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• 11.1 The background determinants of labour force status in Canada
• 11.2 Relative impact of the location of highest postsecondary study on the labour force status of landed immigrants aged 25 to 64 - Marginal effects
• 11.3 The background determinants of employment earnings in Canada
• 11.4 Predicted relative Impact of location of highest postsecondary study on employment earnings of immigrants to Canada
• 11.5 A country-level analysis of the relative earnings incidence of location of highest postsecondary study

11.1 The background determinants of labour force status in Canada

Table A.3 reports the predicted effect of the background variables on the likelihood of being: out of the labour force; self-employed; a paid employee who is undereducated; a paid employee who is correctly matched; a paid employee who is overeducated or; a school attendee, as compared to being unemployed.

Table A.3 The background determinants of labour force status in Canada, multivariate results, 25 to 64 year-olds with a postsecondary education, 2006 - Marginal effects

In line with prior research (see, for instance, Boudarbat and Chernoff, 2010; Sweetman and McBride, 2004; to name few), our results indicate that labour force status was determined by the postsecondary field of study. In comparison with graduates from business / administration fields for instance, individuals with postsecondary fields of study other than agriculture were more likely to be out of the labour market. Self-employment was more likely to be common among people who studied visual arts, agriculture, social / behavioural sciences, mathematic / computer sciences or engineering sciences. However, people with a postsecondary education aged 25 to 64 who studied visual arts were the most likely to be self-employed. In contrast, those least likely to be self employed studied life / physical sciences or education.

Also in line with past studies (see for instance, Boudarbat and Chernoff, 2010; Boyd and Schellenberg, 2007), we find that the postsecondary field of study influenced the level of match between jobs and required qualifications: compared to graduates from business / administration, the undereducation risk was higher among graduates from education, life / physical sciences, mathematics / computer sciences and health / welfare sciences. At the same time, graduates from visual arts, agriculture, social / behavioural sciences and engineering sciences were less likely than those from business / administration fields to be classified as undereducated workers. People who studied education, social / behavioural sciences, life / physical sciences, mathematics / computer sciences, engineering sciences or health / welfare sciences were slightly more likely to occupy professional positions matching their education level compared to graduates from business / administration fields, while those who had studied visual arts, humanities or agriculture were less likely to do so.

Many other background variables determine the labour market status of individuals with a postsecondary education. Rather than being unemployed, for instance, singles were more likely to be out of the labour market or school attendees, and less likely to be self-employed, undereducated employees, correctly-matched employees or overeducated employees, compared to married individuals and people living common-law. In line with prior research (see for instance, Eissa and Liebman, 1996; Keane and Moffit, 1998), our results indicate the existence of gender-based differences in labour force status: compared to an average female with a postsecondary education aged 25 to 64, males were less likely to be out of the labour market, overeducated employees or school attendees, and more likely to be self-employed or undereducated employees.

People with a postsecondary education aged 25 to 64 who belonged to a visible minority group, those who were not primary maintainers and those who experienced health problems that reduced their level of activity inside / outside home were more likely to be out of the labour market or school attendees, and less likely to be self-employed or employed in the wage sector, relative to the unemployed. As uncovered in prior research (see for instance, Baker and Benjamin, 1994; Pendakur and Pendakur, 1998; 2002b), our estimates indicate that the mastery of at least one of Canada's official languages (i.e., English or French) increased the likelihood of securing a professional position in the Canadian wage sector.

Last but not least, we find some geographic differences in the labour market behaviour of individuals with a postsecondary education aged 25 to 64. Relative to the unemployed, for instance, those who lived in Quebec (+5%), Saskatchewan (+2%), Alberta (+3%) or British Columbia (+2%) were slightly more likely than Ontarians to be self-employed while those least likely to display this labour force status lived in Newfoundland and Labrador (-6%). The overeducation risk was slightly higher among those who lived in the Maritimes, i.e., Newfoundland and Labrador (+4%), Prince Edward Island (+5%), Nova Scotia (+5%) and New Brunswick (+5%), and slightly lower for those who lived in Quebec (-3%) or British Columbia (-3%), as compared to Ontarians.

Our results also suggest that in comparison with people with a postsecondary education aged 25 to 64 who lived in Ontario, their counterparts who lived in the Maritimes or Quebec were slightly less likely to be undereducated, while those who lived in western Canada (except British Columbia), Yukon, Northwest Territories or Nunavut were slightly more likely to be undereducated. School attendance was slightly lower among people who lived in the Maritimes, and slightly higher for those who lived in Quebec, western Canada, Northwest Territories or Nunavut compared to Ontarians. In comparison with urban residents, those who lived in rural areas were more likely to be out of the labour market or self-employed, and less likely to be employed in the wage sector or school attendees.

Summing up, the background determinants of labour force status in Canada have the expected signs and match most prior findings for Canada (see for instance Ferrer and Riddell, 2006; Finnie and Frenette, 2003; Hansen, 2006) and other market economies (for a review of international empirical evidence, see for instance, Psacharopoulos and Patrinos, 2002).

11.2 Relative impact of the location of highest postsecondary study on the labour force status of landed immigrants aged 25 to 64 — Marginal effects

Table A.4 shows the partial effect of location of study on the labour market status of immigrants with a postsecondary education and aged 25 to 64 compared with their Canadian-born counterparts. We used these multivariate results to build Charts 1.A to 1.F analyzed in Section 7.1.

To illustrate how Table A.4 works, we will use the group of people not in the labour force as an example. Our estimates show that compared with being unemployed, the average very-recent, recent and established immigrants who completed their postsecondary education in Canada were, respectively, 8% (section A; column 1; row 1), 3.3% [=(0.080-0.047)*100; (section A; columns 2-3; row 1) + (columns 2-3; section B, row 1)] and 1.4% [=(0.080-0.0667)*100; (section A; columns 2-3; row 1) + (section C; columns 2-3; row 1)] more likely to be out of the labour force than the average Canadian-born, all other things being equal.

Table A.4 Relative impact of location of highest postsecondary study on the labour force status of landed immigrants aged 25 to 64 with a postsecondary education-Marginal effects

11.3 The background determinants of employment earnings in Canada

We now turn to the analysis of background characteristics that affect employment earnings in Canada. Table A.5 reports estimates obtained without and with selectivity correction, respectively. We start by contrasting the results across the two empirical strategies used to estimate the earnings equation. We note that correcting for selection bias modifies the magnitude of many estimates. Given also that all selection terms are statistically significant at the 1% level, this Appendix will uniquely cover coefficients obtained after correcting for selection bias.

Table A.5 The background determinants of employment earnings in Canada, 25 to 64 year-olds with a postsecondary education, multivariate results

First of all, our results indicate the existence of a field of study premium on Canada's labour markets. Among all wage sector employees, for instance, graduates from business / administration fields (the reference category) enjoyed an earnings premium over graduates from fields other than engineering, especially those who studied visual arts and humanities. A similar earnings pattern is also observed when overeducated employees are considered. Concerning correctly-matched employees, people who studied business / administration earned on average substantially more than graduates from any other field of study. These findings corroborate Sweetman and McBride (2004) who showed that in Canada as of 1996, arts, literature and humanities were the lowest paying fields of study, whereas business, law and related fields had greater labour earnings. Among undereducated employees, graduates from agriculture, social sciences, engineering sciences and health / welfare sciences were the only ones with higher employment earnings than graduates from business / administration.

Differences in employment earnings are also explained by differences in working schedule and occupation. For instance, full-time employees enjoyed a substantial wage premium over their part-time counterparts. In comparison with people who worked in business, finance or administrative occupations, those employed in occupations including management, natural applied sciences and health had, on average, greater employment earnings. By contrast, those employed in recreation occupations (i.e., arts, culture or sports), occupations unique to primary industry, processing, manufacturing or utilities had lower employment earnings.

It is interesting to note that among overeducated employees, those who worked in trades, transport, equipment operator or related occupations earned, on average, less than their counterparts who worked in business, finance or administrative occupations. When correctly-matched or undereducated employed are considered, however, we notice a reverse situation: people who worked in trades, transport, equipment operator or related occupations earned, on average, more than those who were employed in business, finance or administrative occupations.

Many other background characteristics that determine employment earnings in Canada are in line with prior Canadian research and match findings for other developed economies, irrespective of the level of education-job match. For instance, employment earnings grew with age, but a decreasing at rate, suggesting that in the Canadian economy, the market price of individual skills increases significantly with labour market experience. Also, we notice that men had on average, greater earnings than women. As Table A.5 shows, differences in language skills determined employment income: people able to use at least one of Canada's official languages had greater earnings than those with poor language skills. States such as belonging to the visible minority group, experiencing health problems, not being the primary maintainer and living with children aged 0 to 2 were all associated with a substantial wage disadvantage on Canada's labour markets whereas living with children aged 2 to 5 was a state associated with a small wage advantage.

On average, employees who lived in rural areas earned less than those who resided in urban areas. Finally, our estimates show that Ontarians had greater employment earnings than individuals who lived in the Maritimes (i.e., Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick), Western Canada (i.e., Manitoba, Saskatchewan, and British Columbia), Quebec or Yukon. However, they earned, on average, less that wage sector employees who lived in Alberta or Northwest Territories. This last feature is not surprising given: (i) the importance of high paying industries such as the oil industry in Alberta and the mining industry in Northwest Territories; the strictly positive relationship between labour earnings and education level, and; (iii) the restriction of our population to prime-aged (age 25 to 64) individuals with a postsecondary certificate, degree or diploma.

Our estimates show that very recent, recent and established immigrants who completed their postsecondary education in Canada had average annual earnings that are, respectively, 23.41% [=(EXP[-0.266-0.5*(0.038)2 ]-1)*100] (section A; columns 2-3; row 1)],10.21% [=(EXP[(-0.266+0.125)-0.5*[(0.038)2+(0.044)2] ] -1)*100] (section A; columns 2 and 3; row 1) + (section B; columns 2-3; row 1)] and 2.51% [=(EXP[(-0.266+0.242)-0.5*[(0.038)2+(0.038)2] ] -1)*100] (section A; columns 2 and 3; row 1)+ (section C; columns 2-3; row 1)] lower than their Canadian-born counterparts, everything else held equal.

11.4 Predicted relative Impact of location of highest postsecondary study on employment earnings of immigrants to Canada

Table A.6 shows the effect of location of highest postsecondary study on employment earnings of immigrants, as compared with the Canadian-born. We used these multivariate results to build Charts 2.A to 2.D analyzed in the section 7.2. To illustrate how Table A.6 works, we will use the undereducated group as an example.

Table A.6 Predicted relative impact of location of highest postsecondary study on employment earnings of immigrants to Canada, 25 to 64 year-olds with a postsecondary education

To illustrate how Table A.6 works, we use undereducated employees as an example. Our estimates show that very recent, recent and established immigrants who completed their postsecondary education in Canada had average annual earnings that are, respectively, 23.41% [=(EXP[-0.266-0.5*(0.038)2 ]-1)*100] (section A; columns 2-3; row 1)],10.21% [=(EXP[(-0.266+0.125)-0.5*[(0.038)2+(0.044)2] ] -1)*100] (section A; columns 2 and 3; row 1) + (section B; columns 2-3; row 1)] and 2.51% [=(EXP[(-0.266+0.242)-0.5*[(0.038)2+(0.038)2] ] -1)*100] (section A; columns 2 and 3; row 1)+ (section C; columns 2-3; row 1)] lower than their Canadian-born counterparts, everything else held equal.

11.5 A country-level analysis of the relative earnings incidence of location of highest postsecondary study

Appendix A.7 examines the comparative earnings advantage / disadvantage related to each of the targeted countries of graduations. For sake of simplicity and space, we chose to analyze earnings estimates of all paid employees which are corrected for potential sample selection bias (see, Chart 2.D, section 7.2). These coefficients estimates also tell a very interesting story:

Canada: Very-recent immigrants with a postsecondary education and aged 25 to 64, who completed their highest studies in Canada and worked as paid employees in 2006, earned on average, 32% less than their Canadian-born counterparts. At the same time, recent immigrants who completed their postsecondary education in Canada earned on average, 19% less than the Canadian-born, whereas established immigrants who achieved their postsecondary studies in Canada experienced no earnings disadvantage on Canada's labour markets in comparison with the Canadian-born who also worked as paid employees during this time period.

The United States: Very-recent, recent and established immigrants who received their postsecondary certificate, degree or diploma from an institution located in the United States and worked in the Canadian wage sector as employees in 2006, earned on average30%, 20% and 4% less than their Canadian-born counterparts, respectively.

The United Kingdom: Very-recent and recent immigrants employed in the Canadian wage sector in 2006, who completed their postsecondary education in the United Kingdom, earned on average, 25% and 9% less than their Canadian-born counterparts, respectively. At the same time however, established immigrants with a postsecondary certificate, degree or diploma for the United Kingdom, enjoyed on average, a 6% earnings premium over their Canadian-born counterparts.

Philippines: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from the Philippines who worked as paid employees in Canada in 2006, earned on average, 42%, 22% and 12% less than their Canadian-born counterparts, respectively.

India: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from an institution located in India, who worked as paid employees in Canada in 2006, earned on average, 49%, 28% and 15% less than their Canadian-born counterparts, respectively.

China: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from China, who were paid employees in Canada in 2006 , earned on average, respectively 57%, 37% and 26% less than their Canadian-born counterparts, respectively.

Pakistan: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from Pakistan, who were paid employees in Canada in 2006, earned on average, 63%, 48% and 28% less than their Canadian-born counterparts, respectively.

Poland: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from a foreign institution located in Poland, who were employees in the Canadian wage sector in 2006, earned on average 48%, 33% and 22% less than their Canadian-born counterparts, respectively.

France: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from a foreign institution located in France who worked as paid employees in Canada in 2006, earned on average, 38%, 16% and 4% less than their Canadian-born counterparts, respectively.

South Korea: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from South Korea, who were employed in the Canadian wage sector in 2006, earned on average, 58%, 47% and 36% less than their Canadian-born counterparts, respectively.

Romania: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from a foreign institution based in Romania who worked as paid employees in Canada in 2006, earned on average, 53%, 27% and 23% less than their Canadian-born counterparts, respectively.

Hong Kong: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from a foreign institution based in the special administrative region of Hong Kong, who secured paid employment in the Canadian wage sector in 2006, earned on average, 54%, 32% and 10% less than their Canadian-born counterparts, respectively.

Russian Federation: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from a foreign institution located in the Russian federation, who worked as paid employees in Canada in 2006, earned on average, 62%, 43% and 35% less than their Canadian-born counterparts, respectively.

Germany: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from Germany, who were paid employees in Canada in 2006, earned on average, 39%, 27% and 10% less than their Canadian-born counterparts, respectively.

Iran: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from Iran, who secured paid employment in Canada in 2006, earned on average, 55%, 39% and 29% less than their Canadian-born counterparts, respectively.

Other countries: Very-recent, recent and established immigrants with a postsecondary certificate, degree or diploma from a foreign institution located in countries other than Canada, the United States, the United Kingdom, Philippines, India, China, Pakistan, Poland, France, South Korea, Romania, Hong Kong, Russian Federation, Germany and Iran, who worked as paid employees in Canada in 2006, earned on average, 49%, 35% and 15% less than their Canadian-born counterparts, respectively.