Economic integration of immigrants to Canada: a short survey.
Subject: Wages (Research)
Wages (Social aspects)
Wages (Demographic aspects)
Immigrants (Compensation and benefits)
Immigrants (Employment)
Authors: Hum, Derek
Simpson, Wayne
Pub Date: 06/22/2004
Publication: Name: Canadian Journal of Urban Research Publisher: Institute of Urban Studies Audience: Academic Format: Magazine/Journal Subject: Social sciences Copyright: COPYRIGHT 2004 Institute of Urban Studies ISSN: 1188-3774
Issue: Date: Summer, 2004 Source Volume: 13 Source Issue: 1
Topic: Event Code: 290 Public affairs; 310 Science & research; 530 Labor force information; 280 Personnel administration Computer Subject: Salary
Product: Product Code: E198450 Immigrants
Geographic: Geographic Scope: Canada Geographic Name: Canada Geographic Code: 1CANA Canada
Accession Number: 115498145
Full Text: Abstract

The relative prosperity of Canada's larger metropolitan areas makes it tempting to believe that immigrants integrate into the economy with relative ease, such that they enjoy a standard of living fairly comparable to native-born Canadians. But as appealing as this belief may be, is it true? This paper reviews the literature on the economic integration of Canadian immigrants and suggests that differences among immigrants--according to the circumstances and timing of their arrival--have significant implications for their economic success. While the evidence indicates that, on average, immigrants continue to experience an earnings disadvantage at entry with respect to their native born counterparts, most recent studies reject the idea these earnings eventually converge.

Keywords: Immigrant, Earnings, Income, Integration

Resume

La prosperite relative des plus grandes aires metropolitaines au Canada invite a croire que les immigrants s'integrent assez facilement dans l'economie, a tel point qu'ils jouissent d'un niveau de vie comparable a celui des Canadiens nes dans le pays. Encore faut-il se demander si cette croyance seduisante reflete la realite. Cet article presente une analyse documentaire relative a l'integration economique des immigrants au Canada. Les auteurs proposent que les differences entre les immigrants, notamment les circonstances et le choix du moment quant a leur arrivee au pays, ont des incidences significatives sur leur reussite economique. Alors que les indicateurs attestent que l'immigrant moyen est moins remunere, a son arrivee au Canada, que ses homologues nes dans le pays, la majorite des etudes recentes rejettent la theorie selon laquelle les salaires de ces deux groupes finissent par converger.

Mots cles: Immigrants, Remuneration, Salaire, Integration au travail

1. Introduction

Canada is a nation of immigrants. Though deferential to its English and French colonial heritage, Canada is now a multicultural society that reflects the contributions of its many immigrants. Nowhere is this more evident than in the changing cultural landscape of its cities since Canada's metropolitan centres remain the location preference of immigrants. Over 40% of immigrants choose Toronto as their destination, almost 20% choose Vancouver, and more than 10% choose Montreal. These three cities together receive more than 70% of immigrant arrivals to Canada. The 14 large and medium urban centres accounted for almost 90% of total annual immigrant arrivals in 1999 (Li 2003b: 147). Without exaggeration, the evolution of urban centres and multiculturalism in this country is the story of how immigrants have adapted in Canada. Although the research we discuss in this paper is typically directed at the economic integration of all immigrants to Canada, the preponderance of those immigrants are urban dwellers and the research is indirectly about economic integration in Canadian cities. (1)

Canada is also a prosperous and developed country, with a high living standard and steady economic growth. Not surprisingly, it is tempting to believe that immigrants integrate into the Canadian economy with moderate ease; that is, that immigrants to Canada do well economically after a brief period of adjustment, provided they possess motivation and work hard. Canada, for its welcome, is thought to be tolerant, civil, respectful of differences, as well as generous with economic opportunities to strangers. Canadians find this story appealing. But how accurate is it? Do immigrants, in fact, integrate into the wider Canadian economy with relative ease or are their opportunities restricted? Do immigrants face a difficult initial period of adjustment? If so, how long does it take before immigrants "catch up" to the economic performance of comparable native born individuals, if they catch up at all? Is it more difficult for present-day immigrants to achieve economic success than those who arrived in previous decades?

This essay surveys the research literature concerning the economic integration of first-generation Canadians. By integration we specifically mean the path by which immigrant economic performance converges toward that of their native born counterparts. Although reference is made occasionally to other developed countries that receive a significant number of immigrants, we concentrate on Canadian research findings. (2) Moreover, we focus exclusively on economic integration, rather than sociological, cultural, or behavioural conformity. We further restrict our scope to performance in the labour market, thereby excluding wider economic outcomes such as capital ownership, entrepreneurial activity, investment activity and the like. Finally, we focus exclusively on quantitative studies and do not consider ethnomethodological case studies of particular immigrant groups. With these announced limitations, the next section considers the appropriate procedure (measures and benchmarks) by which to assess economic integration, including data issues and analytic approaches. Having established an assessment template, the following section reviews the published studies on Canadian economic integration. We report their results, discuss their research method and comment on their significance and validity. We conclude with suggestions for future research and data developments.

2. Concepts and Issues

Rather than catalogue the many meanings of economic integration that arise in different contexts, we simply delimit the conceptual and operational understanding for our present purpose. Peter Li (forthcoming) has recently deconstructed discourse in Canada concerning immigrant integration, characterizing use of the term as "a narrow understanding and rigid expectation that treats integration solely in terms of the degree to which immigrants converge to the average performance of the native-born Canadians and their normative and behavioural standards." This is a useful point to begin. In the operation of the labour market, the notion that immigrants should ideally attain the same level of remuneration for their labour services as similarly qualified native-born Canadians is not only defensible but also thought desirable.

All individuals, whether native-born or newly arrived immigrants, experience adjustment difficulties of one sort or another with respect to the labour market. Problems, such as those associated with the transition from formal training to first job, intermittent spells of unemployment, geographical relocation, and the like, affect all participants in the labour market. What sets apart the experience of immigrants are additional factors such as lack of proficiency in at least one of Canada's official languages, unfamiliarity with cultural practices in the Canadian workplace, thin employment networks, or lack of recognition of foreign credentials and professional experience by employers and unions. Since Canada's immigrants are increasingly visible minorities, the potential for discrimination is also always present. The list of factors goes on. The adjustment difficulties of immigrants may be temporary, erode slowly, or last a lifetime.

Relocation to a new country on a permanent basis is a life-altering event for adults and it would be rare if such a major labour market disruption did not have some short-run impact. Over time, such entry disadvantage may dissipate as immigrants learn to adjust to the Canadian workplace, gain experience and skills, widen their circle of contacts, and accumulate social networks and friends. Whether this process occurs quickly, slowly, or not at all, is the crucial point, and an assessment of economic integration as a process through time requires some explicit benchmark. (3)

What should be the standard of comparison? There are many possibilities. One might compare average immigrant performance to average native-born performance, ignoring differences in education, experience, language, urban area or size, region, period of entry into the Canadian labour market, etc. While such exercises might be a useful introduction, they are unlikely to be definitive unless the immigrant and native-born populations are similar in terms of these characteristics. Thus, the studies we review compare immigrants and the native born after taking into account various observable characteristics that matter in the determination of economic performance (that is, characteristics that, if they differ among the native born, would affect the labour market outcomes we observe) or that distinguish the immigrant population (identifiers of immigrant status, years in Canada, or time of arrival). We would note that, even if observable characteristics are fully accounted for, there might be unobservable factors that matter. Models of selective migration (e.g. Carliner 1980), for example, argue that differences in unobservable traits, such as motivation, may also be important in explaining immigrant integration experiences. Nonetheless, the important point we make here is that there must be some appropriate reference group or benchmark in order to assess when, or whether, integration has been achieved. (4) Otherwise, improvement (or deterioration) in the economic fortunes of immigrants may simply be the result of economy-wide trends that affect all workers, including the native born. Further, the notion of economic integration is fundamentally a phenomenon that occurs through time. Whether integration is slow or fast for a particular individual immigrant may be conveniently calibrated by the duration of time spent in Canada before achieving "convergence" to the benchmark.

The final conceptual element to consider is the outcome response or performance measure to adopt when assessing economic integration. Even granted our limited concentration on labour market outcomes, the options are still numerous. Popular ones include labour force participation, employment, earnings, hours worked, wage rate, human capital accumulation, and occupational status. Our choice in this essay is a practical one. The literature we consider has focused almost exclusively on total individual earnings, either from paid employment only or a combination of paid and self-employment, using large micro data sets such as the Census, the Survey of Consumer Finance (SCF), and the Immigration Data Base (IMDB). A few recent studies use the Survey of Labour and Income Dynamics (SLID) and are, therefore, able to capture more information on labour market activity, including hourly wage rates. These panel data follow individual immigrants and native born through time and are extremely useful for examining economic integration matters, albeit this detail comes at the expense of a limited immigrant sample restricted to a much shorter time frame (the 90s). In any case, total earnings is one useful measure to compare the economic well-being of immigrants and the native born, since earnings bear directly on the incidence of poverty, the receipt of government transfers, consumption, housing choice, welfare dependency, and other social issues.

Thus, our review concentrates on what has been learned about the experiences of immigrant workers relative to comparable native-born workers in terms of their earnings. This focus is: What initial earnings disadvantage do immigrants face and how much of the earnings gap is eliminated over time? Alternatively, how many years in Canada do immigrants require to achieve earnings wage parity with comparable native-born workers? Deceptively simple to pose, these questions are not easy to answer because they may depend on the period of immigration under review, the state of the Canadian economy, government policy influences and, of course, differing research approaches and data requirements. Nonetheless, we present a summary of research findings to date.

3. What We Have Learned

There is now a fairly extensive literature comparing the earnings of the foreign-and native-born in Canada using large cross-section surveys of individuals (micro data). The authoritative review of the research on the general phenomenon of immigrant integration (not specific to Canada) is Borjas (1994). It sets out the basic model used by most researchers to estimate immigrant integration profiles. We capture the essence of this model in Figure 1, which plots a measure of economic performance, typically earnings in the literature, on the vertical axis and time or age on the horizontal axis. Earnings of a comparable native-born worker are depicted by a smooth curve. (5) We arbitrarily depict an immigrant, labeled Immig Cohort1, who enters Canada at age 20, induced by the prospect of a "better life" with higher earnings. (Ignore the path Immig Cohort2 for now.) After some interruption in his/her earnings stream, the immigrant begins a work career in Canada. Earnings at entry into the Canadian labour market are below those of the comparable native born by an amount referred to as the "entry effect," shown in Figure 1. While this concept seems straightforward, it can be used to illustrate the problem of an appropriate comparison group. Suppose that the native-born worker is working prior to age 20. Then the earnings of the native-born worker begin before age 20 and slope gently upward as in Figure 1. If both the foreign- and native-born worker left school at the same age, say 18, this comparison based on age might be appropriate. But what if foreign experience has no value in Canada? Then the immigrant is essentially "starting over" and it may be more appropriate to compare the immigrant's performance to native-born labour market entrants, as some recent studies do (e.g. Green and Worswick, 2003) or to make sure that actual work experience is a standardizing variable (e.g. Hum and Simpson, 2002b). (6) Of course, other important observable differences (such as education, language skills, location, etc.) also need to be accounted for in making the native and foreign born "comparable."

[FIGURE 1 OMITTED]

The integration profile of immigrant earnings is depicted by the convergence of the earnings of the immigrant worker to those of the native born-worker after entry into Canada. As years since migration increase, Figure 1 depicts a narrowing gap until, at age 50, the earnings of the immigrant worker match, and eventually exceed, those of the native born-worker. In terms of years since migration, we would say that immigrant earnings converge to native-born earnings in 30 years, other factors considered. Notice that we have shown the "integration profile," the difference between the earnings of the foreign-and native-born worker with each passing year since migration, to be nonlinear. Immigrants catch up relatively quickly in the early years after migration but more slowly thereafter. Several studies find that earnings convergence follows this general pattern.

3.1 Entry Effects

Although the evidence clearly demonstrates that immigrants face an initial earnings disadvantage compared to the native born, estimates of the size of this entry effect vary quite widely. One early study by Meng (1987) using the 1973 National Mobility Survey estimated that immigrants earn 15% less than comparable native born at entry, and Borjas (1993), using the 1971 and 1981 Canadian Censuses, estimated the entry effect to be 18.4%. Abbott and Beach (1993) find similar entry effects of 16-20%, using the 1973 Job Mobility Survey. But Bloom, Grenier and Gunderson (1995), adding the 1986 Census to the 1971 and 1981 Censuses, estimate entry effects as large as 34% for men, and Baker and Benjamin (1997) find the entry effects for immigrant families to be 35-45% for husbands and 28-43 % for wives, using the 1986 and 1991 Surveys of Consumer Finance.

What can account for such a variety of results? One obvious factor is different data sources spanning different time periods. Borjas (1985) convincingly argues that, since the country-of-origin composition of migrants changes over time, the productivity of migrant cohorts in the host country cannot be taken to be constant. He shows that the productivity of successive cohorts of migrants declined in the U.S. and, in his later study, in Canada (Borjas, 1993). This point can be viewed in terms of Figure 1 as labeling the immigrant earnings profile after entry as the profile of a specific cohort of entrants, Immig Cohort1, and arguing that a subsequent cohort of entrants, Immig Cohort2, has a different profile involving a greater earnings deficit at entry (lower productivity). His analysis combines a series of Census data cross-sections in what is often termed a "quasi-panel" analysis that allows the researcher to view different cohorts of immigrant entrants, in addition to the same cohort (although not necessarily the same individuals) over time. For example, Cohort1 of entrants might be viewed in the 1971 Census and the progress of the group revisited ten years later in the 1981 Census.

Subsequent analyses of Canadian Censuses have largely confirmed this viewpoint. Baker and Benjamin (1994) and Bloom, Grenier and Gunderson (1995) both find in the 1971, 1981 and 1986 Censuses that the entry effect grew from 1970 to 1985. Grant (1999), adding the 1991 Census, finds no further deterioration between 1985 and 1990. But the first results from the addition of the 1996 and 2001 Census are less encouraging. Frenette and Morissette (2003) find that the entry effect approximately doubled, from 17% in 1980 to 40% in 2000 for men and from 23% in 1980 to 44% in 2000 for women. McDonald an Worswick (1998) provide one dissenting result. Using the SCF from 1981 to 1992 and controlling for job tenure and the current unemployment rate, they find no evidence of a decline in cohort quality.

Accounting for the apparent rise in the earnings disadvantage of recent immigrants is an important issue, but no clear consensus has emerged. One possibility is that the composition of migration has changed over time to include a much larger proportion of non-European and visible minority immigrants. Duleep and Regets (1992) find from the 1981 Census that the entry earnings of Chinese immigrants are 53% below native earnings, while the entry earnings of British immigrants are 13% above native earnings. Hum and Simpson (1999) find from the 1993 SLID an entry effect of 37.4% for visible minority males compared to 8.7% for other males and an entry effect of 26.4% for visible minority females and 13.6% for other females. Schaafsma and Sweetman (2001) show that those who immigrate at a younger age have higher age-earnings profiles than older immigrants, particularly those over 35 years. They find similar results for visible minority immigrants as well, suggesting that acculturation plays an important role in determining immigrant economic success. In fact, their results suggest that visible minority immigrants who land before their teen years have no earnings deficit at all. Abdurrahman and Skuterud (2003) also confirm the deteriorating entry effect in a recent study of the last five Censuses, but they argue that no more than one-third of the decline can be attributed to compositional shifts in the language abilities or region of origin of recent immigrant cohorts. They report that most of the decline appears to result from a persistent deterioration in the returns to foreign work experience and foreign years of schooling, and this is concentrated almost exclusively among immigrants originating from non-traditional source countries.

But perhaps the most common explanation for growing entry effects is that recent migrants are worse off because of deteriorating labour market conditions for all labour market entrants. Green and Worswick (2003) compare each cohort of immigrants to the same cohort of native-born labour market entrants (i.e. recent graduates) in the IMDB and SCF cross sections from 1981 to 1997. They find that as much as half the growth in the entry effect can be explained by similar movements in the earnings patterns of native-born new entrants. Frenette and Morissette (2003), using the last five Censuses, confirm that much of the change in the prospects of entering immigrants can be explained by similarly dismal prospects for their native-born counterparts entering the labour market. Thus, while they estimate that the entry effect rose from 17% to 40% when all native-born workers are used as the comparison, the entry effect rose from only 7% in 1980 to 12% in 2000 when entering immigrants are compared only to native-born labour market entrants. This suggests that immigrant cohort labour market outcomes may reflect macroeconomic conditions more than individual qualities, although recent changes in the composition of the immigrant population and recent changes in the job prospects of new labour market entrants are difficult to separate statistically.

3.2 Earnings Convergence

A number of Canadian studies of cross-sectional data find that immigrant earnings eventually converge to those of their native born-counterparts at some point in their working lifetime (e.g. Abbott and Beach, 1993; Duleep and Regets, 1992; McDonald and Worswick, 1998; Meng, 1987; Miller, 1992; Hum and Simpson, 1999, 2002a; Li, 2000, 2003). Many of these studies provide a specific estimate of the length of time it takes for the average working immigrant to achieve parity. These range from 10 to 30 years. For example, using the Canadian National Mobility Survey of 1973, Meng (1987) estimates that male immigrant earnings match those of native-born men within about 14 years. Hum and Simpson (1999) estimate from the 1993 SLID cross-section that earnings converge within ten years for immigrant men but that it takes at least 30 years for immigrant women. Further, they find that convergence does not occur within the lifetime of visible minority immigrant men.

While there is general consensus that immigrants face an initial earnings disadvantage in the Canadian labour market, the issue of whether or not immigrant earnings eventually converge to those of their native-born counterparts is more controversial. Much of the controversy centers on the augument from Borjas (1985) that recent cohorts of immigrants have been less productive, which causes studies of cross-sectional data to overestimate the degree of immigrant integration. Consider again Figure 1, where we have depicted Immig Cohort2 of immigrants with a greater earnings disadvantage and poorer general prospects for earnings recovery than Immig Cohort1. For simplicity, both cohorts enter Canada at age 20. Since cohort of arrival for immigrants is perfectly correlated with years spent in the host country for any cross-section of data, suppose that Cohort1 arrived ten years earlier and has spent ten years in Canada. Researchers using a single cross-section would compare the entry effect of Immig Cohort2 at age 20 with the earnings of Immig Cohort1 at age 30 as shown by the dashed line in Figure 1. This comparison would estimate a larger degree of earnings convergence than Cohort2 actually will realize, and would estimate faster earnings convergence than Cohort1 will ever realize as well. (7) Borjas' suggested solution, a "quasi-panel" consisting of a series of Census cross-sections, demonstrates that accounting for differences among immigrant cohorts substantially attenuates the integration effect for the U.S. and for Canada. Borjas' initial analysis of the 1971 and 1981 Censuses implies very slow, and statistically insignificant, integration for recent immigrant cohorts, although he admits that these estimates remain controversial (Borjas, 1994, 1675).

Much of the subsequent debate uses Borjas' approach with a series of Census cross-sections. Bloom, Grenier and Gunderson (1995) extend Borjas' approach to the 1986 Census and find very slow integration rates for recent cohorts. Their results imply that the earliest cohorts, up to about 1965, assimilated within 15 years but that subsequent cohorts have not done nearly as well, and cohorts since 1971 never achieve parity with the native born in their lifetimes (Bloom, Grenier and Gunderson, 1995, 994, Table 1). Baker and Benjamin (1994) also use the 1971, 1981 and 1986 Censuses together and find a wide range of integration rates, including some negative rates across cohorts. In general, however, their results correspond to those of Borjas and Bloom, Grenier and Gunderson. Falling entry rates for later cohorts combined with modest or negligible integration rates mean that later cohorts are unlikely to achieve parity with their native-born counterparts. (8) When Grant (1999) extends the quasi-panel analysis to the 1991 Census, however, she finds a promising reversal. Immigrants arriving in the 1980s have assimilated more quickly than previous cohorts. Grant's estimates imply that the most recent cohort in her sample (ie. 1986-1990) is catching up at a rapid rate of about 3.5% per year in the first five years, which will permit parity with the native born within ten years. But Frenette and Morissette (2003), adding the 2001 Census, find little evidence to suggest that the earnings growth of immigrants who landed in the 1990s will be sufficient to close the large earnings disadvantage they face at entry. In essence, they find that rates of earnings convergence for this cohort are similar to those for earlier cohorts, but the gap or entry effect to be overcome is growing. To recap the discussion to this point, a series of studies extending Borjas' analysis of successive Canadian Censuses suggests that earlier cohorts of immigrants may have readily achieved parity with their native-born counterparts, but recent cohorts likely have not, and will not, in their lifetimes. Moreover, they cast doubt on studies of cross-sectional data that find that the earning of immigrants eventually converge to those of their native-born counterparts.

Results questioning convergence of immigrant earnings are not confined to the Census quasi-panel approach. Abbott and Beach (1993) find evidence of slow integration for later cohorts as far back as the early 1970s using the 1973 Job Mobility Survey. They argue that they are able to use "age" to represent birth-year cohort, since they have a direct measure of actual experience, whereas other studies must rely on an indirect measure of potential experience (age minus schooling years). Moreover, accepting the idea that cross-sectional data sets pose inherent limitations for studies of immigrant economic integration, since integration is fundamentally a process that takes place over time, suggests that we need to consider data that actually follows individual immigrant and native-born Canadians through time. Using the 1993-98 SLID panel, Hum and Simpson (2000) show that, contrary to the assumption of convergence, wages are not growing more quickly for immigrants than for the native born. Their analysis does not reject the possibility that wage growth is identical for immigrants and native born, but since wages did not grow faster for immigrants (a necessary condition if there is to be "catch up" from an initial lower starting level), no economic integration can be statistically detected. (9)

The most common explanation for the lack of integration of recent cohorts has been deteriorating labour market conditions, especially at the beginning of the 1990s. McDonald and Worswick (1998), using 1981-92 Surveys of Consumer Finance, explicitly reject the argument of declining cohort quality and interpret slower integration among cohorts entering around 1990 as a consequence of weaker labour market demand. Grant's (1999) finding that the immigrant cohort entering in the late 1980s did better than earlier cohorts, and Frenette and Morissettes's (2003) finding that the cohort landing in the 1990s did worse, are also consistent with macroeconomic conditions that were stronger in the late 1980s before the downturn of the early 1990s. But Green and Worswick (2003), extending the study of Surveys of Consumer Finance to 1997, find that this can only be part of the story. While earnings for native-born labour market entrants improved in the 1990s, earnings for entering immigrants continued to decline. And Frenette and Morissette's (2003) recent study including the 2001 Census finds no evidence of improvement in the late 1990s, when labour market conditions are improving. Will the fortunes of immigrants continue to decline relative to their native-born counterparts? What accounts for this discouraging pattern of outcomes? And what can be done about it? These are important matters for ongoing research on the economic integration of immigrants.

4. Concluding Remarks

Studies of the economic integration of immigrants have concentrated on employment earnings for the most part. Investigations using cross-sectional data find that immigrants face an initial earnings disadvantage relative to comparable native-born workers but that this negative "entry effect" erodes with time spent in the host country and immigrants eventually "catch up" (and even overtake) the native born. However, more careful assessments, using a series of cross-sections or panel data, generally reject the idea that immigrant earnings eventually converge to those of the native born. While the issue is far from settled, as to the fact or pace of economic integration, there is now a large body of evidence that seeks to explain not whether immigrant earnings converge but why they do not, or at least why recent cohorts do not.

Examinations of past research often uncover once-tentative interpretations that have since hardened into accepted wisdom or myth. They may also detect gaps in understanding or bring to light new data possibilities or analytical approaches. Our survey is no exception. Armed with this understanding, we offer several suggestions for future research and data development, with full realization that a meta-analysis of Canadian research has yet to appear. Therefore, we concentrate on major themes rather than specifics.

One major theme among researchers is accounting for individual differences among immigrants who arrive in Canada under different circumstances and at different times. This is often expressed by ordinary phrases as "individuals have their own life story" or "each immigrant has an unique experience of economic adjustment." Restated in econometric parlance, this is referred to as "individual heterogeneity." Researchers acknowledge that immigrants to Canada differ greatly with respect to many features, including such factors as language, human capital, ethnic origin, urban size and/or region, and a wide range of socio-demographical characteristics, and typically adjust for this observed heterogeneity when comparing immigrants and the native born. Factors such as entry auspices, whether immigrants enter as independent immigrants, sponsored family members or as refugees, have also been assessed to some degree (for example, Hum and Simpson, 2002a; Wanner, 2003; Li 2003). (10) But, since analyses of immigrants to Canada focus of necessity on the economic performance of immigrants after they arrive in Canada, they cannot account for the possibility that prospects of economic integration for some immigrants may have already been softly shaped prior to their entry in the Canadian labour market.

Those who immigrate to Canada as adults have an education and work history that includes training, job experience, special skills as well as institution-specific capital. All these factors affect the pace of economic integration in Canada. Consequently, we would like to know more about the employment circumstances of immigrants prior to their arrival in order to gauge the impact of the career interruption occasioned by relocation to Canada. These data, however, are unlikely to be easily available. The varied job experiences of immigrants is just one of the many examples of "individual heterogeneity" that bedevil research with micro data. However, it is intuitive that this particular heterogeneity, namely, the job history and past work experience of immigrants, may be especially significant in affecting economic integration. We do not know why foreign work experience appears to be so poorly rewarded in the Canadian labour market. More detailed knowledge about that experience might help us to understand why it is not valued.

A second dimension of "heterogeneity" is obviously the time of arrival in Canada, since integration prospects will be much conditioned by the performance of the economy during this period. Just as immigrant integration experiences vary among individuals having different socio-economic traits, so too is the possibility that even similarly qualified immigrants experience different integration paths depending upon their time of entry to Canada. Some understanding of this "heterogeneity" has been achieved by combining a series of compatible cross-sectional data sets (successive Censuses or Surveys of Consumer Finance) to form quasi-panel data. Panel data sets, which are ideally suited to uncovering effects that unfold over time, are now beginning to emerge in Canada but, as yet, they are not designed to study immigrant economic integration issues. (11)

Still, the two points raised above, under the general theme of "individual heterogeneity," suggest major avenues for further investigation. Future studies would be well advised to ask what aspects of heterogeneity matter for the issue of economic integration and what data can be developed to adequately address these questions.

Acknowledgements

We thank Peter Schnabl and Kathleen Sexsmith for excellent research assistance and SSHRCC and the Prairie Centre of Excellence for Research on Immigration and Integration for financial support. The authors take sole responsibility for errors, omissions and interpretations.

Notes

(1) Warman and Worswick (in this issue) focus exclusively on immigrant performance in cities. They show that controls for urban size are important because of the concentration of immigrants in large urban areas. Although most of the studies we review in this survey control for urban size and/or region, their results suggest a lower level of immigrant economic integration when the comparison is restricted to urban areas than when all immigrants and all Canadian born are compared. This implies that researchers might need to control for urban residence in evaluating immigrant economic performance per se, not simply control for urban residence in explaining the combined performance of immigrants and those Canadian born.

(2) This paper forms part of an ongoing study of economic integration of immigrants in different receiving countries. Since this paper is confined to Canadian findings, conclusions need not apply to immigrant integration experience in other countries.

(3) Immigrants suffer an immediate economic disadvantage vis-a-vis comparable qualified native-born individuals upon entry to Canada. This is referred to as an "entry effect", and there is not much controversy on this point. All studies report a negative entry effect, although estimates of its magnitude vary.

(4) Studies in which there is no comparison group or benchmark with which to interpret the integration progress are not considered in this essay since there would be no way of determining whether integration is taking place. The requirement of a comparison group excludes most ethnomethodological case studies from our survey.

(5) By the term "comparable," researchers intend their analysis to compare native-born and immigrant workers who share a variety of observed characteristics that cause earnings to differ among the native born and are not directly related to the comparison with immigrants. In practice, this typically means that researchers adjust for such factors as education, experience, language, and socio-demographic characteristics (location, ethnicity, etc.) using multiple regression analysis. In this review, we concentrate on studies that adjust for observable differences in this manner.

(6) Hum and Simpson show that usual measures of potential work experience (age minus years of schooling) are poorly correlated with actual experience for immigrants because of the disruptions of migration. Thus, standardizing on potential experience, while perhaps still useful, is not ideal.

(7) Note that any study that assumes a linear convergence path, or constant rate of convergence of earnings, will overestimate the speed and probability of convergence in the event that earnings convergence slows as years in Canada increases. Studies that allow for slowing convergence with years in Canada generally accept the hypothesis that it occurs.

(8) Baker and Benjamin (1994) also demonstrate that research results from cross-sectional data can provide a distorted view of immigrant integration and that quasi-panel data and techniques can produce valid estimates.

(9) Hum and Simpson (2002b) suggest two specific reasons why convergence may be exaggerated in other studies. First, they find that the effect of using potential experience is to exaggerate both the disruption (the entry effect) and the recovery (the integration effect) caused by immigration. The overall effect is to suggest more rapid integration. Secondly, they find evidence that unobserved effects exaggerate estimates of immigrant integration. Since intangibles, such as motivation, typically provide an important part of the story of immigrants, their results suggest that ignoring these effects in immigrants and the native born provide a further misleading comparison of actual immigrant performance.

(10) Wanner (2003) lacks a comparison group of native-born workers. Therefore, his study should be interpreted as dealing with differential rates of economic progress among immigrants who arrive under different auspices. Hum and Simpson (2002a) employ the same data set of landing records but compare it to the SLID sample, and then benchmark the progress of various groups against the Canadian national average. Li (2003a) also adopts average national earnings to benchmark the earnings of immigrants. None of these studies have a proper comparison group that fully adjusts for characteristics. Li (2003a) also adopts a linear model, which may overstate convergence.

(11) Detailed discussion of panel data sets in Canada is not attempted here. Most panel sets (for example, SLID) are too short in duration compared to the length of time typically estimated to span integration, small in terms of immigrant sample points, and under-representative of the immigrant population that is concentrated in large cities. A new longitudinal survey of immigrants, as well as the IMDB (administrative files of landing records linked to Revenue Canada data), are promising but currently lack proper comparison groups.

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