The cost of immigrants’ occupational mismatch and the effectiveness of postarrival policies in Canada

Abstract

Using the 2006 Census, we create a continuous index that quantifies the relatedness between 1375 fields of study and 520 occupations for native-born workers and use it as the benchmark reflecting the "common" matching quality in Canadian labor markets that internationally educated immigrant workers could achieve in the long run. This allows us to approximate the cost of the occupational mismatch of immigrants by estimating the change in their earnings had they been distributed identically to the native born in terms of relatedness. Although the results show a significant and persistent poor matching quality for foreign-educated immigrants, their relative underutilization cost is negligible.

From engineer to taxi driver? Language proficiency and the occupational skills of immigrants

“… See Aydede and Dar () for a study of occupational outcomes and matching quality based on field of study information from the Census. …”

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

“…While this study, which builds on a recent work of Aydede and Dar (2016), greatly benefits from the previous research outlined above, it contributes to the current understanding of the gap in returns to education by nativity in Canada through developing a new approach in which the quality of immigrants' education-job match is evaluated relative to the occupational distribution of native-born workers in labor markets both at vertical and horizontal levels. This will help us isolate the effect of occupational attainment in estimation, so that the actual return to foreign education can be assessed for immigrant workers.…”

“…The corresponding rates are 15 and 17 %, respectively, for Canadian-educated native-born university graduates. A most recent study by Aydede and Dar (2016) also points to a persistent and significantly poorer horizontal mismatch for foreign-educated immigrants in Canada: 76 % of immigrants work in jobs that are considered least related by native-born workers in their field of study. In light of this evidence, it is obvious that differential returns to formal schooling by nativity would reflect not only the variable quality of education across source countries but also systematic differences in the occupational matching for those groups in Canada.…”

“…For example, in their recent study, Aydede and Dar (2016) found that the cost of immigrants' occupational mismatch is negligible and, even if their matching quality improves to what native-born workers experience in Canada, it would not significantly reduce the wage gap between them. This evidence implies that the underlying reason for lower returns to foreign schooling and a persistent and significant occupational mismatch may not be the postarrival difficulties involving the recognition of immigrants' foreign credentials but rather the lower quality of those credentials.…”

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

“…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.…”