Using the 1981Using the , 1986Using the , 1991Using the , 1996Using the , and 2001 Canadian Censuses, we explore causes of the deterioration in entry earnings of successive cohorts of immigrant men and women. Roughly one-third of the deterioration is explained by compositional shifts in language ability and region of birth. We find no evidence of a decline in the returns to foreign education for either immigrant men or immigrant women but a definite deterioration in the returns to foreign labour market experience, most strongly among men from non-traditional source countries. We can explain roughly two-thirds of the male and one-half of the female deterioration without any reference to entry labour market conditions. When we also account for entry conditions, our results suggest Canada's immigrants of the late 1990s would otherwise have enjoyed entry earnings equal to or higher than their counterparts of the 1960s.

Using data drawn from the Canadian, Mexican, and U.S. censuses, we find a numerically comparable and statistically significant inverse relation between immigrant‐induced shifts in labor supply and wages in each of the three countries: A 10% labor supply shift is associated with a 3%–4% opposite‐signed change in wages. Despite the similarity in the wage response, the impact of migration on the wage structure differs significantly across countries. International migration narrowed wage inequality in Canada; increased it in the United States; and reduced the relative wage of workers at the bottom of the skill distribution in Mexico. (JEL: J31, J61)

Although economic theory predicts an inverse relation between relative wages and immigration-induced supply shifts, it has been difficult to document such effects. The weak evidence may be partly due to sampling error in a commonly used measure of the supply shift, the immigrant share of the workforce. After controlling for permanent factors that determine wages in specific labor markets, little variation remains in the immigrant share. We find significant sampling error in this measure of supply shifts in Canadian and U.S. Census data. Correcting for the resulting attenuation bias can substantially increase existing estimates of the wage impact of immigration.

Immigration, Point system, Visa category, J61, J68,

No abstract