Why do immigrant workers in Australia perform better than those in Canada? Is it the immigrants or their labour markets?

Research comparing the labour market performance of recent cohorts of immigrants to Australia and Canada points to superior employment and earnings outcomes in Australia. Examining Australian and Canadian Census data between 1986 and 2006, we find that this performance advantage is not driven by differences in broader labour market conditions affecting all new labour market entrants. Rather, the results from comparing immigrants from a common source country – either the U.K., India, or China – suggest that Australian immigrants perform better, particularly in average earnings, primarily because of a different source country distribution. Moreover, the recent tightening of Australian selection policy, most notably its use of mandatory pre‐migration English‐language testing, appears to be having an effect, primarily by further shifting the source country distribution of immigrants away from non‐English‐speaking source countries, rather than in identifying higher‐quality migrants within source countries.     

Immigrant job search assimilation in Canada

Immigrant assimilation is a major issue in many countries. While most of the literature studies assimilation through a human capital framework, we examine the role of job search assimilation. To do so, we estimate an equilibrium search model of immigrants operating in the same labour market as natives, where newly arrived immigrants have lower job offer arrival rates than natives but can acquire the same arrival rates according to a stochastic process. Using Canadian panel data, we find substantial differences in job offer arrival and destruction rates between natives and immigrants that are able to account for three quarters of the observed earnings gap. The estimates imply that immigrants take on average 13 years to acquire the native search parameters. Due to immigrants facing much lower on‐the‐job offer arrival rates than natives, the model predicts that earnings growth through job search is minimal for immigrants prior to their job search assimilation.     

Computer adoption and returns in transition

Across nine transition economies, it is the young, educated, English‐speaking workers with the best access to local telecommunications infrastructures who work with computers. These workers earn about 25 percent more than do workers of comparable observable skills who do not use computers. Controlling for likely simultaneity between computer use at work and labour market earnings makes the apparent returns to computer use disappear. These results are corroborated using Russian longitudinal data on earnings and computer use on the job. High costs of computer use in transition economies suppress wages that firms can pay to their workers who use computers.     

Identifying Earnings Assimilation of Immigrants under Changing Macroeconomic Conditions

Failure to account for differences between immigrants and natives in their responsiveness to changes in macroeconomic conditions may bias estimates of assimilation effects on immigrant earnings. Using Norwegian register data from 1980 to 1996, we first establish that earnings of immigrants from non‐OECD countries exhibit greater sensitivity to local unemployment than do earnings of natives. The empirical analysis further reveals that standard methods of estimation—which fail to consider differential immigrant and native responsiveness—understate earnings growth and overstate cohort differentials among non‐OECD immigrants. These biases are attributable to trends in macroeconomic conditions over the sample period.     

LABOR MARKET ASSIMILATION OF IMMIGRANTS: THE IMPORTANCE OF LANGUAGE SKILLS

The pending Immigration Reform and Control Act (Simpson-Mazzoli) would require current illegal aliens to demonstrate minimal proficiency in English or to enroll in an English language class to attain permanent-resident status. This paper examines the importance of English language skills in the assimilation of immigrants. Data on 1975 earnings for men from 11 language /ethnic groups are used. English skills are found to play an important role in determining the earnings of immigrant and minority-language men in the U.S. Costs of deficiencies in English are substantial for most immigrants—more than $1,000 per year for eight of the 11 groups.     

The Effects of Marginal Employment on Subsequent Labour Market Outcomes

Abstract. Unemployed workers in Austria do not lose their unemployment benefits (UI) if they work in a job where their earnings are below a certain threshold [‘marginal employment’ (ME)]. ME might improve their labour market status by signalling effort, or worsen it through reduced job‐search effort. Those who work in ME while claiming UI have less employment and lower earnings afterwards than those who do not. The penalty lessens over time but is still present after three years.     

The earnings of Canadian immigrant and native-born males

This paper examines the economic attainment of Canadian immigrants. Although foreign-born males initially earn less than the native-born, their earnings rise more rapidly with Canadian labour market experience, and after 14years their earnings equal and exceed those of the native population. It is also shown that the use of Mincer's identity leads to biased results when estimating the earnings of the immigrant population.     

Explaining the deteriorating entry earnings of Canada's immigrant cohorts, 1966 – 2000

Abstract.  Using the 1981, 1986, 1991, 1996, and 2001 Canadian Censuses, we explore causes of the deterioration in entry earnings of successive cohorts of immigrant men and women. Roughly one‐third of the deterioration is explained by compositional shifts in language ability and region of birth. We find no evidence of a decline in the returns to foreign education for either immigrant men or immigrant women but a definite deterioration in the returns to foreign labour market experience, most strongly among men from non‐traditional source countries. We can explain roughly two‐thirds of the male and one‐half of the female deterioration without any reference to entry labour market conditions. When we also account for entry conditions, our results suggest Canada's immigrants of the late 1990s would otherwise have enjoyed entry earnings equal to or higher than their counterparts of the 1960s.     

The Earnings of Immigrant Men in Australia: Assimilation, Cohort Effects, and Macroeconomic Conditions

This paper analyzes the earnings of immigrant men in Australia using data from Income Distribution Surveys for 1982, 1986 and 1990. The paper expands on the standard approach used in the literature to evaluate immigrant earnings adjustment by considering the impact of current labour market conditions and conditions at labour market entry on current earnings. Immigrants from non-English speaking backgrounds have significantly lower earnings on arrival in Australia compared with native-born males, and this gap is not narrowed as years in Australia increase. However, poorer macroeconomic conditions at entry are found to have a significantly smaller negative effect on the earnings of immigrants from non-English speaking backgrounds than native-born males.     

The assimilation of Australian immigrants: does occupation matter?

This paper utilises the occupational attainment approach to investigate immigrant labour market assimilation, complementing other assimilation approaches such as employability, earnings, skills-match and job satisfaction. Our results show that all immigrant groups suffer from initial occupational attainment disadvantage. Worryingly, no ‘catch-up’ over time is evident – even when disaggregated to reflect different cultures and backgrounds. Nor is there much evidence that the occupational status of younger arrivals matches those of Australian born residents, despite being immersed in local mores and institutions while undertaking schooling in Australia. Newer cohorts of immigrants (those who arrived between 2000 and 2014) are also more prone to suffering an occupational penalty. We recommend policymakers subsidise bridging courses to aid recognition of overseas-obtained qualifications and encourage immigrants to obtain local qualifications that can complement their overseas-obtained work experience. This will increase their ‘Australian-ready’ skill-set and occupational attainment in their new host country.     

Ethnic enclaves and immigrant earnings growth

Abstract.  The impact of living in an ethnic enclave on earnings growth of immigrants in Canada is examined using the 1981–2001 Censuses. Consistent with U.S. findings, enclaves are found to have a negative impact on the earnings growth of male immigrants. A negative impact is also found for female immigrants. Living in an enclave was found to be particularly harmful for individuals immigrating as adults, especially for females, but did not affect immigrants who arrived at a young age. Enclaves had a more negative impact on high-skilled male immigrants, especially if they had received the bulk of their education outside Canada. Enclaves were also found to hinder language skills.     

Local labor markets and earnings of refugee immigrants

This paper estimates how local conditions at the time of immigration influence later outcomes for refugee immigrants to Norway, exploiting the quasi-experimental nature of the Norwegian system for settlement for “quota” or resettlement refugees. A unique administrative dataset with assigned settlement municipalities is used to identify the causal effect of initial location characteristics. Being placed in a labor market where other non-OECD immigrants do well increases own annual labor earnings up to 6 years after immigration. Extended models suggest that this effect is not driven by individual scarring effects: when controlling for the contemporaneous employment rate in the assigned region, effects of initial conditions disappear. Rather, the effects appear to be due to persistence in local labor market conditions combined with limited geographical mobility in response to adverse labor market conditions.     

Occupational Attainment and Immigrant Economic Progress in Australia*

Using data from the 2001 Australian Census of Population and Housing, on adult men in full‐time employment, this paper augments a conventional human capital earnings function with information on occupations. It also estimates models of occupational attainment. The results from both the earnings function and model of occupational attainment indicate that the limited international transferability of human capital skills results in immigrants entering into relatively low status occupations when they first enter the Australian labour market. Comparison with similar research for the USA suggests that the different immigrant selection regimes (primarily family reunion in the USA, skill‐based immigration in Australia) do not impact on the negative association between current occupational status and pre‐immigration labour market experience.     

Human capital accumulation: Evidence from immigrants in low-income countries

This paper offers new evidence on the theory of human capital accumulation. The current findings in developed countries have documented that immigrants' earnings growth exceeds that of natives and that immigrants upgrade their occupations over time. Three possible explanations for these observations are suggested in the literature: 1) immigrants accumulate more human capital than natives, 2) immigrants are not able to fully transfer their skills, so over time, they restore the value of source-country human capital, and 3) immigrants are more productive than natives because they are positively selected on ability. This study investigates the labor market outcomes of immigrants in low-income countries and finds that immigrants earn more than comparable natives and work in better-paid occupations. Over time the gap in earnings and occupational distribution between immigrants and natives narrows. This observation is more consistent with the predictions of human capital accumulation theory than with skill transferability and selection theories.     

The earnings of male immigrants in England: evidence from the quarterly LFS

"In this paper we estimate earnings functions for native born and foreign born white and non-white males in the English labour market, using data from the Quarterly Labour Force Survey.... Our results highlight the importance of distinguishing between native born and foreign born males when investigating the labour market experience of ethnic minorities. Furthermore, the earnings performance amongst white immigrants varies considerably."     

Retraining for the unemployed and the quality of the job match

ABSTRACT

In Germany, retraining is an important measure in active labour market policy, providing unemployed individuals with extensive vocational training. Using administrative data, we show that retraining participants are more likely to take up jobs that require their educational degree and are more often employed in those occupations for which they have received vocational training. Moreover, retraining leads to higher earnings. As these effects may be driven by the positive impact of retraining on employment, we additionally try to isolate the direct effect by restricting our analyses to those formerly unemployed who find employment irrespective of participation in retraining.     

Physical appearance and earnings: further evidence

The literature contains numerous studies on earnings differentials based on age, race, and gender. Comparatively few studies have examined differences in labour market success related to physical appearance. Using three waves of data collected at two organizations, this paper tested for earnings differentials among workers based on their self-reported appearance. Significant earnings premiums for attractiveness were found for women, but not for men.     

Movin' On Up: Interpreting The Earnings–Experience Profile

Human capital theory provides the generally accepted interpretation of the relationship between earnings and labour market experience, namely that general human capital tends to increase with experience. However, there are other plausible interpretations. Search models, for example, generally predict that more time in the labour market increases the chance of finding a better match and hence tends to be associated with higher earnings. This paper shows how a simple search model can be used to predict the amount of earnings growth that can be assigned to search with the residual being assigned to the human capital model. A substantial if not the larger part of the rise in earnings over the life-cycle in Britain can be explained by a simple search model, and virtually all the earnings gap between men and women can be explained in this way. Overall, the evidence suggests that we do need to reinterpret the returns to experience in earnings functions.     

Immigrant Unemployment in the First Year of Australian Labour Market Activity*

Analysis of data from a 1983 Manpower Programs Survey shows that the relatively high unemployment rates experienced by overseas-born labour market entrants are reasonably widespread across immigrant groups. One exception is refugees, who are more likely to be unemployed than non-refugees. Consistent with prior research, additional years of education are associated with only modest reductions in the unemployment rates of immigrants. However, immigrants are able to reduce their predicted unemployment rates considerably by obtaining information on Australian job opportunities prior to migrating.     

Immigrant earnings growth: selection bias or real progress?

We use longitudinal tax data linked to immigrant landing records to study the effect of selective attrition on the estimated earnings assimilation of immigrants to Canada. Contrary to findings in the existing international literature, we show that the immigrant‐native earnings gap closes at the same pace in longitudinal and cross‐sectional data. Low‐earning immigrants are likely to leave the cross‐sectional samples over time, but the same is true for the native born. Our study suggests that immigrants to Canada have labour market participation dynamics similar to those of the native born.