6 Did changing the immigrant selection rules improve economic outcomes?

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Citizenship and Immigration Canada introduced significant changes to the selection rules in 1993. The changes were very successfully implemented, and the educational attainment and economic nature of immigrants rose dramatically. Furthermore, the share of 'economic' immigrants in information technology (IT) and engineering occupations rose significantly. This occurred during the high-tech boom of the late 1990s in Canada.

But did these positive—from a labour market perspective—changes in immigrant characteristics significantly improve economic outcomes during the first few years in Canada? The Statistics Canada research focused on both chronic low income (Picot, Hou and Coulombe 2008) and earnings levels (Picot and Hou, forthcoming). The changing characteristics did little to improve chronic low-income rates or the probability of entering low income among entering immigrants.

The research suggested that this was largely because the highly educated immigrants at the bottom of the earnings distribution were unable to convert their education into higher earnings.

There are a host of possibilities as to why many highly educated entering immigrants experienced almost zero relative returns to their university education—relative to the high-school educated— and found themselves at the bottom of the earnings distribution in spite of their education. The possibilities include:

• the inability of the labour market to absorb such a large increase in the supply of highly educated workers, resulting in downward pressure on relative wages; this was certainly the case among those with IT or engineering backgrounds intending to work in the IT sector after 2000;
• potentially poorer quality education—relative to North American higher education—held by many entering immigrants from the non-traditional source regions; and
• possible language issues that prevent the higher education held by many new immigrants from having the expected positive effect on earnings; there is some evidence to support this view,⁹ and language issues may play an important role in the poor economic assimilation of the highly educated.

Further research suggested that the improved economic characteristics ofimmigrants did have a significant positive effect on the earnings of entering immigrants at the middle and top of the earnings distribution.

 

⁹ Green and Riddell, along with co-authors Ferrer (2003) and Bonikowska (2008), observed that immigrants have lower levels of literacy in English or French (the most common languages of work in Canada) than do the Canadian born. Furthermore, they found that the returns to any given level of literacy were no lower among immigrants than among the Canadian born. That is, given the levels of literacy skills observed among immigrants, they were not earning less than one would expect. These results were observed for all levels of education. These results suggested that half or more of the gap in earnings between immigrants and the Canadian born could be accounted for by differences in literacy skills in English or French. Another recent paper by Chiswick and Miller (2002) found that in the United States immigrants earned 7% more for each additional year of education if they were fluent in English, but only 1% if they were not. In other words, in the absence of English-language fluency, additional education provided little in the way of additional earnings over a less educated immigrant.