Initial Earnings and Catch-up Capacity of Immigrants

Abstract

The literature, largely based on cross-sectional census data, has suggested that recent immigrant cohorts to Canada earned less than earlier ones relative to Canadians' earnings. The Longitudinal Immigration Data Base (IMDB) developed by Citizenship and Immigration Canada and Statistics Canada provides rich data for studying immigrants' longitudinal earnings profiles. Using custom-made IMDB tables, this paper estimates the initial earnings gap between immigrants and Canadians, and immigrants' catch-up capacity, defined as the number of years immigrants took, or expected to take, to reach earnings parity with Canadians. The findings show that recent immigrant cohorts earned less initially than earlier ones, but caught up faster. Some tentative explanations and policy implications are offered.