The deteriorating economic welfare of immigrants and possible causes
by Garnett Picot
Business and Labour Market Analysis Division
Analytical Studies Branch research paper series, No. 222
Context
Host countries such as Canada look to the skills and initiative of
immigrants to promote economic growth. Immigrants, in turn, look to
the host country for opportunities to exploit their skills and abilities.
These considerations are particularly important when immigrants are
highly educated. Host countries are increasingly seeking highly educated
immigrants to drive economic growth in the 'knowledge-based'
economy, and immigrants look to exploit their higher education levels
to achieve high economic standards of living.
If immigrants are unable to convert their training to productive use,
the expectations of both the host country and the arriving immigrants
remain unmet. Immigrant contributions to the host country, which are
central to the economic justification for relatively open immigration
policies, may not be fully realized. In light of these concerns, there
is considerable concern regarding the deteriorating economic outcomes
among recent immigrants over the past two decades,
Objectives
This paper reviews the increase in the earnings gap between immigrants
and Canadian-born over the past two decades, and the current explanations
of this labour market deterioration among recent immigrants in particular.
The paper also outlines the rising gap in low-income rates between immigrants
and non-immigrants. This paper also reviews the explanations discussed
in the literature for this economic deterioration.
Findings
The paper concludes that the earnings gap at entry has increased for
immigrants entering Canada during the 1990s, as compared to those of
the 1970s. The gap in the low-income rates has been increasing. The
rate of low income has been rising among immigrants (particularly recent
immigrants) during the 1990s, while falling among the Canadian-born.
The rise in low-income rates among immigrants was widespread, affecting
immigrants in all education groups, age groups and from most source
countries (except the 'traditional source regions').
Immigrants with a university degrees were not excluded from this rise
in low-income rates, in spite of the discussion regarding the rising
demand for more highly-skilled workers in Canada.
As a result of both the rising low-income rates among immigrants and
their increasing share if the population, in Canada’s major cities
virtually all of the increase on the city low-income rates during the
1990s was concentrated among the immigrant population.
The change in the characteristics of immigrants appears to have accounted
fro abour one-third of the increase in the earnings gap at entry.
Decreasing economic returns to foreign work experience is another factor
that appears to play a large role, as is the declining return to years
of schooling. Numerous pther possible explanations are discussed.
Data Sources: Census 1981, 1986, 1991, 1996, 2001.
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