Abstract
AbstractUsing 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.Jel codes: J6, J15, J61
Highlights
Recent studies in developed economies indicate a significant mismatch problem between workers’ qualifications and what their jobs require in the labor force, one that is conceptually different from short-term cyclical underemployment.1 In a study of Canadian university graduates between 1993 and 2001, Li et al (2006) found that those who were chronically or always overqualified accounted for about 50 % of the ever-overqualified population
Studies have found that low literacy skills and language proficiency of immigrants have a direct effect on postimmigration labor market outcomes (Warman et al 2015; Ferrer et al 2006). These findings raise the question of the portability of internationally educated new immigrants’ human capital, an issue that has been investigated in the literature in conjunction with their occupational attainment and mismatch in hosting countries (Green 1999; Imai et al 2011; Warman et al 2015). If it is the nonportability of their foreign credentials resulting from shifting source-country composition (Warman and Worswick 2015) that penalizes their wage earnings in hosting labor markets, rather than their transitory occupational mismatch, solutions to the poor economic integration of immigrants should lie more in policies targeting source-country human capital characteristics of new immigrants rather than policies designed for postimmigration improvements (Green and Worswick 2012)
The results show a significant and persistent poor matching quality for foreign-educated immigrant workers, their relative underutilization cost is not as sizeable as envisioned in some policy circles
Summary
Recent studies in developed economies indicate a significant mismatch problem between workers’ qualifications and what their jobs require in the labor force, one that is conceptually different from short-term cyclical underemployment. In a study of Canadian university graduates between 1993 and 2001, Li et al (2006) found that those who were chronically or always overqualified accounted for about 50 % of the ever-overqualified population. That define the match between pre- and postimmigration (or intended) occupations, this study will use the clustering of native-born workers in each cell of the field of study–occupation matrix as a benchmark reflecting the “common” matching quality in Canadian labor markets that internationally educated immigrant workers can attain in the long run This approach allows us to approximate the annual cost of underutilizing the human capital of immigrants by estimating the change in immigrant earnings that would occur if they were distributed identically to the native born in terms of relatedness (field of study–occupation match) in Canada. We turn next to the models we use to estimate the effects of mismatch and the method employed to approximate the cost associated with this mismatch for immigrants in Canadian labor markets
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