Explaining the Deteriorating Entry Earnings of Canada’s Immigrant Cohorts: 1966-2000

1. Explaining the Deteriorating Entry Earnings ofCanada’s Immigrant Cohorts: 1966-2000 Paper written by: Dr. Aydemir and Dr. Skuterud Presentation by: Curt Pollock, Marc Dales, LevonSarmazian, Jessica Lindgren and Chad Johnson

2. Introduction • Recent male cohorts face lower entry earnings • Recent immigrants faced with more difficult challenges • Policy implications • Immigration is the main source of Canada’s population growth

3. Agenda • Returns to foreign education • Marc • Returns to foreign experience • Levon • Shifts from traditional source countries • Jessica • Canada’s economic status during immigration year • Chad

4. Model Used • Breaks down experience and years of schooling into Canadian and Forgiven factors. • Uses interaction terms (Cohort, Canadian Experience) to show if immigrants who gain Canadian experience face less deterioration as time progresses.

5. Overall Findings • Found decreasing return’s to earnings • In 1999 immigrant males entry earnings were less than 1969 by 27% . • Entry earnings decrease of 22% for females. • Evidence entry earnings is increasingly decreasing • Entry earnings has continuously decreased for every additional cohort. • 61 log points less for male earnings & 63 log points less for female earnings in 1990’s as compared to 1960’s.

6. Returns to Foreign Education • Similar returns for an additional year of education • For immigrant men the return to foreign school years is 6.1 percent, slightly higher than the return to Canadian years of 5.7 percent. • For immigrant women Canadian school years raise earnings by 7.3 percent, compared to 6.8 percent for foreign years. • No evidence that return to foreign education is decreasing over additional cohorts • Therefore no decreasing returns for foreign education was found

7. Effects of Foreign Experience • Clear deterioration in the returns to foreign labour market experiences among immigrant men and women • Post 1965-1969 cohorts, foreign experience is valued less than native-born experience • Cohorts after the 1965-1969 period have lower returns to foreign experience • Shift from “Western” to “Eastern” source immigrants • Economic class to refugees

9. Language ability - A shift from English as mother tongue to foreign mother tongue • 1990-1994 immigrant cohort estimates • Declined from 34% to 30% • 1995-1999 immigrant cohort estimates • Declined from 27% to 23%

10. Region of Birth • Move from ‘traditional’ source countries • 1965-1969 immigrant cohort • 65% ‘traditional’ source countries • 13% ‘non-traditional’ source countries • 1995-1999 immigrant cohort • 14% ‘traditional’ source countries • 54% ‘non-traditional’ source countries

11. Contributing Factors • Language effect • Earnings for foreign mother tongue immigrants are 9% lower • Region effect • Earnings for immigrants from Asian regions are 14-16% lower than North American immigrants

12. Cont. • 1/3 of the decline in entry earnings can be explained by shifts in immigrant’s language abilities and their region of origin • Unable to identify underlying factors: • Language effect • Might capture real productivity differentials • Region effects • Might reflect omitted or unobservable characteristics • Direct wage effect • Correlated with the region of birth

13. Recession and Recovery • Early 1990s recession • Unemployment rates peaked 1992 and 1993 • Followed by recovery where gains made in the self employment sector

14. Effect on Immigrants • Less success because less familiar • Less social networks • Year of labour market defined as year following final year of school • Upward trend in the unemployment rate and downward trend in the native cohort effects

15. Results • Coefficients on cohort dummies did not interact with immigrant status • Suggests a pattern of deteriorating earnings across native-born labour market entry cohorts • Similar deterioration among native born women • The 1995-99 cohort effect estimate for men statistically significant at the 10% level

16. Cont. • Suggests that if not for decreasing returns in foreign experience the earnings of Canadian men most recent immigrants would be higher than equivalent immigrant men from the 1960s. • The positive cohort effects overstate or understate the earning’s potential of Canada’s most recent immigrant cohorts

17. Conclusion • No evidence exists to support a decline in the returns to foreign education • Exists a deterioration in returns to foreign labour market experience • Shift away from traditional source countries • Recent immigration cohorts would face the same entry earnings as previous cohorts

18. Questions?