DECLINE OF IMMIGRANTS DUE TO CHANGING CANADIAN LABOR MARKET

Decline of immigrants due to changing Canadian labor market

Decline of immigrants due to changing Canadian labor market

Introduction

The deteriorating labor market performance of recent immigrants in Canada has been documented in many studies through the 1980s as well as 1990s. This decline has continued despite the enhanced macro-economic situations in the late 1990s and early 2000s, and rising educational attainment of immigrants (Picot, Hou, and Coulombe 2008).

A number of papers have documented the causes of the decline in entry earnings among immigrants. There are many well-known Canadian studies on this topic. There is no consensus in the Canadian studies. Reitz finds that about half of the decline in entry earnings of immigrant men between the late 1970s and mid-1990s was attributable to rising levels of education of the Canadian born, the increased importance of education in Canadian labor markets, and the increased difficulty of immigrants in gaining market recognition of their educational qualification. While Reitz emphasizes the importance of education-related factors, Aydemir and Skuterud (2005) and Green and Worswick (2004a) find that there has not been an increased devaluation of foreign education. Rather, they suggest that changing immigrant composition, a new labor market entrant effect and falling returns to foreign experience together explain all or most of the decline in entry earnings. However, these two latter studies differ regarding the role played by declining returns to foreign work experience. Green and Worswick (2010) show that declining returns to foreign experience tend to reduce immigrant men's entry earnings in the 1980s, but contribute more than other factors to the expansion of the entry earnings gap in the 1990s. In comparison, Aydemir and Skuterud (2005) indicate that the same factor was responsible for about one-third of the decline in entry earnings from the late 1960s to the late 1990s.

There are at least three possible reasons why these studies reached somewhat different conclusions. First, various explanatory factors might have played a different role during different periods. This possibility was not carefully explored in previous studies. Second, the data sources used in the studies differed; some used census data, others the Immigration Data Base which links immigrant landing records with taxation records. Third, methodological differences might contribute to the variation in the results. Notably, the

There are some other possible reasons for inconsistent results. For instance, the use of different earnings measures (weekly vs. annual earnings) and sample restriction (all earners vs. full-time full year workers), could potentially lead to different trends in the earnings gap between recent immigrants and the Canadian born if the two groups experienced divergent trends in working time (see footnote 3 for a discussion of results based on different earnings measures and restriction criteria in our study). The definition of immigrant entry earnings (based on the first year after landing vs. the first two or five years) and the choice of the comparison group (all working age Canadian born vs. Canadian born new labour market entrants) could also ...