Chapter 1: Introduction

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The labour market success of immigrants to Canada has generated interest among scholars and practitioners since Canada has traditionally accepted international migrants from almost all parts of the world for permanent residence. During the last two decades, however, this topic has become a major public policy issue and the subject of much systematic investigation as attested to by an array of recent empirical literature (see for instance; Picot, 2008; Picot, Hou and Coulombe, 2007; Frenette and Morissette, 2003). Why is the labour market success of long-term immigrants to Canada important? Is it simply a matter of social equity or a desirable optimum from the standpoint of sustaining Canada's economic growth in the long run?

There are at least two reasons why the labour market success of immigrants to Canada is both economically and socially desirable. First, with adequate employment income, immigrants can substantially improve their living conditions, as well as those of their families. Second, given the on-going impacts of technological change and the rising importance of knowledge-based activities in almost all industrialized countries, better utilization of immigrants' skills can efficiently contribute to the sustainability of the Canadian economic growth in the long run.¹ This study contributes to the debate about the labour market conditions of highly-educated immigrants to Canada by examining the value accorded to foreign-acquired training by Canada's labour markets.

Following the seminal work by Chiswick (1978), a growing body of the empirical immigration-based research explains observed differences in how immigrants are faring in the labour markets of host countries by differences in international transferability of skills acquired via the education system in the source country (for international evidence, see for instance Chiswick and Miller (2008; 2009) for the United States; Liebig (2007) for Australia; see Chapter 2 of this report for Canadian evidence). It has been increasingly argued in the literature that since each country's school system has country-specific components, only some of which can be easily transferable in other contexts, the success of a typical internationally-trained immigrant in the host country's labour markets will be determined by the relative importance of these two components in his/her pre-immigration education. In other words, immigrants with readily transferable education will quickly succeed economically in the destination country compared to those with training that is specific to the country of origin or graduation.²

Building upon this hypothesis, this study takes advantage of information collected for the first time by the Census in 2006 on location (country) in which an individual completed his/her highest level of postsecondary education. Multivariate analysis is used to investigate whether and how the origin of educational qualifications influences the labour market success of internationally-educated immigrants in Canada. Much of the motivation for this study comes from arguments made by authors such as Ferrer and Riddell (2008) and Nekby (2002). According to Ferrer and Riddell (2008) who studied employment patterns in the Canadian economy, the average prospective employer may use information on location of study as a screening device or proxy for perceived skill levels since productivity-related information on internationally-educated immigrants is generally costly to obtain, especially as they first enter Canada's labour markets. Nekby (2002) claims that in a typical host economy with multiple source countries, the average prospective employer may more "readily recognize and accept foreign credentials from regions in close proximity to the host country, while being unsure of the value of work-related characteristics and credentials of immigrants from more geographically and culturally distant regions."

For most immigrants who choose to participate in the Canada's labour markets with foreign training, there is a greater chance that educational choices were determined by labour market dynamics outside of Canada. It could also be that for a sizeable number of them, educational systems attended are not necessarily similar to the Canadian educational system in terms of formal and informal aspects of schooling. Thus, if Canadian employers use information on educational attainment to sort prospective labour market participants by productivity level and reward them accordingly, there are some in the group of foreign-educated immigrants at the same level of educational attainment who will do well and others who will not. The difference would be determined, at least in part, by how prospective employers perceive the applicability of skills obtained via education systems in other countries in the Canadian economy. In other words, internationally-educated immigrants' abilities to successfully convert their education into employment and labour earnings after their acceptance to Canada would be determined to some extent by employers' assessment of similarities or dissimilarities between schooling systems attended abroad and schooling systems in Canada.

Further context for this empirical study is the fact that Canada's immigrant population is increasingly coming from Eastern Europe, South Asia, East Asia, West Asia and Africa, areas that until the mid 1980s were considered non-traditional sources of Canadian immigration (Picot, 2008).³ Further, permanent immigration is currently Canada's main source of population growth and recent population projections indicate that by 2031, 46% of Canadians aged 15 and over will be foreign-born or have at least one foreign-born parent, compared to 39% in 2006 (Statistics Canada, 2008; 2010).

The remainder of this report is organized as follows. Chapter 2 summarizes the findings of a review of the literature on this topic. Chapter 3 discusses the relevancy of the research and Chapter 4 presents the data used. Descriptive statistics are discussed in Chapter 5. Chapter 6 presents the methodology used in the multivariate analysis. The multivariate results are presented in Chapter 7 while a sensitivity analysis is performed in Chapter 8. Implications and shortcomings to our research as well as future research needs are discussed in Chapter 9, while Chapter 10 offers concluding remarks.

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Notes

1. It has been suggested for instance that in the host country, successful labour market integration of highly-educated long-term immigrants can alleviate the expected shortage of skilled workers in key industries and prevent wage inflation potentially detrimental to the competitiveness of the national economy (see, for instance, Kahn, 2004; Hansen, 1993). Further, a recent report by the Conference Board of Canada suggests that every one-percentage-point growth in Canada's immigration can raise the value of its imports and exports by 0.21% and 0.11% respectively, and immigration bolsters innovation and foreign direct investments in Canada (The Conference board of Canada, 2010).
2. It is also worth stressing that imperfect transferability of human capital skills (i.e., education and/or experience) across labour markets has not only been associated with differences in formal aspects of educational systems. It has alternatively been linked to barrier to entry into specific occupations and economic discrimination against immigrants (see, for instance Baker and Benjamin, 1994; Pendakur and Pendakur, 1998; 2002b).
3. From 1981 to 2001 for instance, the share of immigrants from Eastern Europe, South Asia (India, Pakistan), East Asia (China, Korea, and Japan), West Asia (Iraq, Iran, and Afghanistan) and Africa increased from 35% to 72% (Picot, 2008).