest for which longer-run earnings could be determined, earnings after five to six years were higher among FSWP (and CEC) immigrants than among those landing via the PNP.

There were also significant differences among provinces in the average earnings of provincial nominees. The highest earnings, both at entry and at five to six years, were observed in Ontario, Alberta and British Columbia, and the lowest in the Atlantic provinces, Manitoba and Saskatchewan. Regression analysis indicated that a proportion (6% to 55%, depending on the province) of the observed differences in earnings between the higher- and lower-earnings provinces was attributable to differences among provinces in economic conditions (as measured by the unemployment rate) and the background characteristics of PNP principal applicants. However, even after accounting for these differences, significant earnings gaps persisted (ranging from $5,200 to $16,500 annually) between provincial nominees in the higher- and lower-earnings provinces. Observationally similar PNP principal applicants had higher earnings in some provinces than others because of factors other than those accounted for in this analysis.

It may be that these provincial differences among PNP immigrants simply reflected the differences in earnings observed among all workers. However, the provincial differences in PNP earnings were much larger than those among all workers (Canadian-born and permanent residents) and different from the provincial differences among federal skilled workers. Among all workers, those in Alberta and Ontario tended to have higher employment income than those in other provinces, but the provincial differences were much smaller than those observed among PNP immigrants.^Note Furthermore, additional analysis showed that FSWP immigrants in Ontario generally did not hold an advantage in entry and longer-run earnings, compared with their counterparts in other provinces (appendix tables 3 and 4).^Note The large provincial earnings differences among observationally similar immigrants appear to be unique to the PNP program.

This research showed that earnings among provincial nominees, both in absolute terms and relative to other programs, changed significantly in recent years. More recent earnings patterns likely reflect changes in the selection process for all three economic immigrant programs. The changes noted above strengthened the human capital and hence labour market outcomes among FSWP and CEC immigrants. Provincial nominees appear not to have benefited from such changes in the same ways.

Appendix

   

References

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