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Immigrant category of admission and the earnings of adults and children: how far does the apple fall?

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Abstract

Immigrants in many Western countries have experienced poor economic outcomes. This has led to a lack of integration of child immigrants (the 1.5 generation) and the second generation in some countries. However, in Canada, child immigrants and the second generation have on average integrated very well economically. We examine the importance of Canada’s admission classes to determine if there is an earnings benefit of the selection under the economic classes to (1) the Adult Arrival immigrants and (2) the Child Arrival immigrants (1.5 generation) once old enough to enter the labour market. We employ unique administrative data on landing records matched with subsequent income tax records that also allows for the linking of the records of Adult Arrival parents and their Child Arrival children. We find, relative to the Family Class, the Adult Arrivals in the Skilled Worker category have earnings that are 29% higher for men and 38% higher for women. These differences persist even after controlling for detailed personal characteristics such as education and language fluency at 21% for men and 27% for women. Child Arrival immigrants landing in the Skilled Worker Class have earnings advantages (as adults) over their Family Class counterparts of 17% for men and 21% for women. These Child Arrival Skilled Worker advantages remain at 9% for men and 14% for women after controlling for child characteristics, the Principal Applicant parent’s characteristics, and the parent’s subsequent income in Canada.

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Notes

  1. For example, there was a Senate Hearing in 2006 on the merits of a points system and a points system was also part of the Border Security, Economic Opportunity, and Immigration Modernization Act of 2013. The current US Administration has shown interest in shifting immigrant selection more towards skill-based criteria possibly using a points system mechanism.

  2. See Borjas (1994) and Card et al. (2000) (USA), and Sweetman and Dicks (1999) for example of studies examining the intergenerational integration of different groups of immigrants.

  3. There is a large literature examining differences in educational outcomes. Using Canadian data, Worswick (2004) shows that while the children of immigrant parents have low performance on vocabulary tests at ages four to six, by age 14, this disadvantage has been eliminated. Conversely, Dustmann et al. (2012) report that immigrant children in most European countries have lower average PISA test scores than do the native born in their countries (see Sweetman and van Ours (2015) for a very good review of the international evidence on the academic performance of the children of immigrants). For related analysis, also see Corak (2012) (Canada); Chiswick and DebBurman (2004) and Gonzalez (2003) (USA); Aydemir and Sweetman (2008) (Canada and USA); Böhlmark (2008) (Sweden); and Bratsberg et al. (2011) (Norway).

  4. Research on the intergenerational transmission of education has recently considered the role of culture and ethnic identity (for example, see Schüller (2015) for Germany).

  5. Aydemir et al. (2009) also consider educational mobility (see also Gang and Zimmermann 2000who consider these relationships for immigrants to Germany). Their parents’ education does not emerge as a powerful predictor of the educational outcomes of the adult children (see also the studies by Riphahn 2003 for Germany, Cobb-Clark and Nguyen 2012 for Australia, Belzil and Poinas 2010 for France, and Tsay 2006 for Taiwan).

  6. We are unable to reliably match records for the Refugee Class or the Live-in-Caregiver category. We elaborate on this in Section 3.

  7. This data will soon be available across Canada in the Research Data Centres.

  8. An immigrant had to have at least one tax record between 1982 and 2014 to be in the analysis.

  9. Based on the landing records, less than 0.3% of the sample age 0 to 17 at arrival were Principal Applicants. We drop them from the analysis. A small number of Child Arrival immigrants are also dropped due to the Principal Applicant identification codes being missing or there being multiple Principal Applicants present.

  10. The variable is derived from the sum of total earnings from T4 slips and Other employment income.

  11. Atlantic region, Quebec, Manitoba, Saskatchewan, Alberta, B.C., territories, with Ontario as the omitted group.

  12. We include deviations from the unemployment rate instead of year dummies since the inclusion of year dummies could cause collinearity issues given that we include age, years-since-migration, and arrival cohort controls. Separately for each province, we calculate deviations from the provincial trend using CANSIM Table 282-0087.

  13. For the adult analysis, the definition is based on the first year for tax returns in the matched data, while the PA definition is based on the first tax year variable in the landing file.

  14. It is worth noting that past research has found that foreign degrees have heterogenous returns depending on source country (see for example Li and Sweetman 2014).

  15. Country dummies are determined based on the 20 countries of birth with the greatest number of the child arrivals. These include Cambodia, China, El Salvador, Guyana, Haiti, Hong Kong, India, Iran, Jamaica, South Korea, Laos, Lebanon, the Philippines, Poland, Portugal, Sri Lanka, Taiwan, the UK, the USA, and Vietnam.

  16. We do not separately identify PAs and SDs in the Family Class since the PA is determined by having a close family connection to someone who is already permanently in Canada and so we would not expect differences in economic outcomes for the immigrant to be related to this status as opposed to the person being a Family Class SD.

  17. We have used income for the years the child was 10 to 17 to proxy family resources available at the time when a student might be deciding on post-secondary education. The variable combines inflation-adjusted self-employment income and earned income for the PA each year in which the child immigrant was 10 to 17 years old, then the average amount for all years with non-zero combined income is calculated.

  18. The region of origin and country of birth dummies are the same as those listed in the description of Eq. 1.

  19. See Aydemir (2011) and Sweetman and Warman (2013) for a discussion of the relevant literature.

  20. To conserve space, we omit the means for the default categories in Table 1; however, these can easily be recovered by adding up the means of the categories presented.

  21. Over this period, the tax system in Canada refunds the federal value-added tax to lower income individuals through quarterly payments, potentially worth over $150 per quarter for a family of four. To qualify for these payments, one must file a tax return. This requirement, along with the ability to claim deductions and tax credits, results in an extremely high fraction of individuals filing taxes each year.

  22. This is in fact the number of years since attaining landed immigrant status in Canada.

  23. See Pandey and Townsend (2013) for a thorough analysis of the Provincial Nominee Programs.

  24. It is important to note that the earnings data come from tax records which do not contain information on hours of work so these earnings differences will in general be a combination of differences in hourly wage rates and differences in annual hours of work. We are not aware of any research on differences in hours of work across immigrant admission categories in Canada.

  25. The Canadian points system does not give points based on country of origin.

  26. These estimates are available upon request from the authors.

  27. Intercepts calculated for 35 years old, mother tongue not English or French but could speak English at the time of immigration, immigrated between 2000 and 2004, had a Bachelor’s degree at the time of immigration, lives in Ontario, born in China and did not live in Canada prior to immigrating, and an unemployment rate of 6%.

  28. Retired workers would still show up in these tax records since they would be required to file taxes. Given that the last year of filing tax information is merged to the landing records, we are able to estimate whether an individual emigrated even if they aged out of the sample for the earnings regressions.

  29. We find similar estimates if we restrict the sample to Adult Arrivals with 10 or more years of tax returns (not necessarily consecutive) (see Appendix Table 23).

  30. In Appendix Table 24, we repeat the analysis of Table 9 but after incorporating net self-employment income into our measure of employment earnings (as we did in our analysis that led to the estimates in Table 6). The estimates are comparable with those in Table 6. We find similar coefficients for the admission category variables that are common to the two tables. See, for example, the Family coefficients in the models for men and women.

  31. It is quite possible that the self-assessed knowledge of official language variable has important measurement error that is correlated with admission class. Unfortunately, we cannot directly assess this issue with the current data.

  32. The level of detail of the summary statistics is constrained by the Statistics Canada disclosure rules.

  33. The CEC category of admissions is relevant for our Adult Arrival analysis but not for the Child Arrival analysis since Child Arrivals admitted under this program were not yet old enough (within our sample’s time frame) to have labour market earnings and be in our Child Arrivals sample.

  34. The match rate for this income variable is as high as 47% for Skilled Worker PAs and as low as 22% for ‘Other’ PAs (see Tables 12 and 13).

  35. Broadly similar results are found in Table 26 when the restriction is in at least 10 (not necessarily consecutive) tax returns.

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Acknowledgments

We would like to thank Klaus F. Zimmermann (the Editor), three anonymous reviewers, Manish Pandey, Frances Woolley, and seminar participants at Dalhousie University, Queen’s University, University of Waterloo, and the 2015 Canadian Economics Association meetings for their helpful comments. We would also like to thank Athanase Barayandema, Rose Evra, Ian Marrs, Scott McLeish, Michael Wendt, and Xiaoyi Yan for their help with the IMDB data.

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Authors and Affiliations

  1. Department of Economics, Dalhousie University, Halifax, Canada

    Casey Warman

  2. Department of Economics, Carleton University, Ottawa, Canada

    Matthew D. Webb

  3. Department of Economics, Carleton University and CReAM, Ottawa, Canada

    Christopher Worswick

  4. National Bureau of Economic Research, Cambridge, MA, USA

    Casey Warman

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  1. Casey Warman
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Correspondence to Casey Warman.

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Responsible editor: Klaus F. Zimmermann

Appendix

Appendix

Table 23 Earnings regressions, adult arrivals with 10 or more years of tax returns
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Table 24 Wage + self-employment earnings regressions, parents
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Table 25 Earnings regressions, child arrivals (0–17) with a male principal applicant
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Table 26 Earnings regressions, child arrivals with at least 10 tax returns
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Warman, C., Webb, M.D. & Worswick, C. Immigrant category of admission and the earnings of adults and children: how far does the apple fall?. J Popul Econ 32, 53–112 (2019). https://doi.org/10.1007/s00148-018-0700-5

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