Is the lower return to immigrants\u2019 foreign schooling a postarrival problem in Canada?

Yigit Aydede,Atul Dar

doi:10.1186/s40176-016-0076-9

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

Highlights

It is well recognized that education is unambiguously rewarded in labor markets, the literature identifies three different channels through which formal schooling impacts on earnings
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
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

Summary

Introduction

It is well recognized that education is unambiguously rewarded in labor markets, the literature identifies three different channels through which formal schooling impacts on earnings. 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. Using horizontally normalized VRIs classified into five groups, we can rank each degree for a given occupation based on the native-born workers’ distribution Likewise, using this categorical variable as a proxy for m(d, o) in Eq (1) for immigrants, we can control for the effect of vertical mismatch on wage earnings. Those who hold a bachelor’s degree are rewarded an additional 4 % for their education, this is not comparable to the 14–15 % earned by native-born and Canadian-educated counterparts

Conclusions

Findings

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