Immigrants in Canada earn less than locals

The Globe and Mail recently highlighted a study by Statistics Canada that shows that recent  immigrants earned less than equally qualified locals doing the same job. However, the study indicated that those immigrants who have spent over 10 years in Canada have been able to narrow the earnings gap. The detailed study could be downloaded by clicking HERE.

I have leafed through the study and discovered that the difference in wage is not corrected for other mitigating factors. The differences have not been tested statistically and the wage differences are not determined in a regression-type model. This is a serious limitation of the study because it does not allow us the ceteris paribus inferences.

For instance, the study has found a $2.30 difference in the hourly wage between immigrants and non-immigrants.  However, if one were to control for factors other than education, which are instrumental in determining a person's wage, i.e.  personal drive, communication abilities, familiarity with the industry and working culture, productivity, would one have observed the same wage difference as observed in tabulations reported in the study?

Irrespective of the abovementioned caveats, the study tabulates wage differences and offers interesting comparisons, and is of great value for a debate on this critical issue.

Statistics Canada reported the following:

Wage-related indicators

In 2008, the average hourly wage of a Canadian-born employee in the core working-age group of 25 to 54 was $23.72, compared with $21.44 for an immigrant worker, a difference of $2.28 an hour. A gap existed regardless of when the immigrants landed. However, it was widest, at $5.04, for immigrants who had landed within the previous five years.

The gap in wages between immigrant workers and their Canadian-born counterparts was particularly wide among those with university degrees. Immigrants aged 25 to 54 with a university degree earned $25.31 an hour on average in 2008, about $5 an hour less than their Canadian-born counterparts.

In terms of wage distribution, the proportion of immigrants earning less than $10 an hour in 2008 was 1.8 times higher than for Canadian-born workers. At the other end of the spectrum, a lower share of immigrants earned $35 or more an hour than the Canadian born.

Union coverage among immigrant employees aged 25 to 54 in 2008 was lower than the Canadian born regardless of period of landing. The share of Canadian-born employees with union coverage was nearly 1.5 times higher than for immigrants as a whole, and 1.3 times higher than for immigrants who had been in Canada for over 10 years.

Over-qualification for the job

In 2008, 42% of immigrant workers aged 25 to 54 had a higher level of education for their job than what was normally required, while 28% of Canadian-born workers were similarly over-qualified. Regardless of period of landing, immigrants had higher shares of over-qualification.

More than 1.1 million workers aged 25 to 54 who had a university degree were working in occupations whose normal requirements were at most a college education or apprenticeship. The share of immigrants with degrees who were over-qualified was 1.5 times higher than their Canadian-born counterparts.

Over-qualification was particularly prevalent among university-educated immigrants who landed within five years before the survey. Two-thirds worked in occupations that usually required at most a college education or apprenticeship.