The wealth position of immigrant families in Canada
by Xuelin Zhang
Business and Labour Market Analysis Division
Analytical Studies Branch research paper series, No. 197
Context
The economic assimilation of immigrants is a key concern for economists
and policy makers. The wealth position of immigrants is not only an
important measure of their assimilation, it also plays a key role in
the whole process of economic assimilation. But little is known about
the wealth of immigrants in Canada and elsewhere.
Objectives
This article takes a first step in addressing some key issues pertaining
to the wealth position of immigrants in Canada. Specifically, the study
estimates the wealth gap between immigrant and Canadian-born families
and identifies factors that may explain this gap. Cohort effects on
immigrant wealth is also explored.
Findings
The study confirms the existence of wealth gaps between immigrant and
Canadian-born families from the middle to the top portions of the wealth
distribution. Among married families, immigrants have higher wealth
than their native-born counterparts from the 40th to 90th percentiles
of the distribution, with the wealth gap ranging between $20,000 and
$78,000. Among single families, immigrants have higher wealth from the
55th to 95th percentiles, with the wealth gap ranging between $14,000
and $145,000. At the bottom of the distribution, however, evidence suggests
that immigrants have lower wealth, although the gap is generally below
$10,000.
Various decomposition results indicate that the age of the major income
recipient (and of the spouse for married families) as well as factors
affecting permanent income explain a significant portion of the wealth
gap in cases where immigrant families have higher wealth than the native-born.
At the bottom of the wealth distribution, however, the wealth gap cannot
be explained by the age of the major income recipient, permanent income
factors, or family size (or lone-parent status), suggesting that low-wealth
immigrant families may behave differently than low-wealth Canadian-born
families in their wealth accumulation process.
The wealth gap is also studied from a cohort perspective. Not surprisingly,
recent immigrants have lower wealth than comparable Canadian-born families,
and immigrants who arrived before 1976 have higher wealth. While immigrants
who arrived in Canada between 1976 and 1985 are widely believed to initially
have had more of an earnings disadvantage than their predecessors with
respect to the Canadian-born, this study finds that, over the upper
segment of the distribution, the wealth of this cohort is not significantly
different from that of comparable Canadian-born families. But over the
lower portion of the distribution, this cohort has lower wealth.
Data sources: Survey of Financial Security, 1999.
View
the article in the Daily about this publication.
View the full publication.
You need to use the free Adobe Reader to view PDF documents. To view (open) these files, simply click on the link. To download (save) them, right-click on the link. Note that if you are using Internet Explorer or AOL, PDF documents sometimes do not open properly. See Troubleshooting PDFs. PDF documents may not be accessible by some devices. For more information, visit the Adobe website or contact us for assistance.
