Economic integration of immigrants to Canada: a short survey.
Hum, Derek ; Simpson, Wayne
Abstract
The relative prosperity of Canada's larger metropolitan areas
makes it tempting to believe that immigrants integrate into the economy
with relative ease, such that they enjoy a standard of living fairly
comparable to native-born Canadians. But as appealing as this belief may
be, is it true? This paper reviews the literature on the economic
integration of Canadian immigrants and suggests that differences among
immigrants--according to the circumstances and timing of their
arrival--have significant implications for their economic success. While
the evidence indicates that, on average, immigrants continue to
experience an earnings disadvantage at entry with respect to their
native born counterparts, most recent studies reject the idea these
earnings eventually converge.
Keywords: Immigrant, Earnings, Income, Integration
Resume
La prosperite relative des plus grandes aires metropolitaines au
Canada invite a croire que les immigrants s'integrent assez
facilement dans l'economie, a tel point qu'ils jouissent
d'un niveau de vie comparable a celui des Canadiens nes dans le
pays. Encore faut-il se demander si cette croyance seduisante reflete la
realite. Cet article presente une analyse documentaire relative a
l'integration economique des immigrants au Canada. Les auteurs
proposent que les differences entre les immigrants, notamment les
circonstances et le choix du moment quant a leur arrivee au pays, ont
des incidences significatives sur leur reussite economique. Alors que
les indicateurs attestent que l'immigrant moyen est moins remunere,
a son arrivee au Canada, que ses homologues nes dans le pays, la
majorite des etudes recentes rejettent la theorie selon laquelle les
salaires de ces deux groupes finissent par converger.
Mots cles: Immigrants, Remuneration, Salaire, Integration au
travail
1. Introduction
Canada is a nation of immigrants. Though deferential to its English
and French colonial heritage, Canada is now a multicultural society that
reflects the contributions of its many immigrants. Nowhere is this more
evident than in the changing cultural landscape of its cities since
Canada's metropolitan centres remain the location preference of
immigrants. Over 40% of immigrants choose Toronto as their destination,
almost 20% choose Vancouver, and more than 10% choose Montreal. These
three cities together receive more than 70% of immigrant arrivals to
Canada. The 14 large and medium urban centres accounted for almost 90%
of total annual immigrant arrivals in 1999 (Li 2003b: 147). Without
exaggeration, the evolution of urban centres and multiculturalism in
this country is the story of how immigrants have adapted in Canada.
Although the research we discuss in this paper is typically directed at
the economic integration of all immigrants to Canada, the preponderance of those immigrants are urban dwellers and the research is indirectly
about economic integration in Canadian cities. (1)
Canada is also a prosperous and developed country, with a high
living standard and steady economic growth. Not surprisingly, it is
tempting to believe that immigrants integrate into the Canadian economy
with moderate ease; that is, that immigrants to Canada do well
economically after a brief period of adjustment, provided they possess
motivation and work hard. Canada, for its welcome, is thought to be
tolerant, civil, respectful of differences, as well as generous with
economic opportunities to strangers. Canadians find this story
appealing. But how accurate is it? Do immigrants, in fact, integrate
into the wider Canadian economy with relative ease or are their
opportunities restricted? Do immigrants face a difficult initial period
of adjustment? If so, how long does it take before immigrants
"catch up" to the economic performance of comparable native
born individuals, if they catch up at all? Is it more difficult for
present-day immigrants to achieve economic success than those who
arrived in previous decades?
This essay surveys the research literature concerning the economic
integration of first-generation Canadians. By integration we
specifically mean the path by which immigrant economic performance
converges toward that of their native born counterparts. Although
reference is made occasionally to other developed countries that receive
a significant number of immigrants, we concentrate on Canadian research
findings. (2) Moreover, we focus exclusively on economic integration,
rather than sociological, cultural, or behavioural conformity. We
further restrict our scope to performance in the labour market, thereby
excluding wider economic outcomes such as capital ownership,
entrepreneurial activity, investment activity and the like. Finally, we
focus exclusively on quantitative studies and do not consider
ethnomethodological case studies of particular immigrant groups. With
these announced limitations, the next section considers the appropriate
procedure (measures and benchmarks) by which to assess economic
integration, including data issues and analytic approaches. Having
established an assessment template, the following section reviews the
published studies on Canadian economic integration. We report their
results, discuss their research method and comment on their significance
and validity. We conclude with suggestions for future research and data
developments.
2. Concepts and Issues
Rather than catalogue the many meanings of economic integration
that arise in different contexts, we simply delimit the conceptual and
operational understanding for our present purpose. Peter Li
(forthcoming) has recently deconstructed discourse in Canada concerning
immigrant integration, characterizing use of the term as "a narrow
understanding and rigid expectation that treats integration solely in
terms of the degree to which immigrants converge to the average
performance of the native-born Canadians and their normative and
behavioural standards." This is a useful point to begin. In the
operation of the labour market, the notion that immigrants should
ideally attain the same level of remuneration for their labour services
as similarly qualified native-born Canadians is not only defensible but
also thought desirable.
All individuals, whether native-born or newly arrived immigrants,
experience adjustment difficulties of one sort or another with respect
to the labour market. Problems, such as those associated with the
transition from formal training to first job, intermittent spells of
unemployment, geographical relocation, and the like, affect all
participants in the labour market. What sets apart the experience of
immigrants are additional factors such as lack of proficiency in at
least one of Canada's official languages, unfamiliarity with
cultural practices in the Canadian workplace, thin employment networks,
or lack of recognition of foreign credentials and professional
experience by employers and unions. Since Canada's immigrants are
increasingly visible minorities, the potential for discrimination is
also always present. The list of factors goes on. The adjustment
difficulties of immigrants may be temporary, erode slowly, or last a
lifetime.
Relocation to a new country on a permanent basis is a life-altering
event for adults and it would be rare if such a major labour market
disruption did not have some short-run impact. Over time, such entry
disadvantage may dissipate as immigrants learn to adjust to the Canadian
workplace, gain experience and skills, widen their circle of contacts,
and accumulate social networks and friends. Whether this process occurs
quickly, slowly, or not at all, is the crucial point, and an assessment
of economic integration as a process through time requires some explicit
benchmark. (3)
What should be the standard of comparison? There are many
possibilities. One might compare average immigrant performance to
average native-born performance, ignoring differences in education,
experience, language, urban area or size, region, period of entry into
the Canadian labour market, etc. While such exercises might be a useful
introduction, they are unlikely to be definitive unless the immigrant
and native-born populations are similar in terms of these
characteristics. Thus, the studies we review compare immigrants and the
native born after taking into account various observable characteristics
that matter in the determination of economic performance (that is,
characteristics that, if they differ among the native born, would affect
the labour market outcomes we observe) or that distinguish the immigrant
population (identifiers of immigrant status, years in Canada, or time of
arrival). We would note that, even if observable characteristics are
fully accounted for, there might be unobservable factors that matter.
Models of selective migration (e.g. Carliner 1980), for example, argue
that differences in unobservable traits, such as motivation, may also be
important in explaining immigrant integration experiences. Nonetheless,
the important point we make here is that there must be some appropriate
reference group or benchmark in order to assess when, or whether,
integration has been achieved. (4) Otherwise, improvement (or
deterioration) in the economic fortunes of immigrants may simply be the
result of economy-wide trends that affect all workers, including the
native born. Further, the notion of economic integration is
fundamentally a phenomenon that occurs through time. Whether integration
is slow or fast for a particular individual immigrant may be
conveniently calibrated by the duration of time spent in Canada before
achieving "convergence" to the benchmark.
The final conceptual element to consider is the outcome response or
performance measure to adopt when assessing economic integration. Even
granted our limited concentration on labour market outcomes, the options
are still numerous. Popular ones include labour force participation,
employment, earnings, hours worked, wage rate, human capital
accumulation, and occupational status. Our choice in this essay is a
practical one. The literature we consider has focused almost exclusively
on total individual earnings, either from paid employment only or a
combination of paid and self-employment, using large micro data sets
such as the Census, the Survey of Consumer Finance (SCF), and the
Immigration Data Base (IMDB). A few recent studies use the Survey of
Labour and Income Dynamics (SLID) and are, therefore, able to capture
more information on labour market activity, including hourly wage rates.
These panel data follow individual immigrants and native born through
time and are extremely useful for examining economic integration
matters, albeit this detail comes at the expense of a limited immigrant
sample restricted to a much shorter time frame (the 90s). In any case,
total earnings is one useful measure to compare the economic well-being
of immigrants and the native born, since earnings bear directly on the
incidence of poverty, the receipt of government transfers, consumption,
housing choice, welfare dependency, and other social issues.
Thus, our review concentrates on what has been learned about the
experiences of immigrant workers relative to comparable native-born
workers in terms of their earnings. This focus is: What initial earnings
disadvantage do immigrants face and how much of the earnings gap is
eliminated over time? Alternatively, how many years in Canada do
immigrants require to achieve earnings wage parity with comparable
native-born workers? Deceptively simple to pose, these questions are not
easy to answer because they may depend on the period of immigration
under review, the state of the Canadian economy, government policy
influences and, of course, differing research approaches and data
requirements. Nonetheless, we present a summary of research findings to
date.
3. What We Have Learned
There is now a fairly extensive literature comparing the earnings
of the foreign-and native-born in Canada using large cross-section
surveys of individuals (micro data). The authoritative review of the
research on the general phenomenon of immigrant integration (not
specific to Canada) is Borjas (1994). It sets out the basic model used
by most researchers to estimate immigrant integration profiles. We
capture the essence of this model in Figure 1, which plots a measure of
economic performance, typically earnings in the literature, on the
vertical axis and time or age on the horizontal axis. Earnings of a
comparable native-born worker are depicted by a smooth curve. (5) We
arbitrarily depict an immigrant, labeled Immig Cohort1, who enters
Canada at age 20, induced by the prospect of a "better life"
with higher earnings. (Ignore the path Immig Cohort2 for now.) After
some interruption in his/her earnings stream, the immigrant begins a
work career in Canada. Earnings at entry into the Canadian labour market
are below those of the comparable native born by an amount referred to
as the "entry effect," shown in Figure 1. While this concept
seems straightforward, it can be used to illustrate the problem of an
appropriate comparison group. Suppose that the native-born worker is
working prior to age 20. Then the earnings of the native-born worker
begin before age 20 and slope gently upward as in Figure 1. If both the
foreign- and native-born worker left school at the same age, say 18,
this comparison based on age might be appropriate. But what if foreign
experience has no value in Canada? Then the immigrant is essentially
"starting over" and it may be more appropriate to compare the
immigrant's performance to native-born labour market entrants, as
some recent studies do (e.g. Green and Worswick, 2003) or to make sure
that actual work experience is a standardizing variable (e.g. Hum and
Simpson, 2002b). (6) Of course, other important observable differences
(such as education, language skills, location, etc.) also need to be
accounted for in making the native and foreign born
"comparable."
[FIGURE 1 OMITTED]
The integration profile of immigrant earnings is depicted by the
convergence of the earnings of the immigrant worker to those of the
native born-worker after entry into Canada. As years since migration
increase, Figure 1 depicts a narrowing gap until, at age 50, the
earnings of the immigrant worker match, and eventually exceed, those of
the native born-worker. In terms of years since migration, we would say
that immigrant earnings converge to native-born earnings in 30 years,
other factors considered. Notice that we have shown the
"integration profile," the difference between the earnings of
the foreign-and native-born worker with each passing year since
migration, to be nonlinear. Immigrants catch up relatively quickly in
the early years after migration but more slowly thereafter. Several
studies find that earnings convergence follows this general pattern.
3.1 Entry Effects
Although the evidence clearly demonstrates that immigrants face an
initial earnings disadvantage compared to the native born, estimates of
the size of this entry effect vary quite widely. One early study by Meng
(1987) using the 1973 National Mobility Survey estimated that immigrants
earn 15% less than comparable native born at entry, and Borjas (1993),
using the 1971 and 1981 Canadian Censuses, estimated the entry effect to
be 18.4%. Abbott and Beach (1993) find similar entry effects of 16-20%,
using the 1973 Job Mobility Survey. But Bloom, Grenier and Gunderson
(1995), adding the 1986 Census to the 1971 and 1981 Censuses, estimate
entry effects as large as 34% for men, and Baker and Benjamin (1997)
find the entry effects for immigrant families to be 35-45% for husbands
and 28-43 % for wives, using the 1986 and 1991 Surveys of Consumer
Finance.
What can account for such a variety of results? One obvious factor
is different data sources spanning different time periods. Borjas (1985)
convincingly argues that, since the country-of-origin composition of
migrants changes over time, the productivity of migrant cohorts in the
host country cannot be taken to be constant. He shows that the
productivity of successive cohorts of migrants declined in the U.S. and,
in his later study, in Canada (Borjas, 1993). This point can be viewed
in terms of Figure 1 as labeling the immigrant earnings profile after
entry as the profile of a specific cohort of entrants, Immig Cohort1,
and arguing that a subsequent cohort of entrants, Immig Cohort2, has a
different profile involving a greater earnings deficit at entry (lower
productivity). His analysis combines a series of Census data
cross-sections in what is often termed a "quasi-panel"
analysis that allows the researcher to view different cohorts of
immigrant entrants, in addition to the same cohort (although not
necessarily the same individuals) over time. For example, Cohort1 of
entrants might be viewed in the 1971 Census and the progress of the
group revisited ten years later in the 1981 Census.
Subsequent analyses of Canadian Censuses have largely confirmed
this viewpoint. Baker and Benjamin (1994) and Bloom, Grenier and
Gunderson (1995) both find in the 1971, 1981 and 1986 Censuses that the
entry effect grew from 1970 to 1985. Grant (1999), adding the 1991
Census, finds no further deterioration between 1985 and 1990. But the
first results from the addition of the 1996 and 2001 Census are less
encouraging. Frenette and Morissette (2003) find that the entry effect
approximately doubled, from 17% in 1980 to 40% in 2000 for men and from
23% in 1980 to 44% in 2000 for women. McDonald an Worswick (1998)
provide one dissenting result. Using the SCF from 1981 to 1992 and
controlling for job tenure and the current unemployment rate, they find
no evidence of a decline in cohort quality.
Accounting for the apparent rise in the earnings disadvantage of
recent immigrants is an important issue, but no clear consensus has
emerged. One possibility is that the composition of migration has
changed over time to include a much larger proportion of non-European
and visible minority immigrants. Duleep and Regets (1992) find from the
1981 Census that the entry earnings of Chinese immigrants are 53% below
native earnings, while the entry earnings of British immigrants are 13%
above native earnings. Hum and Simpson (1999) find from the 1993 SLID an
entry effect of 37.4% for visible minority males compared to 8.7% for
other males and an entry effect of 26.4% for visible minority females
and 13.6% for other females. Schaafsma and Sweetman (2001) show that
those who immigrate at a younger age have higher age-earnings profiles
than older immigrants, particularly those over 35 years. They find
similar results for visible minority immigrants as well, suggesting that
acculturation plays an important role in determining immigrant economic
success. In fact, their results suggest that visible minority immigrants
who land before their teen years have no earnings deficit at all.
Abdurrahman and Skuterud (2003) also confirm the deteriorating entry
effect in a recent study of the last five Censuses, but they argue that
no more than one-third of the decline can be attributed to compositional
shifts in the language abilities or region of origin of recent immigrant
cohorts. They report that most of the decline appears to result from a
persistent deterioration in the returns to foreign work experience and
foreign years of schooling, and this is concentrated almost exclusively
among immigrants originating from non-traditional source countries.
But perhaps the most common explanation for growing entry effects
is that recent migrants are worse off because of deteriorating labour
market conditions for all labour market entrants. Green and Worswick
(2003) compare each cohort of immigrants to the same cohort of
native-born labour market entrants (i.e. recent graduates) in the IMDB
and SCF cross sections from 1981 to 1997. They find that as much as half
the growth in the entry effect can be explained by similar movements in
the earnings patterns of native-born new entrants. Frenette and
Morissette (2003), using the last five Censuses, confirm that much of
the change in the prospects of entering immigrants can be explained by
similarly dismal prospects for their native-born counterparts entering
the labour market. Thus, while they estimate that the entry effect rose
from 17% to 40% when all native-born workers are used as the comparison,
the entry effect rose from only 7% in 1980 to 12% in 2000 when entering
immigrants are compared only to native-born labour market entrants. This
suggests that immigrant cohort labour market outcomes may reflect
macroeconomic conditions more than individual qualities, although recent
changes in the composition of the immigrant population and recent
changes in the job prospects of new labour market entrants are difficult
to separate statistically.
3.2 Earnings Convergence
A number of Canadian studies of cross-sectional data find that
immigrant earnings eventually converge to those of their native
born-counterparts at some point in their working lifetime (e.g. Abbott
and Beach, 1993; Duleep and Regets, 1992; McDonald and Worswick, 1998;
Meng, 1987; Miller, 1992; Hum and Simpson, 1999, 2002a; Li, 2000, 2003).
Many of these studies provide a specific estimate of the length of time
it takes for the average working immigrant to achieve parity. These
range from 10 to 30 years. For example, using the Canadian National
Mobility Survey of 1973, Meng (1987) estimates that male immigrant
earnings match those of native-born men within about 14 years. Hum and
Simpson (1999) estimate from the 1993 SLID cross-section that earnings
converge within ten years for immigrant men but that it takes at least
30 years for immigrant women. Further, they find that convergence does
not occur within the lifetime of visible minority immigrant men.
While there is general consensus that immigrants face an initial
earnings disadvantage in the Canadian labour market, the issue of
whether or not immigrant earnings eventually converge to those of their
native-born counterparts is more controversial. Much of the controversy
centers on the augument from Borjas (1985) that recent cohorts of
immigrants have been less productive, which causes studies of
cross-sectional data to overestimate the degree of immigrant
integration. Consider again Figure 1, where we have depicted Immig
Cohort2 of immigrants with a greater earnings disadvantage and poorer
general prospects for earnings recovery than Immig Cohort1. For
simplicity, both cohorts enter Canada at age 20. Since cohort of arrival
for immigrants is perfectly correlated with years spent in the host
country for any cross-section of data, suppose that Cohort1 arrived ten
years earlier and has spent ten years in Canada. Researchers using a
single cross-section would compare the entry effect of Immig Cohort2 at
age 20 with the earnings of Immig Cohort1 at age 30 as shown by the
dashed line in Figure 1. This comparison would estimate a larger degree
of earnings convergence than Cohort2 actually will realize, and would
estimate faster earnings convergence than Cohort1 will ever realize as
well. (7) Borjas' suggested solution, a "quasi-panel"
consisting of a series of Census cross-sections, demonstrates that
accounting for differences among immigrant cohorts substantially
attenuates the integration effect for the U.S. and for Canada.
Borjas' initial analysis of the 1971 and 1981 Censuses implies very
slow, and statistically insignificant, integration for recent immigrant
cohorts, although he admits that these estimates remain controversial
(Borjas, 1994, 1675).
Much of the subsequent debate uses Borjas' approach with a
series of Census cross-sections. Bloom, Grenier and Gunderson (1995)
extend Borjas' approach to the 1986 Census and find very slow
integration rates for recent cohorts. Their results imply that the
earliest cohorts, up to about 1965, assimilated within 15 years but that
subsequent cohorts have not done nearly as well, and cohorts since 1971
never achieve parity with the native born in their lifetimes (Bloom,
Grenier and Gunderson, 1995, 994, Table 1). Baker and Benjamin (1994)
also use the 1971, 1981 and 1986 Censuses together and find a wide range
of integration rates, including some negative rates across cohorts. In
general, however, their results correspond to those of Borjas and Bloom,
Grenier and Gunderson. Falling entry rates for later cohorts combined
with modest or negligible integration rates mean that later cohorts are
unlikely to achieve parity with their native-born counterparts. (8) When
Grant (1999) extends the quasi-panel analysis to the 1991 Census,
however, she finds a promising reversal. Immigrants arriving in the
1980s have assimilated more quickly than previous cohorts. Grant's
estimates imply that the most recent cohort in her sample (ie.
1986-1990) is catching up at a rapid rate of about 3.5% per year in the
first five years, which will permit parity with the native born within
ten years. But Frenette and Morissette (2003), adding the 2001 Census,
find little evidence to suggest that the earnings growth of immigrants
who landed in the 1990s will be sufficient to close the large earnings
disadvantage they face at entry. In essence, they find that rates of
earnings convergence for this cohort are similar to those for earlier
cohorts, but the gap or entry effect to be overcome is growing. To recap the discussion to this point, a series of studies extending Borjas'
analysis of successive Canadian Censuses suggests that earlier cohorts
of immigrants may have readily achieved parity with their native-born
counterparts, but recent cohorts likely have not, and will not, in their
lifetimes. Moreover, they cast doubt on studies of cross-sectional data
that find that the earning of immigrants eventually converge to those of
their native-born counterparts.
Results questioning convergence of immigrant earnings are not
confined to the Census quasi-panel approach. Abbott and Beach (1993)
find evidence of slow integration for later cohorts as far back as the
early 1970s using the 1973 Job Mobility Survey. They argue that they are
able to use "age" to represent birth-year cohort, since they
have a direct measure of actual experience, whereas other studies must
rely on an indirect measure of potential experience (age minus schooling
years). Moreover, accepting the idea that cross-sectional data sets pose
inherent limitations for studies of immigrant economic integration,
since integration is fundamentally a process that takes place over time,
suggests that we need to consider data that actually follows individual
immigrant and native-born Canadians through time. Using the 1993-98 SLID
panel, Hum and Simpson (2000) show that, contrary to the assumption of
convergence, wages are not growing more quickly for immigrants than for
the native born. Their analysis does not reject the possibility that
wage growth is identical for immigrants and native born, but since wages
did not grow faster for immigrants (a necessary condition if there is to
be "catch up" from an initial lower starting level), no
economic integration can be statistically detected. (9)
The most common explanation for the lack of integration of recent
cohorts has been deteriorating labour market conditions, especially at
the beginning of the 1990s. McDonald and Worswick (1998), using 1981-92
Surveys of Consumer Finance, explicitly reject the argument of declining
cohort quality and interpret slower integration among cohorts entering
around 1990 as a consequence of weaker labour market demand.
Grant's (1999) finding that the immigrant cohort entering in the
late 1980s did better than earlier cohorts, and Frenette and
Morissettes's (2003) finding that the cohort landing in the 1990s
did worse, are also consistent with macroeconomic conditions that were
stronger in the late 1980s before the downturn of the early 1990s. But
Green and Worswick (2003), extending the study of Surveys of Consumer
Finance to 1997, find that this can only be part of the story. While
earnings for native-born labour market entrants improved in the 1990s,
earnings for entering immigrants continued to decline. And Frenette and
Morissette's (2003) recent study including the 2001 Census finds no
evidence of improvement in the late 1990s, when labour market conditions
are improving. Will the fortunes of immigrants continue to decline
relative to their native-born counterparts? What accounts for this
discouraging pattern of outcomes? And what can be done about it? These
are important matters for ongoing research on the economic integration
of immigrants.
4. Concluding Remarks
Studies of the economic integration of immigrants have concentrated
on employment earnings for the most part. Investigations using
cross-sectional data find that immigrants face an initial earnings
disadvantage relative to comparable native-born workers but that this
negative "entry effect" erodes with time spent in the host
country and immigrants eventually "catch up" (and even
overtake) the native born. However, more careful assessments, using a
series of cross-sections or panel data, generally reject the idea that
immigrant earnings eventually converge to those of the native born.
While the issue is far from settled, as to the fact or pace of economic
integration, there is now a large body of evidence that seeks to explain
not whether immigrant earnings converge but why they do not, or at least
why recent cohorts do not.
Examinations of past research often uncover once-tentative
interpretations that have since hardened into accepted wisdom or myth.
They may also detect gaps in understanding or bring to light new data
possibilities or analytical approaches. Our survey is no exception.
Armed with this understanding, we offer several suggestions for future
research and data development, with full realization that a
meta-analysis of Canadian research has yet to appear. Therefore, we
concentrate on major themes rather than specifics.
One major theme among researchers is accounting for individual
differences among immigrants who arrive in Canada under different
circumstances and at different times. This is often expressed by
ordinary phrases as "individuals have their own life story" or
"each immigrant has an unique experience of economic
adjustment." Restated in econometric parlance, this is referred to
as "individual heterogeneity." Researchers acknowledge that
immigrants to Canada differ greatly with respect to many features,
including such factors as language, human capital, ethnic origin, urban
size and/or region, and a wide range of socio-demographical
characteristics, and typically adjust for this observed heterogeneity
when comparing immigrants and the native born. Factors such as entry
auspices, whether immigrants enter as independent immigrants, sponsored
family members or as refugees, have also been assessed to some degree
(for example, Hum and Simpson, 2002a; Wanner, 2003; Li 2003). (10) But,
since analyses of immigrants to Canada focus of necessity on the
economic performance of immigrants after they arrive in Canada, they
cannot account for the possibility that prospects of economic
integration for some immigrants may have already been softly shaped
prior to their entry in the Canadian labour market.
Those who immigrate to Canada as adults have an education and work
history that includes training, job experience, special skills as well
as institution-specific capital. All these factors affect the pace of
economic integration in Canada. Consequently, we would like to know more
about the employment circumstances of immigrants prior to their arrival
in order to gauge the impact of the career interruption occasioned by
relocation to Canada. These data, however, are unlikely to be easily
available. The varied job experiences of immigrants is just one of the
many examples of "individual heterogeneity" that bedevil
research with micro data. However, it is intuitive that this particular
heterogeneity, namely, the job history and past work experience of
immigrants, may be especially significant in affecting economic
integration. We do not know why foreign work experience appears to be so
poorly rewarded in the Canadian labour market. More detailed knowledge
about that experience might help us to understand why it is not valued.
A second dimension of "heterogeneity" is obviously the
time of arrival in Canada, since integration prospects will be much
conditioned by the performance of the economy during this period. Just
as immigrant integration experiences vary among individuals having
different socio-economic traits, so too is the possibility that even
similarly qualified immigrants experience different integration paths
depending upon their time of entry to Canada. Some understanding of this
"heterogeneity" has been achieved by combining a series of
compatible cross-sectional data sets (successive Censuses or Surveys of
Consumer Finance) to form quasi-panel data. Panel data sets, which are
ideally suited to uncovering effects that unfold over time, are now
beginning to emerge in Canada but, as yet, they are not designed to
study immigrant economic integration issues. (11)
Still, the two points raised above, under the general theme of
"individual heterogeneity," suggest major avenues for further
investigation. Future studies would be well advised to ask what aspects
of heterogeneity matter for the issue of economic integration and what
data can be developed to adequately address these questions.
Acknowledgements
We thank Peter Schnabl and Kathleen Sexsmith for excellent research
assistance and SSHRCC and the Prairie Centre of Excellence for Research
on Immigration and Integration for financial support. The authors take
sole responsibility for errors, omissions and interpretations.
Notes
(1) Warman and Worswick (in this issue) focus exclusively on
immigrant performance in cities. They show that controls for urban size
are important because of the concentration of immigrants in large urban
areas. Although most of the studies we review in this survey control for
urban size and/or region, their results suggest a lower level of
immigrant economic integration when the comparison is restricted to
urban areas than when all immigrants and all Canadian born are compared.
This implies that researchers might need to control for urban residence
in evaluating immigrant economic performance per se, not simply control
for urban residence in explaining the combined performance of immigrants
and those Canadian born.
(2) This paper forms part of an ongoing study of economic
integration of immigrants in different receiving countries. Since this
paper is confined to Canadian findings, conclusions need not apply to
immigrant integration experience in other countries.
(3) Immigrants suffer an immediate economic disadvantage vis-a-vis
comparable qualified native-born individuals upon entry to Canada. This
is referred to as an "entry effect", and there is not much
controversy on this point. All studies report a negative entry effect,
although estimates of its magnitude vary.
(4) Studies in which there is no comparison group or benchmark with
which to interpret the integration progress are not considered in this
essay since there would be no way of determining whether integration is
taking place. The requirement of a comparison group excludes most
ethnomethodological case studies from our survey.
(5) By the term "comparable," researchers intend their
analysis to compare native-born and immigrant workers who share a
variety of observed characteristics that cause earnings to differ among
the native born and are not directly related to the comparison with
immigrants. In practice, this typically means that researchers adjust
for such factors as education, experience, language, and
socio-demographic characteristics (location, ethnicity, etc.) using
multiple regression analysis. In this review, we concentrate on studies
that adjust for observable differences in this manner.
(6) Hum and Simpson show that usual measures of potential work
experience (age minus years of schooling) are poorly correlated with
actual experience for immigrants because of the disruptions of
migration. Thus, standardizing on potential experience, while perhaps
still useful, is not ideal.
(7) Note that any study that assumes a linear convergence path, or
constant rate of convergence of earnings, will overestimate the speed
and probability of convergence in the event that earnings convergence
slows as years in Canada increases. Studies that allow for slowing
convergence with years in Canada generally accept the hypothesis that it
occurs.
(8) Baker and Benjamin (1994) also demonstrate that research
results from cross-sectional data can provide a distorted view of
immigrant integration and that quasi-panel data and techniques can
produce valid estimates.
(9) Hum and Simpson (2002b) suggest two specific reasons why
convergence may be exaggerated in other studies. First, they find that
the effect of using potential experience is to exaggerate both the
disruption (the entry effect) and the recovery (the integration effect)
caused by immigration. The overall effect is to suggest more rapid
integration. Secondly, they find evidence that unobserved effects
exaggerate estimates of immigrant integration. Since intangibles, such
as motivation, typically provide an important part of the story of
immigrants, their results suggest that ignoring these effects in
immigrants and the native born provide a further misleading comparison
of actual immigrant performance.
(10) Wanner (2003) lacks a comparison group of native-born workers.
Therefore, his study should be interpreted as dealing with differential
rates of economic progress among immigrants who arrive under different
auspices. Hum and Simpson (2002a) employ the same data set of landing
records but compare it to the SLID sample, and then benchmark the
progress of various groups against the Canadian national average. Li
(2003a) also adopts average national earnings to benchmark the earnings
of immigrants. None of these studies have a proper comparison group that
fully adjusts for characteristics. Li (2003a) also adopts a linear
model, which may overstate convergence.
(11) Detailed discussion of panel data sets in Canada is not
attempted here. Most panel sets (for example, SLID) are too short in
duration compared to the length of time typically estimated to span
integration, small in terms of immigrant sample points, and
under-representative of the immigrant population that is concentrated in
large cities. A new longitudinal survey of immigrants, as well as the
IMDB (administrative files of landing records linked to Revenue Canada
data), are promising but currently lack proper comparison groups.
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