Why Indian immigrants earn higher than others in America?

Immigrants born in India outdo others in achieving economic success in the Untied States. At the same time, Pakistan-born immigrants, while trailing behind Indians, do better than the native-born Americans. While both immigrant groups originate in South Asia, huge disparities in their economic success exist in the US that needs further exploration.

The estimates reported in the 2010 American Community Survey revealed that the median salaried household income of India-born immigrants was around $94,700. In comparison, the median household income of native-born Americans was estimated at $51,750. Unlike the Pakistan-born immigrants in Canada, who lagged behind others in economic prosperity, Pakistanis in America are relatively thriving where the median household income of Pakistan-born immigrants is 18% higher than that of the native-born Americans.

The American Community Survey for 2010 (latest data available from the US Census Bureau) reveal that amongst South Asians living in the US, India-born immigrants are far ahead of Pakistanis, Bangladeshis, and Afghanis. Even when compared with immigrants from Egypt, a country known for supplying highly educated immigrants to the US, Indians report exceptionally higher indicators of economic progress.

Source: American Community Survey, 2010

Indian-born immigrants also reported one of the lowest poverty rates at 4%. Afghanistan-born immigrants reported the highest poverty rate where one in five Afghan immigrants was deemed below the poverty line in the US. While Pakistan-born immigrants reported higher median household incomes than the native-born Americans, surprisingly 14% of the Pakistan-born immigrants were below the poverty line compared to only 9.4% of the native-born Americans.

Another indicator of financial distress amongst households in North America is the percentage of household income spent on gross rent. Households spending 30 percent or more of household income on rent are considered financially distressed. Amongst households who live in rental units, 57% of the immigrants from Pakistan, Bangladesh, and Egypt spent more than 30% of the household income on rent compared to only 24% of immigrants from India.

Source: American Community Survey, 2010

These poverty statistics raise several questions. For instance, despite having similar South Asian heritage, Pakistan-born immigrants report a 2.4-times higher rate of poverty than their Indian counterparts. Furthermore, poverty among younger cohorts (18 years old or younger) is even worse amongst immigrants from Pakistan than from India. At the same time almost 50% of under-18 Afghan immigrants are reportedly below the poverty line in the US. These statistics necessitate the need to explore the reasons behind disparities amongst immigrants from South Asia.

I am presenting here a socio-economic comparison of South Asians in the US. I have restricted the reporting to immigrants from India, Pakistan, Bangladesh, and Afghanistan. This is done because India, Pakistan, Bangladesh, and to some extent Afghanistan have more in common in culture and recent history than other countries in South Asia. I have thrown in Egypt for good measure to serve as a control for immigrants from another Muslim country with a different cultural background.

The purpose of this comparative review is to determine what are the reasons behind the success of India-born immigrants in the US. Could it be that the immigrants from India had luck on their side, or could it be that Indian immigrants possessed the necessary ingredients to succeed in the highly competitive labour market in the United States. More importantly, one needs to explore why immigrants from Pakistan and Bangladesh lag behind those from India in achieving the same levels of economic success.

The immigrant wage gaps have been a focus of several studies in the past. A whole host of theories have been forwarded to explain why such gaps exist. For instance, Nielsen and others (2001) suggest that such gaps exist because of lack of adequate qualifications and assimilation of immigrants in the mainstream. They believe that a “large fraction of that gap would disappear if only immigrants could find employment and thus accumulate work experience.” Aldashev and others (2008) found that the immigrant wage gap in Germany was lower for those who studied in Germany suggesting that improving education in Germany improves immigrants’ income prospects.

Sizing the South Asians

With approximately 1.8 million individuals, India- born immigrants form the largest cohort amongst South Asians in the US. The American Community Survey (ACS) in 2010 estimated Pakistan-born immigrants at 300,000, Bangladesh-born immigrants at 153,000, and Afghanistan-born immigrants at 60,000. Egypt-born immigrants totalled 133,000. Immigrants from India were approximately six-times the size of Pakistan-born immigrants. The relatively large size of Indian immigrants leads to larger social networks, which help with searching for better employment prospects.

Despite their large size, most India-born immigrants in the US are recent arrivals. Whereas 47% of the India-born immigrants arrived in the US after 2000, only 36% of the Pakistan-born immigrants arrived after 2000. This suggests that the economic success of immigrants from India is driven by the recent arrivals. Relatively speaking, immigrants from Afghanistan have enjoyed the longest tenure in the US of all South Asian countries discussed here. Notice that while 42% of immigrants from Afghanistan arrived in the US before 1980, only 25% of the Indian immigrants accomplished the same.

Source: American Community Survey, 2010

Pakistanis have larger families

With 4.3 persons per households, immigrants from Pakistan and Afghanistan reported significantly larger family sizes. In comparison, the native-born population reported a household size of 2.6 persons whereas the size of India-born immigrant households was around 3.5 persons. The difference between immigrants from India and other South Asians is more pronounced when one looks at the per capita earnings. Owing to their smaller household size, immigrants from India reported significantly higher per capita incomes than the rest. For instance, Bangladesh-born immigrants reported 50% less in median per capita income than those from India. And while immigrants from Pakistan reported higher household incomes than the immigrants from Egypt, the larger household size of Pakistan-born immigrants brought their per capita incomes lower than that of Egyptians.

Larger household size results in overcrowding, especially amongst low-income households, who often live in rental units. The average household size of rental households from Pakistan was found to be 33% larger than the same from immigrants from India. 15% of households from Pakistan were found to have more than one occupant on average per room compared to only 6% of those from India.

Women in the Labour Force

A key source of distinction between the immigrants from India and other South Asians is the higher participation of Indian women in the labour force. A much higher integration of women in the labour force is one of the reasons why immigrants from India have fared much better than others in the United States. Consider that only 42% of the women from Pakistan were active in the labour force in the US compared to 57% women from India. In fact women from Pakistan reported the lowest participation in the labour force in the US falling behind women from Egypt, Afghanistan , and Bangladesh.

Education Matters the Most

It should come as no surprise that immigrants from India are one of the most educated cohort in the United States. Almost 42% of immigrants from India over the age of 25 reported having a graduate (Masters) or a professional degree. In comparison, only 10% of the native-born adults reported having a graduate or professional degree. Approximately 23% of adult immigrants from Egypt and Pakistan reported having a graduate or professional degree.

The correlation between higher education attainment and higher median household incomes is explicitly presented in the graph below. India-born immigrants with professional degrees also reported significantly higher incomes than the rest. In comparison, immigrants from Afghanistan with one of the lowest incidence of professional degrees reportedly the lowest median household incomes.

Source: American Community Survey, 2010

The gender divide is again instrumental between immigrants from India and the rest. Whereas 70% of the India-born female adults reported having a Bachelors degree or higher, only 46% of adult females born in Pakistan reported the same in the US. At the same time only 28% of the native-born female adults in the US reported completing university education.

Better Education Better Careers

The education attainment levels amongst adult immigrants determine, to a large extent, their career choices. University education resulting in professional or graduate degrees allows immigrants to qualify for well-paying jobs in the US. Immigrants from India have been able to use their high-quality education to make inroads in the high-paying employment market. One is therefore hardly surprised to see that of the adult employed population, 70% immigrants from India are working in occupations focussing on management, business, science, and arts. In comparison, only 44% of immigrants from Pakistan ad 33% immigrants from Bangladesh are employed in similar occupations.

What Have We Learnt

"Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tost to me,

I lift my lamp beside the golden door!"

In 1883, Emma Lazarus asked for the tired, the poor, and the wretched refuse. India instead sent its very best to the United States. Instead of the huddled masses, graduates from Indian Institutes of Technology and Management arrived in hundreds of thousands at the American shores. These immigrants were products of a sophisticated higher education system whose foundations were laid by Pandit Nehru in early fifties.

In the rest of South Asia, especially in Pakistan and Bangladesh, education has never been a national priority. The results of such conflicting priorities are obvious. Graduates from Indian universities are outdoing others in competitive labour markets at home and abroad.

If education is not made a national priority, the gap between Indians and other South Asians will grow at home and in diaspora.

References:

Helena Skyt Nielsen & Michael Rosholm & Nina Smith & Leif Husted, 2004. "Qualifications, discrimination, or assimilation? An extended framework for analysing immigrant wage gaps," Empirical Economics, Springer, vol. 29(4), pages 855-883, December.

Alisher Aldashev & Johannes Gernandt & Stephan L. Thomsen, 2008. "The Immigrant Wage Gap in Germany," FEMM Working Papers 08019, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.

Pakistani-Canadians: Falling below the poverty line

Pakistan-born immigrants are the new face of poverty in urban Canada. The Canadian census revealed that 44% of the Pakistan-born immigrants fell below the poverty line making them the second most poverty prone group of immigrants in Canada.

While they may project an aura of opulence during their visits back home, their life in Canada however is often full of struggle and frustration. Thousands of Pakistani trained engineers, doctors, and PhDs are driving taxis or are working as security guards in large cities. In fact, one in three taxi-drivers in Canada was born in either India or Pakistan. Several others are unemployed thus becoming a burden on Canadian taxpayers.

Majority of Pakistan-born immigrants (63%) live in and around Toronto, whereas another 22% live in Montreal, Calgary, Vancouver and Edmonton.

The latest Census data for income are available for 2005, which revealed that Pakistan-born immigrants reported the second highest incidence for the low-income cut-off, a proxy for poverty line in Canada. In comparison, only 18% of India-born immigrants in Canada reported being a low-income person or belonging to a low-income economic family. Immigrants born in the United Kingdom, Portugal, Italy, and Germany reported the lowest incidence of poverty in Canada.

Source: 2006 Public Use Microdata File, Statistics Canada

Research on Canadian immigrants has shown that recent immigrants, i.e., those who have arrived in the past two years, are the ones earning significantly less than the Canadian average (Pico, Hou, and Coulombe, 2007). The authors speculated that the “downturn in the technology sector after 2000 might be a partial explanation, as the share of entering immigrants in information technology (IT) and engineering occupations rose dramatically over the 1990s.” Immigrant earnings improve over time as immigrants assimilate and develop social networks that help them broaden their job searches (Xu, 2002). However, this has happened at a much smaller rate for Pakistan-born immigrants.

Unlike in the Middle East where the Arab governments do not allow assimilation of migrant workers, the Canadian government and the society to a large extent does not create systematic barriers that may limit immigrants’ ability to succeed and assimilate in Canada. This is not to suggest that immigrants face no barriers at all in Canada. They in fact do. For instance, Pakistan-trained doctors cannot practice medicine without completing further training in Canada. The shorter duration of medical training in Pakistan necessitates the additional certification for doctors. Engineering graduates from Pakistan, however, face no such barrier because the engineering curriculum and the duration of training in Pakistan is similar to that in Canada.

Despite the opportunities (and constraints), Pakistani-Canadians did not prosper as much as immigrants from other countries did. In 2005, wages earned by Pakistan-born immigrants were on average 70% of the wages earned by those born in Canada. In comparison, wages earned by the India-born immigrants were 86% of the wages earned by Canadians. At the same time, immigrants born in America earned 20% more in wages than those born in Canada. Similarly, UK-born immigrants also reported on average higher wages than that of Canadian-born.

Source: 2006 Public Use Microdata File, Statistics Canada

Because of lower wages, Pakistan-born immigrants reported one of the lowest home-ownership rates. Only 55% of the Pakistan-born immigrants reported owning their homes. In comparison, 75% of the India-born immigrants owned their homes. At the same time, while only 12% of the India- and Philippines-born immigrants had never worked in the past, 22% of the Pakistan-born immigrants in Canada reported never being in the workforce.

The difference in wages, homeownership rates, and employment rates between immigrants from India and Pakistan extend beyond the economic spheres. For instance, Pakistani-born immigrants live in large-sized families. Whereas only 13% of India-born immigrants live in households of five persons or more, 44% of the Pakistan-born immigrants live in households with five or more people. Given the lower wages, high unemployment rates, and rental units, Pakistan-born immigrants experience severe crowding at homes where number of residents per room is perhaps the highest owing to the large family sizes. Furthermore, larger family size of Pakistan-born immigrants does not necessarily result in higher family income than India-born immigrants, as is evident from the graph below.

Source: 2006 Public Use Microdata File, Statistics Canada

Given similar cultural endowments, education, and language skills, it is important to explore why Pakistan-born immigrants in Canada have lagged behind their Indian counterparts. The Indian diaspora is much larger in size and has been established in Canada for over a longer period, which has allowed immigrants from India to benefit from the social networks required to establish oneself in employment markets.

While immigrants from Pakistan lack the social networks necessary for success with employment, I would also argue that they suffer from a self-imposed identity crisis. After arriving from Pakistan, many male immigrants feel threatened by the Canadian liberal values, which empower their children and women. Suddenly the head of the household cannot dictate the way he did in Pakistan. Instead of embracing the change that empowers their families, several male immigrants end up in a hostile standoff with their families that sometimes lasts for decades. At the same time, religious leaders, which are almost always imported from back home to serve in mosques in Canada, preach orthodoxy to the parish, further confusing the struggling males.

With turmoil at home and bleak employment prospects outside, Pakistan-born male immigrants struggle with the decision to stay in Canada or return to Pakistan. Children and wives are often shipped back to Pakistan for prolonged periods while the males continue struggling in the job market. While their children see themselves as Canadians, the Pakistan-born male immigrants spent decades figuring out how to cope with their hyphenated identity, i.e., Pakistani-Canadian.

The limited success of (mostly Asian and African) immigrants in the economic spheres and their modest assimilation in the mainstream Canadian culture has prompted the right-wing groups to launch campaigns against immigration to Canada. While opponents of immigration are mostly naïve and their recommendations to reduce immigration border on lunacy, the fact remains that huge changes in the Canadian immigration policies are already taking place. In Saskatchewan, for instance, the provincial government on May 2 has changed the law that now prohibits immigrants from sponsoring their extended family members unless they secure a “high skill” job offer before arrival.

Since 2001, Pakistan has lost the most in its share of supplying immigrants to Canada. Pakistan was the third largest source of immigrants to Canada in 2001 supplying 6.1% of the total immigrants. However, by 2010 Pakistan’s share of immigrants declined by 71%. Pakistan is no longer even in the top 10 sources of immigrants to Canada. At the same time, the Philippines experienced a 153% increase in its share of immigrants making it the biggest source of immigrants to Canada in 2010.

Source: Citizenship and Immigration Canada

While there is no shortage of applicants in Pakistan, it is hard to establish the precise reason for the declining number of immigrants. It could be that the dismal performance of Pakistan-based immigrants may have prompted the government to reduce the intake from Pakistan. It may also be true that the exponential increase in violence and militancy in Pakistan may have made the task of verifying credentials and identifying future citizens much more difficult.

Over the next 50 years Canada will need millions more immigrants. The current and expected fertility rates in Canada suggest that immigration is the only possible way of ensuring enough workers needed for economic growth and to keep solvent Canada’s security net. Pakistan-born immigrants had the chance to excel in Canada and pave the way for future generations of enterprising immigrants. Instead, Pakistan-born immigrants became the face of Canada’s urban poverty. Their dismal performance in Canada and the spread of religious fanaticism back home will most likely result in even a greater decline in immigration to Canada from Pakistan.

References:

Picot, Garnett; Hou, Feng; Coulombe, Simon, 2007. "Chronic Low Income and Low-income Dynamics Among Recent Immigrants," Analytical Studies Branch Research Paper Series 2007294e, Statistics Canada, Analytical Studies Branch.

Kuan Xu, 2002. "Converging at the Bottom of the Income Distribution? Assimilation of Immigrant Cohorts over Time," Department of Economics at Dalhousie University working papers archive, Dalhousie, Department of Economics.

Online learning in law schools

This is indeed a first: a completely online masters degree in Law. The North American schools are way behind on capitalizing the true potential of online education. There are hundreds of thousands of students waiting to enlist in Asia, Latin America, and Africa.It does not look like Canada is ready to embrace the potential ...

Law School Plans to Offer Web Courses for Master’s By TAMAR LEWIN

The law school of Washington University announced Tuesday that it would offer, entirely online, a master’s degree in United States law intended for lawyers practicing overseas, in partnership with 2tor, an education technology company.

Legal education has been slow to move to online classes, and the new master’s program is perhaps the earliest partnership between a top-tier law school and a commercial enterprise.

“We don’t know where the students are going to come from exactly, but we believe there is demand abroad for an online program with the same quality that we deliver in St. Louis, accessible to people who can’t uproot their lives to come to the United States,” said Kent D. Syverud, the dean of the law school, which currently offers students on campus a Master of Law degree, or LL.M., in United States law for foreign lawyers. “It’s not designed to prepare students for the bar exam.”

Law School Plans to Offer Web Courses for Master’s - NYTimes.com

The futile politics Osama and Islamist parties

A year after his assassination in Abbottabad, Osama bin Laden is as irrelevant today to the welfare of millions of starving and suffering Muslims as he was when alive. The same holds true for almost all Islamist political movements who are singularly concerned with enforcing their ideologies on the often unwilling Muslim populace while these movements having no plans for alleviating poverty, hunger, and disease.

Last year when I learnt of Mr. bin Laden's assassination, I headed straight to the Parliament in Islamabad to report on the mass protests that many had predicted would erupt in case of such an eventuality. I walked up and down the Constitution Avenue but did not spot a single protester. I visited the Lal Masjid, the fundamentalist hotbed in the centre of Islamabad, hoping to capture some action there. Again, there was nothing to report. After walking through the Capital for hours I realized that there may not be any mass demonstrations to protest against Mr. bin Laden's sudden demise.

In the weeks following Mr. Bin Laden's death hardly any protests were witnessed anywhere in the Muslim majority countries. Unbeknown to most political pundits (especially in the west), Mr. bin Laden had gradually become a nonentity to the ordinary Muslims who have been busy fighting a losing battle against food price inflation, violence, and hunger. Whereas the majority of Indonesians and Pakistanis held a favourable view of Mr. bin Laden during 2002-2005, his popularity declined significantly in most Muslim majority countries by 2011.

Source: Pew Global Attitudes Project

In the recent past religious (Islamist) parties active in the political arena have advocated using force to impose their ideologies on the populace and have evoked religion to mobilize the society against the ‘heretics’ within and the infidels elsewhere. Osama bin Laden followed the same approach. He evoked Islam to mobilize the Pashtun and Arab youths to fight first against the Soviet Union and later against America and its allies. His protégés, including the Afghan Taliban, followed the same ideology while brutally enforcing their puritan version of Islam where armed men entrusted themselves to hold sway over matters regarding vice and virtue. The Islamists projected public executions and flogging of men, women, and children as the ‘true’ face of Islam.

Similar to the Taliban, the Islamists, regardless of being in Pakistan or elsewhere, are almost always busy creating mass hysteria about the ‘infidels’ killing and pillaging through the Muslim lands. Hence the Islamists are found campaigning for pan-Islamic movements to raise Muslim armies for the doomsday Armageddon between the Muslims and the rest. Islamists not active in the electoral politics propagate this through sermons delivered from the pulpit whereas those active in the electoral politics propagate the same on the floor of the House.

The Islamists' political philosophy almost always is focused on first wrestling the control of governments and militaries from the ‘heretic secularists’ before the Islamists would be able to offer any relief to the populace. Their political manifestos therefore seldom list any policies about what is needed by the masses in the short run. One therefore knows a lot about where the Islamist parties, such as Jamaat-I-Islami, Jamiat-i-Ulama-e-Islam (JUI) and others stand on Kashmir, Israel, and President Obama, but one knows almost nothing about how these parties would address the immediate challenges, such as dengue fever, power shortages, poor water supply and sanitation, and generating employment opportunities for millions of unemployed youth.

For decades Mr. bin Laden lived in countries where poverty, hunger, and disease were the biggest concerns of the poor and disenfranchised. However, despite having access to millions of dollars of his own money and billions more that others would have readily donated, he did not initiate any mentionable projects to address poverty, hunger or disease in Afghanistan, Pakistan, or Yemen. He could have founded hospitals, schools, and vocational training institutes. Instead he sponsored military academies in the most deprived parts of Afghanistan and Pakistan.

If one were to look back at the communities today where Mr. bin Laden had lived in the past 25-odd years, would one see a transformed people with improved access to health and education facilities, or would one see more hunger, disease, and hardship. Had Mr. bin Laden used his celebrity to address poverty, hunger, and disease, he could have transformed the very communities, which hosted him for years.

This lack of imagination also ails most Pakistan-based Islamist parties. Consider JUI, which is an astute Islamist party that has often outsmarted non-religious parties in political manoeuvring. JUI does not have a policy for sanitation, water supply, or primary healthcare. Apart from claims that if elected JUI will fix all of the above, it offers no blueprints or hosts expert panels to debate the same. JUI's central leadership comprising the Rahman brothers could be seen active in Parliament’s standing committees for foreign affairs (Mr. Fazl-ur-Rahman is a member) and Kashmir/religious affairs (Mr. Atta-ur-Rahman is a member) thus conforming to the ideological bend of the most Islamist parties that see all threats being exogenous and the only internal concerns are reserved for vice and virtue.

Jamaat-i-Islami also champions issues that fail to address the immediate challenges faced by the poor in Pakistan. Jamaat’s recent drive against obscenity is one such example of using a red herring to demonstrate street power, command airtime, control political discourse, yet offer no relief to the masses on poor job prospects, or inadequate healthcare and education opportunities.

Jamaat is also a smart political enterprise whose leadership is intimately aware of its limited vote bank in Pakistan that is not sufficient to put the Jamaat in control of the federal government either by itself or in a coalition. The Jamaat uses this almost certain lack of a possibility of a Jamaat-led government to its advantage and spoils the governance for others by promising the world to the electorate. Jamaat's manifesto is therefore filled with promises that other parties with a shot at forming the government cannot match. Since the Jamaat knows it will never have to deliver on its promises, its electoral commitments include an unsustainably high minimum wage in a welfare state that will provide for the basic needs of all. Nowhere in Jamaat’s manifesto is any mention of how these projects, requiring hundreds of billions of dollars, will be financed.

Even the most celebrated Islamists became irrelevant to the masses soon after their death. Who can forget the hundreds of thousands of mourners at the funeral of late General Zia-ul-Haq in August 1988, which suggested to some that his legacy would last well beyond his death. While General Zia’s legacy is alive in Pakistan in the form of religious violence and intolerance, however within a couple of years after his demise his family and a few close friends were the only ones observing his death anniversary.

On the other hand, political, social, and religious reformers in the subcontinent have remained relevant to the masses even decades after their death. Zulfiqar Ali Bhutto’s final resting place in Garhi Khuda Bakhsh is always alive with visitors who shared Bhutto’s political philosophy. The mausoleum of Bulleh Shah in Kasur and Data Darbar in Lahore are evidence of lasting legacies of the reformers who have remained relevant to their followers.

A few decades from today few will remember, if at all, that on May 2, 2011, Osama bin Laden was assassinated in Abbottabad. However, most will remember the several thousand victims of religious extremists who followed in Mr. bin Laden’s footsteps.