Is the lower return to immigrants’ foreign schooling a postarrival problem in Canada?

Abstract

Using the 2006 Canadian Census, this paper investigates the lower return to immigrants' foreign education credentials after adjusting for their occupational matching in hosting labor markets. We develop two continuous indices that quantify the matching quality of the native-born in both horizontal (fields of study) and vertical (educational degrees) dimensions. This allows us to separate the effects of immigrants' occupational attainment and their foreign schooling quality on wage earnings by measuring immigrants' occupational match relative to that of native-born. Our findings indicate that the lack of portability in immigrants' foreign credentials may not be addressed effectively by postarrival policies as the results show that a significant and persistent poor matching quality for internationally educated immigrants cannot substantiate the lower return to their foreign education credentials. JEL Classification: J6, J15, J61

Asymmetric Information and the Discount on Foreign-Acquired Degrees in Canada

“…However, this evidence would not answer the question of whether the lower return to foreign education is due to deficiencies in foreign-qualification recognition (or accreditation in regulated occupations) in local labor markets or the nonequivalent quality of the foreign schooling. A recent study by Aydede and Dar (2017) shows that it is not the markets' lack of recognition of foreign qualifications but the nonprobability of foreign credentials that contributes to occupational mismatch and the resulting wage penalty that internationally educated immigrant workers experience in Canada. This is also consistent with our findings: while Canadian-educated immigrants with matching jobs have around a 10% discount in returns to their education relative to their nativeborn counterparts, foreign-educated immigrants who also work in matching occupations suffer from a substantially larger 35% discount.…”

“…However, data from the 2006 census show that more than 24% of these immigrants obtained their highest degree in Canada, with this ratio jumping to 66% for those coming from the Middle East in the same age group. When the measurement error due to this imputation is addressed (Fortin et al, 2016;Aydede and Dar, 2016), the evidence shows that immigrants' foreign education appears to be significantly discounted in Canada even if immigrants work in jobs that match their training in terms of the level of schooling and specialization (Aydede and Dar, 2017). Nevertheless, it is quite possible that wage differences, commonly attributed to the lower quality of foreign credentials or occupational mismatch, merely reflect lower wage offers that immigrant workers receive due to risk aversion among local firms faced with an elevated degree of asymmetric information associated with unfamiliar ethnic backgrounds.…”

An intersectional pathway penalty: Filipina immigrant women inside and outside Canada’s Live‐In Caregiver Program

“…Intersectional analysis additionally reveals the multiple and overlapping forms of disadvantage that immigrant women face in the labour market. In addition to the broader challenges faced by all immigrants such as the devaluation of foreign credentials and work experience (Aydede & Dar, 2017;Fortin et al, 2016;Li & Sweetman, 2014), intersectional analysis underscores how immigrant women often face a 'double disadvantage' or even 'triple disadvantage'-as immigrants, women and racialized minorities (Raijman & Semyonov, 1997). Immigrant women in Canada are found to have higher rates of unemployment and lower earnings than immigrant men, as well as native-born women and men, while racialized immigrant women are significantly more likely than their white counterparts to work in precarious jobs (Chui & Maheux, 2011).…”

Returns-to-education gaps between native and migrant workers: the infl uence of economic integration on their drivers. Are Active Labour Market Policies (ALMPs) an eff ective remediation tool? A case comparison: Italy, Germany, Denmark and Cyprus

“…In the USA, there is evidence that natives tend to have higher returns to education than equivalent foreign workers (Bernt & Ragan, 2002). Also in Canada, researchers contend that returns to education are lower for immigrants, even after controlling for the quality of the match between the job positions and workers qualifications (Aydede & Dar, 2017). In the EU, the mean hourly migrant pay gap has been estimated as 8.61%, out of which 14.24% remains unexplained (Amo-Agyei, 2020).…”

“…One reason that has been put forward is the lack of transferability of skills and knowledge acquired within a national educational system to another country's labor market. Some studies contend that the lack of transferability is artificially created by legal norms hindering the recognition of foreign credentials (Chapman & Iredale, 1993;Aydede & Dar, 2017). Although that could be at the root of the gap in returns to education between EU and non-EU workers, it would not explain differences between natives and EU workers since, for the latter, recognition is nearly automatic.…”